Transcript types of businesses - Public Schools of Robeson County

TYPES OF BUSINESSES
BUSINESSES ARE STRUCTURED IN
THREE BASIC WAYS TO EARN A PROFIT
NON PROFIT ORGANIZATIONS TOO
Chapter 22 Business and Labor
PROPRIETORSHIP
BUSINESS OWNED & OPERATED BY
A SINGLE PERSON
– MOST COMMON TYPE
Beauty salons, cleaners, pizza restaurants
– 72% of businesses are proprietorship
graph page 601
– Relatively simple-can you earn money
mowing lawns?
Advantages v Disadvantages
Advantages
– Ease of starting &
going out of
business
– Control over profits
& business
operations
– Pride of ownership
– Lower taxes (no
Corporate taxes)
Disadvantages
– Unlimited liability
– Difficulty in raising
funds or financial
capital
– Responsible for all
losses
– Management
knowledge may be
limited
Partnership
Business owned by two or more
individuals
Structure more difficult
Two kinds of partnership
– General partnership – all partners are
responsible for management and financial
obligations
– Limited partnership – one partner is not active
in running daily operations
– Article of Partnership: legal agreement
specifying how much money each of you will
contribute and what role each partner will play
in the business
Advantages and Disadvantages
Advantages
– Easier to raise
financial capital or
funds
– Partners may
combine managerial
skills
– Personal
satisfaction
– Lower taxes
Disadvantages
– Unlimited liability
– Shared profits
– Possible conflicts
with partners
– Possible instability
after death of
partner
Corporations
A business owned by stockholders
and has rights and responsibilities as
if it were a person or one entity
– It can be sued
– It can sue
– It pays taxes
Corporations structure
Apply for state or federal charter to
open as corporations
Sell stock to raise money
– Different types of stock
Common/Preferred/Corporate Bonds
Stockholders own stock and help
make decisions about who will run
the business: board of directors and
CEO through their proxy
Advantages and Disadvantages
Advantages
– Limited liability
– Greater financial
capital
– Unlimited life
– Specialized
management
Disadvantages
– Increased taxation
– Corporate taxes on
profits
– Difficulty in starting
each state has its own
rules for a corporate
charter
– May be larger, more
bureaucratic than other
forms of businesses
– Increased government
regulation and control
Other business organization
Non profit organizations like charities
Cooperatives: Pee Dee Electric: a
voluntary association of people
formed to carry on an economic
activity that benefits its members.
LABOR UNIONS
WORKERS BAN TOGETHER
TO:
1. BETTER PAY/BENEFITS
2. BETTER WORKING
CONDITIONS
3. 14% OF WORKERS ARE
UNION MEMBERS
TYPES OF UNIONS
CRAFT/TRADE UNIONS
– WORKERS PREFORM THE SAME SKILL
PLUMBERS UNION; PRINTERS UNION
INDUSTRIAL UNIONS
– DIFFERENT TYPES OF WORKERS FROM THE
SAME INDUSTRY
AUTO WORKERS UNION; TEAMSTERS
– LOCAL UNIONS – factories, companies
– NATIONAL UNIONS – example American
Federation of Labor-Congress of Industrial
Organizations
– INTERNATIONAL UNIONS THESE CAN BE
EITHER CRAFT OR INDUSTRIAL (Mexico,
