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Types of Businesses

Types of Businesses. SOLE PROPRIETORSHIPS AND PARTNERSHIPS. WHY DO YOU THINK MARY KAY ASH PROVED SO SUCCESSFUL IN HER COSMETICS VENTURE?. BECAUSE Entrepreneurial skills Innovation in sales techniques and incentives. Sole Proprietorships. Advantages. Disadvantages. Limited funds

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Types of Businesses

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  1. Types of Businesses

  2. SOLE PROPRIETORSHIPS AND PARTNERSHIPS

  3. WHY DO YOU THINK MARY KAY ASH PROVED SO SUCCESSFUL IN HER COSMETICS VENTURE? • BECAUSE • Entrepreneurial skills • Innovation in sales techniques and incentives

  4. Sole Proprietorships Advantages Disadvantages Limited funds Limited life Unlimited liability • Easy to open and close • Few regulations • Freedom and control • Owner keeps Profit

  5. Why are sole proprietorships the most common form of business organization in the US? • Easy to start up • Full control • Relative freedom from regulation • Ability to leave the business at any time • All profits to the sole proprietor

  6. Partnerships Advantages Disadvantages Potential for conflict Limited life Unlimited liability • Easy to open and close • Few regulations • Access to resources • Joint Decision Making • Specialization

  7. What do stocks and dividends have to do with corporations? Stocks are sold to people (shareholders) and those shareholders receive a dividend or check at the end of the year containing a percentage of the corporations profits.

  8. Corporations Advantages Disadvantages Start-Up Cost and Effort Heavy Regulation Double Taxation Loss of Control • Access to Resources • Professional Managers • Limited Liability • Unlimited Life

  9. Perfect Competition & Monopolies

  10. MANY BUYERS & SELLERS Ensures no one controls prices STANDARDIZED PRODUCTS All products are the same CHARACTERISTICS OF PERFECT COMPETITION WELL-INFORMED BUYERS/SELLERS So they know market prices & other conditions FREEDOM TO ENTER & EXIT MARKET No interference INDEPENDENT BUYERS & SELLERS They do not band together to influence prices

  11. Who is the man in the cartoon? JOHN D. ROCKEFELLER What is the message of the cartoon? ROBBER BARONS CONTROLLED THE GOVERNMENT What industry did he have a monopoly in? OIL

  12. ONLY ONE SELLER Who controls supply of a product with no close substitutes CONTROL OF PRICES CHARACTERISTICS OF A MONOPOLY RESTRICTED, REGULATED MARKET Gov’t. regulations or other barriers keep other firms out of the market

  13. formal organization of sellers or producers that agree to act together to set prices and limit output CARTEL

  14. OPEC: ORGANIZATION OF THE PETROLEUM EXPORTING COUNTRIES Libya Iraq Iran Algeria Kuwait Venezuela Saudi Arabia Nigeria Equador Angola Indonesia

  15. OPEC: • Control 2/3’s of the world’s oil • Have a sort of monopoly on oil • Try to control prices by controlling supply • Not always successful in controlling supply because member nations do not want to limit their profits

  16. Have OPEC nations increased the price that they charge for oil in the last few years? How do you know this? (How are we affected by oil prices?)YES BECAUSE GAS PRICES HAVE GONE UP.What situations are currently affecting gas prices?MIDDLE EAST CONFLICTS, ECONOMIC CRISIS, INCREASED DEMAND DUE TO LARGE VEHICLES

  17. Get a textbook and turn to page 200 and work on the OPEC section. Then continue as far as you can in the packet.

  18. In what ways does OPEC act like a monopoly? They control how much oil flows through their pipelines, controlling supply and therefore, price. What will happen to OPEC’s power as new sources of energy are discovered? They will lose their power.

  19. Monopolistic Competition many buyers and sellers similar but differentiated products limited control of prices freedom to enter or exit the market

  20. Oligopoly few sellers many buyers standardized products for industry; differentiated products for consumers more control of prices little freedom to enter or exit the market

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