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CHAPTER INTRODUCTION SECTION 1 Forms of Business Organization SECTION 2 Business Growth and Expansion SECTION 3 Other Organizations CHAPTER SUMMARY – PowerPoint PPT presentation

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Title: Contents


1
Contents
CHAPTER INTRODUCTION SECTION 1 Forms of Business
Organization SECTION 2 Business Growth and
Expansion SECTION 3 Other Organizations CHAPT
ER SUMMARY CHAPTER ASSESSMENT
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section.Press the ESC key at any time to exit
the presentation.
2
Section 1-2
Study Guide (cont.)
Key Terms
  • sole proprietorship ?
  • stock ?
  • stockholder ?
  • shareholder ?
  • dividend ?
  • bond ?
  • principal ?
  • interest ?
  • double taxation
  • proprietorship ?
  • unlimited liability ?
  • inventory ?
  • limited life ?
  • partnership ?
  • limited partnership ?
  • bankruptcy ?
  • corporation ?
  • charter ?

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display the information. Section 1 begins on page
57 of your textbook.
3
Section 1-3
Study Guide (cont.)
Objectives
After studying this section, you will be able to
?
  • Describe the characteristics of the sole
    proprietorship. ?
  • Understand the advantages and disadvantages of
    the partnership. ?
  • Describe the structure and features of the
    corporation. ?

Applying Economic Concepts
Unlimited Liability How is personal liability
affected by the type of business owned?
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Story.
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display the information. Section 1 begins on page
57 of your textbook.
4
Section 1-4
Introduction
  • There are three main forms of business
    organizations in the economy todaythe sole
    proprietorship, the partnership, and the
    corporation. ?
  • Each offers its owners significant advantages and
    disadvantages.

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5
Section 1-5
Sole Proprietorships
  • The most common form of business organization in
    the United States is the sole proprietorship or
    proprietorship a business owned and run by one
    person. ?

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6
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7
Section 1-8
Advantages
  • The advantages of a sole proprietorship include ?
  • ease of starting up ?
  • ease of management ?
  • owner enjoys the profits of successful management
    ?
  • no separate business income taxes ?
  • psychological satisfaction ?
  • ease of getting out of business

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8
Section 1-9
Disadvantages
  • The disadvantages of a sole proprietorship
    include ?
  • owner has unlimited liability full and personal
    responsibility for all losses and debts of the
    business ?
  • difficulty in raising financial capital ?
  • size and efficiency the business may have to
    carry a large inventory, or stock of finished
    goods and parts in reserve ?
  • limited managerial experience ?
  • difficulty of attracting qualified employees ?
  • limited life firm ceases to exist when owner
    dies, quits, or sells the business

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9
Section 1-10
Partnerships
  • A partnership is a business jointly owned by two
    or more persons. ?
  • Partnerships are the least numerous form of
    business organization, accounting for the
    smallest proportion of sales and net income.

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10
Section 1-11
Types of Partnerships
  • The most common form of partnership is a general
    partnership, one in which all partners are
    responsible for the management and financial
    obligations of the business. ?
  • In a limited partnership, at least one partner is
    not active in the daily running of the business,
    although he or she may have contributed funds to
    finance the operation.

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11
Section 1-12
Forming a Partnership
  • Like a proprietorship, a partnership is
    relatively easy to start. ?
  • Because more than one owner is involved, formal
    legal papers called articles of partnership are
    usually drawn up to specify arrangements between
    partners.

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12
Section 1-13
Advantages
  • The advantages of a partnership include ?
  • ease of establishment ?
  • ease of management ?
  • lack of special taxes ?
  • attract financial capital easily ?
  • slightly larger size, increased efficiency ?
  • easier to attract top talent

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13
Section 1-14
Disadvantages
  • The disadvantages of a partnership include ?
  • each partner is fully responsible for the acts of
    all other partners ?
  • potential for conflict between partners ?
  • A business may have to file for bankruptcy, a
    court-granted permission to an individual or
    business to cease or delay debt payments.

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14
Section 1-15
Corporations
  • Corporations account for approximately one-fifth
    of the firms in the United States and about 90
    percent of all sales. ?
  • A corporation is a form of business organization
    recognized by law as a separate legal entity
    having all the rights of an individual.

