Chapter 2 Business

What are the different forms of business ownership

Sole Proprietorship, Partnership, Corporation, Co-operative, Franchise

Sole Proprietorship (Features, Advantages and Disadvantages)

Owned by One Person

Features
- one owner

Advantages
- be your own boss
- easy to start and end
- profits to the owner

Disadvantages
- unlimited liability
- financing may be difficult
- owner may not be familiar with all aspects of business

Partnership (Features, Advantages and Disadvantages)

Usually owned by 2 or more partners

Features
- two or more owners
- written partnership agreement

Advantages
- more capital and financing
- shared responsibilities

Disadvantages
- unlimited liability in general
- partnerships and partner disagreements

Corporation (Features, Advantages and Disadvantages)

is an artificial business "person" created by the law and is owned by shareholders

Features
- many shareholders
- one vote per share
- board of directors

Advantages
- limited liability
- transfer of ownership is simple

Disadvantages
- timely and costly startup
- people who own only a few shares don’t have a lot of influence on how the company is run

Co-operative (Features, Advantages and Disadvantages)

Owned by its workers, or members that buy from the business

Features
- owned by members
- each member has only one vote regardless of the number of shares
- board of directors

Advantages
- less expensive
- goods/services easily set up

Disadvantages
- decision-making process could be difficult

Franchise (Features, Advantages and Disadvantages)

one business licenses another to use its name, operating procedure, and so on

- as a hybrid, can have any form of ownership

Features
- a hybrid type of ownership

Advantages
- brand recognition
- shared marketing
- corporate training and support

Disadvantages
- franchise fee
- monthly fee
- a requirement to buy from a franchiser

What are some key reasons that people choose to start their own business?

- They can be the ones responsible for making final business decisions.

- Many people go into business to achieve financial independence.

- Having your own business gives you the opportunity to use your skills and knowledge and to be creative.

What different types of businesses are there?

Service Business, Not-for-profit Organizations, Retail Business, Manufacturing Business

Service Business

• generates a profit by doing something for other businesses or consumers

examples include carpet cleaners, cable companies, restaurants, and theatres

Not-for-profit Organizations

• different from other types because the organization does not generate a profit, the purpose is to meet specific needs of the community

examples include charities and housing co-operatives

Retail Business

• generates a profit by selling things

• usually buys items from a producer and sells them to a consumer , sometimes referred to as distributors

examples include most stores and catalogue companies

Manufacturing Business

• generates a profit by producing products from raw materials or component parts and then selling them to consumers or distributors

examples include car and appliance manufacturers

What are some risks that a new business might face?

• dissatisfied customers may not pay you
• business partner may make deals that are unacceptable to you
• an employee may not do the job properly
• supplier might be late delivering orders

What are the six different international business structures?

Joint Ventures, International Franchises, Strategic Alliances, Mergers, Offshoring, Multinational Corporations

Joint Ventures

A joint venture can match the skills and
the expertise of two different individuals or
businesses to generate more benefits for
both parties.

Ex) Google and NASA developing Google
Earth

International Franchises

An international franchise is a way to
achieve an international presence by
buying the rights to

Ex) Boston Pizza

Strategic Alliances

Strategic alliances occur when two or more businesses agree to commit particular resources to achieve a common set of objectives. Alliance partners remain separate and entirely independent of each
other.

Ex) Chapters Indigo and Starbucks

Mergers

Mergers happen when two or more companies join together: one of the businesses usually wants to purchase a controlling interest in the other company, or both business have combined interests.

Ex) Toronto Dominion and Canada Trust

Offshoring

relocates some of a company’s operations to another country. Usually, this happens to take advantage of lower labour costs, to
be closer to large and emerging buyer markets, and have access to skilled workforces.

Ex) Microsoft, IBM

Multinational Corporations

A business enterprise that conducts business in another country or
several different countries is a multinational corporation. A multinational corporation offers different benefits to the country it invests in.

Some positive benefits include new jobs and training for people.
Negative consequences could be less pay and more financial instability
for citizens of that country.

Ex) Coca-Cola, Apple

What are some costs associated with starting a business

Capital resources to run a business are available through debt financing referred to as borrowing money to run the business.

Using your savings or investor savings called
equity financing is an alternative way to fund a business.

Eight Questions to Ask Before Going into Business

Why Start Your Own Business?

What Different Types of Businesses Are There?

What Are Your Skills and Interests?

Where Can You Find Information About a Business?

What Are the Start-up Costs?

What Level of Risk Can You Expect?

What Steps Are Involved in Running This Business?

What Resources Will You Need?