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The Firm and Its Environment, corporation, large companies, rights and…
The Firm and Its Environment
basic economic structure
business
goods/services
shape\size
large\small
domination
starting
resources\labour\capital
organization
sole proprietorship
one-owner business
advantages
easy to organize
quick decisions
all of the profits
disadvantages
limited resources
personal savings\funds
lacking capital
BOOM
unlimited liability
pay with personal property
limited business life
partnership
two or more people
partners
equal capital
equal authority
shared profits\losses
greater liability
corporation
a lot of people+resources
owned by one or more investors
stockholders-a board of directors
corporation
shares of stock
certificates
one vote
profit
dividends
advantages
limited liability
no personal responsibility
very large amount of money
bond
unlimited life
the ease of ownership transfer
disadvantages
difficult set up
regular dividends\records
double taxation
small individual share
no direct control
large companies
hierarchical
board of directors
departments
Britain\private limited companies
capital from friends\banks\venture capital institutions
several large departments\divisions
Memorandum of Association
Certificate of Incorporation
name, purpose, registered office, premises, authorised share capital
registar of companies
rights and duties
to buy, sell, own
to make contracts\hire\fire
set prices
to be sued, fined, taxed
individuals to day-to-day operations
CHARTER OF INCORPORATION
president+chief administration
manage the resources
many characteristics of the sole proprietorship
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