Intro. To Business Adminstration Chapters 1-3 And 5

Front 1

Sole Proprietorship?DIS?AID?

Back 1

is a business that is owned, and usually managed, by one person; it is the most common form.
ADV:
Ease of start/end Be your own boss Pride of ownership Leave a legacy Retain profit No special taxes
DIS:
Unlimited liability Limited financial resources Management difficulty Time commitment Few fringe benefits Limited growth Limited life span

Front 2

A Partnership?DIS?AID?

Back 2

is a legal form of business with two or more owners. Two Types: GM=General Partner Management responsibility Liability for debit Profit %.
LM=Limited Partner No Management responsibility NO Liability for debit Profit %
ADV: More financial resources Shared management Longer survival No Special Taxes
DIS: Unlimited liability Division of profits Disagreements among partners Difficult to terminate

Front 3

A corporation "Conventional", DIS? AID?

Back 3

A CONVENTIONAL (C) CORPORATION is a state-chartered legal entity with authority to act and have liability separate from its owners.
The corporation’s owners (stockholders) are not liable for the debts of the corporation beyond the money they invest.
The corporate form of ownership also lets many people to share in the ownership of a business without working there.
AID: Limited liability More money for investment Size Perpetual life Ease of ownership change Ease of drawing talented employees Separation of ownership/mgmt.
DIS: Extensive paperwork Double taxation Two tax return Size Termination difficult Conflict with Stockholder & Board Initial cost

Front 4

A corporation "S Corporation"? DIS, AID?

Back 4

is a unique government creation that looks like a corporation but is taxed like sole proprietorship and partnerships. S corporations have shareholders, directors, and employees, but the profits are taxed as the personal income of the shareholders.
They also have the benefit of limited liability. S CORPORATIONS MUST: Have no more than 100 shareholders.Have shareholders who are individuals or estates and are citizens or permanent residents of the U.S.Have only one class of outstanding stock.Not have more than 25% of income derived from passive sources (rents, royalties, interest, etc.)The tax structure of an S corporation isn’t attractive to all businesses. The benefits of S corporations change every time the tax rules change.

Front 5

A Merger? Types? and Acquisition?

Back 5

A MERGER is the result of two firms forming one company
An ACQUISITION is one company’s purchase of the property and obligations of another company.
VERTICAL MERGER is the joining of two companies involved in different stages of related businesses (example: merger of a soft drink company and a company producing artificial sweetener.) 2. HORIZONTAL MERGER joins two firms in the same industry and allows them to diversify or expand their products (example: merger of a soft drink and a mineral water company.)
3. CONGLOMERATE MERGER is the joining of firms incompletely unrelated industries thereby diversifying business operations (example: merger of a soft drink company and a snack food producer.)

Front 6

Economics "MICRO, MACRO"

Back 6

Economics is the study of how people make choices under conditions of scarcity and the result of those choice for society.
. MACROECONOMICS is that part of economic study that looks at the operation of a nation’s economy as a whole. Gross domestic product The unemployment rate The price index
MICROECONOMICS is that part of economic study that looks at the behavior of people and organizations in particular markets.
RESOURCE DEVELOPMENT is the study of how to increase resources and to create the conditions that will make better use of those resources.
New way of creating food and goods and services. i.e. technology
Discovering a new energy sources. i.e. solar energy Recycling

Front 7

Theories

Back 7

Thomas Malthus (Early 1800s)
“Dismal Science”
Too many people
Adam Smith (1776)
Freedom is vital
“Invisible Hand”

Front 8

Invisible Hand

Back 8

The INVISIBLE HAND is a phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all.

Front 9

How the price is determined

Back 9

Prices in a free market are not determined by sellers; BUYERS AND SELLERS NEGOTIATING in the marketplace determine them.Price is determined through the economic concepts of supply and demand. SUPPLY refers to the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time. The amount supplied will increase as the price increases (DIRECT relationship.) The quantity producers are willing to SUPPLY at certain prices is illustrated on a SUPPLY CURVE.DEMAND refers to the quantity of products that people are willing to buy at different prices at a specific time. The quantity demanded will decrease as the price increases (INVERSE relationship.)
The quantities consumers are willing to buy at certain prices are illustrated on a DEMAND CURVE.

Front 10

THE EQUILIBRIUM PRICE, OR MARKET PRICE

Back 10

THE EQUILIBRIUM PRICE, OR MARKET PRICE The key factor in determining the quantity supplied and the quantity demanded is PRICE.At the equilibrium price, THE SUPPLY AND DEMAND CURVES CROSS, and the quantity demanded equals the quantity supplied. MARKET PRICE is the price determined by supply and demand. In free-market economies it is the INTERACTION between SUPPLY and DEMAND that determines the market price in the long-run If SURPLUSES develop, a signal is sent to sellers to lower the price.If SHORTAGES develop, a signal is sent to sellers to increase the price.
Eventually, supply will again equal demand.