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Business Organizations

Business Organizations. Sections 3 & 4. Corporations, Mergers, and Multinationals. Section 3 . Corporations. A Corporation is a legal entity owned by individual stockholders. Stock is a certificate of ownership in a corporation. . Types of Corporations .

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Business Organizations

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  1. Business Organizations Sections 3 & 4

  2. Corporations, Mergers, and Multinationals Section 3

  3. Corporations • A Corporation is a legal entity owned by individual stockholders. • Stock is a certificate of ownership in a corporation.

  4. Types of Corporations • Closely held corporation is a corporation that issues stock to only a few people, often family.

  5. Types of Corporations • Publicly held corporation is a corporation that sells stock on the open market.

  6. Types of Corporations • Publicly held corporation have many stockholders, are sold in places like New York Stock Exchange.

  7. Corporate Structure

  8. Advantages of Incorporation • Limited liability for owners • Transferable ownership • Ability to attract capital • Long life

  9. Advantages for Stockholders • Limited liability • Flexibility • Transferable

  10. Advantages for the Corporation • More potential for growth • Raise money for capital • Selling stock or bonds • Do not need managerial skills

  11. Disadvantages of Incorporations • Expense and difficulty of start-up • Double taxation • Potential loss of control by the founders • More legal requirements and regulations

  12. Disadvantages of Incorporations • Difficulty and expense of start-up • Must get certificate of incorporation which is a license to form a corporation issued by a state government.

  13. Disadvantages of Incorporations • Double Taxation • Corporations are considered separate legal entities from their owners, so therefore they must pay taxes on their income and stockholders must also pay taxes on their income.

  14. Disadvantages of Incorporations • Loss of Control • More Regulation • Annual reports to Securities and Exchange Commission (SEC), stock market regulators.

  15. Corporate Combinations • Horizontal Mergers • Vertical Mergers • Conglomerates

  16. Horizontal Mergers • The combination of two or more firms competing in the same market with the same good or service.

  17. Vertical Mergers • The combination of two or more firms involved in different stages of producing the same good or service.

  18. Conglomerates • Business combination merging more than three businesses that make unrelated products.

  19. Multinational Corporations • Large corporation that produces and sells its goods and services throughout the world. • Must obey laws and taxes where they are located

  20. Advantages and Disadvantages • Providing jobs worldwide, spread new technologies. • Influence culture and politics in countries, poor working conditions.

  21. OTHER ORGANIZATIONS Section 4

  22. Business Franchises • A semi-independent business that pays fees to a parent company in return for exclusive right to sell a certain product or service in a given area.

  23. Advantages of Franchises • Management training and support • Standardized quality • National advertising programs • Financial assistance • Centralized buying power

  24. Disadvantages of franchises • High franchising fees and royalties, a share of earnings given as payment. • Strict operating standards • Purchasing restrictions • Limited product line

  25. Cooperative organizations • A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit.

  26. Consumer Cooperative • Retail outlet owned and operated by customers. • Some require work, some require fees.

  27. Service Cooperatives • Cooperatives that provide service instead of goods. • Discounted insurance, banking services, health care, legal help, or baby sitting.

  28. Producer Cooperatives • Agricultural marketing cooperatives that helps members sell their products

  29. Nonprofit Organizations • Institution that functions much like a business, but does not operate for the purpose of generating profits • Museums, YMCA, Boys and Girls Clubs, public schools.

  30. Professional Organizations • Nonprofit organization that works to improve the image, working conditions, and skill levels of people in particular occupations.

  31. Business Associations • Nonprofit organization that promotes collective business interests for a city, state, or other geographical area, or for a group of similar businesses.

  32. Trade Associations • Nonprofit organization that promotes the interests of a particular industry.

  33. Labor Unions • An organized group of workers whose aim is to improve working conditions, wages, hours, and fringe benefits.

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