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15
Section 1-16
Forming a Corporation
  • Unlike a sole proprietorship or partnership, a
    corporation is a very formal and legal
    arrangement. ?
  • People who would like to incorporate, or form a
    corporation, must file for permission from the
    national government or the state where the
    business will have its headquarters. ?
  • If approved, a charter a government document
    that gives permission to create a corporation
    is granted.

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16
Section 1-17
Forming a Corporation (cont.)
  • The charter also specifies the number of shares
    of stock, or ownership certificates in the firm. ?
  • These shares are sold to investors, called
    stockholders or shareholders. ?
  • The money is then used to set up the corporation.

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17
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18
Section 1-18
Forming a Corporation (cont.)
  • If the corporation is profitable, it may
    eventually issue a dividend a check
    representing a portion of the corporate earnings
    to each stockholder.

19
Section 1-19
Corporate Structure
  • When an investor purchases stock, he or she
    becomes an owner with certain ownership rights.
  • There are two types of stock.
  • 1) Common Stock - this type of stock gives the
  • owner voting privileges, but is the last to
    be
  • sold in a bankruptcy.
  • 2) Preferred Stock this type of stock conveys
  • no voting rights, but will have a higher
  • redeem value if the company declares
  • bankruptcy.

20
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21
Section 1-20
Advantages
  • The advantages of a corporation include ?
  • ease of raising financial capital ?
  • gain capital by selling additional stock ?
  • borrow money by issuing bonds ?
  • A bond is a written promise to repay the amount
    borrowed at a later date. ?
  • The amount borrowed is known as the principal. ?
  • While the money is borrowed, the corporation pays
    interest, the price paid for the use of anothers
    money.

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22
Section 1-21
Advantages (cont.)
  • More advantages of a corporation include ?
  • professional managers run the firm ?
  • limited liability for owners ?
  • unlimited life ?
  • ease of transferring ownership

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23
Section 1-22
Disadvantages
  • The disadvantages of a corporation include ?
  • difficulty and expense of getting a charter ?
  • owners have little say in how the business is
    run ?
  • double taxation of corporate profits,
    stockholders dividends are taxed twiceonce as
    corporate profit and again as personal income ?
  • more government regulation

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24
Section 1-Assessment 2
Section Assessment (cont.)
Identify the characteristics and organization of
the sole proprietorship.
owned by one individual all decisions made by
owner owner receives all profits, responsible
for debts, losses limited life
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display the answer.
25
Section 1-Assessment 3
Section Assessment (cont.)
Discuss the advantages and disadvantages of the
partnership.
advantages ease of establishment and management,
no special taxes, can attract financing and top
talent, more efficient disadvantages all
partners equally responsible for business losses
(except in limited partnerships), limited life,
potential conflict among partners
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26
Section 1-Assessment 4
Section Assessment (cont.)
Discuss the structure and features of the
corporation.
It is a separate legal entity with all the rights
of the individual. It possesses a charter and
shares of stock that are sold to investors.
Investors purchase common stock or preferred
stock.
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27
Section 1-Assessment 6
Section Assessment (cont.)
Drawing Conclusions When a corporation wants to
introduce a potentially profitable but risky
product, it frequently sets up a separate company
that has its own corporate structure. Why do you
think the corporation does this?
limited liabilitythe first corporation limits
its exposure by setting up a separate corporation
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28
Section 1-Assessment 7
Section Close
Discuss which business form you think is the most
important for the American economy.
29
End of Section 1
Click the mouse button to return to the Contents
slide.
30
Section 2-2
Study Guide (cont.)
Key Terms
  • merger ?
  • income statement ?
  • net income ?
  • depreciation ?
  • cash flow ?
  • horizontal merger ?
  • vertical merger ?
  • conglomerate ?
  • multinational

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68 of your textbook.
31
Section 2-3
Study Guide (cont.)
Objectives
After studying this section, you will be able to
?
  • Explain how businesses can reinvest their profits
    to grow and expand. ?
  • Recognize the reasons that cause firms to merge.
    ?
  • Identify two different types of mergers. ?

Applying Economic Concepts
Business Growth Businesses can grow by
reinvesting their profits in themselves, or they
can combine with another business. What
influences growth?
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Story.
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32
Section 2-4
Introduction
  • Two ways that a business can grow. ?
  • 1) It can grow by reinvesting some of its
    profits. ?
  • 2) A business can also expand by engaging in a
    merger a combination of two or more businesses
    to form a single firm.

