Business Administration

Unit 2 – Forms of Business Ownership & The Law

Chapter 7Legal Aspects of Business

Text Book Page 165 Legal Limits for a Taxi Business

Controversial Issue Should a federal law be passed that

would prevent all organizations that collect information about individuals from selling of sharing that information with anyone else without their written consent? 3-5 reasons for yes 3-5 reasons for no

Monopoly One company provides product/service without competition Can control supply & price

Prices are usually high

Monopoly Gvt. approved monopolies Regulates prices & policies

Natural gas company

Monopoly Deregulation

Monopolies eliminated or weakened

Commercial airfare, phone company, railroads, Peco

Resulted in lower prices & better service

Deregulation Research Use the Internet to research the

following questions1. What industry was deregulated in PA

within the past 15 years?2. In what way was is deregulated?3. Why was it deregulated?4. Was it successful?5. What does the future hold for this

industry?

Fair Competition Gvt. agencies & laws promoting fair competition Sherman Act Clayton Act Robinson-Patman Act Wheeler-Lea Act

Sherman Act 1890 – discourages monopolies Outlaws business agreements between competitors

Setting selling prices

Clayton Act 1914

Forbids acquiring ownership of another company to create a monopoly

Outlaws contracts make you buy one item to get another

Microsoft forced computer mfgs. buying Windows O.S. to also buy I.E.

Robinson-Patman Act

1936 Price discrimination

Different prices to different customers

Unless sold as different quality or quantity

Wheeler-Lea Act 1938

Forbids unfair or deceptive acts/practices

False advertisingMisleading important info

Failure to reveal facts Drugs, medical devices, cosmetics, food

Federal Agencies FTC

Federal Trade Commission See pg. 169 - Fig. 7-1

FAA Federal Aviation Admin.

FCC Federal Communications Comm.

Federal Agencies FDA

Food & Drug Admin. NRC

Nuclear Regulatory Comm. SEC

Securities & Exchange Comm.

Bankruptcy Legal process Selling of assets to pay debt Excess debt forgiven Bad credit rating – 10 years

Can’t declare again – 6 years

PA Bankruptcy Research Use the following website to answer the questions

below: http://www.pennsylvania-bankruptcy.com/

1. What are the steps/requirements for filing for bankruptcy in PA?2. What property can you protect from creditors when you file

bankruptcy in Pennsylvania?3. Explain Pennsylvania Debt Consolidation as an Alternative to

Bankruptcy4. Explain the difference between Chapter 7 and Chapter 13 bankruptcy

http://www.pennsylvania-bankruptcy.com/7v13.html

5. 7 and 13 Advantages and Disadvantages

Patents Inventor has sole right to make, use, & sell invention or process for 20 years Inventor can license to others Temporary monopoly

Encourages mfg. to invest $ in R&D

Digital cameras, synthetic tissue, insulin

Copyright Author has sole right to reproduce, publish & sell literary or artistic work for life + 70 years Author can permit others to copy

Protects CD games & music, video & audio tapes & computer software

Trademarks Distinguishing name, symbol, or special mark

Owner only person legally allowed to use

Trademarks Symbols

Nike “swoosh” McDonald’s “golden arches”

Company or product name Sony “Walkman” “Game Boy”

Trademarks Rights continue indefinitely unless: Mark is abandoned OR Loses significance by becoming generic

Escalator, linoleum, zipper

Internet Trademark sites

www.uspto.gov/ http://www.sba.gov/starting/indextrademarks.html

Handout Obtaining a Patent

Public Protection FDA regulates

Impure, improperly labeled, falsely guaranteed & drugs unhealthful foods & cosmetics

Extensive drug testingCosts escalateDrives up insurance costs

Public Protection Non-Food

Labels on possible dangerous items

Health warning on cigarettes

Prohibits sale under 18

Public Protection Consumer Product Safety Act Sets safety standards Recalls, repairs or halts sale

Warranty Act Specifies action taken if defective product

Controversial Issue (debate)

Should the federal government substantially raise the so-called “sin taxes” on tobacco products and alcoholic beverages to increase federal revenues and to discourage the use of these products? 3-5 Reasons for yes 3-5 Reasons for no

8 volunteers to debate this issue??

Text Book Page 174 – Ethical Issues Ethics & Internet Advertising

Answer ?’s 2 & 3 Check if done Review in class

Information Information Liability

Responsibility for physical or economic injury arising from incorrect or wrongful use of data

Similar to product liability

Information Electronic Communications Privacy Act Crime to view, use, or change data (unauthorized)

E-mail privacy

Information Cookies

Files of info about web sites visited

Stored on own computer Track interests & preferences for marketing

Invasion of privacy???

State & Local Regs

Interstate Commerce Operations & transactions that cross state lines

Intrastate Commerce Business transacted w/in state

Large businesses Subject to fed, state & local laws

Limits & controls certain types of businesses Inspections

Dirty restaurant inspected – loses license

Licensing

Public Franchise Contract permits use of public property for private profit Taxi service, cable TV

Bld. Codes & Zoning

Building Codes Local gvt. Control physical features of structures

Height, sq. ft., type of materials

Zoning What areas used for

Homes or businesses

Taxes Used to fund new & on-going programs

Regulate business activity Economic growth by lowering taxes

High taxes on alcohol & tobacco Discourage use

Proportional Tax Flat Tax

Rate remains same regardless of cost of item

Real estate taxState income tax of 6%

Progressive Tax Based on ability to pay

Federal income tax Income up, taxes increase

Combined proprtl. & prgrssv. Flat tax of 5% on incomes up to $20,000; 6% on incomes over $20,000

Regressive Tax Actual tax rate decreases as taxable amount increases Sales tax!

Lower income pays a larger proportion of income in taxes

Applies to purchases instead of income

PA – no sales tax on food/clothing

Income Tax Tax on profits of business

Net profit Earnings of individuals

Based on salary & other income after deductions

Income tax is largest revenue source for Fed. Gvt.

Sales Tax Tax on retail price of goods/services when sold Retailers collect

Excise tax Applies to selected items, higher or additional rate

Cigarettes & gasoline

Sales Tax Main source of most states revenue

Internet sales tax Yes or no???

Property Tax Tax - material goods owned Main revenue of local gvts.

Real Property Real estate – land & bldgs.

Personal Property Movable possessions

Furniture, equipment

Property Tax Assessed valuation

Value of property per tax official

Tax rate of $2.80 per $100 of property with:

Assessed valuation of $180,000 = $5,040 tax bill

Taxes-Business Decisions

Determine accounting method

How to pay management Where to locate new business

Move existing business

Taxes Evaluation Answer the following questions in

your own words. 1. Explain the differences between proportional,

progressive & regressive taxes and provide examples of each.

2. Explain property tax, what qualifies and how is it determined?

3. Why are taxes an important issue in starting a business?

Text Book Group work – 3-4 students Pages 187-190

Case 7-1 - ?’s 1-3 Case 7-2 - ?’s 1-4

Check if doneReview in class

Work Book Pgs. 57-58 – Study Guide

Turn in Pgs. 60-63

Don’t do 7-D #4, 7-F & 7-HCheck if doneReview in class

Test Unit 2 – next class meeting

Chapters 5-6-7

End of Chapter 7