Business

Ownership and
Operations
Chapter 6
 Group members

Nguyễn Thị Phan Huỳnh Tố Đỗ Thục

Xuân Nguyên Quyên

Đặng Thị Nguyễn

Thanh Trí Tường Vy
 Table of contents
01 02
Types of Business Types and Functions of
Ownership Business

03 04
Summary Exercises
 01
Types of Business
Ownership
Organizing a
Business
1. What are three main types of business
organizations?
● Sole
proprietorships

● Partnerships

● Corporations
 2. What is sole
proprietorship?
• A sole proprietorship is a business owned by one
person.

E.g: a local grocery store, a local clothes store,…

Advantages and Disadvantages
3. What are the advantages of Owning a Sole
Proprietorship?
• Starting a sole proprietorship is easy to do.
• Can make all the decisions and run the companies as
they see fit.

• Can keep all the profits, and income taxes are lower
than corporation’s.
4. What are the disadvantages of Owning a
Sole Proprietorship?
• The owner has unlimited liability: they are responsible
for the company debts.
• Limited access to credit.
• A person in charge may not have all skills needed to
run the business.

• The sole proprietorship ends when the owner dies.

 Partnerships
1. What is a Partnership?

• A partnership is a business owned by two or more

people who share its risks and rewards.

E.g: The relationship between Red Bull and GoPro. GoPro sells
more than portable cameras, while Red Bull sells more than energy
drinks. They are both lifestyle brands that have similar goals.
 Advantages and
Disadvantages
2. What are the Advantages of Owning
a Partnership?
• Partnerships are easy to start, need only to obtain a license.
• Each partner usually contributes money to start the
business.
• Banks are more willing to lend money to partnership than
sole proprietorship.
3. What are the Disadvantages of Owning a
Partnership?
• All the partners share the business risks.

• They also share unlimited legal or financial liabilities.

 Corporations
1. What is a Corporation?

• A corporation is a company that is registered by a state

and operates apart from its owners.
 Advantages and
2.Disadvantages
What are the Advantages of Forming
a Corporation?
• Limited liability.

• To raise money when people buy stock.

• The corporation does not end if the owner dies.

3. What are the Disadvantages of Forming
a Corporation?

• Subject to double taxation.

• Has rigid formalities and protocols to follow.

 Other Ways to Organize a
Business
A Cooperative is an organization that is owned and operated
by its member.

E.g: A good example of a consumer cooperative is parent-based

child care. It is a common function of cooperative businesses,
where parents group together to provide inexpensive, yet reliable
care for their children through mutual participation.
• A nonprofit organization (nonprofit), is a type of
organization that focuses on providing a service.

E.g: Some common nonprofit organizations include The Carter

Center and the American Jewish World Service which fund
social initiatives and advocate for human rights.
• A franchise is a contractual agreement to use the name and
sell the products or services of a company in a designated
geographic area.

Eg: Dunkin Donuts, which specializes in donuts, and McDonald's

is a famous fast-food distributor and retailer.
 Why might two
or more people
decide to form a
partnership
instead of each
forming a sole
proprietorship?
Suggested answer: Some people may not want to
have all the responsibility on only themselves. In a
partnership, the responsibilities and business risks
are divided between the partners. It's also easier to
get a loan from the bank if you have a partnership.
 02
Types and Functions
of Businesses
 2.1 Types of
Businesses
Think of a product you own.
What kinds of business made
the product?
 Suggested answer: The process of
making a t-shirt
• Producers: to produce the raw materials: cotton, polyester.

• Processors: raw materials then processed into usable fabric.

• Manufacturers: The fabric then sent to manufacturer who cuts and

sews it into t-shirts.

• Intermediaries: T-shirts are typically sold to intermediaries:

wholesalers, distributors.

• Retailers: sell the t-shirts directly to consumers.

 Producers
What is a Producer?

• A producer is a business that gathers raw goods.

• Agriculture, mining, fishing, and forestry are some of

the industries that produce raw goods.
 Processors
What is a Processor?