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33
Section 2-5
Growth Through Reinvestment
  • Most businesses use some of the revenue they
    receive from sales to invest in factories,
    machinery, and new technologies. ?
  • We can use the income statement a report
    showing a businesss sales, expenses, and profits
    for a certain period to illustrate the process.

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34
Section 2-6
Estimating Cash Flows
  • The business first records its total sales for
    the period. ?
  • Next, it finds its net income by
    subtractingall of its expenses, including
    taxes, from its revenues. ?
  • These expenses include the cost of goods and
    depreciation, a non-cash charge the firm takes
    for the general wear and tear on its capital
    goods.

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35
Section 2-9
Growth Through Mergers
  • When firms merge, one gives up its separate legal
    identity. ?
  • The name of the new company may reflect the
    identities of the merged companies. ?
  • A firm may seek a merger to grow faster, to
    become more efficient, to acquire or deliver a
    better product, to eliminate a rival, or to
    change its image.

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36
Section 2-10
Reasons for Merging
  • Some companies merge in order to grow faster. ?
  • Efficiency is another reason for mergers. ?
  • Some mergers are driven by the need to acquire
    new product lines. ?
  • Sometimes firms merge to catch up with, or even
    eliminate, their rivals. ?
  • A company may use a merger to lose its corporate
    identity.

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37
Section 2-11
Types of Mergers
  • Economists generally recognize two types of
    mergers ?
  • The first is a horizontal merger, which takes
    place when two or more firms that produce the
    same kind of product join forces. ?
  • When firms involved in different steps of
    manufacturing or marketing join together, it is
    a vertical merger.

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38
Section 2-12
Conglomerates
  • A corporation may become so large through mergers
    and acquisitions that it becomes a conglomerate. ?
  • A conglomerate is a firm that has at least four
    businesses, each making unrelated products,
    none of which is responsible for a majority of
    its sales.

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39
Section 2-13
Multinationals
  • Other large corporations have become
    international in scope. ?
  • A multinational is a corporation that has
    manufacturing or service operations in a number
    of different countries. ?
  • They are important because they have the ability
    to move resources, goods, services, and financial
    capital across national borders.

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40
Section 2-Assessment 6
Section Assessment (cont.)
Making Comparisons What are the benefits and
drawbacks of multinationals to their host
countries?
benefits help spread new technology, generate
new jobs, produce tax revenues for host
countries drawbacks may exploit workers, export
scarce natural resources, or adversely interfere
with local business
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41
Section 2-Assessment 3
Section Assessment (cont.)
Identify five reasons why firms merge.
grow faster, increase efficiency, acquire new
product lines, eliminate rivals, or change
corporate image
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42
Section 2-Assessment 4
Section Assessment (cont.)
Describe the different ways a business can merge.
horizontal two or more firms that produce the
same product merge vertical firms in different
steps of manufacturing or marketing merge
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43
End of Section 2
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slide.
44
Section 3-4
Introduction
  • Most businesses use scarce resources to produce
    goods and services in hopes of earning a profit
    for their owners. ?
  • Other organizations operate on a not-for-profit
    basis. ?
  • A nonprofit organization operates in a
    businesslike way to promote the collective
    interests of its members rather than to seek
    financial gain for its owners.

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45
Section 3-5
Community and Civic Organizations
  • Examples of nonprofit institutions include
    organizations such as schools, churches,
    hospitals, welfare groups, and adoption agencies.
    ?
  • Most of these organizations are legally
    incorporated to take advantage of unlimited life
    and limited liability. ?
  • They are similar to profit-seeking businesses,
    but do not issue stock, pay dividends, or pay
    income taxes. ?

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46
Section 3-6
Cooperatives
  • Another example of a nonprofit organization is
    the cooperative, or co-op. ?
  • A cooperative is a voluntary association of
    people formed to carry on some kind of economic
    activity that will benefit its members.

