1、Forms of Business OwnershipChapter1Chapter1Chapter 1Forms of Business OwnershipForms of Business OwnershipChapter1Chapter1Forms of Business OwnershipLecture Outlinel Sole Proprietorships 個人企業l Partnerships 合伙制企業l Corporations 公司l Joint Ventures 合資企業l Limited Liability Companies 有限責任公司l Mergers &

2、 Acquisitions 企業兼并與收購l Franchises 特許經營Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipLead-in activitieslHow many Chinese and foreign companies can you name? lDo you know what forms of business ownership they are?lWhat is your most admired corporation? lWhat company do you wish

3、 to work for? Why?Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipLead-in activitieslSample:Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipLead-in activitieslSample:Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipAdditional activitie

4、slDo you know the symbols of the following companies and their forms of business ownership? Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipSole Proprietorship l An organization that is owned, and usually managed, by one person is called a sole proprietorship.l A sole proprieto

5、rship is the oldest and most common type of business.l Examples: a virtual assistant working from her/his home, a woodworker selling at craft fairs and a freelance consultant offering his services to local businesses.Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipSole Propriet

6、orship l Advantages Owner in direct control (you are your own boss). Keeping the profits from the business The easiest form of business to start No double taxationDOUBLE TAXATIONThe imposition of two or more taxes on the same income (in the case of income taxes), asset (in the case of capital taxes)

7、, or financial transaction (in the case of sales taxes)Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipSole Proprietorship l Disadvantages Total (unlimited) personal liability. Limited financial resources (capital). Lack of continuity as a result of disability or death of owner

8、. Owner may have limited managerial expertise. Forms of Business OwnershipChapter1Chapter1Forms of Business Ownership1 Why is the sole proprietorship one of the most popular forms of business ownership? Why would unlimited liability be considered as one of the biggest drawbacks to sole proprietorshi

9、psSole Proprietorship l Questions for discussionForms of Business OwnershipChapter1Chapter1Forms of Business OwnershipPartnershipsl A partnership is a legal relationship between persons carrying on a profit-motivated businesslEach person contributes money, property, labor or skill, and expects to sh

10、are in the profits and losses of the business.Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipPartnershipsl Three key elements common ownership shared profits and losses the right to participate in managing the operations of business Forms of Business OwnershipChapter1Chapter1F

11、orms of Business OwnershipPartnershipsl Two types of partnerships General partnership Limited partnership Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipPartnerships: General Partnershipl Advantages Simple organization. Additional personal resources (financial and managerial).

12、 The right to select partners. Low start-up (organizational) costs. Limited outside regulation. No double taxation. Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipPartnerships: General Partnershipl Disadvantages Unlimited liability for partnership obligations. Lack of continui

13、ty in event of death or disability of one partner. Sharing of profits. All profits are taxed as personal income. Difficult to raise additional capital. Hard to find suitable partners. Divided authority (limited decision making). Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipP

14、artnerships: Limited Partnershipl Advantages General partner maintains control of the business. Limited partner can invest with a limit on personal liability. Easy way to secure capital. Business not taxed directly. Forms of Business OwnershipChapter1Chapter1Forms of Business Ownership1Partnerships:

15、 Limited Partnershipl Disadvantages More complex to organize. Limited partner has no control over the business. General partner has unlimited personal liability for the obligations of the business. Lack of continuity in event of death or disability of the general partner. Forms of Business Ownership

16、Chapter1Chapter1Forms of Business OwnershipPartnerships: Limited Partnershipl Disadvantages More complex to organize. Limited partner has no control over the business. General partner has unlimited personal liability for the obligations of the business. Lack of continuity in event of death or disabi

17、lity of the general partner. Forms of Business OwnershipChapter1Chapter1Forms of Business OwnershipPartnershipsl Questions for discussion What are the differences between a limited partner and a general partner? How would you decide whether to team up with someone in a partnership form of business?F

