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SBM2000 CH.8 Powerpoint

by: itswingo

SBM2000 CH.8 Powerpoint SBM2000


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About this Document

- Teams - Legal Forms - Strategic Alliances
Small Business Management 171
Professor Al Williams
Class Notes
smallbusinessmanagement, sbm, alliance, forms, Legal, teams, smallbusiness, Management, Proprietorship, fsw, floridasouthwestern




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This 5 page Class Notes was uploaded by itswingo on Wednesday September 28, 2016. The Class Notes belongs to SBM2000 at Florida SouthWestern State College taught by Professor Al Williams in Fall 2016. Since its upload, it has received 8 views. For similar materials see Small Business Management 171 in Business at Florida SouthWestern State College.


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Date Created: 09/28/16
Chapter 8: The organizational Plan: Teams, Legal Forms, & Strategic Alliances • Buo Management team: managers and other key persons who give a company its general direction • Characteristics of a strong management team: o Capable of securing the resources needed to make business a success o Reassures investors about their investment and the continuity of business o Diversity of talent makes the team stronger than an individual entrepreneur • Teo The required combination of education and experience depends on the type of business and the nature of its operations o The key: achieving a balance of skills and competencies in functional areas o Designing an internal management structure that defines relationships and responsibilities g  Outside professional support can supplement the skills of a management team i  An active board of directors can provide counsel and guidance d e i r u specifying u t structure B c u expanding social m r networks t a S e achieving T balance • The sole proprietorship option: o Sole proprietorship: a business owned by one person  Advantages:  Receives the firm’s profits  Holds title to all of the firm’s assets  Can easily sell or transfer ownership of company name and assets  Requires no registration or filing fee  Has absolute freedom from interference by other stakeholders  Disadvantages:  Bears all business frisk  Is subject to all claims of creditors  Has unlimited personal liability for business  Receives no tax free benefits as an employee  Death/incapacity of owner terminates business  Is limited to the proprietor’s personal capital  Is taxed on business income as personal income • Partnership Insights o Choose partner wisely o Be open and use caution in regards to friend-related partnerships o If possible, try to test-drive the relationship for a feel of how things work o Expect the best, prepare for the worst o Consider unique advantages of partnership • Rights and duties of partners o Partnership agreements are written documents that state each partners’ rights and duties o Agency power is the ability of any one partner to legally bind (i.e., borrow money) the other partners. • The C Corporation Option o Corporation: business existing as a legal entity; provides limited liability for owners o Legal entity: business recognized by law having separate legal existence; can be sued, incur debt, etc. o C corporation: corporation chartered by state; taxed by federal government as separate legal entity • Rights and Legal Status of Stockholders o Stock certificate:  Specify number of stock shares owned by shareholder o Pre-emptive right:  Stockholders’ right to buy new shares or stocks before public offering o Legal status:  Ownership provides control  Ownership limits liability to invest  Ownership can be easily transferred without affect • Choosing an organizational form o Factors affecting the choice of a firm’s structure:  Initial cost  Continuity of the business  Transfer of ownership  Management control  Extent of liability  Income taxes  Attraction of capital • Forms of business – federal income taxes o Sole proprietorship: self-employed persons taxes on business incomes at individual set tax rates o Partnership: does not pay taxes; allocated income shares derived from partnership taxed as personal income o Corporation: separate legal entity; reports income and pays taxes related to profits • Taxes on gains and losses o Ordinary income: earned in ordinary course of business, including salary o Capital gains and losses: from sail of property not part of regular business o Section 1244 stock: allows owner to claim ordinary income tax- deductible loss if stock becomes worthless • Specialized forms of organization o Limited partnership structure  General partner  Limited partners  Income (taxable) or losses o S corporation  No more than 100 stockholders  Individuals or trusts  One outstanding class of stock  Domestic corporation  Operate on fiscal calendar year basis  No nonresidents  Liability limited to investment  Dividends avoid double taxation o Limited liability company  Still pay personal income taxes on business profits  Easy set up  Flexible  Tax advantages o Professional corporation  Protects licensed professionals from liability of partners but not own liability o Nonprofit corporation  No profit generation  Education, charity, religion, civic, etc. • Forming strategic alliances o Organizational relationships that link two or more business entities with a common endeavor o Reduced cycle times through shared resources o Increased performance o Synergistic combinations o Difficulty in establishing and maintaining alliances • Setting up and maintaining successful strategic alliances o Healthy network o Partner’s potential financial benefits o Speak and understand partner’s “language” o Monitor alliance progress • Making the most of a board of directors o Board of directors  Governing body of corporation  Elected by stockholders  Inside directors: work for the firm  Outside directors: do not work for the firm o Duties  Elect top management  Approve management plans and policies  Review performance  Declare dividends o Contributions  Bring knowledge  Provide experience  Review policy decisions  Provide general direction  Mediate and resolve disputes  Monitor ethical behavior o Advisory council: alternate  Provides advice  No fiduciary responsibility for direction of firm


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