| A | B |
|---|
| sole proprietorship | a buisness owned and operated by one person |
| Ease of start up; full control; exclusive right to profits | advantages of sole proprietorships(3) |
| easy start up | (1 of 3 advantages of sole proprietorships)chief advantage; fairly small amounts of financial capital; involve few legal considerations |
| zoning laws | specify the area of a city or country where various types of buisness activities can be pursued; certain liscense |
| Control | (1 of 3 advantages of sole proprietorships) can act quickly to correct problems or take advantage of oppurtunities |
| Profit | (1 of 3 advantages of sole proprietorships) main reason for starting a buisness |
| unlimited liability; sole responsibilities; limited growth potential; lack of longevity | Disadvantages of sole proprietorships(4) |
| Unlimited liability | (1 of 4 disadvantages of sole proprietorships)can go into personal property to pay off debt |
| sole responsibilities | (1 of 4 disadvantages of sole proprietorships) owner is responsible for all aspects of running the buisness |
| limited growth potential | (1 of 4 disadvantages of sole proprietorships) most owners have limited collateral thus limited potential for growth |
| lack of longevity | (1 of 4 disadvantages of sole proprietorships) length of a firms life depends on the health, commitment and competance of one person. |
| liability | responsibility for debt |
| collateral | anything of value that a borrower agrees to give up if he/she is not able to pay a loan |
| partnership | a buisness that is owned and controlled by two or more people |
| general partnership | parters enjoy equal authority and shared equality in the buisness profits and sucess |
| Limite partnerships | A form of partnership in which some members invert money but take no part in the mangement also have limited liability |
| Ease of Start up;Specialization; Shared Decision making; Shared buisness losses | Advantages of Partnerships |
| Ease of Start up | (1 of 4 Advantages of partnerships) few governmant regualtions apply to partnerships and costs tend to be low |
| Specialization | (1 of 4 Advantages of partnerships)specific buisness duties can be assigned to different partners |
| Shared Decision making | (1 of 4 Advantages of partnerships) can minimize mistakes by consulting |
| Shared Buisness losses | (1 of 4 Advantages of partnerships) may enable a partnerships survive a crisis; better able to obtain financial capital for buisness expansions and modification |
| partnership contract | to avoid a conflict in buisness, partners usually develop a written agreement known as ? |
| Unlimited liability; Potential for conflict; Lack of longevity | Disadvantages of Partnerships(3) |
| Unlimited liability | ( 1 of 3 disadvantages of Partnerships) general disadvantage; each partner is responsible for debts |
| Potential for conflict | ( 1 of 3 disadvantages of Partnerships) personality conflicts and different management styles |
| Lack of longevity | ( 1 of 3 disadvantages of Partnerships)dependant on the willingness and abilitty of the partners to continue working together |
| corporations | legally distinct from their owners and are treated as if they were individuals; own property, hire workers, make contracts, pay taxes, sue and be sued, and make and sell products |
| articles of incorporation | applications for a state liscense |
| corporate charter | liscense from state permiting the formation of new corporations |
| Board of Directors | (elected by shareholders);key decision making body;-decides how the corporation should develop and what properties it should follow |
| Common Stock; Preffered Stock | two types of stock |
| CommonStock | provides shareholders with a voice in how the company is run and a share in any potential dividens |
| Preferred Stock | provides guarenteed dividens, does not grant share holders a voice in running the corparation |
| corporate bonds | a certificate issued by a corporation in exchange for money borrowed from an investor ( no ownership in corporation) |
| principle | actual amount of money borrowed |
| interest | amount paid for the use of funds |
| limmited liability(cannot seize a shareholders assets to pay corporate debts); flexibility(selling shares) | benefits of stock holders |
| limited liability;the seperation of ownership from management; reletive case with which capital can be revised; longevity- life not dependant on other few individuals | Benefits for corporations |
| corporate issues | costs of corporate charter, more state and federal regulations, slow process of decision making |
| Stock holders issues | No direct participation in running buisness |
| Shared issues (stock holders and corporate) | corporate profits are taxed twice |
| mergers | one company joins with or absorbs another(the absorbed company often loses its identity) |
| Horizontal combination, verticle combinations, conglomerate combinations | 3 common types of mergers |
| Horizontal combination | (1 of three types of mergers) a merger between two or more companies producing the same good or service(also companies that dominate on phases of the same good or service) |
| verticle combinations | (1 of three types of mergers)a merger between two or more companies involved in different production phases of the same good or service |
| conglomerate combinations | (1 of three types of mergers) a merger of companies producing un related products |
| subsideries | distinct divisions of a large company |
| efficiency;potential for lower costs; makes it easier to acquire financial capital | Advantages of combination (3) |
| practices can lead to higher rates of unemployment; may result in reduced competition, can lead to higher prices for consumers | Disadvantages of Combinations |
| franchises | an enterprise that uses the original company's name to sell goods and services (examples resteraunts, hotel and motel chains,real estate agents,gasoline stations etc. |
| Franchisor | parent company-owning the name |
| franchisee | person or group opening the franchise |
| Cooperatives | Buisnesses owned collectively by its members (examples residents of apartment buildings, sams club, slemco, credit unions |
| Non price organizations | Does not focus on financial aid;works in a buisness like way to provide goods and services while pursuing other goals. |