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47
Section 3-7
Consumer Cooperatives
  • The consumer cooperative is a voluntary
    association that buys bulk amounts of goods such
    as food and clothing on behalf of its members. ?
  • Members usually help keep the cost of the
    operation down by devoting several hours a week
    or month to the operation. ?
  • If successful, the co-op is able to offer its
    members products at prices lower than those
    charged by regular businesses.
  • Examples Sams, Costco

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48
Section 3-8
Service Cooperatives
  • A service cooperative provides services such as
    insurance, credit, and baby-sitting to its
    members, rather than goods. ?
  • One example is a credit union, a financial
    organization that accepts deposits from, and
    makes loans to, employees of a particular company
    or government agency.
  • Example Teachers Credit Union

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49
Section 3-9
Producer Cooperatives
  • Producers, like consumers, can also have co-ops. ?
  • A producer cooperative helps members promote or
    sell their products.
  • Examples Amway, Ignite Energy

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50
Section 3-15
Government
  • Government is another nonprofit economic
    organization. ?
  • Sometimes government plays a direct role in the
    economy, while at other times the role is
    indirect.

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51
Section 3-16
Direct Role of Government
  • Many government agencies produce and distribute
    goods and services to consumers, giving
    government a direct role in the economy. ?
  • The role is direct because the government
    supplies a good or service that competes with
    private businesses.
  • Many federal agencies are organized as
    government-owned corporations.
  • Examples Public Schools

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52
Section 3-17
Indirect Role of Government
  • The government plays an indirect role when it
    acts as an umpire to make sure the market economy
    operates smoothly and efficiently. ?
  • One such case is the regulation of public
    utilities, investor- or municipal-owned companies
    that offer important products to the public, such
    as water or electric service.

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53
Section 3-18
Indirect Role of Government (cont.)
  • The government also plays an indirect role when
    it grants money to people in the form of Social
    Security, veterans benefits, financial aid, and
    unemployment compensation.

54
Section 3-Assessment 3
Section Assessment (cont.)
Other examples that illustrate the governments
direct and indirect roles as an economic
institution.
direct police and fire protection, schools,
court systems indirect regulation of public
utilities and quasi-monopolies, subsidies
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55
End of Section 3
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slide.
56
Chapter Summary 1
Section 1 Forms of Business Organization
  • Sole proprietorships are small, easy-to-manage
    enterprises owned by one person. They are
    relatively numerous and profitable. Disadvantages
    include raising financial capital and attracting
    qualified employees. ?
  • Partnerships are owned by two or more persons.
    Their slightly larger size makes it easier to
    attract financial capital and qualified workers.
    Disadvantages include the unlimited liability of
    each general partner for the acts of the other
    partners, the limited life of the partnership,
    and the potential for conflict among partners.

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57
Chapter Summary 2
Section 1 Forms of Business Organization (cont.)
  • Corporations are owned by shareholders who vote
    to elect the board of directors. Shareholders
    have limited liability and are not liable for the
    actions or debts of the corporation. The
    relatively large size of the corporation allows
    for specialized functions and large-scale
    manufacturing within the firm. ?
  • Disadvantages of corporations include the cost of
    obtaining charters, limited shareholder influence
    over corporate policies, and having to deal with
    some government regulations. ?
  • The corporation is recognized as a separate legal
    entity and so must pay a separate corporate
    income tax not paid by proprietorships and
    partnerships.

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58
Chapter Summary 3
Section 2 Business Growth and Expansion
  • Businesses can grow by reinvesting their cash
    flows in plant, equipment, and new technology. ?
  • Businesses can also expand through mergers. Most
    mergers take place because firms want to become
    bigger, more efficient, acquire a new product,
    catch up to or eliminate a competitor, or change
    its corporate identity. ?
  • A horizontal merger takes place when two firms
    that produce similar products come together. A
    vertical merger is one that involves two or more
    firms at different stages of manufacturing or
    marketing.

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59
Chapter Summary 4
Section 2 Business Growth and Expansion (cont.)
  • A conglomerate is a large firm that has at least
    four different businesses, none of which is
    responsible for a majority of sales. ?
  • A multinational can be an ordinary corporation or
    a conglomerate, but it has manufacturing or
    service operations in several different
    countries. Multinationals introduce new
    technology, generate jobs, and produce tax
    revenues for the host countries.

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60
Chapter Summary 5
Section 3 Other Organizations
  • Nonprofit organizations function like a business,
    but on a not-for-profit basis to further a cause
    or for the welfare of their members. ?
  • The cooperative, or co-op, is one of the major
    nonprofit organizations. The co-op can be
    organized to provide goods and services, or to
    help producers. ?
  • Professional associations work to improve the
    working conditions, skill levels, and public
    perceptions of their profession. ?
  • Businesses often form a chamber of commerce or a
    Better Business Bureau to promote their
    collective interests.

