Understanding Franchises and Business Types

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Questions and Answers

What is the key difference between strategic alliances and joint ventures?

Strategic alliances focus on increasing efficiency, while joint ventures aim to reduce costs.

In strategic alliances, companies operate in multiple countries, while in joint ventures they operate in a single country.

Strategic alliances involve merging two companies together, while joint ventures only involve a partnership.

Strategic alliances involve no new business entities being formed, while joint ventures do create new entities. (correct)

What is offshoring?

A type of merger between two international corporations.

The moving of a company's operations to another country to reduce labor costs. (correct)

The act of combining two businesses into one entity.

The process of relocating a company's headquarters to another country.

What is a multinational corporation?

A company that engages in offshoring operations.

A corporation that merges with another corporation in a different country.

A business that operates in more than one country. (correct)

A business entity formed through a joint venture.

What is a code of ethics in business?

A document outlining how employees should respond in certain situations. Signup and view all the answers

Why do companies engage in mergers?

To increase efficiency and face competition better. Signup and view all the answers

What is the purpose of debt financing for businesses?

To borrow money from financial institutions for operational needs. Signup and view all the answers

What is one benefit of international trade mentioned in the text?

Access to cheaper labor Signup and view all the answers

Which type of transaction involves selling products produced in different countries?

International transaction Signup and view all the answers

How does international trade contribute to increased quality of goods?

By allowing countries to specialize in certain goods Signup and view all the answers

Why might businesses prefer international markets for production?

To have access to resources not available domestically Signup and view all the answers

In which scenario might international trade lead to human rights abuses?

When workers in poor countries face abuse, non-payment of wages, and excessive working hours Signup and view all the answers

Which factor contributes to making products cheaper in international trade?

Access to resources from developing countries Signup and view all the answers

What is the primary source of funding for a business in debt financing?

Obtaining a loan from a bank Signup and view all the answers

Which type of business converts raw materials into finished products for profit?

Manufacturing business Signup and view all the answers

What distinguishes non-profit organizations from other types of businesses?

They do not aim to generate profits Signup and view all the answers

In equity financing, where does the capital come from to operate the business?

Investor savings Signup and view all the answers

What do joint ventures involve in the context of international business structures?

Two businesses combine to create a new entity Signup and view all the answers

How do joint ventures benefit the participating businesses?

Through collaboration that leverages different skills Signup and view all the answers

Study Notes

Strategic Alliances and Multinational Corporations

Strategic alliances are agreements between businesses to achieve common objectives without forming new entities.
Multinational corporations operate in more than one country, often to save money by having production plants in countries with cheap labor.

Offshoring and Mergers

Offshoring is the relocation of a company's operations to another country, usually to reduce labor costs.
Popular offshoring destinations include India for call centers and IT work, and China for manufacturing.
Mergers involve two companies joining to form one company, often to increase efficiency in the face of competition.

Business Ethics

A code of ethics is a document that explains how employees should respond in certain situations to ensure ethical behavior.
Fraud is the crime of lying and deceiving for personal gain.

International Trade

Domestic transactions involve selling items produced in the same country.
International transactions involve selling items produced in other countries.
Benefits of international trade include access to markets, cheaper labor, increased quality of goods, increased quantity, and access to resources.
Costs of international trade include human rights and labor abuses, and environmental degradation.

Business Types

Franchises are a hybrid form of ownership, mixing corporate ownership and sole proprietorship.
There are four main types of businesses: retail, manufacturing, service businesses, and non-profit organizations.
Retail businesses generate profit by selling goods, manufacturing businesses generate profit by producing goods, service businesses generate profit by doing something for customers, and non-profit organizations do not aim to make a profit.

Financing and International Business Structures

Debt financing involves borrowing money to run a business, while equity financing involves using one's own or investor savings.
Joint ventures involve two businesses joining together to create a separate business entity, mutually beneficial for both parties.

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Description

Learn about franchises as a hybrid form of ownership, using McDonald's as an example, along with the four types of businesses: those that sell goods, retail and manufacturing. Explore how each type generates profit through different methods.