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A market where there are:
- Numerous firms
- Identical products
- Many buyers
- no restrictions to enter/exit the market
- Established firms have no advantage over new firms
- Sellers and buyers are well-informed about prices |
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| Largest petroleum company |
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| Largest Defense/Aerospace Company |
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| Largest pharmaceuticals company |
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| Largest consumer goods company |
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| Largest telecommunications company |
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| Largest insurance company |
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| Largest manufacturing company |
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| Largest transportation company |
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| Largest conglomerate company |
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| Largest supermarket company |
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| Largest computer hardware company |
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| Largest computer software company |
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| Largest computer peripherals company |
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| Largest microprocessors company |
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| Largest semiconductors company |
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| Largest biotechnology company |
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| Largest health care company |
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| Business owned and controlled by one person and is the most common type |
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| Sole proprietorship advantages |
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- It's simple to form
- A sense of independence
- Satisfaction of running your own business
- Profit is yours |
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| Sole proprietorship disadvantages |
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unlimited liability
- Total responsibility for every aspect
- Limited growth
- Lack of longevity
- 9/10 businesses fail in the first five years |
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| Business owned and operated by two or more people -- least common in the US |
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Share decision making
Access to more capital |
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| Partnership disadvantages |
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-Unlimited liability (except for limited partners)
-Conflicts with partners
-Limited longevity |
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Owned and controlled by shareholders
The most influential in the US
Legally a person |
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as a shareholder you have limited liability and you can profit without working there
As a corp you can raise capital easily: if a company needs money it can issue more stock
Longevity |
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| Corporation disadvantages |
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- Slowness of decision making
- Complexity of becoming incorporated
- Government regulations and restrictions
- Double tax on profits |
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| It is a contract in which a company agrees to allow someone to establish a business using its name to sell goods and services |
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Training for management and employees
National advertising
Financial assistance |
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Have to give up a certain percentage of profits
Have to pay a fee to begin a franchise
Have to follow their guidelines and standards |
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Businesses owned and operated by people who use its services (credit unions)
Marketing co-ops: sunmaid, sunkist, land-o-lakes |
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| usually able to control the buying and the selling of your good or service |
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| You usually have to be a member of the co-op to get the advantages |
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| Business that provides a g/s w/o seeking a profit |
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not taxed on their revenue
usually have a positive relationship with the public |
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| often dependent upon financial contributions from others |
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market with a single supplier of a g/s
1. g/s has no legit substitute
2. there are (legal or natural) barriers to entry
ex. public water |
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- A large # of firms compete
- Each has a small market share
- Can only influence the price of its own product
- Collusion (companies working together to fix prices) is impossible
- Each firm produces a slightly different product
- Firms compete on price, quality, and marketing
- Firms are free to enter or exit the market |
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| When one company takes over/buys another |
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Totally absorb (Macy's - Jordan March)
Retain brand name (AOL - Time-warner)
Create new entity (Altria Group - Phillip Morris + Kraft) |
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Vertical: different aspects of a a business
Horizontal: same business
Conglomerate: different businesses |
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Consolidates an industry
Increased size = more capital
Cut costs - overlapping
More efficient centralized planning |
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- Less competition: price goes up
- Becomes bloated
- Rise in unemployment
- Failure to integrate (just because you have the money to buy a company doesn't mean you know how to run it) |
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