Forms of Business Ownership Flashcards
Sole Proprietorship
A business is owned by one person, referred to as a “proprietor”
Partnership
A business with two or more partners who share responsibilities and profits/losses
- General - unlimited liability
- Limited liability
Franchise
A franchisee buys a license to operate a ready-made business from a franchisor
Corporation
A type of business owned by, but existing separate from tis shareholders. It includes a board of directors elected by shareholders
Types of Corporations
- Private (exclusive to employees and close members)
- Public - traded on the stock exchange so anyone can be a shareholder
- Crown - owned by federal government
- Municipal - owned by local government
Cooperative
A business owned by the people and members who are customers of the product/service. Established to share resources and run by board of directors
1st Measure of Business Success
Profit - selling goods/services for more than the required production cost (fixed and variable expenses)
Profit = Revenue - Expenses
Return on Sales = (Profit / Revenue) x 100%
2nd Measure of Business Success
Social Responsibility: helping out the community
- Donating to charity
- Sponsoring public service announcements
- Work experience or apprenticeship programs to students
- Increasing importance as a measure
3rd Measure of Business Success
Employee satisfaction: better chance of success if employees are happy
- Good salaries
- Medical/dental benefits
- Vacation packages
- Recognition of performance
Leads to increased productivity
4th Measure of Business Success
Personal satisfaction: love of what they do, not seeking large profits
Ethics
Rules that help differentiate between right and wrong to encourage the right thing
Values
Personal or company beliefs of what is important
Ethical Dilemma
Difficult choice where benefits must be weighed against an unethical action
Code of Conduct
A document explaining how employees should respond and act in different scenarios
Whistle blowing
Decision of an employee to inform authorities or the public about legal or ethical violation by their company
Fraud
Crime of actively lying and/or pretending for personal or financial gain
How did Ben and Jerry’s represent the 1st measure of business success
Expanded to sell ice cream to restaurants. They then started packaging and distributing to local stores
How did Ben and Jerry’s represent social responsibility?
- Only using vermont milk
- Public stock offering
- Ben and Jerry’s foundation
- Paired with non-profit organizations (ex. Goodwill)
- Rainforest ice cream and brazilian nuts
- 1% for peace campaign
- ‘An unnecessary war’ letter
How did Ben and Jerry’s maintain employee satisfaction?
- Hired people with similar values
- Gave employees shares of the business
- Increased wages
How did Ben and Jerry’s represent personal satisfaction?
- Incorporated Ben’s personal values and principles into the business
- Started with the goal of making ice cream, not making money
- Working with like minded people
What was Ben trying to demonstrate p congress?
He was presenting the idea of reattributing 15% of the national defence budget to peace activities and social service programs.
What values are embedded in the Pirate Creed?
- Fairness / Equality
- Respect
- Loyalty
- Justice
- Survival of the fittest
- Responsibility
1st business ethic
Integrity - standing up for what you believe is right
2nd business ethic
Loyalty - being committed to certain people or groups
3rd business ethic
Honesty - telling the truth
4th business ethic
Responsibility - taking care of all aspects of your job
5th business ethic
Empathy - understanding other people’s point of view
6th business ethic
Confidentiality - keeping others’ personal information private
7th business ethic
Respect - considering the feelings and viewpoints of others before you act
Golden rule of business
Treat others as you would like to be treated
Competition Act
Prohibits:
- False or misleading advertising
- Advertising bargains without having them in stock
- Placing to prices and selling at the higher price
Consumer Protection Act
Cooling off period - consumers can cancel agreements within 10 days
Misrepresentation - customer can withdraw from a contract within a year if they were mislead or lied to
Delivery of goods: deliveries must happen within 30 days of promised date and they cannot be charged for things they did not order
Peak - Business Cycle
Highest everything
CPI
(Cost of basket in year t / cost of basket in base year) x 100%
Contraction
- Higher interest rates lead to lower demand
- Decreasing employment
Trough
Lowest everything
Expansion
- Increasing demand and employment levels
- Increased spending
- Higher investment
