Unlimited Life Economics
business organization
an enterprise that produces goods or provides services, usually in order to make a profit
sole proprietorship
a business organization owned and controlled by one person
limited life
a situation where a business closes if the owner dies, retires, or leaves for some other reason
unlimited liability
means that a business owner is responsible for all the business's losses and debts
easy to open or close, few regulations, freedom and control, owner keeps profits
sole proprietorship advantages
limited funds, limited life, unlimited liability
sole proprietorship disadvantages
partnership
a business co-owned by two or more partners who agree on how responsibilities, profits, and losses of that business are divided
general partnership
partners share management of the business and each one is liable for all business debts and losses
limited partnership
partnership in which at least one partner is not involved in the day-to-day running of business and is liable only for the funds he or she has invested
limited liability partnership
all partners are limited partners and not responsible for the debts and other liabilities of other partners
easy to open and close, few regulations, access to resources, joint decision making, specialization
partnership advantages
unlimited liability, potential for conflict, limited life
partnership disadvantages
corporation
business owned by stock holders, who own the rights to the company's profits but face limited liability for the company's debts and losses
stock
a share of ownership in a corporation
dividend
part of a corporation's profit that is paid out to stockholders
public company
issues stock that can be publicly traded
private company
controls who buy or sell its stock
bond
contract issues by a corporation that promises to repay borrowed money, plus interest, on a fixed schedule
limited liability
means that a business owner's liability for debts and losses of the business is limited
unlimited life
means that a corporation continues to exist even after an owner dies, leaves the business, or transfers his or her ownership
access to resources, professional managers, limited liability, unlimited life
corporations advantages
start up cost and effort, heavy regulation, double taxation, loss of control
corporations disadvantages
horizontal merger
the combining of two or more companies that produce the same product or similar products
vertical merger
the combining of companies involved in different steps of producing or marketing a product
conglomerate
a business composed of several companies, each one producing unrelated goods or services
multinational corporation
large corporations with branches in several countries
franchise
business that licenses the right to sell its products in a particular area
franchisee
a semi-independent business that buys the right to run a franchise (pays a fee to the parent company in return for the right to sell the company's products or services in a particular area)
independent, good training, provide proven products at a low cost, franchiser pays for ads
franchises advantages
invest money with no assurance of success, share profits with franchiser, not have control over all aspects of business
franchise disadvantages
cooperative
business operated for the shared benefit of the owners, who also are its customer
nonprofit organization
business that aims to benefit society, not to make a profit