18、orms of Business OwnershipChapter1Chapter1Corporations lIt is empowered with legal rights which are usually only reserved for individuals, such as to sue and be sued, own property, hire employees or loan and borrow money.lThe corporation is a legal entity, allowed by legislation, which permits a gro

19、up of people, as shareholders (for-profit companies) or members (non-profit companies), to create an organization, which can then focus on pursuing set objectives.Forms of Business OwnershipChapter1Chapter1Corporations lTypes of CorporationType Description Private Attempts to earn a satisfactory pro

20、fit.Public Owned and run by the government.Closed Stock held by only a few owners and not actively sold on the stock market.OpenStock held by numerous people and actively sold on the stock market.Municipal Cities and townships that carry out business.Domestic Incorporated in one province or country

21、and doing business within that province or country.Forms of Business OwnershipChapter1Chapter1Corporations lTypes of CorporationType Description Foreign Incorporated in one province or country and doing business in another province or country.Alien Incorporated in one nation and operation in another

22、 nation.Nonprofit Service organization incorporated for limited-liability status.Forms of Business OwnershipChapter1Chapter1Corporations lAdvantagesLimited personal liability: means that the owners of a business are responsible for losses only up to the amount they invest Skilled management team: Pr

23、ofessional managers are trained and experienced career executives. Forms of Business OwnershipChapter1Chapter1Corporations lAdvantagesTransfer ownership: Shareholders have the right to sell their shares of a corporations stock to whomever they pleaseGreater capital base: The corporate form of busine

24、ss makes it easier for a business to grow and expand. Through the issuance of shares, corporations may be able to access the money they will need for expansion.Stability: A Corporation has an unlimited life.Forms of Business OwnershipChapter1Chapter1Corporations a sole proprietorship or partnership:

25、 if an owner should die, all of his business assets may require probate in order to be passed on to his or her heirs or devisees. corporation or Limited Liability Companies (LLC): shares of stock (or membership interests in the LLC) can be issued to family members or other owners to clearly delineat

26、e their ownership interests in the business. Additional InfolTransfer of business interests to succeeding generations:Forms of Business OwnershipChapter1Chapter1Corporations lDisadvantagesDouble taxation: The corporation has to pay taxes on its profits. The shareholders must also pay income tax on t

27、he dividends they receive through ownership.the imposition of two or more taxes on the same income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes). Additional InfolDouble taxationForms of Business OwnershipChapter1Chapter1Cor

28、porations lDisadvantages Government involvement: Provincial and state Governments have the right by law to exercise certain controls on, and to require corporations to maintain proper corporate records. Lack of secrecy: A corporation must provide each shareholder with an annual report. The reports p

29、resent data on sales volume, profit, total assets, and other financial matters.Forms of Business OwnershipChapter1Chapter1Corporations lDisadvantages Lack of personal interest: In most corporations, management and ownership are separate. This separation can result in a lack of personal interest in t

30、he success of the corporation. Credit limitations: If a corporation fails, its creditors can look only to the assets of the business to satisfy claims. Forms of Business OwnershipChapter1Chapter1Corporations lDisadvantages Lack of personal interest: In most corporations, management and ownership are

31、 separate. This separation can result in a lack of personal interest in the success of the corporation. Credit limitations: If a corporation fails, its creditors can look only to the assets of the business to satisfy claims. Forms of Business OwnershipChapter1Chapter1Corporations Corporations: have

32、an easier time obtaining financing than a sole proprietorship; have several people making management decisions, and the entity continues in the event of illness or the death of one of the partners;can raise money through stock offerings. Additional InfolDifferences With Sole Proprietorships:Forms of

33、 Business OwnershipChapter1Chapter1Corporations Sole proprietorship:a lender is entirely dependent on the business owners ability to repay the loan with his own labor. cant sell stock to raise funds for equipment or expansion. Additional InfolDifferences With Sole Proprietorships:Forms of Business O

