A sole proprietorship is owned by 1 person; a partnership is owned by two or more people.

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1 2.01 Understand the Types of Business Ownership KEY Answer the following questions: 1. What are the 3 most common types of business ownership? Sole Proprietorship Partnership 2. What is the difference between a sole proprietorship and a partnership? 3. Who manages the following types of business: Sole Proprietorship Partnership Corporation 4. What is the founding document for a partnership? 5. What is the founding document for corporation? 6. Who controls the goods and services in a market economy? _ 7. List 2 advantages and disadvantages for owning each type of business: Corporation A sole proprietorship is owned by 1 person; a partnership is owned by two or more people. The owner or a manager The owner or a manager Partnership of Agreement Articles of Incorporation People not government Manager, board of directors, shareholders Sole Proprietorship: Advantages Easy to form Owner has complete control Owner keeps all the profits one time taxation Disadvantages Limited capital unlimited liability Death of owner dissolves the company Partnership: Advantages More capital and credit Losses shared by all partners work load evenly distributed Disadvantages Profits are shared Each owner has unlimited liability decisions are made jointly Corporation: Advantages Capital is easy to obtain Possible unlimited lifetime of business limited liability to shareholders Disadvantages Double taxation government regulations Controlled by shareholders and board of directors

2 8. Identify the options to raise investment money by each type of business: Sole Proprietorship Personal Cash _ Gifts _ Borrowed Partnership Personal Cash _ Gifts _ Borrowed Corporation Sale of stock 9. What is a liability? What you owe 10. The following are types of liabilities. Match the liability with its example. (Each term can be used more than once.) Employment Product-related Errors and Omissions Directors and Officers Accident and Injuries on Premises Company Vehicle-Related Errors and omissions An employee made a mistake and used the wrong paint formula. employment An employee was fired for missing too many days of work. Accident and injuries on premises A customer slipped on a wet floor at a restaurant and sprained an ankle. _ A driver ran into another vehicle while driving the company car. Company vehicle-related The company bookkeeper failed to record a large expense for the business making the company appear to be more profitable than it really was._ Errors and omissions The president of the company was harassing women who worked at the company. Directors and officers A light fixture fell from the ceiling causing injury to a customer. Accident and injuries on premises A toy was recalled because it had parts that small children could easily swallow. Product-related Product-related A warning issued for a dishwasher. The circuit panel could short-circuit and cause a fire.

3 11. The following are types partnerships. Match the partnership with its description. Dormant General Limited Secret Silent General Sam and Jack are partners and each work together to make the business successful. Alice gave Danny some startup money for restaurant. She doesn t help him with the business but it is not a secret that she hopes he is successful and will make a good return on her investment. limited Alberto has invested in Bobby s auto repair shop. He doesn t know anything about auto repair, so he is not active in the business and does not give Bobby any advice. Silent Jill is an accomplished photographer with her own studio in a very exclusive shopping area. She is also part owner of a photography studio in a strip mall that caters to inexpensive photography sessions. No one is aware of her involvement with the strip mall photo studio. Secret Merrill is an investor in a skating rink. The business is up and running successfully and Merrill no longer participates in managing of the business but he still receives profits from the business. Dormant Limited Liability Partnership 12. What does the acronym LLP mean?_ 13. Match the following types of corporations with their meanings: Public Private Cooperative Franchise Private You cannot purchase this company s on the stock exchange. Public This company is business to provide a public service or good. This company allows a group people the power to bargain. Cooperative Franchise This company allows you the right to use another company s name or process. 14. Name two services a public might provide. Sanitation, hospitals, water companies, cable companies 15. Name two industries that are popular for cooperatives. Credit unions, food, housing, electric Allows the franchise to sell a products or services using a specific format 16. Explain a franchise business format Give 2 examples: Allows the franchise to sell a products or services using a specific format

4 17. Explain a franchise product trade name format Allows the franchise to sell specific products the format is not specified Give 2 examples: Car dealerships, appliance stores, department stores, gas stations It is taxed like a sole proprietorship 18. What is the advantage of an Subchapter S Corporation? 19. Give 2 examples of professions that commonly setup LLC (Limited Liability Corporation): Lawyers Doctors 20. Identify 2 characteristics of Non-Profit corporations: Serve the public in some way Do not pay taxes 21. Match the three types of businesses with their definition: Domestic Foreign Alien U.S. corporation doing business outside the state it was charted. Foreign A business charted in another nation and doing business in the U.S. _ Alien A U.S. corporation doing business in the state it was charted. Domestic When/how/where the company was created 22. What does chartered mean: 2.02 Understand Leadership and Management 23. What is the role of a manager? 24. Name the 5 functions of Management and their characteristic: Function: Example: Planning Analyze information, set goals, make decisions Organizing Arrange resources Staffing Obtain, train, and compensate employees Implementing Controlling Direct and lead Determine if goals were met 24. Explain the three management styles below: Directed and controlling; used with inexperienced staff

