Market Structures & Business Organizations By
Download
Report
Transcript Market Structures & Business Organizations By
MARKET STRUCTURES &
BUSINESS ORGANIZATIONS
By: Leanne Huynh & Tory Lynde
Economics
Alvarez (5)
SOLE PROPRIETORSHIP
•
A business owned and managed by a single
individual.
That person earns all of the firm’s profits and is
responsible for all of the firm’s debts.
• Most popular in the United States.
•
ADVANTAGES & DISADVANTAGES
Ease of Start-Up
Few Regulations
Sole Receiver of Profit
Full Control
Easy to Discontinue
Unlimited Personal
Liability
Limited Access to
Resources
Lack of Permanence
PARTNERSHIPS
•
A business organization owned by two or more
persons who agree on a specific division of
responsibilities and profits.
General Partnership – partners share equally in both
responsibility and liability.
• Limited Partnership – only one partner is required to
be a general partner.
• Limited Liability Partnerships – all partners are
limited partners.
•
ADVANTAGES & DISADVANTAGES
Ease of Start-Up
Shared Decision
Making and
Specialization
Larger Pool of Capital
Taxation
Unlimited Liability
Potential for Conflict
CORPORATIONS
•
A legal entity owned by individual stockholders,
each whom faces limited liability for the firm’s
debts.
Closely Held Corporations – issues stock to only a few
people, often family members.
• Publicly Held Corporations – sells stock on the open
market.
•
ADVANTAGES & DISADVANTAGES OF
INCORPORATION
Limited liability for
owners
Transferable
ownership
Ability to attract
capital
Long life
Expense and difficulty
of start-up
Double taxation
Potential loss of
control by the
founders
More legal
requirements and
regulations
PERFECT COMPETITION
•
•
a large number of firms that all produce the same
product.
Four Conditions:
Many buyers and sellers participate in the market
• Sellers offer identical products
• Buyers and sellers are well informed about products
• Sellers are able to enter and exit the market freely
•
HORIZONTAL MERGERS
Joining two or more firms competing in the same
market with the same good or service.
Combined yogurt
company.
VERTICAL
MERGERS
Combining
two
or more firms
that are
involved in
different stages
of producing the
same good.
FRANCHISES
Large companies sell franchises, or contracts that
give a single firm the right to sell their product in
an exclusive area.
Ex) NFL teams, fast food, restaurants in state
parks, hotels.
MULTINATIONAL CORPORATIONS
Corporations that operate in more than one
country at a time.
Disadvantages
Could negatively influence culture/politics
Some MNCs have low wages and poor working
conditions
Advantages
Provide jobs world wide.
Spread new technologies
COOPERATIVE ORGANIZATIONS
Cooperative: Business organization owned and
operated by a group of individuals for their
shared benefit.
Service
Consumer
Producer
NON-PROFITS
An institution that functions much like a
business, but does not operate for the purpose of
generating profits.
MONOPOLY
•
A market structure with only one seller of a
particular economic product that has no close
substitutes.
Natural Monopoly – costs are minimized by having a
single firm produce the product.
• Geographic Monopoly – no other business in the area
offers competition.
• Technological Monopoly – the special privileges given
to those who invent a product or process. (i.e.
copyright or patent)
•
OLIGOPOLY
•
A market structure in which a few large firms
dominate a market.
Few firms dominate
• Some variety of goods
• Some control over prices
• High barriers to entry
•
MONOPOLISTIC COMPETITION
•
•
A market structure in which many companies
sell products that are similar but not identical.
Four Conditions:
Many firms
• Few artificial barriers to entry
• Slight control over price
• Differentiated Products
•