Canada)
UNION ARRANGEMENTS
CLOSED SHOP:
– FIRST JOIN UNION TO BE HIRED
UNION SHOP:
– HIRE THEN JOIN UNION SHORT AFTER
RIGHT-TO-WORK LAW: N.C. & 21 other states
– PREVENT MANDATORY UNION MEMBERSHIP REQUIRED
BY THE UNION SHOP
MODIFIED UNION SHOP:
– DOES NOT REQUIRE UNION MEMBERSHIP TO BE HIRED
OR TO KEEP JOB, BUT UNION MEMBERS MUST REMAIN
IF THE DECIDE TO JOIN
AGENCY SHOP:
– WORKERS REQUIRED TO PAY FEE TO UNION TO
REPRESENT THEM
NEGOTIATIONS
COLLECTIVE BARGAINING:
– PROCESS BY WHICH UNIONS & BUSINESSES
WORK OUT TERMS FOR EMPLOYMENT FOR ALL
WORKERS
WAGES, BENEFITS, HEALTH CARE, HOLIDAYS,
WORKING CONDITIONS, CHANGING RULES
GETTING OUTSIDE HELP– MEDIATION:
THIRD PARTY TO HELP REACH COMPROMISE
– ARBITRATION:
THIRD PARTY TO MAKE DECISION AFTER HEARING
BOTH SIDES
LABOR – MANAGEMENT CONFLICT
STRIKE:
– ALL WORKERS IN A UNION REFUSE TO GO TO
WORK
LOCKOUT:
– CLOSE AND LOCK DOORS UNTIL WORKERS
ACCEPT THE BUSINESS’ CONTRACT
BLACK LISTING:
– PLACE NAME ON LIST & PASS TO OTHER
BUSINESSES OF WORKERS THAT CAUSE
PROBLEMS
BOYCOTT:
– REFUSE TO BUY THE BUSINESS’S PRODUCTS
BUSINESSES IN OUR
ECONOMY
ROLES OF BUSINESSES
ACT AS:
– CONSUMERS
–BUY GOODS AND SERVICES FROM OTHER
BUSINESSES
– EMPLOYERS
–PROVIDE JOBS FOR WORKERS (WAGES)
– PRODUCERS
–GOOD OR SERVICES – FOOD, CLOTHING,
SHELTER, CARS, MOVIES, APPLIANCES
RESPONSIBILITIES:
DIFFERENT RESPONSIBILITIES TO
DIFFERENT GROUPS AND SOME ARE
SPELLED OUT BY LAW
– TO CONSUMERS: SAFE AND WORKING
PRODUCTS, HONEST ADVERTISING, FAIR TO ALL
– TO OWNERS: TRANSPARENCY – PROCESS OF
PUBLISHING FINANICAL INFORMATION
– EMPLOYEES: SAFE WORKING CONDITIONS,
TREAT FAIRLY WITHOUT DISCRIMINATION
– COMMUNITY: SOCIAL RESPONSIBILITY- PURSUE
GOALS THAT BENEFIT SOCIETY AS WELL AS
THEMSELVES
EXAMPLE: GIFTS TO CHARITIES
ROLE OF GOVERNMENT
GOVERNMENT PLAYS
SEVERAL ROLES IN OUR
ECONOMY
Chapter 23 Government and the Economy
ROLES:
PROVIDING GOODS & SERVICES
THAT PRIVATE BUSINESSES DO NOT
PROVIDE
DEAL WITH EXTERNALITIES
– The unintended side effect of an action
that affects someone not involved in the
action (positive and negative)
MAINTAIN COMPETITION
REGULATE MARKET ACTIVITIES
PROVIDING PUBLIC GOODS &
SERVICES
PRIVATE GOODS
PRODUCED BY PRIVATE
SECTOR
GOODS/SERVICES THAT
WHEN CONSUMED BY ONE
INDIVIDUAL CANNOT BE
CONSUMED BY ANOTHER
EXCLUSIONARY RULE
EXAMPLES
– INSURANCE, HAIRCUTS,
MEDICAL SERVICES, AUTO
CARE, TELEPHONE SERVICES
PUBLIC GOODS
PRODUCED BY
GOVERNMENT
GOODS/SERVICES THAT
CAN BE CONSUMED BY
ONE PERSON WITHOUT
PREVENTING THE
CONSUMPTION OF THE
GOOD BY OTHERS
NON EXCLUSIONARY RULE
EXAMPLES
– PUBLIC PARKS, PUBLIC
LIBRARIES, MUSEUMS,
HIGHWAYS, STREET
LIGHTING
DEALING WITH
EXTERNALITIES
UNINTENDED SIDE EFFECTS OF AN
ACTION THAT AFFECTS SOMEONE
NOT DIRECTLY INVOLVED IN THE
ACTION
– Positive
– negative
TYPES OF EXTERNALITIES
POSITIVE
EVERYONE BENEFITS
NASA’S NEED FOR
SMALL COMPUTER
EXTERNALITY: WE
NOW HAVE SMALL
PERSONAL
COMPUTERS AND
OTHER SMALL
ELECTRONICS
NEGATIVE
CHEMICAL COMPANY
DUMPS WASTE TO
KEEP COST DOWN
PEOPLE GET CANCER
ROLE OF THE
GOVERNMENT TO
PREVENT THESE AND
OTHER KINDS OF
NEGATIVE
EXTERNATILIES.
