Business Types within the
Capitalistic (market) System
Sole Proprietorship
• Business owned and run by one person.
– 72% of all businesses
Advantages of Proprietorships
• Ease of starting up.
– Only need a business license
• Quick decision making.
– Why?
• Owner gets all profits!!
– No “middle man”
• You are your own Boss
– No one telling you what to do!
Disadvantages
• Responsible for all debt and losses.
• Hard to raise financial capital
– Takes a lot of money to run a business
• Hard to attract employees
– Large companies have more benefits.
Partnership
• A business jointly
owned by two or more
people
• 8% of all companies
Advantages of Partnerships
• Easy to start
– Need to sign partnership papers
• Attract financial help
• Each person brings something to the table
– One partner can usually offer something the
other can’t.
Disadvantages of Partnerships
• Responsible for the acts of
the other.
– In the community and at
work.
• Conflict with the other
partners
– When it comes to money
things can get ugly.
• Still have liability
Corporations
• Separate legal entity with all the same
powers as an individual.
– Can sue, buy and sell property, enter
legal contracts.
– Made up of shareholders who own part
of the business through stock.
Advantages of Corporations
• Ease of raising financial capital.
– Continue to sell more stock
• Little liability to individual.
• Can’t lose personal wealth!!
– Boats, houses, Etc.
• Easily transfer ownership
Disadvantages of Corporations
• Difficulty of getting approval to start one
• Shareholders have little say
– Run by board of directors
• Double Taxation
– Once as corporation, once as individual income
• More governmental regulations
Important terms.
• Outsourcing:
– Moving the manufacturing of product to an
area or country with cheaper labor. (reducing
input cost)
• Externality:
– Making a third party pay for part or all of the
input cost.
Corporation Movie Questions
1.) Your best explanation of what a
corporation is.
2.) What are the benefits of Corporations?
3.) What are the negatives of Corporations?
Use examples from film.
4.) What type of person is a Corporation?
Explain.
5.) Is the film biased? Explain…