Documente Academic
Documente Profesional
Documente Cultură
Section 2
Corporations,
Mergers and
Multinationals
CORPORATIONS
Most complicated for of business structure
• Corporations
• A legal entity, or being owned by individual stockholders each of whom
has limited liability for the firms debt.
• Owned by individual stockholders
• They have limited liability
• They buy stocks
• Stocks
• a document that shows they have paid money to be a part-owner of
the corporation.
• It is a legal entity (by an individual)
CORPORATIONS
It’s a legal identity
It can make contracts
It can sue
It can be sued
It pays its own taxes
It can make donations to political causes
The Board of Directors selects the President also known as CEO (Chief
Executive Officer) to run the business
CORPORATE STRUCTURE
The CEO selects corporate officers to help administer
the company.
They usually are
• Chief Operating Officer (COO) – day to day operations
• Chief Financial Officer (CFO) – financial matters
• Secretary – paperwork
CORPORATE STRUCTURE
The Corporate Officers oversee the workforce which does the
everyday labor.
CORPORATE STRUCTURE
CHECKING FOR UNDERSTANDING
1. What is a corporation?
2. What is stock?
3. What do stockholders do?
4. What is the official name for the President of a
Corporation?
TYPES OF CORPORATIONS
Closely held
All or almost all stocks are sold to family members
Family members pass stocks to other family members
Keeps it out of other people’s hands
Publicly held
Open to the public to buy and sell stock
Stock is sold on a “stock market” or “stock exchange”
CORPORATE ADVANTAGES
Investors
Limited liability
Investors (stockholders) can only lose amount of
money they put into the company
Lawsuits paid by corporate funds, not invested funds
Flexibility
Easy to transfer stocks
CORPORATE ADVANTAGES
To the Company
Opportunity to grow
Sell stocks
Sell bonds
Bonds are IOUs
No ownership involved
Has the funds to hire the BEST
Long life
DISADVANTAGES
Difficult to start up
A LOT of paperwork
Double Taxation
Corporate profits are taxed
Investor dividends are taxed
Capital gains from sales of stock are taxed
Original owners lose some degree of control
A LOT of government regulations
CHECKING FOR UNDERSTANDING
1. What is the difference between a closely held and a
publicly held corporation?
2. What are some of the advantages that companies get
when they become corporations?
3. What are some of the advantages for investors when
they invest in corporations?
4. What are some disadvantages to forming a
corporation?
CORPORATE
COMBINATIONS
Mergers
A combination of two companies into one.
Horizontal Merger
Combine with another company
Both companies
supply the same
good or service
CORPORATE
COMBINATIONS
Mergers
Vertical Merger .
Combine with .
another company .
The companies deliver
different parts which
work together to .
deliver a final good
CORPORATE COMBINATIONS
Conglomerates
Two or more companies join together
The products the companies make are
completely unrelated
CORPORATIONS
Multinational Corporations
Companies (corporations) which exist in
Many (multi) different
Countries (national)
CHECKING FOR UNDERSTANDING
1. What is the difference between a horizontal and
vertical merger?
2. What is a conglomerate?
3. What is a multinational corporation.
CORPORATIONS AND HOW THEY CONTRIBUTE
TO E-WASTE