bbi2o_types_of_businesses

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=Business Types=

Forms of Business Ownership
__What you need to remember__:
 * 1) Forms of Business Ownership
 * 2) How to start a Business
 * 3) International Business Structures

Forms of Business Ownership
//Video- Venture Worm-Boy// __Questions__
 * 1) List some of TerraCycle's assets, liabilities, equity, revenue and expense examples from the video
 * 2) How are companies like Loblaws trying to become 'greener'?

Sole-Proprietorship
Owned by one person. Is responsible for everything from marketing, service, shipping/receiving, accounting. Money for startup is usually savings, personal relationships, or bank loan. If the business fails then the owner is liable and thus could lose everything. **Unlimited liability** is the problem with sole-proprietorships. When registered with your name you don't have to register the business with the government and you can file your tax receipts along with your personal income tax (as opposed to a far more complicated business tax submission). Richmond examples: Kerr Carpentry, Christopher's Meat Market.

//Task: come up with 5 sole-proprietorships from your closest town/village//.

Partnership
A type of business where 2 or more people want to run the business. Common examples, construction, lawyers, food-service. Once the **partnership agreement** (a legal document) is signed it can only be dissolved though legal means.

//Task: list 5 Partnerships you can think of.//

There are a number of different partnership agreements, a **general partnership** is the most common. Liability is unlimited, which means one partner's business-related debts and/or liabilities can be covered by the other partner's assets. **Limited partnerships** on the other hand, mean that each partner is responsible for their own portion of the liability. The main advantage of partnerships is that area expertise can be an asset to the company (knowledge/skill). Disadvantage is that compromise is key in having decisions made.

Corporation
There are certain legal rights/privileges granted to the corporation that do not apply to the individuals working FOR the corporation. Corporations can be as small or as large as a **multinational**, it's the LEGAL ramifications which make a corporation. Large corporations require funding from many sources and, when publicly owned, they're divided into small **shares** (or stock), which are exchanged on [|stock markets]. **Shareholders** expect to gain money (in the form of **dividends**) from owning own a part of the company (which largely are governed by **boards of directors**). Liabilities of the corporation are not assumed by the individuals within the company, which is the big attraction of forming a corporation.
 * Private corporation - often not widely known by the public. Only a few people control the shares/stock, and there's no public trading of stock. Advantage, owners assume profits. Disadvantage, harder to raise capital to start. (e.g. l[|ist])
 * Public corporation - By selling stock on the market, large amounts of financial capital can be raised to invest in the company (expansion). Shareholders vote on key decisions. ([|list] - e.g. RIM)
 * Crown corporation - in Canada municipal, provincial or federal government can operate a corporation. e.g. VIA, AECL, CBC. City of Ottawa

Co-operative
The company is owned by the workers and/or members (read p. 39 - discuss) and the company exists to provide a service, not for making a profit. There exists a board of directors and members own shares. Voting power is equal, regardless of the number of shares and profit-shares are distributed according to expenditure on the service/company. E.g. Somebody who spends $400 worth of gear from MEC gets 2x as much dividend as that person who spends $200 on gear. Canada is rich in co-operatives (consumer - The Co-operators insurance, retail - MEC, IGA, Worker - Canadian Worker Coop Federation).

Franchises
One business, the **franchiser** licenses the rights to name, procedures, designs etc... to a **franchisee**. They are independant businesses which have separate ownership and exist together only in this right. The most well-known franchise is McDonald's with 30,000 franchises around the world. That said, Subway is the franchise in [|top demand] for the past few years. Largely due to their [|low startup costs], and high rates of return (Subway is a privately held corporation). There are a certain number of requirements that must be met before the franchisee can be awarded a franchise (e.g. Tim Hortons in Richmond). Additional to the initial franchise startup fee, there are monthly costs like 'membership and advertising' which can add up to 5-10% of sales monthly. Tim Hortons split from Wendy's in 2006.

Forms of Ownership Matrix ([|link])
Homework Questions
 * 1) What similarities exist between a Ontario Power Generation (crown corporation) and the Royal Bank //(public corporation)?//
 * 2) p.50 Q#//8//
 * 3) //What shift in business occurs commonly occurs when a private corporation moves to expand it company beyond it current financial means?//

Starting a business
When and what you start depend largely on your strengths weaknesses. There is greater risk at the offset, but greater reward long-term. The first big choice is what type of business should you create (see the business startup grid). The largest type of small business is the small office, home office (**SOHO**), which can be **e-commerce** based, or not.

E-commerce based companies need to establish a website along with a **doman name** (as opposed to the actual IP address e.g. www.bradleysinsurance.com is actually 209.217.127.78). Websites are created (usually with the help of a design company) and financial transaction companies are contacted (e.g. VISA, Paypal etc...).

Industry Canada is the most important site in Canada in which to find **GDP** (gross domestic product) breakdown including markets, look at business analysis, and contacts/information, as well as tips on startup money, and taxes.

