1.2 Characteristics of a Business Flashcards
Sole Proprietorship
A business that is owned by one individual
Partnerships
Two or more individuals own a business and share responibilities. Owners may be active or silent. A Silent partner invests money in the business but does not take part in its day to day activities.
Corporations
The corporation is created as an “artificial” person with rights, powers and duties. Owners are called shareholders (they buy shares in the business – this money is used to expand the business). They also elect a board of directors who will run the corporations. Shareholders receive dividends which would be part of the profits made by the corporation.
Cooperatives
A cooperative is an organization that is owned and operated for the benefit of its members. A government charter allows co-ops to exists. Each member gets a singular vote - regardless of shares owned. Dividends are paid out to members. An example of a co-op would be the credit union.
Franchise
An individual or group of individuals but the right to operate and sell certain goods or services. Examples include dairy queen, pizza hut, Midas muffler.the person buying the franchise - the franchisee - agrees to follow all standards established by the franchisor - the owner of the organization.
Business Enterprise: Service
A company which provides a service rather than a good/product to the consumer. Example: a law firm or travel agency
Business Enterprise: Merchandising
A company which buys finished products and resells them to individuals or other businesses. Example: Sears
Business Enterprise: Manufacturing
A company which buys raw material and transforms the raw material into a finished product. Example: Clayburn Brick Plant - manufacturing
Non-Profit
An organization whose activities meet social needs and are not profit based. Example: Rotary Club
