Chapter 7

Question 1

what are some common organizational types (also called “legal structures”)?

Answer 1

1. Sole proprietorship
2. General partnership
3. Franchise

Question 2

limited liability partnership (LLP)

Answer 2

a partnership in which some or all partners have limited liabilities

Question 3

general partner

Answer 3

unlimited liability

Question 4

3 Advantages of an LLP

Answer 4

1. Single Taxation
2. Limited Liability
3. Flexibility

Question 5

3 Disadvantages of an LLP

Answer 5

1. Duration
2. Limitation of Formation
3. Partner Control

Question 6

limited liability company (LLC)

Answer 6

a hybrid business structure allowed by state statute.

Question 7

articles of organization

Answer 7

a simple document that legitimizes your LLC

Question 8

3 Advantages of an LLC

Answer 8

1. Limited Liability
2. Less Record Keeping
3. Sharing of Profits

Question 9

2 Disadvantages of an LLC

Answer 9

1. Possible Limited Life
2. Self-Employment Taxes

Question 10

franchise

Answer 10

a business model that involves one business owner licensing trademarks and methods to an independent entrepreneur for a prescribed period of time.

Question 11

integration

Answer 11

When businesses acquire other businesses

Question 12

Integration can be accomplished in two primary ways:

Answer 12

through mergers or acquisitions

Question 13

merger

Answer 13

creates one larger company and one of the original companies ceases to exist.

Question 14

horizontal merger

Answer 14

occurs between companies in the same industry.

Question 15

vertical merger

Answer 15

the merger of two organizations that have a buyer-seller relationship or, two or more firms that are operating at different levels within an industry’s supply chain.

Question 16

horizontal merger example

Answer 16

facebook + Instagram

Question 17

Vertical merger example

Answer 17

apple

Question 18

acquisition

Answer 18

occurs when a company purchases the assets of another business and usually permits the acquired company to continue operating as it did prior to the acquisition.