Chapter 2 Notes

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Chapter 2: Types of BusinessesForms of Business Ownership

Forms of business ownership and types of businesses describe how they are organized and run. The ____________________________________ ______________are listed below.

Sole ProprietorshipsA sole proprietorship is __________________________ who is known as the proprietor. The proprietor has a wide range of responsibilities including arranging displays and selling to customers to name a few. Funds to run the business usually come from the _____________________________. If the business prospers, the owner receives all of the profits. If the business does poorly, the owner is responsible for its losses. This is called _________________________.

A franchise _______________________, of the four forms of ownership.

• sole proprietorship• corporation

• partnership• co-operatives

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PartnershipsA partnership refers to a type of business in which ________________ ______________________________________________ of owning andoperating it.

The terms of the partnership are recorded in the __________________. The _________________________________ is a generalpartnership. When two individuals form a limited partnership, the__________________________________________________________ ______________________________. This is called limited liability.

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CorporationsA corporation is a business granted ___________with rights, privileges, andliabilities that are __________________________ who work for the business.Corporations can be small such as a one-person business or large such asa ________________ that conducts business in _______________countries.

________________of corporate ownership that are owned publicly are called_____________________. Individuals who own shares of a corporation are called _____________________ and become owners of the business. ______________________________. A board of directors runs a corporation that is owned by shareholders.

A publicly traded corporation that makes ________________________ __________________________________________.

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Types of Corporations

Co-operativesA co-operative __________________________________________________________that the business offers. This type ofbusiness is motivated by service and not profit. Adaptations of thisbusiness model include consumer, retail, and worker co-operatives.

• private corporations• Crown corporations

• public corporations•municipal corporations

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FranchisesThe franchiser ______________________________________________________________ to another business called the franchisee.

A franchise agreement can provide the franchisee with• _____________________________________________• ________________________________________________

Requirements before a franchise is awarded may include• paying the __________________• agreeing to pay a ___________________ as well as any national

or local advertising costs• _____________________________ centrally from the franchiser• participating in _________________________________

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Chapter 2: Types of BusinessesGoing into Business

Eight Questions to Ask Before Going into Business1. Why Start Your Own Business?

People who desire to be the boss and take responsibility for making decisions often decide to run their own business. Theybelieve it is the best way for them to _____________________ ____________, to allow them to use their skills and knowledge, and to be creative.

2. What Different Types of Businesses Are There? service business retail businessnot-for-profit organization manufacturing business

3. What Are Your Skills and Interests?Different ideas, skills, and knowledge can be used to start a new business. Two popular ones are _________________________ businesses.

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i. Should Your Business Be Home-based?Technology has changed how _____ (“___________________”) businesses operate. Computers, scanners, and Internet access are a few of the tools that home office businesses use today to be successful.

ii. Should Your Business be Web-based?E-commerce (“___________”) is a marketplace where consumers and sellers meet without face-to-face contact. In the “real world,” products are __________. Products and services are sold to us by personal contact with the sellers. In __________________, we do not interact with products or come face-to-face with the sellers. Our experience with services is limited or non-existent. Consumers are often reluctant to purchase online due to ____________________________________________________.

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4. Where Can You Find Information About a Business?Businesses require accurate and current information to make good decisions. Important resources to find information include

5. What Are the Start-up Costs?Capital resources to run a business are available through___________________ referred to as borrowing money to run the business. Using your savings or investor savings called _____________________ is an alternative way to fund a business.

_____________________________________

____________________________________

_____________________________ (i.e., Strategis and Statistics Canada are two helpful government sites or agencies.)

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6. What Level of Risk Can You Expect?Even with research and planning, business can be ________. Risks or threats beyond and within the owner’s control can put the business in _____________________.

7. What Steps Are Involved in Running This Business?Some types of businesses, such as _________________. A complex business requires __________________ with different skills to successfully start and operate it.

8. What Resources Will You Need?________________ is determining the resources the business requires and how much financing it needs to obtain them.__________________ is the amount of money gained from the sale of products or services.

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Chapter 2: Types of BusinessesInternational Business Structures

A number of different _________________ allow businesses to expand into international markets.

Joint VenturesA joint venture can _________________ ___________of two different individuals or businesses to generate more benefits for both parties.

International FranchisesAn international franchise is a way to achieve an _______________________ by buying the rights to a chain operation from the ____________________.

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Strategic Alliances

Strategic alliances occur when _________________________ agree to commit particular resources to achieve a common set of objectives. Alliance partners remain _____________________________________ of each other.

Mergers

Mergers happen when ______________________________: one of the businesses usually wants to purchase a ________________ in the other company, or both business have _____________________________.

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OffshoringOffshoring _____________some of a company’s operations to _____________________. Usually this happens to take advantage of lower labour costs, to be closer to large and emerging buyer markets, and to have access to __________________________.

Multinational CorporationsA business enterprise that __________________________________ or_____________________________ is a multinational corporation. Amultinational corporation offers different benefits to the country it investsin. Some positive benefits include ______________________________.Negative consequences could be less pay and more financial instability for ____________________________________.