Startup costs are a problem for most nascent companies. Money is available from two sources:
 * 1) Debt Financing - borrowing money to start the business. Business plan, past history is closely scrutinized by the bank/company before money is lent. Interest hinges on **risk**.
 * 2) Equity Financing - using your own savings/investor savings (**venture capital**) to start the business. When you get equity financing you often must relinquish some control on the business.

Risk is the single most difficult thing to predict when starting a business, yet success hinges on mitigating risk. Risk scenarios common to the startup include lack of payment for services/goods rendered, unfavorable deals (by yourself or a partner), employee liability and supply/distribution problems.

//video -// [|Chinese Handmaster] //Questions://
 * 1) //How might the Chinese companies Dr. Zachary is dealing with cause him to go bankrupt?//
 * 2) //What alternatives might Dr. Zachary use to mitigate his risk in production?//
 * 3) //Once supply/distribution lines are open, what risk does Dr. Zachary carry on a day-to-day basis?//

One of the major difficulties in knowing how to run the business is **forecasting**. This includes how much inventory/supplies/employees/tools/buildings to carry. The owner also needs to project **revenue** every few months to review the business plan. E.g. if forecasted revenue decreases then costs would need to be cut., if revenues are forecasted to increase, perhaps capital expenditures are warranted.

International Business Structures
Acquiring as many customers as possible often includes selling abroad in today's global climate. There are a few common business structures that reflect that.
 * Joint ventures: Often used by producers (e.g. cars, clothing) looking for marketers in a location. E.g. Try buying a Nikon camera from Nikon.com, they have different distributors in Canada (hence nikon.ca). There is no precise legal definition, but it's a joining of two ore more companies towards a common goal. Because there's no legal merger between the companies, they can stay together a long, or as short as they want.
 * International Franchise: much like the regular franchise, but the franchisee is international. They will have to adhere to local laws and look at infringing trademarks, but otherwise the same.
 * Strategic Alliance: agreements between businesses, in which each business contributes resources towards a common goal (co-production/co-develop/co-produce). Still considered separate businesses, the difference from a joint venture is that the result is that there is more invested in a strategic alliance than a joint venture.
 * Merger: When two or more companies join together because either a controlling interest has been obtained, or due to combined interest. The new company reflects the original individual companies (GlaxoKleineSmith used to be SmithKleine and Glaxo). [|Microsoft] is the merger/**acquisition** king. There are rules in Canada as to whether mergers can take place (anti-competitive laws). Acquisitions on the other hand may be agreed on, or aggressive. There are many reasons for acquisition, but in the end one company remains, and the other disappears.
 * Offshoring: more specifically **outsourcing**, moving portions of the company to another country to take advantage of some property of that country. E.g. taxes, //labour//, resources. Can be a public-relations problem however (e.g. Bell offshoring tech support to India) as well as problematic for safety (unstable country).
 * Multinational Corporation: takes advantage of a global economy and operates as though there were no borders. Different from offshoring in that the company remains a single unit. While a multinational can move some operations offshore, it isn't outsourced. Many multinational companies are so powerful they can heavily influence politics in countries (threats to withdraw/close/fire). A list for 2009 can be found [|here].

__Task: Impact of International Business on Me__

Unsure as to how international business impacts **//__your__//** life??? Think your isolated here and matters of trade, import and export don’t affect you??? Let’s check shall we? Look on everything you brought with you today (pens, shoes, watch, binder, cell phone, etc..). Everything that you find with a country of manufacture on it write it on the chart below. Do you still feel international trade does not impact you???
 * Made in Canada ||||  NOT made in Canada  ||
 * Item ||  Country  ||  Item  ||

__Assignment #4__ - International Investigation
([|Presentation Pointers])
 * Do’s and Don’ts of global culture

The purpose of this activity is to introduce students to the cultural complexities of doing business outside of North America. There are many intricacies to traveling to other countries and establishing business relationships. Whether it be negotiation styles, business attire, gift giving, how to make a deal or how to entertain, understanding the business culture of foreign markets may be crucial to the success or failure of a company’s international business future.

You are going to visit various websites and report on the business culture of one of the international business cultures. Your report shall take the form of a (maximum) five minute slideshow presentation. The information you present should:

a. Report on a location that does a lot of business with Canada, or that Canadians have outsourced/offshored to b. Reflect business-related topics (dress, negotiation techniques, conversation,...) c. Highlight cultural characteristics that are different that traditional North American standards

Follow the sequence below to complete this exercise:

1) Groups of 2 or less. 2) Select a country. 3) Write your country on the board to claim it and ensure no one else duplicates your research. 4) Use various search engines to compile your research (ex. = Doing business in “X”, “X” business culture, etc…) which should highlight the cultural business differences inherent in doing business in that country. 5) You should use sub-headings to organize your presentation. (ex. Business Dress, Negotiation Styles, Communication, etc…) and use research from more than one source. 6) You should also try to locate any information on products/services that are unique to the country or that are sold a lot in that country (and why). 7) You have two periods to prepare your research and presentation. ||
 * __International Culture Presentations Marking Scheme__**
 * __International Culture Presentations Marking Scheme__**

