Analyzing the Characteristics of Business
Course Title – Money Matters
Lesson Title – Analyzing the Characteristics of Business
Specific Objective –Given basic facts on the characteristics of business, students
use critical thinking skills and computer skills to analyze and report on the different forms
of business.
Performance Objectives:
Students will:
 Explain the free enterprise system.
 Identify and classify forms of ownership
 Explain the legal requirements for forming a proprietorship, a partnership and a
corporation.
 Identify the advantages and disadvantages of the three major forms of business
ownership.
 Input findings in a word processing document, computer presentation, poster and/or
bulletin board.
 Proofread document or presentation.
TEKS: 130.162.(c)(3)(B)
Time required: Instruction time for this lesson and activities 2 days (90 minute
classes). (Time is estimated and may vary depending on teaching style)
Occupational Correlation (O*Net – http://www.onetonline.org/)
11-1021.00 - General and Operations Managers
Plan, direct, or coordinate the operations of public or private sector organizations. Duties
and responsibilities include formulating policies, managing daily operations, and planning
the use of materials and human resources, but are too diverse and general in nature to
be classified in any one functional area of management or administration, such as
personnel, purchasing, or administrative services.
Sample of reported job titles: Operations Manager, General Manager (GM), Director of
Operations, Plant Manager, Store Manager, Facilities Manager, Plant Superintendent,
Vice President of Operations, Warehouse Manager, Chief Operating Officer (COO)
I. Tasks
 Oversee activities directly related to making products or providing services.
 Direct and coordinate activities of businesses or departments concerned with the
production, pricing, sales, or distribution of products.
 Review financial statements, sales and activity reports, and other performance data to
measure productivity and goal achievement and to determine areas needing cost
reduction and program improvement.
 Manage staff, preparing work schedules and assigning specific duties.
 Direct and coordinate organization's financial and budget activities to fund operations,
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1
maximize investments, and increase efficiency.
 Establish and implement departmental policies, goals, objectives, and procedures,
conferring with board members, organization officials, and staff members as
necessary.
 Determine staffing requirements, and interview, hire and train new employees, or
oversee those personnel processes.
 Plan and direct activities such as sales promotions, coordinating with other
department heads as required.
 Determine goods and services to be sold, and set prices and credit terms, based on
forecasts of customer demand.
 Locate, select, and procure merchandise for resale, representing management in
purchase negotiations.
Preparation
Equipment Needed:




Computers with internet access – one per student
Computer with projection software
Whiteboard or other means to display student handwritten responses
Handouts of multimedia presentation with note blanks – one per student
Learner Preparation:
A business is easy to form in a free enterprise economy. If a person wants to start a
business, it is a matter of deciding what will be bought and sold and how to attract
customers. Thousands of people operate small enterprises from their own homes with
little thought about how the business is organized and whether it is following proper
business procedures. The form of business ownership determines the financial,
managerial, and legal responsibilities of business owners.
Ask students to identify what they believe to be the primary differences between
businesses owned by one or two people compared with those owned by hundreds of
stockholders. Stress to students that this lesson will help them understand the similarities
and differences among the forms of ownership.
Teaching Strategies:


Have each student indicate whether they would like to own their own business or not.
Ask volunteers to explain why they are interested or not interested in owning their own
business.
Ask students what would be necessary if they wanted to start their own small, parttime business. Explain that it is actually easy to form a business in the U.S. if a
person has the desire.
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Introduction:
When a new business is started, the owner should carefully consider the form of
ownership. While it is possible to change the form of ownership for an existing business,
it is best to decide which to use both for the long-term future of the business as well as for
its first few years.
Assessment:
Quiz on Characteristics of Business
Report – written and presentation on “Sweet Success”
Key Terms:



Sole Proprietorship – a business owned and managed by one person
Partnership – a business owned and managed by two or more people
Corporation – a distinct legal entity formed by completing required legal documents in
a specific state in the U.S.
Additional Resources:
Websites:
"Business Ownership: How Sweet It Can Be!" Economics and Personal Finance
Resource for K-12. Council for Economic Education, n.d. Web. 14 June 2012.
<www.econedlink.org/lessons/index.php?lid=533&type=educator>
Additional teaching resources:
The Corporation. CaliforniaStateUniversity, Northridge, 2003. Accessed 20 May, 2012.
http://www.csun.edu/~hfact004/corporation.htmlBusiness Partners
Corporations.Publication 542 (Rev. March 2012) - http://www.irs.gov/pub/irs-pdf/p542.pdf.
Accessed 20 May, 2012
Textbooks:
Dlabay, Les R., and Jim Burrow. Business Finance. Mason, Ohio: South Western, 2008.
Print.
Dlabay, Les R., Jim Burrow, Brad Kleindl, and Steven A. Eggland. Intro to Business. 7th
ed. Mason, OH: South-Western Cengage Learning, 2009. Print.
Introduction
Introduction (LSI Quadrant I): Define “Free Enterprise” – list the 4 elements and
discuss - using presentation notes as guide. There are three distinct ways to form a
business and each method has particular variations, advantages, and disadvantages
depending on the circumstances of the business and the industry. The following is a
summary of each of three main categories of ownership.
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3
MI
Outline
I. Free Enterprise System - an economic system that
allows individuals to pursue their own interests without
undue governmental restriction. Relies on the presence
of four elements:
A.
B.
C.
D.
Notes to Instructor
Slide #1-6: Market
economies rely on a
private enterprise system.
Private property rights
Freedom of choice
Profits
Competition
Slides #8-10
II. Forms of Ownership
A. Sole Proprietorship
B. Partnership
C. Corporation
There are many
different goods and
services that a new
business can offer, but
there are only a few
ways to organize a
business. The vast
majority of businesses
start out as sole
proprietorships or
partnerships. A third
option is to set up a
corporation. In the
United States, about 70
percent of all businesses
are sole
proprietorships, 20
percent are
corporations and the
remaining 10 percent
are partnerships. Each
type of business has
distinctive
characteristics.
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III. Guest Speaker –
A. Legal requirements for forming (and dissolving)
different forms of businesses.
B. Have students write the guest speaker a thank you
letter. In the letter, have them include a review of
at least one legal requirement the speaker discussed
for each form of business.
Ask students to listen to
an attorney or someone
from a small business
center about the legal
requirements for forming
different forms of
businesses. You might
also want to ask the guest
speaker to address any
legal requirements in
dissolving businesses.
Have your students write
the guest speaker a thank
you letter. In the letter,
have them include a
review of at least one
legal requirement the
speaker discussed for
each form of business.
Have students prepare a
written recommendation
as to which form of
business organization
they think is best. Have
them state the reasons for
their recommendations.
In each case, there will
be some disadvantages to
the business form they
recommend. Have them
identify at least one
negative for each and
suggest how the client
might minimize its
effects.
IV. Compare and Contrast
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Verbal
Linguistic
Students’ quiz answers
will be a graded
assignment.
V.
Assessment
VI.
Observation
A. Graded Assignments:
1. QUIZ – Analyzing the Characteristics of
Business
2. Guest speaker thank-you letter with a review
of at least one legal requirement the speaker
discussed for each form of business
3. “Sweet Success” group activity
Logical
Mathematical
Visual
Spatial
Musical
Rhythmic
Bodily
Kinesthetic
Intrapersonal
The Sweet Success
assignment will serve as
independent review and
review as a class when
the class goes over the
responses to the
assignment.
Interpersonal
Naturalist
Existentialist
Summary
Review (LSI Quadrant I & IV):


Ask students to write a brief description of the three common forms of business
ownership without referring to the lesson on their notes. Have students read their
answers aloud and compare them with those of other students.
Review each point of the different forms of business organization as you enjoy each
group’s presentation in “Sweet Opportunities” and when you go over the quiz after it
has been graded and returned to students.
Evaluation
Informal Assessment (LS1 Quadrant III): Observe students’ participation in
class as you advance through the multimedia presentation. Ask open-ended questions of
students that are not engaged. “Volunteer” these students for tasks during the lesson.
Writing student responses on the board, etc.
Formal Assessment (LSI Quadrant III, IV) :
Quiz – Analysions the Caractéristiques of Business
Group report on Sweet Success
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Extension
Extension/Enrichment (LSI Quadrant IV): SWEET OPPORTUNITIES Scenarios –
Divide students into small groups to prepare their recommendations. If time is limited, you
may want to assign each group just one or two clients. After the groups finish reading the
client stories in the file, Sweet Opportunities, have them prepare written
recommendations as to which business organization they believe to be best. Make sure
the groups provide reasons for their recommendations as well as list at least one
negative with suggestions on how to minimize that negative effect.
When students have completed their recommendations, compare and discuss their
decisions as a class. Here are some sample recommendations, Sweet SuccessRecommendations, to assist you in this discussion. Obviously, there will be variations in
their advice given. Here are some questions for the discussion: If students need
additional information to help them make their recommendations, they can refer to the
links below:
"Should You Have a Partner”
"What Type of Business Organization is Best for You?"
 What accounts for the differences in your recommendations?
[The weight advisors and clients give to various decision factors varies; also, with
most problems there is more than one solution.]

What are the negatives you identified and what are your solutions for dealing with
them?
[Answers will vary. Particularly savvy students may suggest the use of limited
partnerships or subchapter S corporations.]

Why do you think most new businesses are sole proprietorships and partnerships?
[These forms of ownership are easier and less expensive to start.]

What do you see as the biggest disadvantages of sole proprietorships and
partnerships in the long term?
[Disruptions caused by the death/disability of an owner; potential for disagreements
over operations; difficulty transferring ownership; acquisition of resources for
expansion are limited to owner assets, income and debt.]

What are the advantages of setting up a limited versus general partnership?
[The partners can limit their liability to their investment in the business. A limited
partnership can also be used to establish who has the authority to make decisions.]

Are there any disadvantages?
[Partners unable to provide input in the decision process may be unhappy.]