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61
Chapter Summary 6
Section 3 Other Organizations (cont.)
  • Government plays a direct role in the economy
    when it provides goods and services directly to
    consumers it plays an indirect role when it
    provides Social Security, veterans benefits,
    unemployment compensation, and financial aid to
    college students, or when it regulates
    businesses.

62
End of Chapter Summary
Click the mouse button to return to the Contents
slide.
63
Chapter Assessment 1
Identifying Key Terms
Classify each term below into the following
categories
Sole Proprietorships Corporations Partnerships
Nonprofit Organizations
bond _______________________________________ stoc
k _______________________________________ cooperat
ive __________________________________ dividend
_____________________________________ unlimited
liability_______________________________ charter
______________________________________ labor
union ___________________________________ professi
onal association _________________________ limited
partner _________________________________ credit
union ___________________________________
corporations corporations nonprofit
organization corporations sole
proprietorships partnerships corporations
nonprofit organizations nonprofit
organizations
nonprofit organizations
partnerships nonprofit organizations
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pages 8283.
64
Chapter Assessment 2
Reviewing the Facts
Explain the strengths of a sole proprietorship.
ease of establishment, ease of management, owner
keeps all profits, no separate taxes,
psychological benefits, ease of getting out of
business
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display the answer.
65
Chapter Assessment 3
Reviewing the Facts (cont.)
Identify the weaknesses of a partnership.
all partners equally responsible for business
losses (except limited partnerships), limited
life, potential conflict among partners
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66
Chapter Assessment 4
Reviewing the Facts (cont.)
Explain the structure and strengths of a
corporation.
structure A board of directors, elected by
owners of common stock, sets broad policies and
goals. The board hires a professional management
team to run the business on a daily basis.
Strengths ease of raising financial capital,
ability to hire best managers, limited liability
for owners, unlimited life, and ease of transfer
of ownership
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67
Chapter Assessment 5
Reviewing the Facts (cont.)
Explain how the firm obtains, and then disposes
of, its cash flow.
Cash flow is obtained by adding net income to
non-cash charges. A firm may pay this sum back to
the owners or reinvest in itself.
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68
Chapter Assessment 6
Reviewing the Facts (cont.)
Describe the difference between a horizontal and
a vertical merger.
horizontal merger two or more firms that produce
the same product join forces vertical merger
firms in different steps of manufacturing or
marketing come together
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69
Chapter Assessment 7
Reviewing the Facts (cont.)
Explain why a corporation might choose to become
a conglomerate.
Its overall sales and profits will be protected
from isolated economic happenings.
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display the answer.
70
Chapter Assessment 8
Reviewing the Facts (cont.)
Describe the difference between a nonprofit
institution and other forms of business
organizations.
Nonprofits do not seek financial gain.
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display the answer.
71
Chapter Assessment 9
Reviewing the Facts (cont.)
List three examples of cooperative associations.
consumer a food co-op service a credit union
producer a farmers co-op
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display the answer.
72
Chapter Assessment 10
Reviewing the Facts (cont.)
Describe the purpose of a labor union.
to work for its members interests
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display the answer.
73
Chapter Assessment 11
Reviewing the Facts (cont.)
Identify three types of business or professional
organizations.
professional (American Bar Association) business
to promote members interests (chamber of
commerce) business to help consumers (Better
Business Bureau)
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display the answer.
74
Chapter Assessment 12
Reviewing the Facts (cont.)
Compare the direct and the indirect roles of
government.
direct role producer and consumer of goods and
services indirect role regulates, makes
payments to individuals
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75
Chapter Assessment 13
Thinking Critically
Making Comparisons If you were planning to open
your own business, such as a sportswear store or
a lawn service, which form of business
organization would you prefersole
proprietorship, partnership, or corporation? Give
reasons for your answer. To help you organize
your response, begin by setting up a diagram like
the one on page 82 of your textbook.
Answers should demonstrate understanding of
advantages offered by the form chosen.
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76
Chapter Assessment 14
Thinking Critically (cont.)
Drawing Conclusions Do you think mergers are
beneficial for the U.S. economy? Defend your
response.
Answers should include reason for response.
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77
Chapter Assessment 15
Thinking Critically (cont.)
Synthesizing Information List the strengths and
weaknesses of each type of business organization.
Then share the list with the owner of a business
in your community. Ask the owner which items on
