Bill Gates $113 Million House
http://www.usnews.com/usnews/tech/billgate/room12a.htm
Bill’s wife, Melinda, attended Ursuline Academy in Dallas, TX.
She graduated from Duke University with a major in “Economics.”
Most expensive residential house ever built. The $1.4 million
guest wing has two bedrooms, 2 bathrooms, and its own
dinning room. 66,000 square feet equal to 1.5 acres. The
house has 7 bedrooms, 24 bathrooms, 6 kitchens and 6
fireplaces. The annual property taxes run around $990,000.
Pool: $6 million, 60-foot long, complete with a
waterfall & its own underwater stereo system.
Library has 10,000 rare books including da
Vinci’s 72 page $31 million scientific notebook.
Bill’s garage has 3 Porshes [the 99 above is favorite] 1 Mercedes,
1 Jaguar, 1 Ford Mustang, and a Ferrari. His other $1.2 million
garage will hold 30 cars. Bill can jump off excess energy in
his trampoline room with 20-foot high ceilings.
THE BUSINESS POPULATION
Business Shares of Domestic Output
Percentage of Firms Percentage of Sales
Corporations
20%
Partnerships
8%
Sole
Proprietorships
72%
Farmer
Corporations
84%
Partnerships 11%
Sole Proprietorship 5%
Business Failures
Over 500,000 small businesses are launched each year.
One third of these start-ups fail within two years.
1. Sole proprietorships – one individual
in business for himself/herself.
Examples are beauticians, dentists, lawyers,
dry-cleaning and lawn care and lemonade stands.
2. Advantages of a Sole Proprietorship
A. Easy to form and easy to quit.
b. All of the profit
c. Personal satisfaction- own boss
d. Total control- can make
Decisions quickly
\
3. Disadvantages of Sole proprietorships
A. Unlimited liability
B. Burden of sole responsibility
C. Limited potential for growth
D. Difficult to attract qualified employees–can’t
offer fringe benefits. [Let’s say you ask for more benefits]
E. Short life span – depends on owner’s health
and competence. If the owner dies, it is over.
Partnership
-
business
operated by 2 or more people.
“
.
Advantages of Partnerships
[“Two heads are better than one.”]
Two Heads
better than
One Head
7 1. Specialization – specific duties assigned to
different partners.
A 2. Sharing of losses. Can borrow more and can sustain
heavier losses.
B 3. Easy to form. Small amount of money to start & operate.
C 4. Shared decision making – more informed decisions.
5. Personal satisfaction – sense of accomplishment.
8 Disadvantages of Partnerships
A 1. Disagreements among partners –
conflicts delay decisions, lower employee
morale, & lessen efficiency. Each partner
is responsible for the acts of all other
partners. Must choose good partners.
B 2. Have to share the profits.
C 3. Unlimited liability – can lose their
business and personal possessions.
4. Limited life – sickness, conflicts,
or death can end the partnership.
Take That!
Corporation
– a business organization
recognized as a separate legal entity (existence).
10 Stockholders – are the owners of a corporation who invest
by buying shares.
Stock – the certificate of ownership.
Two Types of Corporations
11 1. Publicly owned – anyone can invest by buying shares,
so unlimited # of owners. Includes most corporations.
12 2. Closed – is owned by a limited number of stockholders.
Ford Motor Company was family owned (closed) until 1956.
They went public in 1956 & issued 10,200,000 shares of stock.
13 Exxon Mobil leads all other corporations in sales at $371 B.
Advantages of corporations
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Easy to raise money
Limited liability
Longevity
Can attract good employees because of
money and benefits
Disadvantages of a Corporation
19 Disadvantages from the corporation’s point of view.
A 1. Slow in decision making – must go thru chain of command.
B
C
2. Many government restrictions – must follow regulations of the
SEC, comply with laws on merging and maintain many records.
3. Heavy organizing expenses – pay for its charter and then
depending on the state, expenses can run from a few
hundred to thousands of dollars.
D 4. Double taxation – when a company distributes profits
(dividends) to its stockholders, they have to pay personal
income tax on dividends in excess of $100. Corporations
earnings are subject to taxation.
.
