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Types of Business Organizations

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Producer
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maker of good or provider of services
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Business Organizations
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commercial or industrial enterprises and the people who work in them
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Sole Proprietorships
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business organizations owned and controlled by one single person
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Limited Life
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situation where a business closes if the owner dies, retires, or leaves for some other reason
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Unlimited Liability
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business owner is responsible for all the business losses and debts
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Advantages of Sole Proprietorships
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1. Easy to open or close 2. Few Regulations 3. Freedom and control 4. Owner keeps all profits
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Disadvantages of Sole Proprietorships
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1. Limited Funds 2. Limited Life 3. Unlimited Liability
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Partnership
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Business co-owned by two or more people or “partners” who agree on how responsibilities, profits, and losses will be divided.
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General Partnership
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A partnership in which partners share responsibility for managing the business and each one is liable for all business debits and losses
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Limited Partnership
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partnership in which at least one partner is not involved in the day-to-day running of business and is liable only for the funds he/she has invested.
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Limited Liability Partnership
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Partnership in which all partners are limited partners and not responsible for the debts and other liabilities of other partners.
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5 Advantages of Partnership
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1. Easy to open and close 2. Few regulations 3. Greater access to resources 4. Partner to share in decision making and work 5. Specialization- Partner may bring complementary skills to the business
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3 Disadvantages of Partnership
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1. Unlimited liability 2. Potential for conflict with partner 3. Limited life
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Corporation
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a business owned by individuals, called shareholders or stockholders
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Stock
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shares or ownership in the corporation.
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Dividend
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part of the profit that the company pays out to stockholders
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Public Company
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a corporation that issues stock that can be freely bought and sold
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Private Company
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one that retains control over who can buy or sell the stock
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Bond
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a contract the corporation issues that promises to repay borrowed money , plus interested, on a fixed schedule.
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Limited Liability
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the business owner’s liability for business debts and losses is limited.
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Unlimited Life
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they continue to exist even after a change in ownership
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4 Advantages of Corporations
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1. Greater access to funds 2. Business run by professional managers 3. Limited liability 4. Unlimited life
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4 Disadvantages of Corporations
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1. Difficult to start up. 2. More Regulations. 3. Double Taxation. 4. Owners may have less control of running the business.
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Horizontal Merger
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Describes the joining of companies that offer the same or similar products or services
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Vertical Merger
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describes the combining of companies involved in different steps of production or marketing of a good or service
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Conglomerate
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results from a merger of companies that produce unrelated goods or services
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Multinational Corporation
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a large corporation with branches in several countries
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Franchise
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A business that licenses the right to sell its products in a particular area.
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Franchisee
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A semi-independent business that buys the right to run a franchise.
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4 Advantages of Franchises
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1. A level of independence that comes from running your own business. 2. The franchiser provides training and support in running the business. 3. Selling a known product, where the franchiser provides your materials. 4. Benefit from national and regional advertising from the franchiser that will bring in customers.
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3 Disadvantages of Franchises
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1. You must invest your own money and risk loosing it if your business fails. 2. You must share a percentage of your profits with the franchiser. 3. You do not have total control over all aspects of your business.
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Cooperative
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A type of business operated for the shared benefit of the owners, who are also its customers.
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Consumer Co-ops
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Can be small organizations, require some kind of membership payment, either in the form of labor or monetary fees. They keep prices low by purchasing goods in a large volumes at a discount price.
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Service Co-ops
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business organization, such as credit unions, that offer their members a service.
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Credit Unions
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member-owned financial cooperative, democratically controlled by its members, and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members. Many credit unions also provide services intended to support community development or sustainable international development on a local level.
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Producer Co-ops
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Businesses mainly owned and operated by the producers of agricultural products that join together to ensure cheaper, more efficient processing or better marketing of their products.
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Nonprofit Organization
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is a business that aims to benefit society,not to make a profit.