WAYS TO ORGANIZE A BUSINESS

• Types of Businesses

• SOLE PROPRIETORSHIPS

• PARTNERSHIPS

• CORPORATIONS

• PERCENTAGE OF FIRMS

75%

8%

18%

PERCENTAGE OF SALES

• SOLE PROPRIETORSHIPS

• PARTNERSHIPS

• CORPORATIONS

• 6%

• 4%

• 90%

Sole Proprietorships

• Advantages• Easy to form• Keep all the profit• Own boss• Pride of ownership

• Disadvantages • Unlimited liability• Limited life• Bear all the costs• Limited growth

potential

Partnerships

• Advantages • Access to more

financial capital• Specialization • Share costs• Share the work

• Disadvantages • Limited life• Unlimited liability (not

always)• Disagreements • Different goals• Share profits

Corporations

• Advantages • Access to lots of

capital• Limited liability• Unlimited life• Money earning

money

• Disadvantages • Double taxation• No sense of

ownership• Management is

separate from ownership

Corporation

• The house the Marlboro Man built, Altria Group (formerly Philip Morris Companies), is the world's largest tobacco firm. Altria operates its cigarette business through subsidiaries Philip Morris USA and Philip Morris International, which sell Marlboro -- the world's best-selling cigarette brand since 1972. The company controls about half of the US tobacco market. However, tobacco is only part of its portfolio. It owns 85% of Kraft Foods, the world's #2 food company (after Nestlé), which makes Jell-O, Kool-Aid, Maxwell House, Oscar Mayer, and Post. The tobacco giant bought Nabisco in late 2000, folding it into Kraft. Altria owns 33.9% of SABMiller plc.

•

• FORTUNE 500 2007: Full List 1-100

• List of billionaires (2007) - Wikipedia, the free encyclopedia

Advantage or Disadvantage?Which Business Type?

• Limited Liability• Advantage of corporation• Easy to transfer ownership• Advantage of corp• Limited Life• Disadvantage of Sole and Part• Unlimited Liability• Disadvantage of Sole and Part• More difficult and costly to

organize• Disadvantage of Corp• Share expenses• Advantage of Part

• Easiest to organize• Advantage of Sole• Faced with double taxation• Disadvantage of Corp• Management is separate from

ownership • Advantage of Corp• Unlimited Life• Advantage of Corp• Potential loss of ownership by

the founders• Disadvantage of Corp

OTHER BUSINESS ORGANS(organizations)

• Businesses that provide a good or service without seeking a profit

• A business contract in which a company agrees to let another person establish an enterprise using its name

• Non-Profit Organization

• Franchise

• DQ Grill & Chill® Restaurant• Initial franchise fee is $35,000. (fees include

training program and opening and supportservices)

• Franchise fee for additional store development is$25,000

• Royalties are 4% of sales • Sales promotion fees 5% - 6% of sales • Franchise Agreement is 20 years • Basic requirements for new franchisees

– review of your background – review of work history – prior retail or foodservice

ownership or management experience

– a proposed management plan – financial resources necessary to

develop and operate the unit

• A business that is owned by the people who use its services

• A company that retains its corporate identity after being bought by another company

• Cooperative (co-op) ex. Credit union

• Subsidiary

•  YUM! Brands, Inc. operates as a quick service restaurant company. It develops, operates, franchises, and licenses a system of restaurants, which prepare, package, and sell various priced food items. The company operates various restaurant brands, including KFC, Pizza Hut, Taco Bell, Long John Silver's, and A&W All-American Food Restaurants. Its restaurants specialize in chicken, pizza, Mexican-style food, and quick-service seafood categories. As of December 31, 2006, it operated approximately 34,000 restaurants in 100 countries and territories. The company was founded in 1997. It was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in 2002. YUM! Brands, Inc. is headquartered in Louisville, Kentucky.

MERGER MANIA

• HORIZONTAL: 2 or more firms in the same market with the same good or service

• VERTICAL: 2 or more in different stages of producing the same good or service

• CONGLOMERATE: firms buy other companies that produce totally unrelated goods or services

EXAMPLES

• McDonalds buys Burger King

• McDonalds buys a horse farm

• Steel company buys an iron ore mine

• Steel company buys a shipping line

• Tobacco company buys a cereal company

• Cingular buys AT&T

• Horizontal

• Vertical (kidding)

• Vertical

• Vertical

• Conglomerate • Horizontal