Unit 3 – Business and Markets –

Unit 3 – Business and Markets – Business Organization and Finance CIE 3M0 Mr. T

Organization of Business(the names given to different types of businesses) • Sole Proprietorship • The most common type of business • One person owns and operates the business Advantages: • One decision maker • Don’t share profits • Relatively easy to start

Disadvantages: • $$$ (limited capital results in more struggle) • Lack of specialization results in more work for the owner • Difficult to attract permanent workers because there is little job security • Huge financial risk. You could lose everything…and more!

2. Partnerships • Two or more people enter a business as owners and share the profits / losses based upon an oral or written agreement specifying the money, skills, workload and authority of each partner

Advantages • More capital can be raised • Workload shared allowing for vacations and specialization • Sounder business decisions can be made

Partners can have disagreements Unlimited liability for debt can hurt partner who is not responsible for poor business decisions When one partner dies or leaves a new partnership agreement must be made. Commonly found in farming, the professions (e.g. law), restaurants, construction and repair work Disadvantages

3. Corporations • Has an existence of its own separate from those who created it or own it • Two main types: Crown-owned or controlled by the government (e.g. CBC) & Business-owned and controlled by private individuals (e.g. Bell Canada Enterprises) • Weaknesses of sole proprietorships and partnerships led to corporations being formed

Advantages • Limited liability which means only personally liable for the amount of money you have invested in the company • Easier to raise capital for the business (e.g. retained earnings, securities like preferred & common shares, bonds) • Longevity • Specialization through mass production

Disadvantages • a) Unaccountable management may act selfishly against the best interests of the shareholders • Management less motivated to be successful if they don’t have ownership stake in company • Expensive to establish

Stock Market is an organized market where corporations can sell shares or ownership in their company The Stock Market

4. Cooperatives • Organized with the aim of benefiting its owners through lower prices and / or distribution of surpluses at the end of the year • Like a corporation with shares sold but unlike a corporation despite how many shares you own only one vote per person

Advantages • democratic and fair Disadvantages • little motivation to work harder than others

Public / Government Enterprises • Federal, provincial, and municipal governments produce a wide array of goods and services in Canada from garbage disposal to medical services • Crown corporations are semi-independent (e.g. Canada Post) • Produces goods and services that are essential to a community at a reasonable price • To reduce debt and inefficiency crown corporations have been sold off to the public i.e. privatization (e.g. Air Canada, 407, Bell Canada)

Unit 3 – Business and Markets –