Notes

1-14 Q MC (1/3 Different Forms of Businesses)
15 Q Corporation (Types & Ex) 2 marks
16 Q Three types of resources (Capital, Human, Natural) 10 marks
17 Q Merger and Strategic Alliance 2 marks

Sole proprietor:
Owned by one person
The owner has unlimited liability- if the business does poorly the owner is responsible for all losses.
All profits go to the owner
Easy to start up and end
Be your own boss
Not heavily regulated by the government
Unlimited liability- owner can lose all personal assets if sued
Owner is responsible for all debts
If owner dies, the business ends
May be difficult to get bank financing
Hairdresser


Franchise:
One business licenses another to use its name, operating procedures and so on… As a hybrid, it can have any form of business ownership.
Not part of the four. The four can become a franchise.
Brand recognition
Support from FRANCHISOR- business is set up for you
Uniform quality of products
Expensive to purchase
Monthly fees- royalties and advertising fees.
Little control over business
Have to purchase products from the franchisor
Tim Hortons
McDonald’s

Partnership:
Owned by two or more partners who share the responsibilities and profits/losses.
Types of Partnership:
General: partners have unlimited liability
Limited: partners have limited liability
Combined finances-easier to raise capital
Easier to get bank loan
Combined talents and skills
Easy to set up and end
Unlimited liability
Business is not separate from owners for taxation
Each partner is jointly responsible for each other’s decisions and debts
Partnership disagreements
When one partner dies, partnership ends
Apple Corporation started as a partnership between Wozniak & Jobs

Corporation:
Owned by its workers or members who buy from the business
4 Types of Corporations:
Private
Public
Crown
Non-Profit
Limited liability as it’s a separate legal entity
Transfer of ownership is simple-shares can be bought and sold
Unlimited life
More complex taxation
More expensive to set up
Decision making may take longer
People who own few shares have limited control
Walmart
McDonald's

Cooperative:
Business is an artificial person created by law and owned through shareholds.
In Canada many cooperatives in health care and child care are non-profit.
Less expensive goods and services
All people are equal
Limited liability
Separate legal entity
Each person has 1 vote and can only own 1 share
Decisions making can be difficult
No incentive to invest
Work is equally divided
Mountain Equipment Co-op

Types of Financing
Debt Financing
Disadvantage
if you borrow a large sum of money from the bank, it may be difficult to repay on time
have to pay interest
Advantage
easy to access money sooner

Equity Financing
Advantage
no large debt to repay and no interest expense
Disadvantage
with equity financing, you risk your own savings

Joint Ventures
A joint venture is a strategic alliance where two or more people or companies agree to contribute goods, services and/or capital to a common commercial enterprise. A third company is created.

Strategic Alliances
Strategic alliances are agreements between businesses in which each business commits resources to achieve a common set of objectives. Two companies align for a project.

Mergers
A merger is when two or more companies join together, either because one has purchased a controlling interest in the other or because both companies have combined their interests.

Multinational Corporations
A business enterprise that conducts business in several different countries. A global company.

Outsourcing - get a product or service done by another company which is located either in Canada or another country.

Offshoring is the relocation of some of a company’s operations to another country.