Names: Country: An adequate amount of information is provided The information provided is worthwhile and accurate Presentation follows an organized order and flows from start to finish
 * __Thinking__** **/ 5**

Graphics selected are …. a) appropriate for topic b) used effectively (discussed) Presentation is free from spelling and grammatical errors Animation and transitions are effective and are a positive element of the presentation
 * __Communication (Visual)__** **/ 10**

Presentation is delivered professionally … Name = **/ 10** a) Limited Reading Name = **/ 10** b) Confidence and comfortable with material Name = **/ 10** c) Presenter adds to information on slideshow Presenter is professional in appearance and behaviour
 * __Communication (Oral)__**

**__Application__** **/ 10** All slides use space effectively (not too empty or too cluttered) Slides are consistent in its features (font style sizes, animations, colours, etc.) No part of the presentation distracts the audience from learning assignment based on Mr. Edmonson in SSMED
 * / 35**
 * __Comments:__**

//Tools necessary//:


 * writeup MS Word or Open Office (saved in **Word 97-2003** format if you have a more modern version)
 * [|Google]

Ethics and Social Responsibility
Let's look at BodyShop corporate philosophy: media type="custom" key="5480545" media type="custom" key="5480871"

Code of Ethics
Many companies choose to operate under a code of ethics which dictates how employees should respond to a variety of different situations. This means all employees will respond to a problem in the same way (and can include everything from how they can use their company cellphones after-hours, to internet usage). Here in Canada we have laws which detail acceptable behaviour, but **morally** unacceptable behaviour may not be considered illegal depending on the populations **values**. Many businesses recognize that by adhering to a code of ethics that they can minimize negative publicity for the business, which in turn gives them a competitive advantage. Leadership in a company often has to face ethical dilemmas.

media type="custom" key="5480807" Their corporate philosophy [|in action]: media type="custom" key="5481069" The Living Machine is being used in such companies as Ben & Jerry's, the BodyShop and Mars candy factories.

In the past few decades there has been a tendency for employees to inform the public about unethical business practices. In Canada there is [|WhiltleBlowing legistlation]. Events like these stir people's emotions and to that degree there are a number of films dealing with ethics including:
 * 1) All the President's Men
 * 2) Burn after reading
 * 3) Erin Brockovich
 * 4) The Insider
 * 5) The China Syndrome

In Canada there are a series of laws which have become associated with ethics:
 * Marketing fraud
 * false or misleading advertising
 * bait & switch
 * double ticketing
 * Business Fraud
 * bank fraud (loans to non-existent businesses)
 * consumer fraud (see the preceding market fraud)
 * contract fraud (kickbacks/bribes to get a contract)
 * insurance fraud (false claims)
 * mail fraud (uses post office to siphon information/promote)
 * pyramid scheme fraud (ponzi schemes)
 * stock market media type="custom" key="5480795" align="right"fraud (also known as Insider Trading - overview by Business and Securities Commission)
 * telemarketer fraud (high-pressure phone calls to buy or donate to bogus charities)
 * welfare fraud (benefits w/out eligibility)
 * Accounting Fraud
 * **embezzlement** (siphoning money from a client/company) is the most common form of accounting fraud, though others exist (involving hiding liabilities or assets). Usually **forensic accountants** need to be hired to solve complex accounting fraud.
 * Enron - A leader in gas/energy production it hid liabilities and debts to the tune of $586M, several leaders faced [|criminal charges].
 * Nortel - though it stopped short of criminal accounting fraud (or at least it was pushed aside) Nortel leadership did face several charges of [|civil fraud]

Social responsibility
Key to business ethics is social responsibility, the notion that you should be socially responsible (give back to the community, employess, customers) has been around for a while now. Principles include:
 * safe/healthy work environment
 * Health & Safety(incl WHMIS)
 * fair labour policies
 * pay equity, time off, maternity/paternity leave)
 * fair-trade
 * protect the environment
 * Exxon example
 * truthful advertising
 * avoid discrimination
 * gender discrimination
 * glass ceiling to leadership positions
 * sexual/verbal harrassment
 * accessibility
 * donate to charity/causes/events
 * Tim Hortons
 * Mcdonalds

Ethics CSR Assignment

 * Assignment #5**

[|G][|AP CSR assginment] [|Google Docs Version]


 * Assignment #6**

Bre-X - an exercise in corporate social responsibility. In your groups discuss the following:

a. Government should regulate businesses more heavily and more closely monitor their activities b. Government should promote CSR programs so that businesses can regulate themselves using criteria that fit their organizations and at a lower cost than a government program

Make notes from the [|Venture series] clips 1, 2, 5, 8, 9, 10 that do the following: support statements **a. and b**., support statement **a. but not statement b**., support statement **b. but not statement a**., or **oppose both** statements.

Groups should then turn their notes into a clear summary of their positions to be used in a debate later in the class.