• A processor changes raw materials into more finished

products.

E.g: Sugar cane is turned into sugar, crude oil into

gasoline, and iron ore into steel.
 Manufacturers
What is a Manufacturer?

• A manufacturer is a business that makes finished

products out of processed goods.

• Goods are material products such as cars, CDs,

and computers.
 Intermediaries and
1. WhatWholesalers
is an
Intermediary?
• A intermediary is a business that moves goods from
one business to another.
2. What is a Wholesaler?
• A wholesaler (distributor) distributes goods.

• Wholesalers buy goods from manufacturers in huge

quantities and resell them in smaller quantities to retailers
 Retailers and Service
1. Businesses
What is a Retailer?
• A retailer purchases goods from a wholesaler and sells
them to consumers.
E.g: Service stations, record stores, auto dealers.
2. What is a Service
• Business?
Service Businesses perform tasks rather than provide goods.

• This kind of business employs about 3 quarters of the workforce

and is rapidly increasing in numbers.
 2.2 Functions of
Businesses
Production and
Procurement
1. What is Production?

• Production is the process of creating, expanding,

manufacturing, or improving goods and services.

E.g: the manufacturing of cars.

 2. What is Procurement?
• Procurement is the buying and reselling of
goods that have already been produced.

• Wholesalers buy goods from producers to

resell to retailers and other wholesalers.

E.g: manufacturing companies procure raw materials like steel,

plastic, or textiles to produce their products.
Think about starting a
surfboard business that
sells boards you design
and make. Would your
business be involved in
production or
➝ Our surfboard business would primarily be involved in
procurement?
production. We would manufacture our own surfboards while
sourcing some materials and components externally.
 Marketing
What is Marketing?

• Marketing is the process of planning, pricing, promoting,

selling, and distributing ideas, goods, and services.

• Involving getting consumers to buy a product or service.

• Marketers make decisions based on market research of

trends and consumer habits.

E.g: the rebranding of Vinamilk

• Apply earned media.

• Stimulate user-generated content

 Management
What is Management?

• Management is the process of achieving company goals by

planning, organizing, leading, controlling, and evaluating the
effective use of resources.

E.g: managers will make decisions related to investments, cost

control, and revenue generation.
Finance and
Accounting
1. What is Finance?

• The business or art of money management.

• Requires analyzing financial statements to make future

decisions.
 2. What is Accounting?

• Involving mainting and checking records, handling bills, and

preparing financial reports for a business.
 How the Functions of
Business Are
•Interdependent
The functional areas of business depend on each other.
E.g: A furniture maker’s sales have been decreasing:

• Management and production: more efficient procedures.

• Marketing: a new marketing plan.

• Accounting and finance: closely monitor the effects of

new efforts.
• Sometimes, the functional areas conflict with each other.

E.g: management wants to increase sales by 20% within 3

years:
Departments Production Marketing Accounting

Suggesstions Improve quality More marketing Improve production efficiency

Limitations Add to costs More funds

 Advertising is used to
influence consumers to buy
one product or service over
another. Do you think you
could run a successful
 business without
No. Because advertising helpsdoing
business major
advertising? Why or Why
become visible to a wider audience, establish
not?
and reinforce our brand identity, and remain
competitive in a crowded marketplace.
 03
Summary
Three main types of
business
organizations:
●Sole proprietorships
●Partnerships
●Corporations
Sole Proprietorships
• A sole proprietorship is a business owned by one
person.

Unlimited
• liability
The owner is responsible for the company’s
debts.
 Partnerships
• A partnership is a business owned by two or more
people who share its risks and rewards.

Corporations
• A corporation is a company that is registered
by a state and operates apart from its owners.
 Limited
• liability
Holds a firm’s owners responsible for no more than
the capital that they have invested in it.

• The government regulates corporations more than

other types of businesses.
 Cooperative
• A cooperative is an organization that is owned
and operated by its members.