the list were the most influential in deciding
how to organize his or her business. Write a
report summarizing your findings.
Answers should identify strengths and weaknesses
of each organization.
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78
Chapter Assessment 16
Applying Economic Skills
Economic Institutions Cite a case in your
community where a cooperative would fulfill a
definite economic need. Explain why you think so,
and then tell what kind of cooperative you would
set up.
Answers will vary, but should indicate an
understanding of the concept.
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display the answer.
79
Chapter Assessment 17
Applying Economic Skills (cont.)
The Role of Government Which do you think is more
appropriatethe direct or indirect role of
government? Defend your position.
Answers should indicate an understanding of the
concept.
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display the answer.
80
Chapter Assessment 18
Applying Economic Skills (cont.)
Unlimited Liability What is the difference
between the unlimited liability of
proprietorships and partnerships, and the limited
liability of corporations?
unlimited the owner(s) is/are personally and
fully responsible for all losses and debts of the
business limited the corporation itself, not
the owners, is fully responsible for its debts
and losses
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display the answer.
81
Chapter Assessment 19
Applying Economic Skills (cont.)
Business Growth What advantages might a
multinational bring to a host nation?
Multinationals transfer new technology, generate
new jobs, and produce tax revenues for the host
nation.
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display the answer.
82
Chapter Assessment 20
Applying Economic Skills (cont.)
Nonprofit Organizations In what ways does a
consumer cooperative differ from a service
cooperative?
A consumer co-op offers goods to its members,
whereas a service co-op offers services.
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display the answer.
83
Chapter Assessment 21
Identify at least one similarity between someone
who owns common stock and a citizen of our
country. Name one difference.
Both have the right to vote for people who direct
the entitys business by setting policies and
goals. Differences include how many votes a
citizen or stockholder has. A citizen has only
one vote while a stockholder may have many votes.
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84
End of Chapter Assessment
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slide.
85
Economic Concepts 1
86
Focus Activity 1.1
Continued on next slide.
87
Focus Activity 1.2
88
Focus Activity 2.1
Continued on next slide.
89
Focus Activity 2.2
90
Focus Activity 3.1
Continued on next slide.
91
Focus Activity 3.2
92
Extra Credit Project
Compile an illustrated dictionary of business
terms by using all the Key Terms introduced in
the study guides in each section of Chapter 3.
93
Economics Online
Explore online information about the topics
introduced in this chapter.
Click on the Connect button to launch your
browser and go to the Economics Principles and
Practices Web site. At this site, you will find
interactive activities, current events
information, and Web sites correlated with the
chapters and units in the textbook. When you
finish exploring, exit the browser program to
return to this presentation. If you experience
difficulty connecting to the Web site, manually
launch your Web browser and go to
http//epp.glencoe.com
94
BusinessWeek Online
Explore online information about the topics
introduced in this chapter.
Click on the Connect button to launch your
browser and go to the BusinessWeek Web site. At
this site, you will find up-to-date information
dealing with all aspects of economics. When you
finish exploring, exit the browser program to
return to this presentation. If you experience
difficulty connecting to the Web site, manually
launch your Web browser and go to
http//www.businessweek.com
95
Infobyte 1
Business Inventories The Business Inventories
report measures the monthly percentage changes in
inventories from manufacturers, retailers, and
wholesalers. The report is useful in predicting
inventories within the gross domestic product
(GDP), which can be volatile from quarter to
quarter. Business inventories are reported
monthly by the Commerce Department. Business
inventories data, released in the third week of
each month, show the monthly percentage change in
inventories from manufacturers, retailers, and
wholesalers. Because the majority of the data is
old by the time it is released, it is usually not
a key report to the markets. One portion of the
report that does draw a bit of attention, though,
is the inventory-to-sales ratio. This particular
component is useful in forecasting, since
increasing inventory-to-sales ratios signals a
cutback in production.
96
GE 1
Corporations in Japan Annual shareholder meetings
in Japan are much different than in the United
States. Every corporation in that country holds
its annual meeting on the same day. The meetings
are usually packed with loyal employees, and some
meetings last less than an hour.
97
GE Contents 2
When You Say Profits, Smile World Markets
Click on a hyperlink to choose that topic.
98
GE 2.1
  • When You Say Profits, Smile Just as foreigners
    are striving to learn more about American
    culture, Americans traveling abroad are wise to
    learn more about foreign cultures. The following
    are examples or taboos in other countries
  • In many parts of the world, it is deeply
    offensive to offer something or to eat with the
    left hand
  • In parts of Latin America, its considered rude
    to yawn in public.
  • Its insulting to tip in China.

