introductiontomanagementch02

1、forms of business ownershipchapter 2select a form of business ownershipmethods of owning existing businesseshow business owners can measure their business performanceobjectivesthere are three types of business organizationsproprietorshippartnershipcorporationa proprietorship is owned by one individu

2、al. advantages ease in organizing possess all earnings complete control low taxesdisadvantage limited funds unlimited liability limited skills risks on all lossesjoes a partnership is owned by two or more individuals. advantages more funds shared losses more specializationdisadvantage unlimited liab

3、ility shared control shared profitsjoe and martys some limited partners partners liability limited to cash or property they contributed to the partnership they are only investors, not participate in management share profits or losses limited partnershipone or more general partners manage business re

4、ceive a salary share the profits or losses have unlimited liabilitylimited partnership seventy-five or fewer earnings distributed to the owners taxed at personal income tax rate of each owner limited liabilitys-corporation a type of general partnership general partnership limited liabilitylimited li

5、ability company (llc)a corporation is organized under state or federal statutes as a separate legal entity.advantage limited liability more access to funds easy transfer of ownershipdisadvantage high organizational fees financial disclosure double taxation. agency problemj & m, inc. dividends increa

6、se on the value of the stockhow stockholders earnprivately held: ownership restricted to a small group of investorspublicly held: shares can be easily purchased or sold by investorsassume ownership of a family businesspurchase an existing businessfranchising - use trademark, trade name,copyright und

7、er specified conditionsown existing businessesfranchise advantage & disadvantages proven management style & less risk name recognition financial support from franchisor sharing profits less control-guideline on product production and pricing, etc. limited decision-making (location, motivation on emp

8、loyees, etc.)return on investment roe = earnings after tax/equityriskmeasure business performance higher risk expects higher return the return to creditors is the interest rate to compensate for the higher risk, creditors charge a higher raterisk and return less managerial expertise no funds to diversify into other businesses death or retirement of owners