Ch. 6 Forms of Business Ownership Flashcards
describe sole proprietorship
one person owning and operating a business, without forming a corporation
in a sole proprietorship the … and the .. are …
the business and the owner are a single entity
how many businesses in Canada fall under sole proprietorship ownership
almost 1/4 of all registered businesses
Stock: describe a private corporation
not traded on any stock exchange and limited to 50 or fewer stockholders
Stock: describe public corporations
shares are traded on one or more stock exchanges
Stock: describe non-profit
preforms public service, has special tax considerations to encourage formation
describe professional corporations
owners provide professional services
describe a crown corporation
one that can only be registered by the provincial or federal government
describe how owners affect management
owners select the board of directors, the board of directors hire officers, and the officers select managers
name Canada’s top five largest corporations (most to least)
Wal-mart Canada, Costco Wholesale Canada, Desjardins Group, McKesson Canada and Honda Canada
corporate governance refers to …
the process and policies that determine how an organization interacts with its stakeholders, both internal and external
corporate governance is necessary because of …
the evolution of public ownership
what are “articles of incorporation”
a legal authorization from the federal or provincial/territorial government for a company to use the corporate format
a merger is …
the result of two firms forming one company
an acquisition is …
one company’s purchase of the property an obligations of another company
a vertical merger is …
the joining of two firms involved in different stages of related businesses
a horizontal merger joins …
two firms in the same industry and allows them to diversify or expand their products
a conglomerate merger …
units firms in completely unrelated industries
list the first two reasons why mergers do not work
companies overpay to acquire another firm and acquiring company overestimates cost savings and synergies
list the last two reasons why mergers do not work
after merger, managers disagree about integrating operations and after merger, cost cutting hurts business, costing top employees and customers
a leveraged buyout (LBO) is an attempt …
by employees, management, or a group of investors to purchase an organization primarily through borrowing. the funds borrowed are used yo buy out the stockholders in the company
a franchise agreement is an arrangement whereby …
someone with a good idea for a business sells (franchisor) sells the rights to use the business name and to sell a good or service (the franchise) to others (the franchisee) in a given territory
list four things associated with franchisors
assigns territory, may provide financial aid/advice, offers merchandise/supplies at competitive prices and provides training/support
list four things associated with a franchisee
pays upfront costs, makes monthly payment to franchisor, runs business by franchisor’s rules/procedures and buys materials from franchisor/approved supplier
