** BASIC FORMS OF BUSINESS OWNERSHIP
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Marcellous Curtis
Nickels
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McHugh
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McHugh 1-1
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BASIC FORMS OF BUSINESS OWNERSHIP Sole Proprietorship: A business that is owned and usually managed by one person. Example: if someone starts a tea stall by himself only. Partnership: A legal form of business with two or more owners. Example: Mr. Karim and his friend starts a business together where both of them have contributed.
Corporation: A legal entity with authority to act and have liability apart from its owners. Example: Microsoft.
SOLE PROPRIETORSHIPS ADVANTAGES
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Ease of starting and ending the business Being your own boss Pride of ownership Retention of company profit No special taxes
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SOLE PROPRIETORSHIP DISADVANTAGES
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Unlimited liability Limited financial resources available Management difficulties time commitment Limited growth
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ADVANTAGES OF PARTNERSHIPS
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More financial resources Shared management, skills and knowledge Longer survival No special taxes
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DISADVANTAGES OF PARTNERSHIPS
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Unlimited liability Division of profits Disagreements among partners Difficulty in termination
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ADVANTAGES OF CORPORATIONS
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Limited liability Ability to raise more money for investment Size Perpetual life Ease of ownership change Separation of ownership from management
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DISADVANTAGES OF CORPORATIONS
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Initial cost Extensive paperwork Double taxation Size Difficulty of termination
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CORPORATE EXPANSION: MERGERS AND ACQUISITIONS Merger: The results of two firms forming one new company.
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Acquisition: One company’s purchase of the property and obligations of another company.
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3 TYPES OF CORPORATE MERGERS
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Horizontal merger: The joining of two firms in the same industry.
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Conglomerate merger: The joining of firms in completely unrelated industries.
Vertical merger: The joining of two companies involved in different stages of related businesses.
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FRANCHISE AGREEMENT
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Franchisor: A company that develops a product concept and sells others the rights to make and sell the products.
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Franchisee: A person who buys a franchise.
An arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory.
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ADVANTAGES OF FRANCHISES
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Management and marketing assistance Personal ownership Nationally recognized name Financial advice and assistance Lower failure rate
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DISADVANTAGES OF FRANCHISES
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Large start-up costs Shared profit Management regulation Coattail effects Restrictions on selling Fraudulent franchisors
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Thank You