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Chapter 2: Types of Businesses Forms of Business Ownership

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Chapter 2: Types of Businesses Forms of Business Ownership Forms of business ownership and types of businesses describe how they are organized and run. – PowerPoint PPT presentation

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Title: Chapter 2: Types of Businesses Forms of Business Ownership


1
Chapter 2 Types of BusinessesForms of Business
Ownership
  • Forms of business ownership and types of
    businesses describe how they are organized and
    run. The four main forms of business ownership
    are listed below.
  • Sole Proprietorships
  • A sole proprietorship is a business owned by one
    person who is known as the proprietor. The
    proprietor has a wide range of responsibilities
    including arranging displays and selling to
    customers to name a few. Funds to run the
    business usually come from the owners savings,
    friends, family, or from a bank loan. If the
    business prospers, the owner receives all of the
    profits. If the business does poorly, the owner
    is responsible for its losses. This is called
    unlimited liability.

? A franchise is a combination, or hybrid, of the
four forms of ownership.
  • partnership
  • co-operatives
  • sole proprietorship
  • corporation

2
Chapter 2 Types of BusinessesForms of Business
Ownership
  • Partnerships
  • A partnership refers to a type of business in
    which two or more
  • individuals share the costs and responsibilities
    of owning and
  • operating it.
  • The terms of the partnership are recorded in the
    partnership
  • agreement. The most common form of partnership is
    a general
  • partnership. When two individuals form a limited
    partnership, the
  • partners are only responsible for the funds they
    both invested in the initial business. This is
    called limited liability.

3
Chapter 2 Types of BusinessesForms of Business
Ownership
  • Corporations
  • A corporation is a business granted legal status
    with rights, privileges, and
  • liabilities that are distinct from those of the
    people who work for the business.
  • Corporations can be small such as a one-person
    business or large such as
  • A multinational that conducts business in several
    different countries.
  • Small portions of corporate ownership that are
    owned publicly are called
  • stocks or shares. Individuals who own shares of a
  • corporation are called shareholders and become
  • owners of the business. Shareholders have
  • limited liability. A board of directors runs
  • a corporation that is owned by shareholders.
  • A publicly traded corporation that makes a profit
    may pay out dividends to shareholders.

4
Chapter 2 Types of BusinessesForms of Business
Ownership
  • Types of Corporations
  • Co-operatives
  • A co-operative is owned by the workers or members
    who buy the
  • products or use the services that the business
    offers. This type of
  • business is motivated by service and not profit.
    Adaptations of this
  • business model include consumer, retail, and
    worker
  • co-operatives.
  • private corporations
  • Crown corporations
  • public corporations
  • municipal corporations

5
Chapter 2 Types of BusinessesForms of Business
Ownership
  • Franchises
  • The franchiser licenses the rights to its name,
    operating procedure, designs, and business
    expertise to another business called the
    franchisee.
  • A franchise agreement can provide the franchisee
    with
  • a ready made, fully operational business
  • brand recognition that is appealing to consumers
  • Requirements before a franchise is awarded may
    include
  • paying the franchise fee
  • agreeing to pay a monthly percentage fee as well
    as any national or local advertising costs
  • purchasing all supplies centrally from the
    franchiser
  • participating in franchiser standards training

6
Chapter 2 Types of BusinessesGoing into Business
  • Eight Questions to Ask Before Going into Business
  • Why Start Your Own Business?
  • People who desire to be the boss and take
    responsibility for making decisions often decide
    to run their own business. They
  • believe it is the best way for them to achieve
    financial independence, to allow them to use
    their skills and knowledge, and to be creative.
  • What Different Types of Businesses Are There?
  • service business retail business
  • not-for-profit organization manufacturing
    business
  • What Are Your Skills and Interests?
  • Different ideas, skills, and knowledge can be
    used to start a new business. Two popular ones
    are home-based or Web-based businesses.

7
Chapter 2 Types of BusinessesGoing into Business
  • Should Your Business Be Home-based?
  • Technology has changed how SOHO (small office,
    home-based) businesses operate. Computers,
    scanners, and Internet access are a few of the
    tools that home office businesses use today to be
    successful.
  • ii. Should Your Business be Web-based?
  • E-commerce (electronic commerce) is a
    marketplace where consumers and sellers meet
    without face-to-face contact. In the real
    world, products are tangible. Products and
    services are sold to us by personal contact with
    the sellers. In cyberspace or online, we do not
    interact with products or come face-to-face with
    the sellers. Our experience with services is
    limited or non-existent. Consumers are often
    reluctant to purchase online due to unreliable or
    dishonest businesses and privacy issues.

8
Chapter 2 Types of BusinessesGoing into Business
  • Where Can You Find Information About a Business?
  • Businesses require accurate and current
    information to make good decisions. Important
    resources to find information include
  • What Are the Start-up Costs?
  • Capital resources to run a business are
    available through
  • debt financing referred to as borrowing money to
    run the business. Using your savings or investor
    savings called
  • equity financing is an alternative way to fund a
    business.

libraries trade associations the
Internet existing businesses federal and
provincial governments (i.e., Strategis and
Statistics Canada are two helpful government
sites or agencies.)
9
Chapter 2 Types of BusinessesGoing into Business
  • What Level of Risk Can You Expect?
  • Even with research and planning, business can be
    risky. Risks or threats beyond and within the
    owners control can put the business in financial
    difficulty.
  • What Steps Are Involved in Running This Business?
  • Some types of businesses, such as manufacturing,
    are complex. A complex business requires many
    people with different skills to successfully
    start and operate it.

10
Chapter 2 Types of BusinessesGoing into Business
  • What Resources Will You Need?
  • Forecasting is determining the resources the
    business requires and how much financing it needs
    to obtain them.
  • Revenue is the amount of money gained from the
    sale of products or services.

11
Chapter 2 Types of BusinessesInternational
Business Structures
  • A number of different business structures allow
    businesses to expand into international markets.
  • Joint Ventures
  • A joint venture can match the skills and
    expertise of two different individuals or
    businesses to generate more benefits for both
    parties.
  • International Franchises
  • An international franchise is a way to achieve an
    international presence by buying the rights to a
    chain operation from the franchiser.

12
Chapter 2 Types of BusinessesForms of Business
Ownership
  • Strategic Alliances
  • Strategic alliances occur when two or more
    businesses agree to commit particular resources
    to achieve a common set of objectives. Alliance
    partners remain separate and entirely independent
    of each other.
  • Mergers
  • Mergers happen when two or more companies join
    together one of the businesses usually wants to
    purchase a controlling interest in the other
    company, or both business have combined interests.

13
Chapter 2 Types of BusinessesForms of Business
Ownership
  • Offshoring
  • Offshoring relocates some of a companys
    operations to another
  • country. Usually this happens to take advantage
    of lower labour costs, to
  • be closer to large and emerging buyer markets,
    and to have access to skilled workforces.
  • Multinational Corporations
  • A business enterprise that conducts business in
    another country or
  • several different countries is a multinational
    corporation. A
  • multinational corporation offers different
    benefits to the country it invests
  • in. Some positive benefits include new jobs and
    training for people.
  • Negative consequences could be less pay and more
    financial instability for citizens of that
    country.
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