34、wnershipChapter1Chapter1Corporations Whats the difference between an open and a closed corporation?Why do most young people prefer to work for a large corporation?lQuestions for Discussion:Forms of Business OwnershipChapter1Chapter1Joint Ventures lA joint venture (JV) is the pooling of resources and

35、 expertise by two or more businesses, typically from different areas or countries to achieve a particular goal. The risks and rewards of the enterprise are also shared. lPartnerships occur when two or more entities decide to work together in a business. Forms of Business OwnershipChapter1Chapter1Joi

36、nt Ventures business expansion development of new products moving into new markets, particularly overseas.lReasons behind the formation of a joint venture:Forms of Business OwnershipChapter1Chapter1Joint Ventures access to new markets and distribution networks; increased capacity; the sharing of ris

37、ks with a partner; access to specialized staff and technology. lAdvantages:Forms of Business OwnershipChapter1Chapter1Joint Ventures If the objectives of the venture are not 100 per cent clear, or not communicated to all the staff involved, problems are likely to arise. There is an imbalance in leve

38、ls of expertise, investment, or assets brought into the venture by the different partners. lDisadvantages:Forms of Business OwnershipChapter1Chapter1Joint Ventures Different cultures and management styles result in poor integration and cooperation between the partners. The parent businesses dont pro

39、vide sufficient leadership and support in the early stages. lDisadvantages:Forms of Business OwnershipChapter1Chapter1Joint Ventures Additional InfoForms of Business OwnershipChapter1Chapter1Joint Ventures Additional InfoForms of Business OwnershipChapter1Chapter1Joint Ventures Additional InfoForms

40、of Business OwnershipChapter1Chapter1Joint Ventures What ownership is a joint venture similar to? Why?What are the advantages of a joint venture?lQuestions for Discussion:Forms of Business OwnershipChapter1Chapter1Limited Liability Companies lA Limited Liability Company (LLC) is a type of business o

41、wnership combining several features of corporation and partnership structures.lIt is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. lIts formation is more complex and formal than that of a general partnership

42、.Forms of Business OwnershipChapter1Chapter1Limited Liability Companies lLike a corporation, the owners (called members) of the LLC are not personally responsible for the debts of the LLC. lLike a partnership, there is no dual taxation and the earnings of the business are taxed directly to the membe

43、rs.Forms of Business OwnershipChapter1Chapter1Limited Liability Companies lAdvantagesLimited liability: Members cannot be held personally liable for debts unless they have signed a personal guarantee. Flexible profit distribution: Limited liability companies can select varying forms of distribution

44、of profits. Forms of Business OwnershipChapter1Chapter1Limited Liability Companies lAdvantagesNo minutes: The LLC business structure requires no corporate minutes or resolutions and is easier to operate. No double taxation: All your business losses, profits, and expenses flow through the company to

45、the individual members. You avoid the double taxation of paying corporate tax and individual tax. Forms of Business OwnershipChapter1Chapter1Limited Liability Companies lDisadvantagesLimited liability: a LLC is dissolved when a member dies or undergoes bankruptcy.Going public: it is hard to go publi

46、c.Added complexity: A LLC may be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default (違約) may apply.Forms of Business OwnershipChapter1Chapter1Limited Liability Companies Additional Info有限責任公司是根據美國五十個州中某一州的法律而設立的非法人商業實體。通常必須有

47、兩個或兩個以上的所有者，稱為“成員”；但在一些州，如加利福尼亞州、特拉華州和紐約州，也允許一人設立有限責任公司。有限責任公司的成員可以是個人或實體，美國人或外國人皆可。有限責任公司成員人數并無上限規定。 Forms of Business OwnershipChapter1Chapter1Limited Liability Companies Additional Info有限責任公司是美國各州法律規定的一種比較新的公司模式，在很短時間內就成為了一種大受歡迎的所有權形式。它的產生滿足了商人們的需要、即提供了一種具有（1）有限責任（公司也具備有限責任的特征，但合伙并不具備條件）和（2）合伙型運營