99
GE 2.2
World Markets In the 1990s, Avon Products found
its sales lagging in the United States and
Europe. With more women in the labor force, fewer
people are at home when the Avon sales
representative calls, or are willing to work for
Avon as part-time salespeople. In Asia, Eastern
Europe, Africa, and Latin America, however,
people (typically women) are eager to supplement
their incomes as Avon representatives, and their
customers are happy to buy what they consider to
be chic American products. Since Avon relies on
door-to-door sales, it fits in well in developing
countries that dont have good retailing
infrastructures.
100
FYI 1
Each year, Fortune magazine provides a list of
the top 500 U.S. companies, called the Fortune
500. The companies are ranked by sales revenue.
In 1999, the top ten companies were
6. International Business Machines 7.
Citigroup 8. Philip Morris 9. Boeing 10. ATT
1. General Motors 2. Ford Motor 3. Wal-Mart
Stores 4. Exxon 5. General Electric
101
Cybernomics Contents 1
More About Dell Computers and Online
Auctions Internet Business Forms
Click on a hyperlink to choose that topic.
102
Cybernomics 1.1
More About Dell computers and Online Auctions
Michael Dell started Dell Computers from his
dorm room at the University of Texas at Austin
with a few computers and 1,000. His biggest
innovation was eliminating the middleman by
selling computers directly to customers. That
enabled Dell not only to keep prices down, but
also to offer more reliable service and support
to customers. Dells superior service was very
well received by consumers and eventually prodded
other computer manufacturers to offer better
service.There are now many online auction sites,
but eBay has a distinct advantage over all of
themits the largest. Sellers are drawn to eBay
because it gives them access to the greatest
number of potential buyers. Buyers flock there
because it also offers the largest selection.
Continued on next slide.
103
Cybernomics 1.2
More About Dell computers and Online Auctions
(cont.) One rival, Rbid.com, promoted its new
auction site in May 1999 by offering 60,000 in
prize money. It didnt work. On August 13, or
example, the auction site had only 16 items
listed, and no bidders for any of them. But a new
kind of Web site has sprung up that might
diminish eBays advantage. Sites such as
AuctionRover.com enable buyers to check out
several auction sites at once by doing the
searching for them. If these sites catch on, then
sellers at obscure sites like Rbid.com might have
some more buyers looking over their wares.
104
Cybernomics 1.3
Internet Business Forms  What kind of business
organization is best suited to selling books on
the Internet? The largest online bookstores, such
as Amazon and Barnes Noble, are corporations.
This allows them to acquire large amounts of
financial capital so that they can maintain a
huge inventory of books, provide reliable service
to their customers, and advertise heavily. But
some sole proprietorships and partnerships are
also succeeding at selling books on the Internet.
While its difficult for them to offer the
selection, low prices, and service of the larger
online bookstores, some of them have found a
niche selling used, rare, or out-of-print books.
Since these bookstores are usually too small to
attract many users to their own sites, many of
them list their books on Web sites like
Bibliofind.com, which puts potential buyers in
contact with sellers.
105
BW Newsclip 1
The Beauty of Global Branding
Cosmetic companies like LOréal have found a
profitable strategy acquire smaller cosmetic
companies and promote the culture from which they
came. With this formula, and with the help of
chief executive Lindsay Owen-Jones, LOréals
profits have dramatically increased. Read the
BusinessWeek Newsclip article on page 74 of your
textbook. Learn how LOréals profits have
increased.
Continued on next slide.
This feature is found on page 74 of your
textbook. Click the Speaker button to listen to
an audio introduction.
106
BW Newsclip 2
The Beauty of Global Branding
Analyzing Information  How has LOréal become
more competitive in the global market?
by acquiring smaller companies and promoting the
cultures from which they came
Continued on next slide.
Click the mouse button or press the Space Bar to
display the answer. This feature is found on page
74 of your textbook.
107
BW Newsclip 3
The Beauty of Global Branding
Summarizing Information  In your own words,
explain why it is a challenge for a company to
add brands, yet keep differentiation.
It is usually easier and more efficient to make
all company products look the same in LOréals
case, however, differentiation gives the company
a competitive edge.
Click the mouse button or press the Space Bar to
display the answer. This feature is found on page
74 of your textbook.
108
NBR 1.1
Economics and YouVideo 4 Business Organizations
After viewing Business Organizations, you should
be able to ?
  • Name common types of business organizations. ?
  • Describe how stocks and bonds are used in
    corporate finance. ?
  • Identify the characteristics of a franchise. ?
  • Explain the relationship between the franchisor
    and the franchisee.