Largest Corporate Profits - 2007
1. Wal-Mart
$379 B
2. Exxon Mobil
359
3. Chevron
204
4. Conoco
187
5. General Motors 173
6. GE
173
7. Ford
172
8. Citigroup
146
9. Bank of America 116
10. AIG
110
11. HP
104
12. J.P. Morgan
100
13. Berkshire-Hath 99
14. Verizon
93
15. HP
92
16. IBM
99
17. Valero
91
18. Home Depot
90
19. McKesson
88
20. Citigroup
82
Largest Employers
1. Wal-Mart 1.35 M “associates”
[1.9 million ‘associates” worldwide]
2.
3.
4.
5.
6.
7.
Sears Holding
McD’s
UPS
IBM
GE
General Motors
400,000
364,000
359,000
316,000
313,000
252,000
Wal-Mart has 4,179 total stores
in the U.S.; 1,868 Wal-Mart stores,
1,586 Wal-Mart Super Centers, &
725 Sam’s Clubs in the U.S.
The GDPs for the Virgin Islands
is $1.8 billion; for Djibouti, it
is $582 million; and for
Afghanistan, it is $21 billion.
Forbes List of Richest Americans for 2008
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$62 billion
$58 billion
$26 billion
$25 billion
$19 billion
$19 billion
$19 billion
$19 billion
$19 billion
$19 billion
$16.4 billion
$16 billion
$16 billion
$15.2 billion
Warren Buffett [Berkshire Hathaway]
Bill Gates [Microsoft]
Sheldon Adelson [casinos]
Larry Ellison (Oracle)
Sergey Brin [Google]
Larry Page [Google]
Christy Walton
Jim Walton
Rob Walton
Alice Walton [Richest in TX]
Michael Dell [Dell Computer]
Kirk Kerkorian [investments, casinos]
Paul Allen
Steven Ballmer [President-Microsoft]
Is Wal-Mart Too Powerful?
At $379 bil. in revenues, Wal-Mart is the world’s largest company.
Every day, 20 million shoppers visit Wal-Mart’s 4,750 stores.
82% of American households will make one purchase here during
the year.
Wal-Mart’s lower prices puts pressure on other retailers and saves
American consumers over $100 billion a year. Consumers in the
D-FW area saved an average of $895 each or cumulative of $263
million in 2004. Wal-Mart sales clerks (“associates”) pulled in $10.74
an hour, or $21,134 a year. 44% of their 1.35 million U.S. workers
quit each year. 143,000 Texans work for a Wal-Mart. [largest TX employer]
Wal-Mart is America’s most admired and most hated company.
Their $18 billion in imports from China accounts for 1/10 of total
imports from China. Their global work force numbers 1.9 million.
Wal-Mart’s market share of consumer goods could hit 50% by 2010.
Wal-Mart sells 32% of all diapers, 30% of hair care, 26% of
toothpaste, and 10% of pet food. Outside of the U.S., they
operate 1,309 stores in 10 countries, ranking as the largest
retailer in Mexico[Wal-Mex] Canada. Will hire 800,000 more by 2008.
In China, they have 56 stores, but will have 20 more this year. They
Have more than 30,000 workers but will hire 150,000 more in 5 yrs.
What Town is This?
22 Franchise gives an individual an agreement to market a
company’s product in return for a percentage (royalty)
of the profits. Semi-independent business.
The company is the franchiser and the individual is the franchisee.
The 1st franchise operation was started by Singer Company in 1851
to sell sewing machines. In the last 40 years, franchising has really
taken off, led by Ray Kroc of McDonald’s.
There are 3,000 franchises in 670 industries, with 600,000 outlets.
The franchiser will train your personnel, take care of marketing
and accounting. The franchisee receives a tried-and-tested business
method.
23 Advantages of Franchises
A 1. Benefits of a well known trade name,
systemized management, and national
advertisement.
B 2. Less than 5% fail each year
(65% of all independently
owned businesses fail within the first 5
years).
C 3. Chance to own your own business
with minimum risk.
24 Disadvantages of Franchises
1. May be too many restrictions imposed
so independence is sacrificed.
B 2. Takes a lot of money for start-up
3. May lose your investment if the
company goes bankrupt.
A
25 Cooperatives – voluntary association of people formed
to carry on some kind of economic activity benefiting members.