MAINTAINING COMPETITION
MONOPOLY: SOLE PROVIDER OF A
GOOD OR SERVICE
– MARKET CONTROLLED BY THE
MONOPOLITIC COMPANY
NO COMPETITION
– COMPANY CAN CHARGE ANY PRICE IT WANTS
– QUALITY MAY BECOME SHODDY
– BECAUSE YOU HAVE TO BUY IT NO OTHER
OPTIONS
GOVERNMENTS JOB TO
PREVENT MONOPOLIES
ENACTS ANTITRUST LEGISLATION
– SHERMAN ANTITRUST
LAW BANDED MONOPLIES AND OTHER FORMS OF
BUSINESS THAT PREVENTED COMPETITION
– DISPERSED STANDARD OIL IN 1911
– DISPERSED AT&T IN 1980S
– CLAYTON ACT
PROHIBITED OR LIMITED A NUMBER OF BUSINESS
PRACTICES THAT LESSNED COMPEITION
– FOR EXAMPLE:CHARGING HIGH PRICES IN AN
AREA WHERE LITTLE COMPETION EXISTED
HOW MONOPOLIES FORM
MERGERS ARE A COMBINATION OF TWO
OR MORE COMPANIES INTO ONE SINGLE
ONE
IF THIS THREATENS COMPETITION THE
GOVERNMENT WILL NOT ALLOW
JUSTICE DEPT. OR FEDERAL TRADE
COMMISSION WOULD STOP OR PREVENT
FROM MERGING
– VERTICLE MERGER
– HORIZONTAL MERGER
REGULATING MARKET
ACTIVITIES
GOVERNMENT WANTS TO REDUCE
NEGATIVE EXTERNALITIES SO THEY
REGULATE SOME ACTIVIITES
HEAVILY
– SAFETY OF PEOPLE
REGULATORY AGENCIES
CPSC –Consumer Product Safety Commission
EPA-Environmental Protection Agency
EEOC -Equal Employment Opportunity
Commission
FAA -Federal Aviation Administration
FCC –Federal Communications Commission
FERC -Federal Energy Regulatory Commission
FTC –Federal Trade Commission
FDA –Food and Drug Administration
NLRB –National Labor Relations Board
OSHA-Occupational Safety and Health
Administration
SEC -Securities and Exchange Commission
THREE AREAS OF
GOVERNMENT ATTENTION
NATURAL MONOPOLIES
– A MARKET SITUATION IN WHICH THE
COSTS OF PRODUCTIONS ARE
MINIMIZED OR LESSON BY HAVING
SINGLE FIRM PRODUCE THE PRODUCT.
ADVERTISING
PRODUCT SAFTEY
– RECALL
THE BUSINESS CYCLE
THE UPS AND DOWNS IN THE
ECONOMY IS THE BUSINESS
CYCLE.
THE GRAPHS ON PAGES 638, 640
& 642 ARE EXAMPLES
Foldable
On the inside include information
about each phase of the business
cycle.
Use pages 638-639 to help you
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Answers
4/7/2016
Expansion
-real GDP rising
-usually lasts longer than recessions
Peak
-Real GDP up
-Peak point-economy producing at full ability
-Unemployment rate down
Contraction
-economy slowing down
Trough
-when real GDP down for 6 straight
months.