Under what circumstances might a business operating as a sole proprietorship or
partnership decide to incorporate?
[Potential answers include when a company wants to insure there is no disruption to
business if an owners dies; to reduce liability; to offer ownership shares as a means
to get money for expansion or motivational incentive for employees.]
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Next, (and if time allows), have each group research what has happened to the founders
and businesses featured in the case studies. Multimedia slide presentations are an ideal
way for students to share with classmates what they discover. If this is not possible, have
them use word processing or desktop publishing software to create their report.
Encourage them to use images as well as text.
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Quiz – Analyzing the Characteristics of Business
1. Business owned by one person is
a. Merchandising business
b. Sole proprietorship
c. Service business
d. Business entity
2. A business owned by two or more persons is called a
a. small business
b. partnership
c. corporation
d. merchandising business
3. The amount of money earned over the money spent in the business is called
a. going concern
b. earnings
c. profit
d. loss
4. What are the three main types of business ownership?
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
5. Of the three types of business ownership, which one is the most difficult to set
up?_______________________________________________________________
6. The owners of a Corporation are called _______________________________.
7. Give two reasons why you would consider forming a Corporation versus a
Partnership or Proprietorship.
_________________________________________________________________
_______________________________________________________________
8. In a Corporation, who controls and directs the business?
a. Managers
b. Employees
c. Stockholders
d. Board of Directors
9. In a Proprietorship, the __________________ __________________ controls and
directs the business.
10. In a Corporation, the ______________ _____________ ______________ elect
the Board the Directors.
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Analyzing the Characteristics of Business Quiz KEY
1.
2.
3.
4.
b. Sole Proprietorship
b. partnership
c. profit
What are the three main types of business ownership?
Proprietorship
Partnership
Corporation
5. Of the three types of business ownership, which one is the most difficult to set up?
Corporation
6. The owners of a Corporation are called ___________shareholders________.
7. Give two reasons why you would consider forming a Corporation versus a Partnership or
Proprietorship.
_____________________________________________________________________
_____________________________________________________________________
8. d. Board of Directors
9. In a Proprietorship, the ____owner______ controls and directs the business.
10. In a Corporation, the ____shareholders____ elect the Board the Directors.
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SWEET
OPPORTUNITIES
Make a recommendation as to what form of business
organization you think is best for each client. State the
reasons for your position. There will also be some
disadvantages to the business form you choose.
Identify at least one negative and suggest how you
might minimize it.
Client 1: When I was three years old, I started making candy with my grandmother. I am
now 10 and I want to sell chocolate candy with a farm theme to my friends and family.
My product ideas include Brown Cows (chocolate cows on a stick), Pigs in Mud
(marshmallow dipped in caramel, nuts and chocolate) and Farm Eggs (jelly beans
dipped in chocolate). The start-up expenses for my business are pretty small: a few
candy molds, candy and chocolate.) My parents have agreed to loan me the money I will
need and to let me work in the family kitchen. Schoolwork has to take priority over
business so if I have more sales than I can handle, I will probably ask friends or my older
brother to help. My brother is also pretty good at math and computers so he could help
me with keeping track of my expenses and advertising. I really like the product
development and packaging part of the business.
Client 2: After apprenticing for another candy maker, I started my first candy business at
age 18. Unfortunately, my first attempt at starting a business (as well as my second)
was a failure. After a rocky start, my third try was more successful – I have just received
a fortune from the sale of my caramel business. During my world travels, I discovered
and decided to buy new equipment that makes chocolate. Today, only the wealthy can
afford chocolate. With this new technology, I think I can make a chocolate that everyone
can afford. In my mid-thirties, I know very little about making chocolate but I am willing to
take the time to learn. I want my life to center on inventing new candies, building this
new business, and laying out a new community that will be a wonderful place for the
people I hire to live. I prefer to leave day-to-day operations of the company—handling
production, sales, marketing and distribution—to someone else.
Client 3: I have substantial experience working in the candy industry. I helped my father
introduce a very popular chocolate bar in the U.S. and have worked in the factories of
two of the best chocolate makers in the world. Today, I am a thirty-plus year-old
businessperson operating a company I started selling candy and pet foods across
Europe. While traveling in Spain recently, I saw a candy-coated chocolate that I think will
sell well in the U.S. I would like to create a new American business producing this candy.
I have at least 80 percent of the money for getting started but I am concerned about
getting the chocolate used in production. There is a war going on and it may be difficult
to get this important ingredient without taking on a partner who has connections to a
chocolate maker. I like the challenge of building businesses and finding ways to make
them operate more efficiently. I also prefer making decisions on my own.
Client 4: I am in my late thirties. I have worked myself up from handling mail to being an
agent for a well known entertainment agency. I now represent several famous
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musicians. People say I am an enthusiastic and tireless promoter. To help my clients get
jobs, I use bite-sized chocolate chip cookies as a calling card. My aunt taught me how
to bake cookies when I lived with her as a teenager. Before I dropped out of high school
and joined the Air Force, I was getting vocational training in the food trades but I have
never run my own business. Some of my friends in the entertainment industry have
encouraged me to open a store that would sell my cookies. They have offered to help
finance my venture in exchange for partial ownership. My cookies would look and taste
very different from the cookies sold in the grocery stores today.
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