329. The purpose of a farm cooperative is to:
330. In a cooperative, members/customers:
331. People who form cooperatives:
332. A distinguishing feature of a cooperative is that it:
333. Which of the following statements about farm cooperatives is most accurate? Farm
cooperatives have:
334. Which of the following people would be most interested in participating in a business
organized as a cooperative?
335. Twenty-six years ago, several small vineyard owners in California joined voluntarily to
market their grapes and wine in an attempt to get better prices. Over the years they expanded
the organization to include other services such as buying and selling farm supplies and
equipment and providing financial and technical services. The arrangement established by these
vineyard owners is an example of a(n):
Mini-Case
For as long as she could remember, Jenna Raiter’s passion was cars. As a teenager, she spent
hours with her dad tinkering with the family car, learning to change the oil and making minor
repairs. She got a job at a local garage while still in high school. A few years after graduating
from high school and completing the auto mechanics degree at a local community college, Jenna
decided she wanted to be her own boss. She quit her job, borrowed some money from her dad,
and began her own repair shop, the AutoMotion Garage. Jenna’s hard work gradually attracted a
loyal clientele of satisfied customers. Her success has her thinking about opening garages in two
other locations, but she lacks the financial resources needed for expansion. Furthermore, the
success of her business is forcing Jenna to spend more time managing the business and less
time doing the actual technical work she still enjoys. She wants to find business partners who
can help her with management and provide additional financial resources. She has approached a
couple of friends she met in high school: Al Ternator and Lew Banfilter, to see if they would like
to join the business.
336. Currently, AutoMotion Garage is operated as a(n):
337. Jenna approached Al Ternator about joining the business as an owner. She proposed that
she continue to provide the technical expertise and deal directly with customers, while Al, who
has a college degree in finance, handles many of the financial aspects of running AutoMotion. In
addition, Jenna wants Al to contribute some much-needed money for expansion. Under Jenna’s
proposal, she and Al would operate the business together as:
338. Although Lew Banfilter, now a young attorney, is impressed with AutoMotion and believes
it could be a place to invest money, he informed Jenna that his professional position at a law firm
prevents him from taking an active role in the business. He is also concerned about accepting
more risk since he has a young family. He mentioned a preference for unlimited liability. If Lew
joined Jenna and Al, the three might consider forming a(n):
339. When Jenna confided in Lew and Al that she too was concerned about adding additional
risk, Lew suggested that they explore the possibility of one of the newest forms of business
ownership, a(n) __________, which has very flexible ownership rules and would give them more
choices in how the company’s earnings are taxed while still protecting all owners from high levels
of risk.
340. Al also suggested another way Jenna could finance her expansion. He described setting
up a chain of AutoMotion Garages by selling the rights to use AutoMotion’s name, business
model, garage design and service ideas to others who would like to own a similar shop. These
individuals would pay AutoMotion an initial fee and monthly royalties based on earnings. Al is
suggesting that Jenna set up a:
341. With all these choice, Jenna’s head is swirling with ideas. She knows that Al and Lew
have expertise in business and management, but she also knows that she will need to read on
her own for more information. Referring back to a textbook she had in her Introduction to
Business class in college, she comes upon the following statement:
342. Although most new firms start out as sole proprietorships, few large firms are organized
this way. Why is the sole proprietorship such a popular form of ownership for new firms? What
features of the sole proprietorship make it unattractive to growing firms?
Sole proprietorships have many features which are attractive to people starting a new business,
including the following:
1. They are relatively easy and inexpensive to set up.
2. The owner can be his or her own boss, which appeals to many entrepreneurs who want to do
things their own way, without the need to consult others.
3. The owner can keep all of the profits (except the share the government takes in taxes).
4. Proprietors can take a great deal of pride in owning their own independent business and
running it as they see fit.
5. The owner’s work establishes a legacy on which future generations may build.
6. There are no special taxes on proprietorships.
However, sole proprietorships also have some disadvantages that limit their growth potential:
343. What is the difference between a general partner and a limited partner? Give an example
of a situation in which a person would want to be a limited partner.
344. What is a C corporation? What are the major advantages and disadvantages of this form
of business ownership?
345. What is a limited liability company (LLC)? How does it compare to an S corporation?
What are the major advantages and disadvantages of an LLC?
346. Describe and differentiate between the three types of corporate mergers. Give an
example of each type.
347. Franchising has certainly become a key component of the U.S. economy. What are the
major advantages and disadvantages of franchising?