Types of Business

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What is the difference between a invention and an innovation

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1

What is the difference between a invention and an innovation

An invention is an original idea or concept typically solving a problem, an innovation is an improvement to a previously invented product, like changing how it’s used.

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2

Patent

Gives the owner the sole right to make, use, or sell an invention for a set amount of time.

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Copyright

Give someone the exclusive right to publish, produce, sell, and distribute music art, works of literature, and software

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4

Licensing Agreement

When the inventor allows another business to use their invention for a fee, the inventor receives a royalty fee.

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5

Selling The Rights

The inventor sells and gives up complete control of their invention

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6

What is SWOT used for

Evaluating Ideas

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7

What does SWOT stand for

Strengths, Weaknesses, Opportunities, Threats

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8

Explain the basic characteristics of a sole proprietorship

Solely owned, Small Staff, Single person has lots of roles and responsibilities

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3 Advantages of Sole Proprietorship

Owner gets all profits Owner can try new things and make all decisions Very fulfilling, personal satisfaction

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3 Disadvantages of Sole Proprietorship

Unlimited liability Owner may not have expertise in all areas of business Financing may be difficult

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Limited Liability

Owner is personally responsible for all debt to creditors (eg. they can come after your assets)

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12

What are the basic characteristics of a partnership

Owned by two or more persons Generally formed in order to share expenses and expertise Written partnership agreement

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3 Advantages of Partnership

Share decision making, Shared ideas, Shared Responsibilities Easier to borrow money Possibility of more capital than sole proprietorship

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3 Disadvantages of Partnership

Limited capital may restrict the size Unlimited liability Sharing of profits Possibility of conflict

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15

Why do companies incorporate

Raise Funds (rather than get a loan which can put you in debt, and you have to pay back) Limited liability

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16

What do companies sell when they incorporate their business

Shares

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Characteristics of a corporation

A separate legal entityLimited Liability Not always big and can be private or public

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3 Advantages of a corporation

Shared decision making Shared responsibilities Can easily raise capital Limited liability

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3 Disadvantages of a corporation

Inability to give every customer personal attention Costly to startup Double taxation (taxes on profits and dividends/earnings)

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What is limited liability

Debts are limited to company assets (eg. they can't come after your house)

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What is a charter

A collection of documents that is created when a business is incorporated that outlines the rules and regulations by which a corporation is to be governed

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22

Proxy

A shareholder giving their right to vote to another shareholder when they don’t want to vote

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Shareholders

Have the right to vote on company decisions, elect the board of directors, receive a percentage of companies profits.

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24

What is a Board of Directors? What are their major responsibilities

A board of directors is elected by shareholders and directs the overall affair of the company, and appoints executive officers.

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Who is the Executive

The executive officers are CEO CFO COO, or in smaller companies Presidents, VP's and Directors

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Who makes one up and what are their major responsibilities

The board of directors appoint them and they decide company objectives, responsible for running areas of the organization

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27

How does a cooperative work

Business owned and operated by a group of people with a strong common interest One member one vote Each member receives their “wage” in the form of a patronage refund Purpose is service not profit

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3 Cooperative Advantages

Member help run the business Lowered risk level Limited liability

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3 Cooperative Disadvantages

Members will have same amount of control Difficult to make decisions Commitment will vary leading to resentment

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Patronage Refund

A sort of credit to purchase something from a cooperative that you receive after making a contribution that you can use to purchase something from the cooperative.

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31

What is a franchise? Who is a franchisor? A franchisee?

A franchise is sold by a franchisor to another person a franchisee that essentially sells the rights to use the business name and sell products and services in a given area

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What is drawn up when a franchisee purchases a franchise

A franchise agreement

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3 Advantages of a franchise

Personal ownership Proven track record and recognition Location choice

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3 Disadvantages of a franchise

Expensive to buy Pay ongoing royalty fees Many rules and regulations

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35

Who are the owners of a crown corporation

Government Federal/provincial/municipal shareholders

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3 Examples of Crown Corporation

Canada Post Bank of Canada CBC

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Why are crown corporations established

To create essential services for the people of their countries To ensure there are no monopolies and ensure competition

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What is the difference between a public corporation and a private corporation

Public has lots of shareholders and is open to the public Private only has up to 50 shareholders and the owner typically owns majority

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Assets

Anything a business or person owns of dollar value

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Collateral

Assets that borrower offers the lender, as a guarantee eg. property for repayment of loan

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Share

A unit of ownership in a corporation

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Dividends

A part of a corporation's profit shareholders receive

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3 Arguments for CSR

Customers want the businesses to be socially responsible (more sales) Allows a stronger labour force because best people want to work for best countries Customer Loyalty companies with a reputation for being socially responsible gain a larger share of the consumer market

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3 Arguments against CSR

Dilutes business purpose Initial Cost of developing these programs Lack of public accountability

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5 CSR Principles

Work Environment Donating to Charity Truthful Advertising Protect the Environment Fair Labour Policies

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46

5 Benefits to Business who embrace international trade

Access to Markets Access to Resources Increased Quality of Goods Increased Quantity of Goods Cheaper Labour

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5 P's of International Trade to consumers

Product: International business allow us greater variety and allow us to access things we cant access where we live (citrus fruits) Price: The cost of producing goods vary from country to country, lower production costs = lower prices Proximity: Sometime it will cost less for shipping something if you live close to the border than shipping it from the other side of your country Preference: Some countries are known to produce the best of certain goodsPromotion: The ease of promotion gives incentive to companies to reach beyond their domestic market for customers

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48

Define balance of trade? What is the difference between a trade deficit and trade surplus? How do you calculate it?

Balance of trade is when exports and imports are equal, to calculate exports - imports a trade deficit is when there are more imports than exports, and a surplus is vice versa

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49

Why do countries implement protectionist policies

To protect domestic industries from unfair competition

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Embargo

When a country ends trade with another country due to political and social protest (non tariff barrier)

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Prohibited/restricted good

The prohibition of the entry of certain items into the country (non tariff barriers)

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Quota

The prohibition of the entry of certain items into the country (non tariff barriers)

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53

Tariff

The percentage of the product price which is to be charged as a duty this is so the prices aren't to low for domestic markets to compete with

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Unlimited Liability

The business owners are fully legal responsible for all business debts, meaning in the case of bankruptcy the bank can go after your assets

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Limited Liability

Means that owners aren’t personally liable of debts to the business (the bank cannot go after personal assets)

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56

G7

The world’s most powerful industrialized democracies

  • Canada

  • United States of America

  • Japan

  • Britain

  • France

  • Germany

  • Italy

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57

NAFTA/USMCA

North American Fair Trade Agreement (NAFTA)/United States Mexico Canada Agreement (USMCA): Applies to goods and services that are made in of of the tree countries; all custom duties remain on goods manufactured anywhere else

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WTO

World Trade Organization, deals with the global rules of trader between nations, made up of 159 countries

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59

Joint Venture

A new legal entity/businesses is formed between two or more businesses, both share control, and everything else

A + B → JV

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Strategic Alliance

An agreement between two or more companies to pursue mutual goals while remaining independent

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Merger

A combination of two or more companies into one larger company A B → AB

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Acquisition

One company purchasing another A B → A

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Offshoring

The relocation of a company’s operations to another country

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Outsourcing

The practice of subcontracting work to other companies

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Multinational Corporation

A business that conducts business in several different countries

  • They operate as if there are no borders

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Why do companies sell shares in their business

To raise funds without borrowing from financial institutions. This helps them expand and  develop new products

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67

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