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9/20 Warm-up

9/20 Warm-up. Explain the reasons for Tom Herman leaving govWorks . In your opinion, do you think Tom was being treated fairly?. 9/21 Warm-up. W hat happened to the money invested by the Venture Capitalists (VCs)? Who is responsible for paying the VCs back?. Group Work.

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9/20 Warm-up

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  1. 9/20 Warm-up • Explain the reasons for Tom Herman leaving govWorks. • In your opinion, do you think Tom was being treated fairly?

  2. 9/21 Warm-up • What happened to the money invested by the Venture Capitalists (VCs)? • Who is responsible for paying the VCs back?

  3. Group Work • Discuss problems faced by govWorks • List on poster paper • Identify the 3 biggest problems faced by govWorks • Ultimately responsible for its failure • Categorize the problems • Internal – problems resulting the product and decisions made by management • External – problems outside the control of the organization

  4. Political / Legal Technology Leadership & Organization Social / Cultural Finance Marketing Human Resources Operations Economic

  5. Article Annotation • Read article and annotate as you read based on the following; • Features of Solyndra’s business/product • What does it do? • How does it work? • How is it different from its competitors? • Amounts & sources of financing • Who invested in the company? • How much money was invested? • Reasons for the failure of the business • Terms that you do not understand.

  6. 9/23 Warm-up • Describe the impact of Solyndra’s failure • Who is impacted and what is the nature of the impact?

  7. Group Work • Use your annotated articles to create a table on poster paper:

  8. Individual Project What Happened to Solyndra? • Create a 1-page poster that explains: • Solyndra’s business • Reasons for its failure • Impact of its failure

  9. 9/27 Warm-up • Describe the role of the government in the U.S. economy.

  10. Objectives • Distinguish between organizations in the private & public sectors. • Distinguish between different types of business organizations and identify their main features. • Analyze the extent to which ownership & control differ in organizations. • Evaluate the most appropriate form of ownership for an organization.

  11. Private vs. Public SectorDetermined by Ownership PUBLIC Owned or Controlled by the GOVERNMENT (Federal, State, Local) PRIVATE Owned or Controlled by PRIVATE Individuals or Organizations

  12. Role of the Public Sector? Involved in all “Fundamental / Strategic” Industries Provide “Universal Programs” & “Public Services” Protect property rights, create & enforce laws, settle disputes Socialism Large government, sets industrial policy Libertarian Small Government Social Democrat Ownership of large businesses, provider of social services, redistributes wealth

  13. Organization of Public Sector Direct Administration Goods/Service provided by gov’t & funded through taxation Government Owned Corporations Operate like a commercial business Outsourcing Goods/Service provided by private sector for public sector

  14. Government-owned Corporations Public Policy with a Business Objective Degree of Government Ownership & Control LITTLE A LOT • Federal Government Acquired Corporations • General Motors • AIG • Citigroup • Federally Chartered & Owned • Amtrak • Tennessee Valley Authority • Center for Public Broadcasting • Government Sponsored Enterprises (GSE) • FNMA • FHLMC • Farm Credit

  15. Privatization • Shifting ownership from public to private sector

  16. Privatization • Shifting ownership from public to private sector • Increased efficiency • Lower costs of production • Increased choice for consumers • Innovation • Save taxpayer money • Source revenue ($) for government

  17. Check-up • What’s the difference between organizations in the private versus public sector? • Why do public sector organizations exist?

  18. 9/28 Warm-up • List & describe the forms of business organization mentioned in the P&G article.

  19. Private sector organizations

  20. Private Sector Organizations Profit Based Profit belongs to owner(s) Non-Profit Based Surplus belongs to organization Sole Traders Non-profit organizations (NPOs) Partnerships Non-governmental organizations (NGOs) Limited Companies (Private & Public) Charities Pressure Groups

  21. Profit-BASEd Organizations

  22. Proctor & Gamble Story • Identify the forms of business organization described in article. • Consider the advantages & disadvantages of each form. • Consider the connection between the form and the size of the business.

  23. Private Sector Organizations Sole Trader Partnership Limited Companies

  24. The Proctor & Gamble Story

  25. Sole Trader William Procter • Business owned & managed by 1 person • Can employ other people to help run business • Business & owner are legally the same • Owner liable for ALL taxes, expenses & debts • Owner receives all profits (income), bears all losses, makes all decisions • Few legal formalities to set-up James Gamble

  26. Partnership Procter & Gamble • Business owned & managed by 2 or more people • Can employ other people to help run business • Partners receive all profits, bear all losses • Business & partners are legally the same • Partners share liability for ALL taxes, expenses & debts • Partners liable for conduct of other partners • Advisable to have legal agreement between partners (not required)

  27. Important FeatureThe Deed of Partnership • Contract between partners • Financing contributed • Roles, obligations, & responsibilities • Sharing of profits • Procedure to include new partners • Procedure for the departure of a partner or ending the partnership

  28. Types of PartnersAll Co-Owners & Have Some Liability

  29. Limited Company (Corporation) • Business is a separate legal entity (incorporated) • separate from owners & managers • lives “forever” • Owners are shareholders • Run by managers • selected by shareholders (via board of directors) • Company has liability (taxes, expenses & debts incurred by business) • Shareholders can only lose their investment • Legal requirements to set-up

  30. 10/3 Warm-up • List & describe the forms of business organization mentioned in the P&G article.