Continued on next slide.
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109
NBR 1.2
Economics and YouVideo 4 Business Organizations
Side 1 Disc 1 Chapter 4
Click the Videodisc button anytime throughout
this section to play the complete video if you
have a videodisc player attached to your
computer. Click the Forward button to view the
discussion questions and other related slides.
Click inside this box to play the preview.
Continued on next slide.
110
NBR 1.3
Economics and YouVideo 4 Business Organizations
How do stocks and bonds differ as a means of
financing a corporations needs?
When a company sells stock, it allows individuals
to become part owners. In return, if the company
earns a profit, stockholders receive a share of
the profits, which is called a dividend. When a
company sells bonds, it borrows money from the
buyer of the bond for a fixed period of time. In
return, the company pays the bond owner a fixed
rate of interest until it repays the debt.
Side 1 Disc 1 Chapter 4
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display the answer.
111
SWS 1
Taking Notes
Effective note taking involves more than just
writing facts in short phrases. It involves
breaking up the information into meaningful parts
so that it can be understood and remembered.
Continued on next slide.
This feature is found on page 80 of your textbook.
112
SWS 2
Taking Notes
Learning the Skill
  • To take good notes, follow these steps. ?
  • When taking notes on material presented in class,
    write the key points, along with the important
    facts and figures, in a notebook. ?
  • Write quickly and neatly, using abbreviations and
    phrases. ?
  • Copy words, statements, or diagrams drawn on the
    chalkboard.

Continued on next slide.
Click the mouse button or press the Space Bar to
display the information. This feature is found on
page 80 of your textbook.
113
SWS 3
Taking Notes
Learning the Skill (cont.)
  • Ask the teacher to repeat important points you
    have missed or do not understand. ?
  • When studying textbook material, organize your
    notes into an outline. ?
  • When outlining written material, first read the
    material to identify the main ideas.

Continued on next slide.
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114
SWS 4
Taking Notes
Learning the Skill (cont.)
  • Next, identify the subheads. Place details
    supporting or explaining subheads under the
    appropriate head. ?
  • For a research report, take notes on cards. ?
  • Notecards should include the title, author, and
    the page number of sources.

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display the information. This feature is found on
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115
SWS 5
Taking Notes
Practicing the Skill
  • Suppose you are writing a research report on the
    topic Business Organizations. ?
  • First, identify main idea questions about this
    topic, such as What are the different kinds of
    business organizations? How are they formed?
    and What are their advantages and
    disadvantages? ?
  • Then find material about each main-idea question.

Continued on next slide.
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display the information. This feature is found on
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116
SWS 6
Taking Notes
Practicing the Skill (cont.)
  • Using this textbook as a source, read the
    material on Forms of Business Organization,
    beginning on page 57. ?
  • Then, review the material and prepare notes like
    those on page 80 of your textbook.

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display the information. This feature is found on
page 80 of your textbook.
117
Profiles in Economics 1.1
Kenneth I. Chenault 1952
Click the picture to learn more about Kenneth I.
Chenault. Be prepared to answer the questions
that appear on the next two slides.
Continued on next slide.
This feature is found on page 67 of your textbook.
118
Profiles in Economics 1.2
Kenneth I. Chenault 1952
Drawing Conclusions What personal qualities do
you think Chenault has that helped make him a
success?
Answers will vary, but should at least imply that
Chenault is intelligent and hard working.
Continued on next slide.
Click the mouse button or press the Space Bar to
display the answer. This feature is found on page
67 of your textbook.
119
Profiles in Economics 1.3
Kenneth I. Chenault 1952
For Further Research Learn about and report on
Chenaults philanthropic contributions in New
York City.
Answers will vary.
Click the mouse button or press the Space Bar to
display the answer. This feature is found on page
67 of your textbook.
120
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