Chapter 1 Forms of Business Ownership(企业产权形式)(briefing ed.).doc

Chapter1 Forms of Business Ownership（企业产权形式）Sole Proprietorships 个人企业Partnerships 合伙企业Joint Ventures 合资企业Corporations 公司Limited Liability Companies 有限责任公司Mergers & Acquisitions 企业兼并和收购Franchises 特许经营 Sole ProprietorshipsAn organization that is owned, and usually managed, by one person is called a sole proprietorship.The sole proprietor is usually an active manager, working in the shop every day. He or she controls the operation of the business, supervises the employees, and makes the decisions. He or she also assumes complete responsibility for any of its liabilities or debts.Advantages(the sole proprietors)you can be your own boss；you can make business decisions without having to ask anyone else；you also get to keep the profits from the business and have the freedom to wind up your business whenever you want；(4) A sole proprietorship is the easiest from of business to start;(5) There is nothing like the pleasure of knowing that you can earn as much as possible and do not have to share that money with anyone else.DisadvantagesIt is often difficult for the owner to raise capital. The owner is personally responsible for all aspects of the business. He or she has unlimited liability.The owner must spend long hours working.It is also difficult to hire and keep high-achievement employees. PartnershipsA partnership is a legal relationship between persons carrying on a profit-motivated business.The three key elements of any general partnership are:common ownership;shared profits and loses;the right to participate in managing the operations of business. A general partnership is a business with at least one general partner who has unlimited liability for the debts of the business.A limited partnership is an arrangement where a person can contribute to a business without being involved in the affairs of the partnership.The general partners arrange and run the business, while the limited partners are investors only.Advantages(to form a partnership) a partnership allows two or more people to work together and bring different skills and resources to the business; when two or more people pool their money and credit, it is easier to pay the rent, utilities and other bills incurred by a business. A limited partnership is specially designed to help raise capital.Disadvantages The partnership is not considered to be separate from its owners, the partners are personally responsible for liabilities of the partnership; Three exists division of profits; There may be disagreements among partners; Tt is usually difficult to terminate. Joint VenturesA joint venture is the pooling of resources and expertise by two or more businesses, typically from different areas or countries to achieve a particular goal.The reasons behind the formation of a joint venture often include business expansion, development of new products or moving into new markets, particularly overseas.AdvantagesIf successful, a joint venture can offer:·access to new markets and distribution networks;·increased capacity;·the sharing of risks with a partner;·access to specialized staff and technology.It isnt as final as a merger or takeover.Disadvantages·If the objectives of the venture are not 100 per cent clear, or not communicated to all the staff involved, problems are likely to arise;·There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners;·Different cultures and management styles result in poor integration and coo-operation between the partners;·The parent businesses dont provide sufficient leadership and support in the early stages.Success in a joint venture depends on thorough research and analysis of aims and objectives. This should be followed up with effective communication of the business plan to everyone involved.4. corporationThe corporation is a legal entity(法人实体), allowed by legislation，which permits a group of people, as shareholders(股东)（for-profit companies）or members(non-profit companies), to create an organization,Types of CorporationsTypeDescriptionPrivateAttempts to earn a satisfactory profitPublicOwned and run by the governmentClosedStock held by only a few owners and not actively sold on the stock marketOpenStock held by numerous people and actively sold on the stock marketMunicipalCities and townships that carry out businessDomesticIncorporated in one province or country and doing business within that province or countryForeignIncorporated in one province or country and doing business another province or countryAlienIncorporated in one nation and operating in another nationNonprofitService organization incorporated for limited-liability statusCorporations are owned by shareholders, each of whom owns a percentage of the entire corporation through their shares. Advantages(to incorporating a business)Limited liability: a major advantage of corporations is the limited liability of owners. Limited liability means that the owners of business are responsible for losses only up to the amount they invest.Skilled management team: The board of directors has the duty of hiring professional managers, and the owners delegate their power of operating the business to these managers.Transfer of ownership: shareholders have the rights to sell their shares of a corporations stock to whomever they please, barring(不包括)a legal restriction on some closed corporations. Thus, shareholders can freely buy and sell shares of stock.Greater capital base: The corporate from of business makes it easier for a business to grow and expand; easier to obtain loans since lenders find it easier to place a value on the company when they can review how the stock is trading.Stability: A corporation has an unlimited life.Disadvantages(to incorporating a business).Multiple taxation(多重税收): The corporation has to pay taxes on its profits.Difficulty and expense of starting:.Government involvement(干预):.Lack of secrecy: a corporation must provide each shareholder with an annual report.Lack of personal interest: in most corporations except the smaller ones,management and ownership are separate.Credit limitations(信用缺陷): banks and other lenders have to consider the limited liability of corporations.5. Limited liability companiesA limited liability company(LLC) is a type of business ownership combining several features of corporation and partnership structures.(But, it is not a corporation or a partnership.)Advantages.Limited liability: owners of an LLC have the liability protection of a corporation.Flexible profit distribution(灵活的利益分配): Limited liability companies can select varying forms of distribution of profits.No minutes(会议纪要): Corporations are required to keep formal minutes, have meetings, and record resolutions.Flow-through taxation: all the business losses, profits, and expenses flow through the company to the individual members.Disadvantages.Limited life:.Going public(上市):.Added complexity6. Mergers & Acquisitions(兼并和收购)A merger is the result of the combination of two companies to form a new company.An acquisition is one company buying the property and obligations of another company.A horizontal merger(横向) joins firms in the same industry and allows them to diversify or expand their products. in a horizontal merger, the acquisition of a competitor could increase market share.the business can now supply a variety of cycling products.A vertical merger(纵向) is the joining of two firms involved in different stages of related businessa manufacturer merging with a supplier of component products, or a manufacture merging with a distributor of its products.A potential competition merger(conglomerate)(混合兼并): unites firms in completely unrelated industries. the primary purpose of a conglomerate merger is to diversity business operations and investments.Mergers can lead to higher prices, reduced availability of goods or services, lower quality of products, and less innovation(创新).7.Franchises(特许经营)A franchises is the right to use a business name and sell products or services, usually in a specific geofraphical territory.A franchises can be formed as a sole proprietorship, partnership, or corporation.The method of doing business involves a standardized approach to delivering a product or service.AdvantagesBuying a franchises is a popular choice for starting a business. it is a way to reduce risk and receive support from a large network. The franchiser usually provides management assistance and training and may offer financial support. The failure rate for franchises has been lower than that of other business ventures.DisadvantagesA franchise offers less freedom than an independent business. The franchise may lose the spirit and incentive of being their own boss with own business. The owner cannot change products and services. Initial franchise fees may be expensive.The franchiser often demands a large share of the profits, referred to as royalty payments(专利权税).Many franchisees face restrictions in the reselling of their franchises with transfer of ownership possibly requiring approval of the franchiser.