Section 6.1 – Types of Business Ownership › Describe the advantages and disadvantages of the...

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Business Ownership and Operations Intro To Business Chapter 6

Transcript of Section 6.1 – Types of Business Ownership › Describe the advantages and disadvantages of the...

Page 1: Section 6.1 – Types of Business Ownership › Describe the advantages and disadvantages of the three major forms of business organizations › Describe.

Business Ownership and Operations

Intro To BusinessChapter 6

Page 2: Section 6.1 – Types of Business Ownership › Describe the advantages and disadvantages of the three major forms of business organizations › Describe.

Learning Targets

Section 6.1 – Types of Business Ownership› Describe the advantages and

disadvantages of the three major forms of business organizations

› Describe how cooperatives and nonprofits are like and unlike corporations and franchises

Page 3: Section 6.1 – Types of Business Ownership › Describe the advantages and disadvantages of the three major forms of business organizations › Describe.

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Types of Business Ownership

Sole Proprietorship› A business owned by one person. Three-

quarters of all businesses in the U. S. take this form of organization

› Advantages: Easy to do (licenses/permits) In charge of their business Can make all of the decisions Can keep all of the profits Usually have lower taxes (taxed once)

Page 4: Section 6.1 – Types of Business Ownership › Describe the advantages and disadvantages of the three major forms of business organizations › Describe.

Types of Business Ownership› Disadvantages:

Unlimited liability The owner is responsible for the company’s debt’s.

If the owner has more debt than they receive, the owner has to make up the difference.

Page 5: Section 6.1 – Types of Business Ownership › Describe the advantages and disadvantages of the three major forms of business organizations › Describe.

Types of Business Ownership

Partnership› A business owned by two or more people

who share its risks and rewards.› Advantages:

Easy to start Easier to obtain capital Banks are often more willing to lend money Taxed only once Each partner brings specific skills and talents

Page 6: Section 6.1 – Types of Business Ownership › Describe the advantages and disadvantages of the three major forms of business organizations › Describe.

Types of Business Ownership› Disadvantages

All of the partners share the risk Problems with partners getting along Unlimited Liability

Corporation› Company that is registered by a state and

operates apart from its owners› To raise money, the owners can sell stock

or shares of the company

Page 7: Section 6.1 – Types of Business Ownership › Describe the advantages and disadvantages of the three major forms of business organizations › Describe.

Types of Business Ownership› Advantages

Limited Liability Holds a firms owners responsible for no more than

the capital that they have invested in it. Ability to raise money by selling stock Company does not end if an owner dies

› Disadvantages Double taxes Extra governmental restrictions More difficult and costly to start

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Types of Business Ownership

Other ways to Organize a Business› Cooperative

An organization that is owned and operated by its members When a group of businesses pool their resources Purpose – to save money on the purchase of certain goods and

services Ex. Ocean Spray› Nonprofit Organization

Type of organization that focuses on a providing a service, but not to make a profit.

Must register with the government. Because they do not make a profit they do not pay taxes. Ex. Churches

› Franchise A contractual agreement to use the name and sell the products or

services of a company in a designated area Ex. McDonalds, Tim Horton’s You have to invest money and pay franchise fees or share the

profits.

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Questions/Reflection

1. What is the difference between a sole proprietorship and a partnership?

2. If a partner makes a bad decision, what responsibility do the other partners have?

3. Why are cooperatives formed?4. Compare limited liability and unlimited

liability.

Page 10: Section 6.1 – Types of Business Ownership › Describe the advantages and disadvantages of the three major forms of business organizations › Describe.

Learning Targets

Section 6.2 – Types and Functions of Businesses› Differentiate the six types of businesses› Describe the five functions of business› Discuss how the five functions of business

relate to each other

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Types and Functions of Businesses

Types of Business› Producers

Business that gathers raw goods Agriculture, mining, fishing, and forestry

› Processors Changes raw materials into more finished products Made from raw goods that require further

processing Crude oil to gasoline, iron ore into steel

› Manufacturers Makes finished products out of processed goods Cars, CD’s, Computers

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Types and Functions of Businesses

Intermediaries and Wholesalers› Intermediary – A business that moves

goods from one business to another Buys goods, stores them and resells them

› Wholesaler – Distributes goods Retailers and Service Businesses

› Retailer – Purchases goods from wholesaler and sells them to consumer

› Record stores and auto dealers

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Types and Functions of Businesses

Functions of Business› Production and Procurement

Production – Process of creating, expanding, manufacturing or improving goods and services

Procurement – The buying and reselling of goods that have already been produced.

› Marketing Process of planning, pricing, promoting, selling

and distributing ideas, goods, and services Getting consumers to buy the product

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Types and Functions of Businesses› Management

The process of achieving company goals by planning, organizing, directing, controlling and evaluating the effective use of resources.

› Finance and Accounting Finance – The business or art of money

management Requires analyzing financial statements to make

future decisions Accounting – Maintaining and checking

records, handling bills and preparing financial reports for a business.

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Questions

What is the difference between a producer and a processor?

Identify the five functions of business. Give an example of how the accounting

and finance functions can affect a business’s marketing and production processes.