Corporation
Corporation
Business owned by stockholders, who own the rights to the company’s profits but face limited responsibility for the company’s debts and losses
2 Major Types of Company
1) Public Company
Public Company issues stock that can be bought freely and sold
2) Private Company
Private Company controls who can buy or sell its stock
Business owned by stockholders, who own the rights to the company’s profits but face limited responsibility for the company’s debts and losses
2 Major Types of Company
1) Public Company
Public Company issues stock that can be bought freely and sold
2) Private Company
Private Company controls who can buy or sell its stock
Stock
In corporation, individuals use stocks for the shares of ownership
Dividend
If company goes well and earns profit, stockholders receive a payment
Corporation Market Structure
Market Structure: An economic model of competition among businesses in the same industry
Merger
Merger
Marger is a strategy of combining different companies into a single company
3 Major Types of Merger
1) Horizontal Merger : Combined different companies that produce similar products
2) Vertical Merger: Combined different companies that are involved in different process of producing
Marger is a strategy of combining different companies into a single company
3 Major Types of Merger
1) Horizontal Merger : Combined different companies that produce similar products
- If Coca-Cola and Pepsi companies combine together, they will offer almost similar products or services to the customers which illustrate horizontal merger.
- This will be helpful to compete against the largest soft drink company, Sprite, by lowering their prices or keeping the rivals out .
2) Vertical Merger: Combined different companies that are involved in different process of producing
- Tamko is a company that makes a building products
- This will allow the company to have better control over the manufacturing process and work efficiently: SYNERGY EFFECT
3) Conglomerate: Combined unrelated different companies together
Two different companies: Nike merges with famous soft drink company, Gatorade
Merger Market Structure
Natural Monopoly: A natural monopoly occurs when the costs of production are lowest with only one producer
- Benefits : Uses Economies of Scale which causes the costs of management to decrease because since both companies Nike and Gatorade are combined, they will use same managers.
- Furthermore, business units will increase the production by advertising.
Multinational Corporation
Multinational Corporation : Globalized companies who branch in several countries