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ADMIN-1001 Intro to Canadian Business > Chapter 5 > Flashcards

Chapter 5 Flashcards

Review of Chapter 5

1
Q

Sole proprietorships

A

Sole proprietorships – businesses owned and usually managed by a single individual

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2
Q

Partnerships

A

Partnerships –
voluntary agreements where two or more people act as co-owners; there are
several types

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3
Q

Corporations

A

Corporations – legal entities, separate from their owners

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4
Q

Sole Proprietorships: Advantages

A
  • Retention of control
  • Pride of ownership
  • Retention of profits
  • Possible tax advantage
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5
Q

Sole Proprietorships: Disadvantages

A
  • Limited financial resources
  • Unlimited liability
  • Limited ability to attract and retain talented employees
  • Heavy workload and responsibilities
  • Lack of permanence
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6
Q

General Partnerships – Advantages

A
  • Pooled financial resources
  • Shared responsibilities
  • Ease of formation
  • Tax advantages
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7
Q

General Partnerships – Disadvantages

A
  • Unlimited liability
  • Disagreements
  • Difficulty in withdrawing from partnership
  • Lack of continuity
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8
Q

General partnership

A

General partnership – all partners have
the right to participate in the management
of the firm, and all share unlimited liability

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9
Q

Limited partnership

A

Limited partnership –

includes at least one general partner and at least one limited partner (who has limited liability)

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10
Q

Limited liability partnership

A 
Limited liability partnership – 
all partners are actively 
involved but they have some 
form of limited liability, which
varies by jurisdiction
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11
Q

What makes corporations different from partnerships and sole proprietorship?

A
  • A corporation is a legal entity, separate and distinct from its owners.
  • Corporations are owned by shareholders.
  • The board of directors establishes the mission and objectives.
  • The board is elected by the shareholders to represent their interests, but rarely gets involved in day-to-day management.
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12
Q

Corporations – Advantages

A
  • Limited liability
  • Permanence
  • Ease of transfer of ownership
  • Ability to raise capital
  • Specialized management
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13
Q

Corporations – Disadvantages

A
  • Expense/complexity of formation and operation
  • Complications if operating across jurisdictions
  • Double taxation
  • Paperwork/regulation
  • Conflicts of interest
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14
Q

Acquisitions

A

Acquisitions – when one firm buys another

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15
Q

Mergers

A

Mergers – two companies agree to become one

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16
Q

Corporations look for?

A

Corporations look for – growth opportunities, operational efficiencies, and competitive advantages

17
Q

Divestitures

A

Divestitures allow a firm to streamline
operations and focus

  • Spin-off
  • Carve-out
18
Q

Spin-off

A

Spin-off – setting up the division or part of the business as a separate entity (sell shares to existing shareholders)

19
Q

Carve-out

A

Carve-out – setting up a separate business from an operation (sell shares to outside investors)

20
Q

What are the different types of corporations?

A

Traditional/Regular
Cooperatives
Not-for-profit or non-profit
Crown corporations

21
Q

Cooperatives

A

Owned by members
Formed to meet common needs of members
Each member has equal ownership and an equal voice on managing the co-op
May be for-profit or not-for-profit
Profits are distributed to members through patronage dividends

22
Q

Who makes decisions in a cooperative?

A

Each member has equal ownership and an equal voice on managing the co-op.

23
Q

Who owns a cooperative?

A

Owned by members

24
Q

Is a cooperative for-profit or not-for-profit?

A

Either, may be for-profit or not-for-profit

25
Q

How are profits distributed?

A

Profits are distributed to members through patronage dividends

26
Q

Not-for-Profit (or Non-Profit)

A

Operate in both public and private sectors

27
Q

Crown Corporations

A
  • Government-owned but most operate at arm’s length from government
  • Provide services to Canadians where private industry cannot
28
Q

Franchising

A

Franchising – not a form of ownership but an operation option; the franchisee uses the brand name, trademark, and practices of the franchisor

29
Q

What businesses are franchises?

A

Tim Hortons, Canadian Tire, M&M Food Market, RONA, etc.

30
Q

Franchising – Advantages

A
  • Less risk
  • Training and support
  • Brand recognition
  • Access to funding
31
Q

Franchising – Disadvantages

A
  • Costs
  • Lack of control
  • Negative halo effect
  • Growth challenges
  • Restriction on sale
  • Poor execution
32
Q

What should you consider when entering into a franchise agreement?

A
  • Terms and conditions
  • Fees and other payments
  • Training and support
  • Specific operational - requirements
  • Conflict resolution
  • Assigned territory

ADMIN-1001 Intro to Canadian Business (7 decks)

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