5 Tactical: Strategic: Less directed; allows input from others; used with trusted or experienced employees Mixed: Combination of tactical and strategic; used when you have a mixture of talent among employees 25. Name the three levels of management and give an example using a job title. Management Level: Example: Top Management Mid-Management Supervisor CEO, CFO, CIO, President, Vice President General Manager, plant manager, regional manager Office manager, shift supervisor, store manager 26. Give a brief definition for each of the leadership qualities: Intelligence: smart Making good choices Judgment: Being fair Objectivity: Initiative: Acting without being told Reliable Dependability: Understanding: Showing empathy towards others Working well with others Cooperation: Being truthful Honesty: Courage: Making the right choices in the face of peer pressure Believing in yourself Confidence: balanced Stability: 27. Identify the following management styles using Autocratic, Democratic, Laissez-Fare. Autocratic Janice was training the new employees. She gave them a checklist for the procedure to cash-out the check register. Laissez-Fare Mike runs an advertising agency. To help the creative process he allows the Democratic employees as much freedom as possible. Albert has a staff of trusted and experienced employees. He asks for their input frequently before he makes management decisions. 28. What is the responsibility of the human resource manager? To manage employees to achieve the goals of the business

6 28. Name the 3 functions of Human Resource Management: Planning & Staffing compensation & benefits Performance 29. Explain the purpose of each classification of employee: Permanent: Has a long term commitment with the company Has been hired for a specific time or a specific job Temporary: Full-Time: Works more than 30 hours per week (usually 40 hours or more) Work less than 30 hours per week Part-Time: 30. Categorize the following activities of a human resource manager using the terms in the box. They can be used more than once. Classifying Employees Determine Job Requirements Recruiting & Hiring Compensation & Benefits Performance Determine job requirements Classifying employees Compensation & benefits Performance Recruiting and hiring Determine job requirements Compensation and benefits Performance performance Determines that all new employees need training in word processing. Determined 20 employees were seasonal workers. Announced that all employees would receive a bonus. Processed forms completed regarding employee performance. Placed an ad in the newspaper to hire more employees for the holiday. Analyzed the job duties for the new secretary. Presented the new cafeteria insurance plan to employees. Determined which employees would be layed-off. Conducted an employee evaluation 31. Explain the following payment methods: Payment per hour Time Wage: Pay amount is flat; paid weekly, biweekly, or monthly Salary: Percentage of sales Commission: Payment per unit produced Piece Rate: Base Plus Incentive: _ base pay plus performance pay

7 32. Name 4 things a human resource manager does in the area of managing performance: Employee Evaluations Transfer Promotion Terminations 33. Explain what an employee benefit is: Something extra above pay; it does not have to be monetary Includes things like insurance, vacation time, sick time 2.03 Understand Production and Operations 34. Name three types of production: Extraction/cultivation processing manufacturing 35. Name three types of manufacturing procedures: Mass production custom manufacturing materials processing 36. Why do business spend time on production and manufacturing planning? To improve efficiencies 37. Explain applied research: Marketing research on existing products to make improve them or get new product ideas Give an example: Improve the smell of air fresheners 38. Explain pure research: Discover new solutions to existing problems Give an example: Discover a new medication that works better than old ones 39. What is CPI: Continuous Process Improvement 40. What three things does CPI strive to reduce: Errors inefficiencies waste 41. What are the 6 steps to CPI: 1. Involve everyone 2. identify process activities Establish quality standards select measurement tools Monitor performance continuously improve process quality

8 41. Identify the types of production below as Extraction/Cultivation, Processing, or Manufacturing: Extraction Processing Manufacturing Extraction Cultivation manufacturing Diamond mining Canning fruit Creating pressed lumber Drilling for oil Planting crops Making nails and screws 42. Identify the types of manufacturing below as Mass Production, Custom Manufacturing, or Materials Processing: Mass production Custom manufacturing Custom manufacturing Materials processing Materials processing Mass production producing jeans for Wal-Mart Building a home designing your own perfume turning scrap metal into a usable product recycling plastics making Lance Crackers 43. Identify the 4 main components of business operations: Facilities Management Scheduling Logistics Safety and Security 44. Identify which type of business operation matches the below activity: Facilities management Logistics Scheduling Safety and Security John purchased 20 new bar stools for his restaurant. Facilities Management Logistics April lost her lease on the warehouse and cannot store her inventory. Facilities management The parking lot needs to be plowed after the snow storm. Scheduling The plant will be creating a second shift from 3 pm 11 pm. Safety and security Employees must have an ID to enter the building.

The Beauty Industry Business

The Beauty Industry Business Opening Your Own Business Location Area Visibility Parking facilities Competition Business plan General description Personnel to be hired Salaries and benefits Expenses Financial plan Purchasing an Drawing