Types of Businesses ProjectBy:Mihail NakoffNiamh RadfordZoie RobertsKianna WatsonHunter Hodges

Chapter 8 Section 3STANDARDSCTE (ECN) 3.0 students will analyze the role of business in a free enterprise systemCTE (ECN)3.1 connect concepts as they apply to the role of business in a free enterprise systemCTE (ECN)3.2 analyze the types of business organizationsCTE (ECN)3.4 analyze the effects of competition and monopoly on a free enterprise systemCTE (ECN)3.8 Explain the phenomena in terms of the law of supply and demandCTE (ECN) 3.9 formulate and analyze knowledge/understanding of elasticity of demand

OBJECTIVES1. Be able to understand

the advantages and disadvantages of an Incorporation.

2. Identify the types of business organizations.

3. Have a knowledge of Elastic and Inelastic Demand.

Unit 1: Intro to Econ

Set up your Notes. Write your EQ!

Key Terms• Free enterprise: the economics system characterized

by private or corporate ownership of capital goods• Elasticity: refers to the degree of responsiveness in

supply or demand in relation to changes in price.• Elastic: it describes demands that is very sensitive to a

change in price.• Elasticity of demand a measure of how consumers

respond to price changes• Certificate of incorporation: license to form a

corporation issued by a state government• Dividend: the portion of corporate profits paid out to

stock-holders

Take Notes!

Key Terms• conglomerate: a business combination merging more

than three businesses that produce unrelated products or services • Horizontal merger: a combination of two or more

firms competing in the same market with the same good or service• Limited liability corporation: a type of business with

limited liability with the owner from not paying corporate income tax

Take Notes!

Advantages of Incorporation• Limited liability for owners• Transferable ownership• Ability to attract capital and long life

• Primary reason entrepreneurs choose to form corporations is to gain the benefit of limited liability• Corporations usually provide owners with more

flexibilities than other forms of ownership- Shares of stock are easily transferable; stock holders can easily sell to others and get money back in return

Take Notes!

Continued..Advantages for the Corporation• They have more potential for growth than other

business forms - By selling shares on the stock market raise large amounts of capital• Corporations can also raise money by borrowing it, this

happens by selling bonds.- Bonds are formal contracts issued by corporations or

other entities that promise to repay the borrowed money with interest at fixed intervals• Corporations also have the adv. Of long life meaning

because the stock is transferable, corps are able to exist longer than simple proprietorships or even partnerships

Take Notes!

Disadvantages of Incorporation• Difficulty of start up

• Double taxation• Potential loss of control• More regulation

Take Notes!

Corporations

• A corporation is a legal entity owned by individual stock holders.• Stockholders own stock, which is a

certificate of ownership of a fraction of the corporation.• Stockholders have limited liability because

the corporations identity is separate from its owner.

Take Notes!

Corporations In the USA

• 20% of businesses are corporations• 80% of sales are from corporations• 60% net income is generated by

corporations

Take Notes!

Types of corporations

• Closely held corporations: corporations that issue stock to only a few people often family members.• Publicly held corporations: corporations

that sell stocks on the open market

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Corporate structure

• Stockholders elect a board of directors to make decisions for the corporation.• The board of directors appoints officers to

run the corporation.• The officers hire managers and employees

to work in finance, sales, research, marketing, and production.

Take Notes!

Corporate Combinations

• Horizontal mergers• Joining two or more companies of the same

type • Horizontal mergers increase the size and

stability of the corporation while eliminating competition.

Take Notes!

Corporate Combinations

• Vertical mergers• Combine companies involved in different

stages of production of the same product.• Vertical mergers make the corporation

more efficient and eliminates some costs• Vertical mergers do not decrease

competition.

Corporate Combinations

• Conglomerates• Joining three or more unrelated

corporations• Increases stability • Does not decrease competition

Take Notes!

Multinational corporations

•Multinational corporations are corporations that sell goods and services in multiple countries• Advantages: provide jobs and products

around the world often raising the standard of living in poorer countries• Disadvantages: influence the culture and

polotics of the countries they operate in.

Take Notes!

Nike

Products and Services• Shoes

• Clothes

• Gear

• Accessories

Take Notes!

Nike

• They control the demand

• Make money every year

• The supply is high.

Take Notes!

Supply and Demand

Nike

• Under Armor

• Adidas

• Wilson

• Easton

Take Notes!

Competitors