Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 05 - How to Form a Business
5-21
c. States often tax corporations more harshly
than other enterprises.
AND BOARD OF DIRECTORS.
benefits of incorporation.
Chapter 05 - How to Form a Business
5-22
critical thinking
exercise 5-2
INDEPENDENT RESEARCH:
SMALL BUSINESS OWNERSHIP
This exercise asks students to select a local businessperson
and interview that individual about his or her business struc-
ture. (See complete exercise on page 5.74 of this manual.)
lecture link 5-4
OUSTED FOUNDERS
Rod Canion (Compaq) and the late Steve Jobs (Apple) both
were removed as heads of the companies they founded. (See
the complete lecture link on page 5.66 of this manual.)
PPT 5-26
Who Can Incorporate?
(See complete PowerPoint slide notes on page 5.51.)
TEXT FIGURE 5.5
How to Incorporate
(Text page 127)
This text figure lists some common items included in the
articles of incorporation.
Chapter 05 - How to Form a Business
a. S corporations have shareholders, directors,
c. They also have the benefit of limited liability.
2. S CORPORATIONS MUST:
a. Have no more than 100 shareholders
b. Have shareholders who are individuals or es-
tates and are citizens or permanent residents
of the U.S.
5-24
PPT 5-27
Oldies But Goodies
(See complete PowerPoint slide notes on page 5.52.)
PPT 5-28
S Corporations
(See complete PowerPoint slide notes on page 5.52.)
PPT 5-29
Who Can Form S Corporations?
(See complete PowerPoint slide notes on page 5.53.)
PPT 5-30
Limited Liability Companies
(See complete PowerPoint slide notes on page 5.53.)
Chapter 05 - How to Form a Business
b. CHOICE OF TAXATION: LLCs can choose to
be taxed as partnerships or as corporations.
i. LLC ownership is nontransferable.
ii. LLC members need the approval of the
other members in order to sell their inter-
est.
5-26
PPT 5-31
Disadvantages of LLCs
(See complete PowerPoint slide notes on page 5.54.)
legal
briefcase
(Text page 129)
PPT 5-32
Virtual
Companies
(See complete PowerPoint slide notes on page 5.54.)
TEXT FIGURE 5.6
Comparison of Forms of Business
Ownership
(Text page 130)
This text figure presents the advantages and disadvantages of
the major forms of business ownership.
progress
assessment
(Text page 129)
PPT 5-33
Progress Assessment
(See complete PowerPoint slide notes on page 5.55.)
Chapter 05 - How to Form a Business
learning goal 4
Define and give examples of three types of corporate mergers, and explain the role of
leveraged buyouts and taking a firm private.
V. CORPORATION EXPANSION: MERGERS AND
ACQUISITIONS
A. The 1990s merger mania reached its peak in 2000.
and a company producing artificial sweetener).
2. HORIZONTAL MERGER joins two firms in the
5-28
PPT 5-34
Mergers and Acquisitions
(See complete PowerPoint slide notes on page 5.55.)
lecture link 5-5
MICROSOFT GAMBLES WITH
SKYPE PURCHASE
Looking to expand into online ventures, Microsoft acquired
Skype in 2011 and spent more than four times the company’s
value to get it. (See the complete lecture link on page 5.68 of
this manual.)
PPT 5-35
Keep Growing . . .
(See complete PowerPoint slide notes on page 5.56.)
PPT 5-36
Types of Mergers
(See complete PowerPoint slide notes on page 5.56.)
TEXT FIGURE 5.7
Types of Mergers
(Text page 132)
This text figure illustrates the differences among the three
types of mergers.
Chapter 05 - How to Form a Business
5-29
of a soft drink company and a snack food produc-
er).
C. Rather than merge, some corporations decide to
MAINTAIN CONTROL of the firm internally, TAKING
IT PRIVATE.
learning goal 5
Chapter 05 - How to Form a Business
5-30
lecture link 5-6
JAM AND COFFEE
In a natural brand coupling, Smucker’s is adding Folgers cof-
fee to its product line using an unusual financial vehicle called a
“reverse Morris Trust.” (See the complete lecture link on page
5.68 of this manual.)
