Business Structure
Lesson 1.5
Abstract
In this lesson students consider the ways in which
people organize themselves to provide resources,
produce goods and services and to receive income
in return. They learn that people organize
themselves in various ways in order to efficiently
allocate and use resources within a large economic
system. Students assess the advantages and
disadvantages in determining how best to
participate in an economic system. Students also
consider how economic systems benefit from
flexibility and choices in the manner in which one
participates in the economy (economic flow).
Entrepreneur Reading
• Each read 1 article
• After, groups of 5 (each with a different
article)
• Complete Entrepreneur Summary
• Share Summaries within Groups
• Have a discussion in groups about the COMMON
CHARACTERISTICS you noticed about the
Entrepreneurs discussed.
• On a piece of chart paper, come to a consensus
about significant characteristics of Entrepreneurs
(list as many as you can come up with)
• Also, RANK the characteristics in order of
importance and include on chart paper.
Debrief
• Share with class
• Explain any disagreements you might have had about the
rankings in your small groups.
• Have a class discussion using the following questions as a
guide:
– How were the rankings of each group similar or different? Why
do you think this is so?
– How did they organize their business? Did they have partners?
– How important was education to the success of these
individuals?
– How did they view competition?
– How did innovation and ingenuity play a role?
– Where there differences in the risk these individual undertook?
Business Organizations
• Sole Proprietorship, Partnership, or
Corporation.
• Fill in the notes on the graphic organizer
Sole Proprietorship
• Simplest form of business organization
– Firm owned and operated by 1 person
– Can hire workers if needed
• Plumber
• Hair Stylist
Partnership
• 2 or more people agree to contribute
resources to the business and share the
profits
– General Partnership – share responsibility of
running the business and in any liability
– Limited Partnership – One partner runs the
business and bears unlimited personal liability;
others provide capital (money, etc.), but have
limited liability.
• Physicians
• Lawyers
Corporation
• A legal entity with an existence that is distinct
from the people who organize, own and run it.
– Private Corporation – Stock ownership limited to a
select few (probably family) and shares of stock
are not publically traded.
– Publically traded Corporation – Shares of stock
owned by many; stock can by bought/sold by the
public in stock exchange markets
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Ford
Nike
Starbucks
Google
Characteristics of Business
Organizations
• Work with your group
• Determine where each characteristic goes – a
few will be used more than once.
• We will discuss together in 10 minutes.
Discussion
• What are risks involved in each form of business?
• Is there a form of business you think is preferable?
Why?
• What form of business do you think is the most
popular? Why do you think so?
• Sole proprietorship is the most common – 72%, but
87% of sales of consumer goods are by corporations.
Why do you think sole proprietorships are the most
common?
• Which business form has the most investors?
• Why is it important for entrepreneurs to consider
different forms of businesses before they begin to
operate?
Entrepreneurs Readings
• Discuss the business forms these individuals
created at various stages of their endeavors.
– Did they change their business structure as their
business grew?
– What incentives might cause people to change the
form of business?