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The Business Of Free Enterprise

The Business Of Free Enterprise. Enterprise Vs. Entrepreneur. Enterprise Business organization Entrepreneur Introduce new and better goods and services or ways of doing things. Characteristics Of Entrepreneurs . Creative individualistic official thinkers Start at an early age

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The Business Of Free Enterprise

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  1. The Business Of Free Enterprise

  2. Enterprise Vs. Entrepreneur • Enterprise • Business organization • Entrepreneur • Introduce new and better goods and services or ways of doing things

  3. Characteristics Of Entrepreneurs • Creative individualistic official thinkers • Start at an early age • Develop and sell ordinary products • Find new ways to sell • Spot new markets and develop new products • Work to perfect their own idea • Work within an existing business

  4. Strategies used by entrepreneurs • Take advantage of unexpected opportunities • Respond to changing market conditions • Improve a product or process • Provide alternative goods/services • Identify population trends

  5. Economic role of a small business • Small business • Independently owned and operated and is not dominate in its field of operation • Industry • Group of one or more firms that produce identical or similar products • Small businesses are the largest percentage of our economy

  6. Advantage of small business • Can add or discontinue merchandise line quickly • Change hours of operation • Alter pricing • Can profit in small markets • Suited to time-stressed consumers • Appeal to specific demographic groups

  7. Disadvantage of small business • Higher failure rate than large firms for three reasons: • Poor management • Inadequate financing • Insufficient capital slow sales heavy debt • Inability to hire highly qualified workers • Problem with salary and benefits

  8. Reasons for owning your own business • Personal independence • Profits are all yours BUT so are the debts • Opportunity to work hours they choose

  9. Forms of business organization Sole Proprietorship • Advantages • Easy to start, few regulations and forms • Free to make all decisions • All profits are yours • No separate taxes • Can reach quickly to problems • Personal satisfaction • Disadvantages • Unlimited liability • Limited funds • Lack of opportunities for employees • Competitors and ability of owner can change

  10. Forms of business organizationPartnership • Advantages • Easy to form no special tax • Partners bring more money to business • New and different ideas • Disadvantage • Unlimited liability • If partner dies or leaves business • Limited funds • Conflicts arise if partner disagrees

  11. Corporations • Must obtain a state charter • Represented by shares of stock • Stockholders are the owners • Privately held stocks are owned by a small group or family • Can be sued, can sue, and enter into contractual agreements

  12. Forms of business organizationCorporation • Advantage • Shareholders are responsible only for a debt up to their investment • Ease of transfer of stocks buy or sell) • Stockholder dies corporation doesn’t dissolve • Raise money by selling stocks or issuing bonds • Disadvantages • Complicated and costly • Taxed twice: Tax on profits, stockholders pay taxes on dividends • When selling stocks to the public, must disclose finances and operations

  13. Special types of business organization

  14. S. Corporations • Don’t pay corporate income tax • Stockholders pay tax on dividends • May not have more than 35 stockholders and may not own 80% or more of another corporation

  15. Limited Liability Companies (LLC) • Must have two or more members who function as a partner or stockholder • Hold property in name of LLC rather than members names • Advantage Don’t risk personal assets • Disadvantage state regulations and strict tax rules limited life

  16. Non-Profit Corporations • Cover operation expenses including wages and benefits • Normally serves educational, social, charitable, religious purposes

  17. Government-owned Corporations • Undertaken when the market doesn’t adequately supply a needed good or service

  18. Cooperatives • Individuals or companies that perform functions for the members • Housing are multiple dwelling units owned by the tenants • Consumer are retail businesses owned by the people who share in the profits and purchase goods/services at lower costs • Producer Companies that manufacture and market products on behalf of the members

  19. Franchises • Is a license that entitles its holder to operate his or her individually owned business as if it were part of large chain of stores

  20. Franchises • Advantage • Company can expand with little cost to itself • Have the incentive to increase efficiency, sales, profits • Provide training programs, financial assistance, advertising

  21. How large corporations are organized • Charter • Stockholders • Board of directors • Annual Corporation report

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