Nonprofit
• organizations
A nonprofit organization, or nonprofit, is a type of
organization that focuses on providing a service, but
not to make a profit.
 Franchise
• A franchise is a contractual
agreement to use the name
and sell the products or
services of a company in a
designated geographic area.
 Types of
Businesses
Producers
• A producer is a business that gathers raw goods.

Processors
• A processor changes raw materials into more
finished products.
 Manufacturers
• A manufacturer is a business that makes finished
products out of processed goods.

Intermediaries
• An intermediary is a business that moves goods
from one business to another.
 Wholesalers
• A wholesaler distributes goods. They are also known
as distributors.

Retailers
• A retailer purchases goods from a wholesaler and sells
them to consumers, the final buyers of the goods.
 Functions of Business
Production
• Production is the process of creating, expanding,
manufacturing, or improving goods and services.

Procurement
• Procurement is the buying and reselling of goods
that have already been produced.
 Marketing
• Marketing is the process of planning, pricing, promoting,
selling, and distributing ideas, goods, and services.

Management
• Management is the process of achieving company goals
by planning, organizing, leading, controlling, and
evaluating the effective use of resources.
 Finance
• Finance is the business or art of money management.

Accounting
• Involves maintaining and checking records, handling
bills, and preparing financial reports for a business.
Imagine that you and a friend have
developed a new engine and would
like to manufacture the engine and
sell it to major automakers. What
form of business organization would
you select for your company? Why?
 04
Exercises
 MULTIPLE
CHOICE
1. What are three main types of business organizations?

A. Sole proprietorships, Cooperative, Partnerships

B. Sole proprietorships, Corporations, Partnerships

C. Partnerships, Limited liability, Corporations

2. A ..... is an organization that is owned and operated by
its members.

A. Cooperative

B. Corporations

C. Limited liability

D. Unlimited liability
3. ….. means the owner is responsible for the company’s debts.

A. Partnerships

B. Limited liability

C. Unlimited liability

D. Limited liability
4. The government …… corporations more than other types of
businesses.
A. Invests

B. Owns

C. Regulates

D. Operates
5. A nonprofit organization……

A. is an entity whose primary goal is to earn income.

B. is a business owned by one person.

C. is a type of organization that focuses on providing a service,

but not to make a profit.
D. is an organization that is owned and operated
by its members.
6. A Cooperative……

A. is an organization that is owned and operated by one person.

B. is an organization that is not owned and operated by its

members.

C. is an organization that is owned and operated by its members.

 MATCH
1. A producer ING
A. distributes goods. Wholesalers are also
known as distributors.

B. is a business that moves goods from one

2. An intermediary business to another.

3. A retailer C. is a business that gathers raw goods

D. purchases goods from a wholesaler and

4. A manufaturer sells them to consumers, the final buyers of
the goods.

E. is a business that makes finished products

5. A wholesaler out of processed goods.
 A. is the process of planning, pricing, promoting,
6. Accounting selling, and distributing ideas, goods, and
services.
7. Management B. is the buying and reselling of goods that have
already been produced.
C. is the process of creating, expanding,
8. Finance manufacturing, or improving goods and services
D. is the business or art of money management
9. Production
E. is the process of achieving company goals by
planning, organizing, leading, controlling, and
10. Procurement evaluating the effective use of resources.
F. involves maintaining and checking records,
handling bills, and preparing financial reports for
11. Marketing a business.
 TRUE -
FALSE
1. A sole proprietorship can make all the
TRUE
decisions and run the companies as they see fit.

2. Banks are not more willing to lend money FALSE

to partnerships than to sole proprietorships.

3. A corporation charter is a license to run TRUE

a corporation.
4. Paying double taxation is an advantage
FALSE
of a Corporation.

5. The functional areas of business depend

TRUE
on each other.

6. Service businesses perform tasks rather

than provide goods.
TRUE
Thanks for
your
Do you have any questions?

listening!
CREDITS: This presentation template was
created by Slidesgo, including icons by
Flaticon, and infographics & images by
Freepik