-usually last for about a year
-unemployment
rate up
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PHASE 1: EXPANDING
PROSPERITY
MORE GOODS MADE
BUSINESSES HIRING
FACTORIES BUYING MORE AND
PRODUCING MORE AND SELLING
MORE
PHASE 2: PEAK
TOP OF PRODUCTION
BEST TIME
FULL EMPLOYMENT
LOW UNEMPLOYMENT
PHASE 3: CONTRACTION
DECLINING
SHRINKING ECONOMY
LESS GOODS PRODUCED
LAYING OFF OF WORKERS
PHASE 4: RECESSION
LOWEST POINT
LOW EMPLOYMENT
HIGH UNEMPLOYMENT
BUSINESS PRODUCING VERY LITTLE
BUSINESSES START TO CLOSE
DOWN
TWO CONSECUTIVE GDP DECLINING
QUARTERS DEFINED AS RECESSION
LONG RECESSION = DEPRESSION
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36
GOVERNMENT INTERVENTION
IN ECONOMY
FISCAL V MONETARY POLICY
FISCAL POLICY: ACTION TAKEN BY
THE U.S. LEGISLATURE TO HELP
SLOW OR SPEED UP THE ECONOMY
MONETARY POLICY: ACTION TAKEN
BY THE FEDS (NATION’S
REGULATING BANK) TO SLOW OR
SPEED UP THE ECONOMY
THE DIFFERENCE: SLOW
ECONOMY DOWN ACTIONS
FISCAL: TAXES OR
SPENDING MONEY
RAISE TAXES
DISCONTINUE
GOVRENMENT
SPENDING ON
VARIOUS
PROJECTS
MONETARY POLICY
– INCREASE
INTEREST RATE TO
COMMERCIAL
BANKS
– INCREASE AMOUNT
NEED IN RESERVES
FOR COMMERCIAL
BANKS
– GOV SELL BONDS
IN OPEN MARKET
OPERATIONS
THE DIFFERENCE: SPEED
ECONOMY UP
FISCAL POLICY
MONETARY POLICY
– LOWER TAXES
– SPEND MONEY
MONEY ON
GOVERNMENT
PROJECTS
– LOWER INTEREST
RATES
– LOWER THE FED
RESERVE RATE FOR
COMMERCIAL
BANKS
– GOV BUY BONDS IN
OPEN MARKET
OPERATIONS
MEASURING ECONOMIC
PERFORMANCE
THE GOVERNMENT DOES THIS BY
LOOKING AT SEVERAL INDICATORS
ABOUT THE ECONOMY:
– MOST IMPORTANT ONE IS GDP
– TOTAL OF ALL FINAL GOODS AND SERVICES
PRODUCE IN A COUNTRY IN ONE YEAR
– IF GDP DECREASES FROM ONE YR TO NEXT:
– IF GDP INCREASES FROM ONE YR TO NEXT:
MEASURING CONTINUED
THE SECOND INDICATOR THE
GOVERNMENT LOOKS AT IS
PERSONAL INCOME:
– THE TOTAL AMOUNT OF MONEY A
PERSON MAKES EACH YR
CONTINUED
THE THIRD INDICATOR THE
GOVERNMENT LOOKS AT IS
DISPOSABLE INCOME:
– THE MONEY PEOPLE HAVE TO SPEND
ON GOODS AND SERVICES
MEASURING ECONOMY HELPS
DEFINE THE STANDARD OF LIVING
KEEP A REGISTER ON INFLATION:
– THE GENERAL RISE IN PRICES OF MOST
GOODS AND SERVICES
TRIES TO PREVENT INFLATION TO HELP
KEEP STANDARD OF LIVING HIGHER
THROUGH FISCAL AND MONETARY
POLICY
Government Economy & you
The government becomes
involved to help keep equality
in tact in the USA.
1. Income inequality
 Why do some people make more money
than others?
 #1 reason education levels
 College grad twice as much as high school grad
 Fed government tries to get more to improve education
levels
 Free lunches, grants, low interest loans
 #2 reason wealth:
 Redistribution of wealth (taxes)
 #3 reason discrimination
 Women & minorities earn less then men
 Glass ceiling ideal
Government intervention
 Passed several laws to help sitution
 Equal Pay Act 1963
 Requires equal pay for jobs that require
equivalent skills and responsibilities
 Civil Rights Act 1964
 Bans discrimination on the basis of gender,
race, color, religion, and national origin
 Americans with Disabilities Act 1990
 Extended this protection to people with
physical and mental disabilities
Poverty
very bottom of income scale
 Government intervention
 Welfare programs:
 Food Stamps: USDA
 WIC
 Medicaid
 Income assistance programs
 SSI: Social Security
 TANF: Temporary Assistance to Needy Families (limited
time)
 Workforce programs
 Require recipient to work for pay
III. Taxation Policies
 Government help poor through
taxation
 Progressive taxes: tax that increases
with income
 Regressive taxes: tax that remains the
same
 Earned income tax credit EITC give tax
credits and often cash payments to
qualified workers (redistribution of
money in USA)