Different Types of Cooperatives:
1. Producer Coop – group of farmers who join to get better
prices for their goods. They eliminate the middle-man charges.
2. Housing Coop – formed by members to buy the building
they live in.
3. Purchasing Coop – retail store owned and operated by
its customers.
4. Credit Union – members pool their savings so they can
borrow from it at lower rates (the most common form of coop)
5. Service Coop – provides service to its members
(electrical or telephone)
6. Baby-Sitting Coop – families swap baby-sitting duties
without ever exchanging money.
26 Nonprofit Organizations – provides products without
making a profit. Churches are the most common.
(Boy Scouts, Y.M.C.A., Salvation Army, & Goodwill)
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Subway
Curves [Women’s fitness]
Quizno’s
McDonald’s
Dunkin’ Donuts
Baskin-Robbins
Sonic Drive In
Pearl Vision
Arby’s
CiCi’s Pizza
Golden Corral
$86,000
Start Up for
$30,000
Franchises
$208,000
$500,000
$255,000
$145,000
$710,000
$115,000
$333,000
$400,000
$1.7 mil.
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Burger King
Merle Norman Cosmetics
Jazzercise
Radio Shack
Dairy Queen
Pro-Cuts
Super-Cuts
Great Clips
Sport Clips
Hollywood Tan
Buffalo Wild Wings
Wingstop
Schlotzsky’s
$294,000
$33,000
$5,000
$60,000
$655,00
$111,000
$90,000
$94,000
$98,000
$269,000
$96,000
$193,000
$400,000
Start Up for
Franchises
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Mr. Rooter
Pizza Inn
Blimpie
Atlanta Bread
Fuddruckers
Marble Slab Cream.
Glamour Shots
Lawn Doctor
Gold’s Gym
Jenny Craig
$46,000
$56,000
$72,000
$629,000
$740,000
$187,000
$78,000
$83,000
$500,000
$150,000
Start Up for
Franchises
Mergers
• Horizontal- 2 companies combine that
produce same good/service…ex ATT and
Verizon
• Vertical- 2 companies that are in the same
line of production merge…ex. Ford and
Firestone Tire
• Conglomerate- 3 or more companies that
produce completely unrelated
products..ex. Procter and Gamble
C Conglomerate (Unrelated) Combination –merger
between four or more companies producing unrelated products.
None is responsible for the majority of sales.
These mergers may include a number of subsidiaries – acquired
companies that have not been required to abandon their corporate identity.
American Brands, Inc.
Tobacco Products
Distilled Spirits
Dick & Mac McDonald
McHistory of McDonald’s
McDonald’s is the world’s most successful fast-food franchise.
They make over $22 billion annually and have one million
employees (crew members). There are 150 McD’s in D-FW.
There are 31,000 stores in 120 countries. 60% are overseas.
They spend $900 million a year on advertising. [13,700 U.S. stores]
They have 54 million customers each day in the 31,000 stores.
They charge 14% royalty (1st stores cost $950 and 1.9% royalty)
They have over 20 restaurants in Moscow including the world’s
largest. It has 900 seats and can serve 50,000 each day.
10,000 line up every day. They have the “Bolshoi Mak”(Bolshoi
means “big”). This store has 27 cash registers & 630 workers
(27,000 applied) who earn $425 a month.
In Japan, McD’s has over 2,000 restaurants. The Japanese are
surprised to find out that McDonald’s is in the U.S. McD’s
are called “Makudonarudo” [Ma ku do na ru do] featuring
“Biggue Maku.” They prefer more fat in the meat and more
onions. Also burgers are garnished with a fried egg.
McD’s New Design
[will cost 300,000-400,000 to upgrade to this]
This will encourage customers to “stay awhile”.
Kuwait City’s opening brought 15,000 customers on opening day in 1994. The line
at the drive thru was seven miles long. Proving once again that "Good Times, Great
Taste" is understandable in any language. They have the McArabia, a chicken sandwich.
McDonald’s McArabia in the Middle East
Smash-hit menu items in one market often translate well to others.
The McArabia flatbread, spicy grilled chicken fillet, onion and
garlic mayonnaise sandwich that debuted in the Middle East a
few years back is now popular in Malaysia and South Africa.
