Objectives:
1. Explain the characteristics of corporations.
2. Analyze the advantages of corporations.
3. Analyze the disadvantages of corporations.
4. Compare and contrast corporate combinations.
5. Describe the role of multinational corporations.
------------------------------------------------------------------------------------------------------------------------------Businesses often rely on _______________________to expand operations.
>One way is to increase investment in the __________________________________.
>Corporations can grow ______________________ by combining with other corporations.
>_____________________________ – a legal entity owned by individual stockholders.
>It is recognized as a _____________________________________.
>It has the rights of a “_________________________”
-It can enter into ____________, ______ and _______________, sell property, and etc.
Strengths of Corporations:
1. It is a ___________________________________
-an artificial person _____________________
2. _____________________________
-The Corp can __________________ – ownership in the corporation.
-The Corp can ________________ – an IOU promise to repay the amount borrowed at a
later date with interest.
3. __________________________
- The Corp can hire the __________________________ to run the company.
- Stockholders do not run the company. - The _________________________ is in charge
of the company and they hire a team to run the company.
4. _________________________
-This is the _________________ of a Corporation.
-________________ can only lose the amount they have invested in the corporation.
-______________________ are not subject to payment of the corporation’s debts.
5. ______________________________
-___________________ the Corporation permission not to pay some or all of their debts.
6. ___________________________________
-This is a _____________________ – it is not tied to anyone’s life. Someone dies,
the corp. still goes on.
7. ______________________________________
-All it takes is to either _____________ or _______________ stock in the corporation.
Weaknesses of Corporations:
1. ________________________________________
-You need to hire a lawyer to _______________________________.
-You have to pay the _____________________ to incorporate.
-Have to have a _______________________ drawn up – it lists the specific number of stocks, dividends,etc.
2. _______________________________________________
-Owners have ________________ over the day-to-day operations of the corporation.
-Board of Directors _______________________________.
-Management Team runs the ____________________ operations of the corporation.
3. ____________________________
-First the Corporation’s ____________ is taxed by the IRS (______________________).
-_______________________ has to pay income taxes (dividends and capital gains taxes).
4. ________________________________________
-___________________________________ Commission
-SEC regulates the _______________________.
-Other Gov’t. _____________________ may be in place for your corporation.
Corporation Combinations
As corporations continue to grow, __________________________________ may decide it makes more
sense to merge or combine, the firm, _______________________________________.
>Each of the corporate combinations can lead to larger, __________________________.
>Often, larger firms can produce and sell their products ______________________________.
Types of Corporate Combinations:
1. _____________________ – joining of two or more firms competing in the same market.
-i.e. 1998 – Chrysler and Daimler-Benz merged into Daimler-Chrysler. Chase National –
Bank merged with Manhatten National Bank – produced Chase-Manhatten
National Bank
-The resulting merger may gain _____________________ power in its market.
2._________________________ – joining of two or more firms involved in different stages of
producing the same good or service.
-i.e. – United States Steel (US Steel)
-This merger may allow a firm to ____________________________.
-Antitrust regulators _____________________________________________.
3. __________________ – a business combination merging more than three businesses that make
unrelated products.
-i.e. – R.J. Reynolds owns Sea-Land Trucking, Delmonte Canning Company, Heublein
Company
-i.e. Pepsi owns Taco Bell, Pizza Hut, and KFC
-Mitsubishi – Japan’s conglomerate – cars, electronics
-No one business earns the ________________________________________ profits.
Multinational Corporations
>A large corporation that produces and sells its goods and services _______________________.
>i.e. General Motors Company, Nike, Sony, McDonalds, and etc
>They are a citizen of _______________________ countries and subject to _______________ in
each country they reside in, and ______________________________ of those countries.
>They have the ability to move resources, goods, services, and financial capital across national
borders.
Benefits of Multinationals:
>They ________________________ and workers worldwide by providing jobs and products
around the world.
>They ____________________________________ and production methods across the globe.
>Often the jobs help poorer countries and raise the _______________________ for those nations.
Disadvantages of Multinationals
>They may unduly ____________________________ and politics of those undeveloped nations.
>They ______________________ and have poor working conditions for the workers.