Intro to Business 7 e CHAPTER 5 Business

Intro to Business, 7 e CHAPTER 5 Business Organization 5 -1 5 -2 5 -3 Business in the U. S. Economy Forms of Business Ownership Organizational Structure for Businesses © 2009 South-Western, Cengage Learning SLIDE 1

Intro to Business, 7 e 5 -1 Business in the U. S. Economy Learning Targets: l Describe the changing status of U. S. employment. l Discuss the role of business in the U. S. economy. l Describe three major types of businesses. © 2009 South-Western, Cengage Learning SLIDE 2

THE CHANGING U. S. JOB MARKET Intro to Business, 7 e Chapter 5 l Employment data – Baby boomers (people born between 1946 -1964) have dominated the labor market. l They will continue to dominate until they reach retirement age (2010 -2019). l Average of U. S. workers in 2020 will be 50 l 20 -30 year old age group will grow fastest in 2010 -2020. l Other groups that will grow: Asian, Hispanic & African. American l Over last 50 years, most notable change in workforce has been women. © 2009 South-Western, Cengage Learning SLIDE 3

Intro to Business, 7 e Pressures on employees Chapter 5 l It was thought that technology would allow people to work fewer hours. l Economic stress has led to downsizing; requiring employees to work extra hours or work two jobs. l 7 of 10 parents felt they did not spend enough time with children/families. © 2009 South-Western, Cengage Learning SLIDE 4

BUSINESS AND THE ECONOMY Intro to Business, 7 e Chapter 5 l Size of businesses – most U. S. businesses are small l Roles of business – provide employment, pay taxes, distribute goods and services l Impact on a community – buys goods and services, employs local people, other businesses open © 2009 South-Western, Cengage Learning SLIDE 5

Intro to Business, 7 e Chapter 5 Source: U. S. Census Bureau Percent of Businesses by Employee Size © 2009 South-Western, Cengage Learning SLIDE 6

Intro to Business, 7 e BUSINESS ACTIVITIES Chapter 5 1. Generating ideas – remain competitive 2. Raising capital - buy buildings, materials, employ workers. Mostly obtained through loans and investments 3. Employing and training personnel – recruit, hire, train employees; pay wages and benefits 4. Buying goods and services 5. Marketing goods and services – activities directed at providing goods/services; without marketing, goods and services go unsold 6. Maintaining business records – management makes decisions based on financial records © 2009 South-Western, Cengage Learning SLIDE 7

Intro to Business, 7 e Chapter 5 TYPES OF BUSINESSES 1. Producers – create products/services; farmers, extractors 2. Intermediaries – sells goods/services made by the producers; Remke’s, Kohl’s 3. Service businesses – dentists, lawyers, painters, pet sitters, furniture movers, etc. © 2009 South-Western, Cengage Learning SLIDE 8

Intro to Business, 7 e 5 -2 Forms of Business Ownership Learning Targets: l Understand the three major forms of business ownership. l Determine when each form of business ownership is most appropriate. l Recognize other specialized business ownership forms. © 2009 South-Western, Cengage Learning SLIDE 9

Intro to Business, 7 e BUSINESS OWNERSHIP Chapter 5 1. Proprietorship – owned and run by one person. Easiest to start and end; few legal requirements. Control over all business decisions. If it fails, owner responsible. 2. Partnership – owned and controlled by 2 or more people. Share profits; partnership agreement; each partner is responsible. 3. Corporation – owned by shareholders; managed by board of directors; must meet legal requirements. © 2009 South-Western, Cengage Learning SLIDE 10

Intro to Business, 7 e Chapter 5 Source: Internal Revenue Service Forms of Ownership © 2009 South-Western, Cengage Learning SLIDE 11

Intro to Business, 7 e CHOOSING A FORM OF BUSINESS OWNERSHIP Chapter 5 l Choosing a proprietorship – freedom of working for self; total control; some formed from hobbies and can be part-time l Choosing a partnership – shared responsibilities; more people to invest; help with decisions l Choosing a corporation – must follow laws in state where they are; must file article of incorporation; more laws/regulations; liability is limited © 2009 South-Western, Cengage Learning SLIDE 12

OTHER FORMS OF OWNERSHIP Intro to Business, 7 e Chapter 5 l Specialized partnerships and corporations l limited liability partnership – you cannot lose more than what you invested l Joint venture l S corporation – all income is passed onto the owner’s l Non-profit organization l Cooperatives and franchises © 2009 South-Western, Cengage Learning SLIDE 13

Intro to Business, 7 e 5 -3 Organizational Structure for Businesses Learning Targets: l Understand important principles in designing an effective organization. l Compare alternative organizational structures for businesses. © 2009 South-Western, Cengage Learning SLIDE 14

DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION Intro to Business, 7 e Chapter 5 l Setting direction – needs to be well organized and have a clear purpose; comes from mission statement; l Principles of effective organization l Responsibility, authority, and accountability l Unity of command – clear reporting relationship l Span of control – number of employees who are assigned to a particular work task and manager © 2009 South-Western, Cengage Learning SLIDE 15

TYPES OF ORGANIZATIONAL STRUCTURES Intro to Business, 7 e Chapter 5 l Functional organization structure – arranged by department/job description l Matrix organizational structure – arranged by project or products © 2009 South-Western, Cengage Learning SLIDE 16

Intro to Business, 7 e Chapter 5 Business Organization Chart © 2009 South-Western, Cengage Learning SLIDE 17

Intro to Business, 7 e Problems with functional organizational structure: Chapter 5 l Employees in a functional organizational structure may tend to lose sight of overall corporate goals. l Workers tend to be limited to specific duties and may not see their relationship to the organization as a whole. l This can result in lack of interest and motivation over time. © 2009 South-Western, Cengage Learning SLIDE 18

Characteristics of a Sole Proprietorship Intro to Business, 7 e Chapter 5 l Owned and run by one person l No protection for personal assets l The easiest for a business to start and run l Business income is taxed like personal income l Does not require a business name l The majority of U. S. businesses are sole proprietorships © 2009 South-Western, Cengage Learning SLIDE 19

Characteristics of a Partnership Intro to Business, 7 e Chapter 5 l Owned and controlled by two or more people l A written agreement l No protection for personal assets l Usually must be dissolved if an owner leaves l Two or more people can invest in the business l Must register the business name and the names of all owners © 2009 South-Western, Cengage Learning SLIDE 20

Characteristics of a Corporation Intro to Business, 7 e Chapter 5 l A written agreement l Shareholders have a say in business decisions l Managed by a board of directors l Protects the liability of the owners l Two or more people can invest in the business l Must create bylaws or operating procedures © 2009 South-Western, Cengage Learning SLIDE 21