Hamburger University
[Oak Brook, Illinois]
The $40 million “Hamburger University” is located in Oak Brook &
communicates in 22 languages. It has 65,000 manager graduates.
Their degree was in “Hamburgerology” with a minor in “Fries”.
Instead of getting a sheepskin, they receive “arches”. Hamburger
Universities are also located in Japan, England, Germany & Australia.
McDonald’s in Cuba
McDonald’s in China
McD’s has 1,000 stores in China.
“Rice Delight”
McDonald’s in Singapore
McDonald’s Shrimp Mania in Japan
This shrimp sandwich is wildly popular in Japan
and, together with special promotional campaigns,
helped end a recent slump at McDonald’s Japan.
This is a critical foreign market for McDonald’s,
which owns a 50% stake in its operating unit there.
McHits and McMisses
[Some menu items have been profitable “hits,” while others have been
“misses.” The consumer decides what stays on the menu with his dollars]
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Hulaburger (1962) – McMiss
Filet-O-Fish (1963) – McHit
Strawberry shortcake(1966)–McMiss
Big Mac (1968) – McHit
Apple pie(1968)–McHit
Drive-thru (1975 – McHit
Egg McMuffin (1973)-McHit
Chicken McNuggets (1983) – McHit
Extra Value Meal (1991) – McHit
McLean Deluxe (1991) – McMiss
Arch Deluxe (1996) – McMiss
Skillet Burrito (2007) – McHit
Big Xtra (1999) – McHit
Premium Salads(2004) - McHit
Snack Wrap(2006) – McHit
Premium coffee (2007) - McHit
A big Mac meal with
fries and a soda has
1,435 calories.
Portion Sizes & Waistlines Have Increased in 20 years.
Twenty Years Ago
Today
Cup of coffee with milk and sugar
Mocha coffee w. milk & mocha syrup
8 ounces/45 calories
16 ounces/350 calories
Blueberry muffin
1.5 ounces/210 calories
Bagel
3 inch diameter/140 cal.
Cheeseburger
330 calories
French fries
2.4 ounces/210 calories
Chocolate chip cookies
1.5-inch diameter/55 cal.
Blueberry muffin
5 ounces/500 calories
Bagel
6 inch diameter/350 cal.
Cheeseburger
590 calories
French fries
6.9 ounces/610 calories
Chocolate chip cookies
3.5-inch diameter/275 cal.
Hardee’s 1, 420 calorie “Monster Thickburger”. It has 4 strips
of bacon and 3 slices of cheese. It sells for $5.19 or $7.09 with
fries & a soda (900 more calories). Hardee’s has 5 burgers with more
than 1,000 calories each. There are 2,120 Hardee’s in 30 states.
If you eat one of these, you get “Hardee’s
It comes in a small
of the arteries”
cardboard box shaped like a coffin.
Two 1/3 pound slabs of Angus beef but no lettuce or tomatoes
15 Pound “Beer Barrel Belly Buster”
You have to
sign a release
form before
you eat this.
Equivalent to 32
Quarter Pounders
A Pennsylvania eatery, Denny’s Beer Barrel Pub, is challenging diners to eat a
huge burger at one sitting. It is the largest burger available anywhere. It has
10 pounds of beef molded into a 20-inch patty on a specially baked, 17-inch bun.
It contains 25 slices of cheese, a head of lettuce, three tomatoes, two onions,
plus copious quantities of mayo, ketchup, relish, mustard, and peppers.
Any two people who can eat it within a 3-hour sitting get it for free. For
everyone else, it costs $30. No two people have been able to eat one yet.
Badlands
Badlands Booker, at 415 pounds, did
eat one in 7 hours. And this in, a 115
pound freshman college student, Kate
Stelnick, from the College of New Jersey,
ate one in 2 hours, 54 minutes
Kate Stelnick
Famous People Who have worked at McD’s
Shania
Twain
Sharon
Stone
Rachel McAdams
“Mean Girls”
Jay Leno
Barbie wore
McD’s in 2001
Pink
Carl Lewis
D.L. Hughley
Macy Gray
“I Try”
Andrew Card
Former “chief of Staff”
Answer on a sheet of paper
• Which is the best type of organization and
why?