CHAPTER 5 SLIDE 1 CHAPTER 5 Economic Decisions and Systems 5-1 Business in the U.S. Economy 5-2 Forms of Business Ownership 5-3 Organizational Structure for Businesses © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e 5-1 Business in the U.S. Economy Goal 1 Describe the changing status of U.S. employment. Goal 2 Discuss the role of business in the U.S. economy. Goal 3 Describe three major types of businesses. © 2012 Cengage Learning. All Rights Reserved. SLIDE 2 CHAPTER 5 SLIDE 3 KEY TERMS ● contingent worker ● intermediary ● service business © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER THE CHANGING U.S. JOB MARKET 5 SLIDE 4 ● Employment data ● Pressures on employees © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER 5 SLIDE 5 Checkpoint ● List several groups that will increase as a percentage of the total U.S. workforce in the next decade. ● Younger workers (16–24 years of age) ● Asian-, Hispanic-, African-American groups ● Women © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER BUSINESS AND THE ECONOMY 5 SLIDE 6 ● Size of U.S. businesses ● Roles of business ● Impact on a community © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER PERCENT OF BUSINESSES BY EMPLOYEE SIZE © 2012 Cengage Learning. All Rights Reserved. 5 SLIDE 7 Principles of Business, 8e CHAPTER 5 SLIDE 8 BUSINESS ACTIVITIES ● Generating ideas ● Raising capital ● Employing and training personnel ● Buying goods and services ● Marketing goods and services ● Maintaining business records © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER 5 SLIDE 9 Checkpoint ● What are the basic activities completed by all businesses? ● Generating ideas ● Raising capital ● Employing and training personnel ● Buying goods and services ● Marketing goods and services ● Maintaining business records © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER 5 SLIDE 10 TYPES OF BUSINESSES ● Producers ● Intermediaries ● Service businesses © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER 5 SLIDE 11 Checkpoint ● How does a manufacturer differ from an extractor? ● An extractor takes natural resources, such as oil or timber, for direct consumption or for use in developing other products. ● A manufacturer takes resources supplied by others and converts them into useable products. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e 5-2 Forms of Business Ownership Goal 1 Understand the three major forms of business ownership. Goal 2 Determine when each form of business ownership is most appropriate. Goal 3 Recognize other specialized business ownership forms. © 2012 Cengage Learning. All Rights Reserved. SLIDE 12 CHAPTER 5 SLIDE 13 KEY TERMS ● proprietorship ● partnership ● corporation ● partnership agreement ● articles of incorporation ● franchise © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER 5 SLIDE 14 BUSINESS OWNERSHIP ● Proprietorship ● Partnership ● Corporation © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER 5 SLIDE 15 Forms of Ownership U.S. Business Comparison by Form of Ownership Form of Ownership Proprietorship Number of Businesses (2006) Total Revenue (Thousands) Percent of All Businesses Percent of Total Revenue 22,075,000 1,278,000,000 71.53% 4.06% Corporation 5,841,000 26,070,000,000 18.93% 82.82% Partnership 2,947,000 4,131,000,000 9.55% 13.12% 30,863,000 31,479,000,000 100.00% 100.00% Total © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER 5 SLIDE 16 Checkpoint ● What are the differences between the three main forms of business ownership? ● Business forms differ in the ways in which decision-making and investments are made and to whom liabilities are distributed. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER CHOOSING A FORM OF BUSINESS OWNERSHIP 5 SLIDE 17 ● Choosing a proprietorship ● Choosing a partnership ● Choosing a corporation © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER 5 SLIDE 18 Checkpoint ● Which form of business ownership is the most complex and difficult to form? ● The corporation is more complex to begin than other business forms. ● Forming a corporation requires much more bureaucracy, is more subject to government regulations, requires the organization of a board, and must have clearly defined bylaws. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER OTHER FORMS OF OWNERSHIP 5 SLIDE 19 ● Specialized partnerships and corporations ● Cooperatives and franchises © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER 5 SLIDE 20 Checkpoint ● What are the other specialized forms of business ownership? ● Limited liability partnership ● Joint venture ● S corporation ● Limited liability company (LLC) ● Nonprofit corporation © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e 5-3 Organizational Structure for Businesses Goal 1 Understand important principles in designing an effective organization. Goal 2 Compare alternative organizational structures for businesses. © 2012 Cengage Learning. All Rights Reserved. SLIDE 21 CHAPTER 5 SLIDE 22 KEY TERMS ● mission statement ● goal ● policies ● procedures ● organization chart © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION 5 SLIDE 23 ● Setting direction ● Principles of effective organization ● Responsibility, authority, and accountability ● Unity of command ● Span of control © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER 5 SLIDE 24 Checkpoint ● What is the difference between a mission statement and a goal? ● A mission statement states the purpose of existence for a business and what it hopes to achieve. ● A goal is a more specific statement of what a business expects to achieve and may be used to measure a business’ success. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER TYPES OF ORGANIZATIONAL STRUCTURES 5 SLIDE 25 ● Functional organization structure ● Matrix organizational structure © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e CHAPTER BUSINESS ORGANIZATION CHART © 2012 Cengage Learning. All Rights Reserved. 5 SLIDE 26 Principles of Business, 8e CHAPTER 5 SLIDE 27 Checkpoint ● What problems can result from the use of a functional organizational structure? ● Employees in a functional organizational structure may tend to lose sight of overall corporate goals. ● Workers tend to be limited to specific duties and may not see their relationship to the organization as a whole. ● This can result in lack of interest and motivation over time. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e