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.
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SLIDE 2
CHAPTER
5
SLIDE 3
KEY TERMS
● contingent worker
● intermediary
● service business
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Principles of Business, 8e
CHAPTER
THE CHANGING
U.S. JOB MARKET
5
SLIDE 4
● Employment data
● Pressures on employees
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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
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Principles of Business, 8e
CHAPTER
BUSINESS AND
THE ECONOMY
5
SLIDE 6
● Size of U.S. businesses
● Roles of business
● Impact on a community
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Principles of Business, 8e
CHAPTER
PERCENT OF BUSINESSES
BY EMPLOYEE SIZE
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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
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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
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Principles of Business, 8e
CHAPTER
5
SLIDE 10
TYPES OF BUSINESSES
● Producers
● Intermediaries
● Service businesses
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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
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Principles of Business, 8e
CHAPTER
5
SLIDE 14
BUSINESS OWNERSHIP
● Proprietorship
● Partnership
● Corporation
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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.
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Principles of Business, 8e
CHAPTER
CHOOSING A FORM OF
BUSINESS OWNERSHIP
5
SLIDE 17
● Choosing a proprietorship
● Choosing a partnership
● Choosing a corporation
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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.
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Principles of Business, 8e
CHAPTER
OTHER FORMS
OF OWNERSHIP
5
SLIDE 19
● Specialized partnerships and corporations
● Cooperatives and franchises
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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
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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.
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Principles of Business, 8e
CHAPTER
TYPES OF ORGANIZATIONAL
STRUCTURES
5
SLIDE 25
● Functional organization structure
● Matrix organizational structure
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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.
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Principles of Business, 8e