Business Organizations

Different Forms of Business

Learning Target

• I can explain the different types of business organizations.

• I can list pros and cons for each.

Focus Questions

• How would you describe the businesses that you most often visit?

– Local Business? National Chain?

– Who is the Owner(s) of the Business?

Business Organization

• A business organization is the ownership structure of a company or firm

• Can you name some types of business organizations?

Sole Proprietorships

• A sole proprietorshipsole proprietorship is a business owned and managed by a single individual

• The single owner earns all profits and responsible for all debts.

• Sole proprietorships are the most common form of business organization

• Yet they generate only about 4 percent of all United States sales

• Examples in Milwaukie?

Partnerships3 Categories of Partnerships• General Partnership

– In a general partnership, partners share equally in both responsibility and liability

• Limited Partnership– In a limited partnership, only one partner is

required to be a general partner, or to have unlimited personal liability for the firm

• Limited Liability Partnership– A newer type of partnership is the limited

liability partnership. In this form, all partners are limited partners

Franchises

• A business franchisebusiness franchise is a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area

Corporations

• A corporation is a legal entity, or being, owned by individual stockholders– Stocks, or shares, represent a stockholder’s

portion of ownership of a corporation– A corporation which issues stock to a limited a

number of people is known as a closely held corporation

– A publicly held corporation, buys and sells its stock on the open market

Corporate Mergers

• Horizontal Mergers– The combining of two or more firms in the

same market with the same good or service• The Government may try to block the merger to

prevent monopolies

• Vertical Mergers– Two or more firms in involved in different

stages of production of a good or service

Corporate Mergers

• Conglomerates– a business combination merging more

than three companies that produce unrelated products or services.

Multinationals

• Produce and sell goods in more than one country

• Obey laws and pay taxes in the countries where they operate

Cooperatives• A cooperativecooperative is a business organization

owned and operated by a group of individuals for their shared benefit

• Consumer Cooperatives– Retail outlets owned and operated by consumers – Sell their goods to their members at reduced prices

• Service Cooperatives– Provide services, rather than goods (credit unions)

• Producer Cooperatives– Agricultural marketing cooperatives that help

members sell their products

Non-Profit Organizations

• Institutions that function like business organizations, but do not operate for profits are nonprofit organizations– Public Schools, Red Cross, Hospitals– Professional, business and trade

Organizations– Labor Unions