Business Organizations and Finance

• Study notes on business organizations, finance, and related economic institutions

Business Structures

• Sole proprietorship: A business owned and operated by one person.
• Limited life: A firm ceasing to exist when the owner dies, quits, or sells.
• Limited partnership: At least one partner is not active in the daily running of the business.
• Corporation: A business organization recognized by law with its own legal existence.

Financial Aspects

• Bankruptcy: A court-granted permission to cease or delay debt payments.
• Net income: Determined by subtracting expenses, including taxes, from revenue.
• Depreciation: A non-cash charge for wear and tear on capital goods.

Mergers and Corporate Types

• Merger: Combination of two or more businesses into a single entity.
• Vertical merger: Combination of firms involved in different steps of manufacturing or marketing.
• Multinational: A corporation operating in multiple countries.

Organizations and Associations

• Nonprofit organization: An institution operating like a business but not seeking financial gain.
• Cooperative: A voluntary association for economic activities benefiting its members.
• Labor union: An Organization representing workers' interests in employment matters.
• Collective bargaining: Negotiations between labor and management representatives.
• Professional association: An Organization promoting its members' and the community's welfare.

Business Characteristics and Facts

• Sole proprietorship is the most common form of business organization in the U.S.
• Ease of raising financial capital is a main strength of the corporate structure.
• A charter is a government document granting permission to create a corporation.
• Common stock represents basic ownership of a corporation, including voting rights.
• Limited life is a weakness of the partnership form of business organization.
• A conglomerate consists of at least four unrelated businesses, none dominant in sales.
• Horizontal mergers involve firms producing the same type of product.
• Multinationals can be conglomerates.
• Multinationals effectively move resources, products, and capital across borders.

Reasons for Mergers

• Diversification is a major reason for conglomerate mergers.

Examples of Organizations

• Greenville Teachers' Credit Union is an example of a service cooperative.

Government's Role

• Regulation of public utilities illustrates the indirect role of government.

Chamber of Commerce

• Chamber of Commerce activities do not include demonstrating against new housing developments.

Profit vs Non-Profit

• A corner grocery store is likely not a nonprofit organization.

Public Utilities

• Government controls are needed on public utilities due to lack of competition.