48、的靈活性的法律實體。有限責任公司的價值還體現在：無論成員對管理的參與程度如何，所有成員只以其出資額為限承擔責任。實際上，有限責任公司是公司和合伙的嫁接產物。Forms of Business OwnershipChapter1Chapter1Limited Liability Companies Additional Info 現行中國公司法規定的公司分為有限責任公司和股份有限公司。從西方公司理論看，公司根據不同條件可做多種分類。例如根據是否適用有限責任分為有限責任公司和無限責任公司。有限責任公司最顯著的特征是，股東以其出資額為限對公司承擔責任，公司以其全部資產對公司的債務承擔全部責任，不能公

49、開募股。股份有限公司區別于有限責任公司的最為重要的特征是：其全部資本分為等額股份，股東以其所持有的股份對公司承擔責任，公司以其全部資本對公司的債務承擔責任，例如上市公司。Forms of Business OwnershipChapter1Chapter1Limited Liability Companies Additional InfoA limited liability company could be converted into a company limited by shares. Forms of Business OwnershipChapter1Chapter1Limit

50、ed Liability Companies Additional InfoNote: 中美公司的名稱有時沒法一一對應翻譯，因為兩國之間公司法對公司的定義不同，比如中國的“股份有限公司”就無法對應英文。 美國公司名稱通常為： Xxx company Xxx Co, Ltd (corporation limited) Xxx Inc. (Incorporated)Forms of Business OwnershipChapter1Chapter1Mergers & AcquisitionslThe phrase mergers and acquisitions (abbreviated

51、 M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.Forms of Bus

52、iness OwnershipChapter1Chapter1Mergers & AcquisitionslA Merger is the result of the combination of two companies (or corporations) to form a new company.lAn Acquisition is one company buying the property and obligations of another company.Forms of Business OwnershipChapter1Chapter1Mergers &

53、AcquisitionslWhen one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. lFrom a legal point of view, the target company ceases to exist, the buyer swallows the business and the buyers stock continues to be traded.Forms of Business Owne

54、rshipChapter1Chapter1Mergers & AcquisitionslIn the pure sense of the term, a merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. lThis kind of action is more precisely referred to as a merger o

55、f equals. Both companies stocks are surrendered and new company stock is issued in its place. E.g Both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler, was created.Forms of Business OwnershipChapter1Chapter1Types of corporate mergerslA horizont

56、al merger joins firms in the same industry and allows them to diversify or expand their products. In a horizontal merger, the acquisition of a competitor could increase market share.Forms of Business OwnershipChapter1Chapter1Types of corporate mergerslA vertical merger is the joining of two firms in

57、volved in different stages of related businessesa manufacturer merging with a supplier of component products, or a manufacturer merging with a distributor of its products.Forms of Business OwnershipChapter1Chapter1Types of corporate mergerslA conglomerate merger unites firms in completely unrelated

58、industries. The primary purpose of a conglomerate merger is to diversify business operations and investments.Forms of Business OwnershipChapter1Chapter1Types of corporate mergersAdditional InfolProcess: Forms of Business OwnershipChapter1Chapter1Types of corporate mergersAdditional InfoForms of Busi

59、ness OwnershipChapter1Chapter1Types of corporate mergersAdditional InfoForms of Business OwnershipChapter1Chapter1Types of corporate mergerslQuestions for Discussion: What is the difference between mergers and acquisitions?Give more examples to explain horizontal mergers, vertical mergers and conglo

60、merate mergers.Forms of Business OwnershipChapter1Chapter1FranchisinglA franchise is the right to use a business name and sell products or services, usually in a specific geographical territory.lFranchising is the practice of using another firms successful business model. The word franchise is of Anglo-French derivation - fr