Today’s Schedule – 10/10

• Finish Partnership Negotiations• PPT: Corp./Mergers/MNCs• HW:– Franchise Research – Due Next Friday– Study for Ch. 8 Quiz – Taking Thursday– Read 9.2

Corporations

• Legal entity owned by individual stockholders–Each has limited liability for firm’s debts–Part owner

• Stock: Certificate of ownership in a corp.• Entity: Legal identity separate from its

owners

Corporations

• Characteristics–Pays taxes, engages in business,

sues/can be sued–20% of all businesses–90% of all products sold–70% of national income

Types of Corporations

• Closely held corporations–Stock given and held by a few

• Publicly held corporations–Buy and sell stock on an open market

(NASDQ, NYSE)

Structure of Corporations

• Stockholders elect board of directors• Board of directors appoints corporate

officers• Corporate officers run business–Hire/manage employees and

production

Advantages of Corporations • Limited liability• Stocks are fluid for stockholders• Easier to raise money –Selling of stock–Selling of bonds•Contract to repay borrowed money in a set

amount of time with a given amount of interest

• Owners can hire experts to manage corp.• Longevity

Disadvantages of Corporations • Difficult to start up–Application for incorporation

• Taxes must be paid based on income corp. earns• Stockholders also pay taxes on their

dividends (profits earned from investment)• Must file quarterly stock reports with the

SEC

Corporate Combos• Horizontal Merger: Firms in the same market

• Vertical Merger: Firms in the same market at different stages of development

• Conglomerate: Firms with unrelated goods

Multinational Corporations (MNCs)• Corporations that operate in more than

one country• Headquarters (HQ) in one country with

branches in others• Must conform to laws in each country

where they operate–Including paying taxes

• ~ 60,000 MNCs today w/$3 trillion in assets

Example: The Americas

BrasilCanadaCanada(French)LatinoaméricaUnited States

EuropeDenmarkDeutschlandEspañaFinlandFranceGreeceItaliaThe Netherlands

• Middle East and South AfricaMiddle EastSouth Africa

• NorwayÖsterreichPortugalРоссияSchweizSwedenUnited KingdomMagyarország

• Asia PacificAustralia China

Hong KongIndia

Japan

Korea

New Zealand

PhilippinesSingapore TaiwanThailand

Advantages of MNCs

• Provide jobs• Access to multiple buyers• Spread technology• Improve standard of living in poorer

countries

Disadvantages of MNCs

• Commercialized influence on culture• Low wages• Poor working conditions