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Corporation WAYS TO ORGANIZE A BUSINESS Types of

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Corporation WAYS TO ORGANIZE A BUSINESS Types of Powered By Docstoc
					       WAYS TO ORGANIZE A
           BUSINESS
Types of Businesses   PERCENTAGE OF
                       FIRMS
• SOLE
  PROPRIETORSHIPS     75%

• PARTNERSHIPS        7%

• CORPORATIONS        18%
   PERCENTAGE OF SALES
• SOLE            • 6%
  PROPRIETORSHIPS

• PARTNERSHIPS    • 4%

• CORPORATIONS    • 90%
         Sole Proprietorships
Advantages              Disadvantages
• Easy to form          • Unlimited liability
• Keep all the profit   • Limited life
• Own boss              • Bear all the costs
• Pride of ownership    • Limited growth
                          potential
                Partnerships
Advantages            Disadvantages
• Access to more      • Limited life
  financial capital   • Unlimited liability (not
• Specialization        always)
• Share costs         • Disagreements
• Share the work      • Different goals
                      • Share profits
               Corporations
Advantages            Disadvantages
• Access to lots of   • Double taxation
  capital             • No sense of
• Limited liability     ownership
• Unlimited life      • Management is
• Money earning         separate from
  money                 ownership
                  Corporation
• The house the Marlboro Man built, Altria Group (formerly
  Philip Morris Companies), is the world's largest tobacco
  firm. Altria operates its cigarette business through
  subsidiaries Philip Morris USA and Philip Morris
  International, which sell Marlboro -- the world's best-
  selling cigarette brand since 1972.
• The company controls about half of the US tobacco
  market. However, tobacco is only part of its portfolio.
• It owns 85% of Kraft Foods, the world's #2 food
  company (after Nestlé), which makes Jell-O, Kool-Aid,
  Maxwell House, Oscar Mayer, and Post.
• The tobacco giant bought Nabisco in late 2000, folding it
  into Kraft. Altria owns 33.9% of SABMiller plc.
•
• FORTUNE 500 2008: Full List 1-100
• List of billionaires (2008) - Wikipedia, the
  free encyclopedia
             Advantage or Disadvantage?
               Which Business Type?

   Limited Liability                •   Advantage of corporation
   Easy to transfer ownership       •   Advantage of corp
•   Limited Life                     •   Disadvantage of Sole and Part
•   Unlimited Liability              •   Disadvantage of Sole and Part
•   More difficult and costly to     •   Disadvantage of Corp
    organize
•   Share expenses                   • Advantage of Part
•   Easiest to organize              • Advantage of Sole
•   Faced with double taxation       • Disadvantage of Corp
•   Management is separate from
    ownership                        • Disadvantage of Corp
•   Unlimited Life                   • Advantage of Corp
•   Potential loss of ownership by   • Disadvantage of Corp
    the founders
   OTHER BUSINESS ORGANS
        (organizations)
• Businesses that          • Non-Profit
  provide a good or          Organization
  service without
  seeking a profit
• A business contract in   • Franchise
  which a company
  agrees to let another
  person establish an
  enterprise using its
  name
•   DQ Grill & Chill® Restaurant
•   Initial franchise fee is $35,000. (fees include
    training program and opening and support
    services)
•   Franchise fee for additional store
    development is
    $25,000
•   Royalties are 4% of sales
•   Sales promotion fees 5% - 6% of sales
•   Franchise Agreement is 20 years
•   Basic requirements for new franchisees
     –   review of your background
     –   review of work history
     –   prior retail or foodservice
         ownership or
         management experience
     –   a proposed management plan
     –   financial resources necessary to
         develop and operate the unit
• A business that is      • Cooperative (co-op)
  owned by the people       ex. Credit union
  who use its services

• A company that          • Subsidiary
  retains its corporate
  identity after being
  bought by another
  company
•    YUM! Brands, Inc. operates as a quick service
    restaurant company. It develops, operates, franchises,
    and licenses a system of restaurants, which prepare,
    package, and sell various priced food items. The
    company operates various restaurant brands, including
    KFC, Pizza Hut, Taco Bell, Long John Silver's, and
    A&W All-American Food Restaurants. Its restaurants
    specialize in chicken, pizza, Mexican-style food, and
    quick-service seafood categories. As of December 31,
    2006, it operated approximately 34,000 restaurants in
    100 countries and territories. The company was founded
    in 1997. It was formerly known as TRICON Global
    Restaurants, Inc. and changed its name to YUM!
    Brands, Inc. in 2002. YUM! Brands, Inc. is
    headquartered in Louisville, Kentucky.

           EX: Horizontal Merger
           MERGER MANIA
• HORIZONTAL: 2 or more firms in the same
  market with the same good or service


• VERTICAL: 2 or more in different stages of
  producing the same good or service


• CONGLOMERATE: firms buy other companies
  that produce totally unrelated goods or services
               EXAMPLES
• McDonalds buys Burger    • Horizontal
  King
• McDonalds buys a cow     • Vertical
  farm
• Steel company buys an    • Vertical
  iron ore mine
• Steel company buys a
  shipping line            • Vertical
• Tobacco company buys a
  cereal company           • Conglomerate
• Cingular buys AT&T       • Horizontal

				
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