PPT 5-37
Leveraged Buyouts
(See complete PowerPoint slide notes on page 5.56.)
lecture link 5-7
EMPLOYEE STOCK OWNERSHIP
PLANS (ESOPS)
ESOPs are essentially employee-owned businesses. In theory,
worker-owners will be more productive and earn more money
than other employees. (See the complete lecture link on page
5.70 in this manual.)
.
PPT 5-38
Franchising
(See complete PowerPoint slide notes on page 5.57.)
Chapter 05 - How to Form a Business
2. Franchising may be an alternative for people who
like to own their own businesses but want more
assurance of success.
3. More than 825,000 franchised businesses oper-
ate in the U.S. That’s 1 in every 10 businesses.
through:
Chapter 05 - How to Form a Business
lecture link 5-8
SUSTAINABLE FRANCHISING
Companies have been making efforts to be “greener” and
the International Franchise Association has seen a huge jump
in green-based franchises. (See the complete lecture link on
page 5.71 in this manual.)
bonus case 5-2
FRANCHISE OR INDEPENDENT?
WHAT FITS YOUR MOLD?
A husband and wife team opens a restaurant and discovers
how big a job it is. (See the complete case, discussion ques-
tions, and suggested answers beginning on page 5.80 of this
manual.)
PPT 5-39
Make Way for the Newbies
(See complete PowerPoint slide notes on page 5.57.)
3. NATIONALLY RECOGNIZED NAME: You get
instant recognition and support.
4. FINANCIAL ADVICE AND ASSISTANCE
to potential franchisees.
(for a Dunkin’ Donuts franchise).
2. SHARED PROFIT: The franchisor often de-
3. MANAGEMENT REGULATION
a. Some franchisees find the company’s rules
Chapter 05 - How to Form a Business
5-34
thinking
green
(Text page 133)
PPT 5-40
Play Ball but Play
Green
(See complete PowerPoint slide notes on page 5.58.)
PPT 5-41
Advantages of Franchising
(See complete PowerPoint slide notes on page 5.58.)
Chapter 05 - How to Form a Business
advertising strategies.
4. COATTAIL EFFECTS
a. The actions of other franchisees have an im-
pact on the franchise’s future growth and lev-
el of profitability, a phenomenon known as a
COATTAIL EFFECT.
D. DIVERSITY IN FRANCHISING
chises due to lack of money—the “GREEN
CEILING.”
b. However, firms owned by women have grown
at twice the rate of all companies.
c. Women are becoming FRANCHISORS as
5-36
PPT 5-42
Disadvantages of Franchising
(See complete PowerPoint slide notes on page 5.58.)
TEXT FIGURE 5.8
Buying a Franchise
(Text page 136)
This text figure provides some tips on evaluating a fran-
chise.
PPT 5-43
Women in Franchising
(See complete PowerPoint slide notes on page 5.59.)
Chapter 05 - How to Form a Business
5-37
well.
d. The text uses the example of the franchise
Two Men and a Truck, founded by entrepre-
neur Mary Ellen Sheets.
2. Home-based FRANCHISES feel less isolated.
Chapter 05 - How to Form a Business
5-38
PPT 5-44
Minority-Owned Franchises
(See complete PowerPoint slide notes on page 5.59.)
PPT 5-45
Home-Based Franchises
(See complete PowerPoint slide notes on page 5.59.)
PPT 5-46
Home Sweet Home
(See complete PowerPoint slide notes on page 5.60.)
PPT 5-47
E-Commerce in Franchising
(See complete PowerPoint slide notes on page 5.60.)
Chapter 05 - How to Form a Business
media, to meet the needs of customers and fran-
chisees.
of proximity and language.
2. The costs of franchising are high in these markets,
but these are counterbalanced by less competition
Chapter 05 - How to Form a Business
social
media in
business
(Text page 139
PPT 5-48
Franchise
Expansion on
Facebook
(See complete PowerPoint slide notes on page 5.60.)
PPT 5-49
Global Franchising
(See complete PowerPoint slide notes on page 5.61.)
lecture link 5-9
FRANCHISING AROUND THE
WORLD
It’s worth the time and risk to franchise internationally and
now small companies, like Wing Zone, are breaking into in-
ternational markets. (See the complete lecture link on page
5.71 in this manual.)
PPT 5-50
What to Choose?
(See complete PowerPoint slide notes on page 5.61.)
PPT 5-51
High Flyers
(See complete PowerPoint slide notes on page 5.62.)
