Types of Businesses
Project
By:
Mihail Nakoff
Niamh Radford
Zoie Roberts
Kianna Watson
Hunter Hodges
Chapter 8 Section 3
STANDARDS
CTE (ECN) 3.0 students will analyze
the role of business in a free
enterprise system
CTE (ECN)3.1 connect concepts as
they apply to the role of business in a
free enterprise system
CTE (ECN)3.2 analyze the types of
business organizations
CTE (ECN)3.4 analyze the effects of
competition and monopoly on a free
enterprise system
CTE (ECN)3.8 Explain the phenomena
in terms of the law of supply and
demand
CTE (ECN) 3.9 formulate and analyze
knowledge/understanding of
elasticity of demand
Unit 1: Intro to
Econ
Set up your Notes.
Write your EQ!
OBJECTIVES
1. Be able to understand
the advantages and
disadvantages of an
Incorporation.
2. Identify the types of
business
organizations.
3. Have a knowledge of
Elastic and Inelastic
Demand.
Key Terms
Take
Notes!
• Free enterprise: the economics system characterized
by private or corporate ownership of capital goods
• Elasticity: refers to the degree of responsiveness in
supply or demand in relation to changes in price.
• Elastic: it describes demands that is very sensitive to a
change in price.
• Elasticity of demand a measure of how consumers
respond to price changes
• Certificate of incorporation: license to form a
corporation issued by a state government
• Dividend: the portion of corporate profits paid out to
stock-holders
Key Terms
Take
Notes!
• conglomerate: a business combination merging more
than three businesses that produce unrelated
products or services
• Horizontal merger: a combination of two or more
firms competing in the same market with the same
good or service
• Limited liability corporation: a type of business with
limited liability with the owner from not paying
corporate income tax
Advantages of Incorporation
• Limited liability for owners
• Transferable ownership
• Ability to attract capital and long life
• Primary reason entrepreneurs choose to form
corporations is to gain the benefit of limited liability
• Corporations usually provide owners with more
flexibilities than other forms of ownership
- Shares of stock are easily transferable; stock holders
can easily sell to others and get money back in return
Take
Notes!
Continued..
Take
Notes!
Advantages for the Corporation
• They have more potential for growth than other business
forms
- By selling shares on the stock market raise large amounts
of capital
• Corporations can also raise money by borrowing it, this
happens by selling bonds.
- Bonds are formal contracts issued by corporations or
other entities that promise to repay the borrowed money
with interest at fixed intervals
• Corporations also have the adv. Of long life meaning
because the stock is transferable, corps are able to exist
longer than simple proprietorships or even partnerships
Disadvantages of Incorporation
• Difficulty of start up
• Double taxation
• Potential loss of control
• More regulation
Take
Notes!
Corporations
• A corporation is a legal entity owned by
individual stock holders.
• Stockholders own stock, which is a
certificate of ownership of a fraction of the
corporation.
• Stockholders have limited liability because
the corporations identity is separate from
its owner.
Take
Notes!
Corporations In the USA
• 20% of businesses are corporations
• 80% of sales are from corporations
• 60% net income is generated by
corporations
Take
Notes!
Types of corporations
• Closely held corporations: corporations
that issue stock to only a few people often
family members.
• Publicly held corporations: corporations
that sell stocks on the open market
Take
Notes!
Corporate structure
• Stockholders elect a board of directors to
make decisions for the corporation.
• The board of directors appoints officers to
run the corporation.
• The officers hire managers and employees
to work in finance, sales, research,
marketing, and production.
Take
Notes!
Corporate Combinations
• Horizontal mergers
• Joining two or more companies of the same
type
• Horizontal mergers increase the size and
stability of the corporation while
eliminating competition.
Take
Notes!
Corporate Combinations
• Vertical mergers
• Combine companies involved in different
stages of production of the same product.
• Vertical mergers make the corporation
more efficient and eliminates some costs
• Vertical mergers do not decrease
competition.
Corporate Combinations
• Conglomerates
• Joining three or more unrelated
corporations
• Increases stability
• Does not decrease competition
Take
Notes!
Multinational corporations
• Multinational corporations are
corporations that sell goods and services
in multiple countries
• Advantages: provide jobs and products
around the world often raising the
standard of living in poorer countries
• Disadvantages: influence the culture and
polotics of the countries they operate in.
Take
Notes!
Nike
Products and Services
• Shoes
• Clothes
• Gear
• Accessories
Take
Notes!
Nike
Supply and Demand
• They control the demand
• Make money every year
• The supply is high.
Take
Notes!
Nike
Competitors
• Under Armor
• Adidas
• Wilson
• Easton
Take
Notes!