  31. 10/3 Warm-up • Read the case summary and answer the following; • Why do you think the brothers created the corporation (Brooks Farms, Inc.)? • Explain why the brothers should not be liable for the corporations debt. • Identify reasons why the brothers should be liable for the corporation’s debt.

  32. GroupsCreate New Form of Business • Develop a new form of business organization that combines the advantages of a partnership with the advantages of a limited company (corporation); • Create a poster with the following; • Name of your new type of business organization (be creative) • List & describe its features • How is it like a partnership? What is the benefit to the small business owner? • How will it be like a limited company? What is the benefit to the small business owner?

  33. GroupsCreate New Form of Business Organization • Your group has been tasked to respond to issues raised by small business owners: • Features of a partnership & limited companies aren’t perfectly fitting their needs. • They want a new type of business organization that combines the best features of both.

  34. 10/3 Warm-up • Federal Income Taxes • What are they? • Who pays them? • How is the amount of tax determined? • Does a business pay income tax? • Who pays them? • How is the amount of tax determined?

  35. Limited Liability Company (LLC) • Explain why an LLC is considered a “hybrid” type of business organization • Identify the advantages/disadvantages of the LLC vs. General Partnership • Identify the advantages/disadvantages of the LLC vs. Limited Company.

  36. Private Sector Organizations Proprietorship Partnership Corporation Limited Liability Company (LLC) Private Public

  37. Read Article, “BK’s Strategy: Play Catch-up” • What is wrong with Burger King? • What changes are needed to turn the business around? • What does the business need in order to turn things around? • How can the buy out by the Private Equity firm help the business?

  38. 10/4 Warm-up • Explain how 3G Capital Management’s buyout can give Burger King what it needs to turn the business around; • Time • Money • Marketing (4Ps) • Why would this turnaround have been difficult if they remained a public limited company?

  39. Objectives • Explain the differences between a private limited company & public limited company. • Identify the advantages & disadvantages of each.

  40. Private Sector Organizations Sole Trader Partnership Limited Companies Private Public

  41. Private vs. Public CompanyWho Can Buy & Own Shares? • Private Limited Company • Shares NOT available for purchase by general public • Shares owned by a small group of people (e.g., family, friends), not traded freely • Usually actively managed by owners • Public Limited Company • Advertise & sell shares to the general public • “Listed” on a stock exchange • Diverse ownership • Managed by Board of Directors

  42. Private Limited Company Advantages Disadvantages • Maintain control • Public does not have access to financial accounts • Fewer rules & regulations (than public limited company) • Unable to raise money from the public • Limits growth • Usually rely on borrowing to finance expansion • Can’t sell shares to the public

  43. Public Limited Companies Advantages Disadvantages • Grow company by accessing huge amounts of financing by selling shares. • Lower production costs (economies scale). • Dominate market (because of size) • Easier & cheaper to obtain credit • Very expensive • sell shares & follow disclosure requirements • Rules & regulations that protect shareholders • Lose control • Public access to financial accounts • Divorce of ownership and control • Large company • Difficult to deal with customers at a personal level. • Inflexible

  44. Group Work • Read the case summary and discuss the following. • Advantages to keeping the business private. • What does the family gain by remaining private? • Disadvantages of keeping the business private. • What does the family lose by not becoming a public?

  45. 10/5 Warm-up • Considering that Cargill is a private limited company, explain where they likely got the financing to expand. • Describe the impact (positive & negative) of remaining a private limited company; • On the company • On the family

  46. File • Articles of Incorporation • (WA Secretary of State) • Number & Type of Shares • Effective Date • Tenure (length of existence) • Registered Agent • Incorporators • Pay Fee ($180) • Choose Name • Must be unique • Contain a corporate designation (Corp., Inc., etc.) • File • Initial Annual Report • (WA Secretary of State) • Registered Agent • Business Address • Corporate Directors • Corporate Officers • Business Description Records & Reporting Requirements Obtain Local & Industry Licenses File Master Business Application (WA Dept. of Licensing) Certificate of Existence

  47. Not-For-profit (non-profit) Organizations

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