Chapter 8 FRQ Flashcards
Sole
Proprietorship
Business owned and managed by single individual
Examples of sole proprietorships
Bakery, hair salon, bike repair
Three advantages of sole proprietorship
Easy start up
Sole receiver of profit
Full control
Three disadvantages of sole proprietorship
Unlimited personal liability
Limited access to resources
Lack of permanence (limited life)
General partnerships
All responsibility equally shared
General partnerships examples
Doctors, lawyers, accountants
Limited partnerships
Only one partner is required to be general partner
Limited liability partnerships
All partners are limited
LLP examples
Attorneys, dentists, accountants
Advantages of partnerships
Easy start up
Shared decision making
Larger pool of capital
No special taxes
Disadvantages of partnerships
Unlimited liability
Potential for conflict
Corporations
A legal entity owned by individual stockholders
Advantages of corporation
Unlimited liability for owners
Transferable ownership
Ability to attract capital
Long life
Disadvantages of corporations
Expense/difficult start up
Double taxation
Potential loss of control by the founders (selling stock)
Multinational corporations
Large corporation that produces and sells its goods and services throughout the world
Multinational corporation examples
Apple inc
Coco cola
Sony
Multinational corporation advantages
Provide jobs around world
Provide products
Spread new technology
Multinational disadvantages
Low wages
Poor working conditions
Bad influence on culture
Business franchise
Semi independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area
Business franchise examples
Jets, pizza, Starbucks
Business franchise advantages
Management training and support
Standardized equality
Advertising programs
Financial assistance
Business franchise disadvantages
High franchise fees and royalties
Strict operating standards
Limited product lines
