sole proprietorship
a business owned by one person
pros: easy to start and end, keep all profits
cons: unlimited liability, responsible for all debts
partnership
Owned by 2 or more partners that share costs and responsibilities
General partnership: actively involved, mutual agency
Limited partnership: silent partner, investor, limited liability
Pros: shared responsibilities/ debts, greater financial resources
Cons: unlimited liability, mutual agency (you can be legally binded to your partner)
Franchise
Licensing a businesses name, operating procedures, designs, etc to another person
Pros: training/help to set up given, good reputation
Con: expensive, decision making is limited
Corporation
A business with 1 or more owners with limited liability and has been granted legal status. shares/stock may be owned by shareholders
Pros: limited liability, lower tax rate
Cons: value of shares may change due to external factors, complicated and costly to start up
Co-operative
Owned and operated by its customers and workers, each person has an equal share/vote
Pros: shared costs/risks, equal control over business
Cons: mutual agency, majority rule over decision making
what are the four business types?
retail, not for profit, service, manufacturing
retail
Selling things for profit. Ex: walmart
not for profit
Exists to meet the needs of the community. Ex: hobby groups, social groups
service
Doing an activity for profit. Ex: massage spas
manufacturing
making products out of raw materials to sell to retailers
what are the three business categories?
non-profit, for profit, not for profit
non-profit
Meant to help others, mainly government related. Ex: school, public healthcare, charities
Still make profit but its not their ultimate goal
for profit
most businesses. ex: walmart
making money is the goal
not for profit
still make money but that is not its purpose. ex: charities
goods
a physically tangible item that is sold for profit
services
an intangible thing that is sold for profit. ex: massage services
profit
money left over after all business expenses are paid
profit = revenue - expenses
consumer
the person that buys the goods/services offered by a company
what is maslows hierarchy?
a theory developed to explain the motivations and behaviors of consumers
unlimited liability
the law does not differentiate between the business and its owner so it is fully legally responsible for the businesses actions
if someone were to sue the business they can come after the owner and their assets
limited liability
the business and its owners are legally separate
if a person were to sue the business they cannot go after the owners assets
silent partner
they are not involved in running the business, they are mainly just investors. they have limited liability
economics
the study of human decisions (production, distributions, consumption, etc) in using scarce resources to satisfy unlimited wants
corporate social responsibility
How companies integrate social, environmental, and economic issues into their business in their transparent and accountable way
Compliance: acting to avoid repercussions
Conviction: acting because they want to make a positive impact
what are the four drivers of CSR?
Economic responsibility - be profitable
Legal responsibility - obey the law
Ethical responsibility - do what's right
Discretionary responsibility - contribute to community
ethics
external rules that help us differentiate between right and wrong
morals
internal rules/opinions on what is right and wrong
fraud
lying with the intent of person or financial gain. there are many types of fraud, ex: consumer fraud, businesses trick consumers into buying goods through unethical ads
production process
purchasing - buying raw materials needs to create the good/service
processing - converting the raw materials into the product
quality control - checking that all products are up to standard
grading - giving the product a quality score
parent company
a company that owns another company
subsidiary
a company another company owns
flagship store
a very important sore for the company typically has a high volume of customers and has the newest products
production
when a person or business creates a product, service, or idea
capital
money, assets, or investments (stock, buildings, machinery)
all businesses need this to run
economic resources
the things that allow businesses to create goods/services
3 types:
natural: materials that come from nature (oxygen, agriculture)
human resources: the people involved in the creation of goods/services (ex: nurses, construction workers)
capital resources: money, assets, investments (buildings, machinery)
scarcity
the limited supply of something
the foundation of economic activity, there are a limited number of resources that need to meet unlimited wants
opportunity cost
the benefit of doing one thing over another
ex: if you decide to do homework instead of watching TV the opportunity cost of homework is the lost enjoyment of watching TV
command economy
all production and sales of goods and services is owned and ran by the government
market economy
all production and sale of goods and services is determined by the producers and consumers
mixed economy
having characteristics of both (canada is a mixed economy)
law of demand
as price increases, demand decreases
law of supply
as price increases, supply increases
what are the six principles of CSR
maslows levels
physiological needs - water, food
security needs - safety
belongingness and love needs - family, community
esteem needs - prestige
self-actualization - reaching full potential in all areas of life