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Business Organizations

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michelle ashmore

on 7 November 2017

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Transcript of Business Organizations

Business Organizations
How individual businesses are arranged within a certain
market structure

Sole Proprietorship
Firms legally owned by
one person
Partnership
legally owned by
2 or more people
General partnership: when all partners are involved in day to day operations

Limited partnership: when one partner is in charge of day to day operations
Corporation
legally owned by shareholders
(people who own a piece of stock) in hopes of gaining dividends (money)

and

run by a hired employee (CEO)
sometimes these business organizations decide to join together to make 1 bigger business.... this is called a MERGER
Vertical Merger
2 businesses involved in making different steps of a product join together
tire
car

Horizontal Merger
2 businesses making the same thing join together
Can you think of a place you shop for each type of business organization?

Sole proprietorship
Partnership
Corporation
75% of all businesses are
sole proprietorships

90% of what you buy is
from a corporation
Umps Fwat video
Lifespan:




liability:

limited (when owner quits,
business ends)
low start up costs
unlimited
(total responsibility)
taxation:



ability to make decisions:
limited govt regulation
taxed once
complete control
freedom
owner keeps profits
lifespan:


liability:
as long as partners continue
easy to start up
unlimited
(partners totally responsible)
shared b/w partners
taxation:


decision making:
less government regulation
taxed once
shared with partner(s)
could cause conflict
lifespan:


liability:
unlimited
(CEO quits, hire new)
specialized workers
hard to start
limited (owners may
only lose money)
taxation:


Decision making:
most government
regulation
double taxation
additional costs
Board of Directors hired by shareholders

owners have limited say in decisions
can sell ownership/shares of stock
1. If a general partnership fails, who is responsible for the debts?
a. anyone who works for the partnership
b. all of the partners
c. only the most senior general partner
d. no one

2. Which of the following is an advantage of a sole proprietorship?
a. No one is responsible if it fails.
b. It is the least-regulated form of business organization.
c. It is an easy way to make a lot of money.
d. It is easy to get financing to start one.

3. What is the major difference between a corporation and a partnership?
a. A corporation is always larger than other kinds of businesses.
b. A corporation is responsible for its debts if it fails.
c. A corporation has a separate entity apart from that of the owners and workers.
d. A partnership is the coolest form of business organization.

Advantages
keep profits
make all decisions
easy to start
Disadvantages
unlimited liability
limited life
hard to get top talent
limited access to $
Advantages
easy to start
specialization
more access to $ than sole prop.
Disadvantages
unlimited liability
limited life
potential conflict
division of profits
Advantages
access to large amount of $ to grow
can grow larger and give advancement opportunities
limited liability
unlimited life
Disadvantages
double taxation
lose control of company (little say)
more govt regulation
Full transcript