BA 101 1st Edition Lecture 17Outline of Last Lecture1. Due Dates and Upcoming Midterm2. Ethics and Business Behavior Outline of Current Lecture I. Midterm #2 topics and Foundation Final ProjectII. Business OrganizationCurrent LectureI. Midterm #2 Topics and Foundation Final Project: Midterm #2: will contain all of the information we learned since the last midterm. This includes: - Foundation exercises that we have gone over in class- Cash flow and investment consideration- Business ethics- EcoCafé Haiti - Sales forcastingOnline Project: This project is worth 60 points and is due March 17th a week after the midterm. Self-paced during that week. You must have completed Foundation through round 8 to participate in the final project. Your Foundation Company will be set back to the end of Round 3,and you will work through rounds 4,5,6,7, and 8 again. Different Grading Criteria: There is no contribution margin or inventory considerations. Don’t take an emergency loan in Round 8. Instead, you want to increase your stock price and maximize your Market Capitalization, which is the price of your stock times shares outstanding. Your percent improvement will be compared to round 8 in the previous official rounds. Rubric: - On time – 20 points- Avoid an emergency loan in Round 8 – 10 points- Percent improvement>0-10 is one point, 11-20 is five, 21-30 is eight, and >30 is 10These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Class quartile ranking of Market Capitalization 4th – 1 point, 3rd – 5, 2nd – 10, and 1st – 20. Tips: - Be more profitable- Avoid emergency loans- Avoid diminishing returns- Introduce additional products to try to get a larger share of the market- Increase efficiency - Invest in TQM- Declare dividends and retire stock wisely - Retire bonds in you have available cash- What your competition does in the final project is going to be very similar to what they have done before in these rounds of foundation- Review and print/save information from rounds 4-8 of foundation before the midterm, because they’re going to disappear after thatII. Forms of Business Organization:There are three main types of business organizations; sole proprietorship, partnership, and corporations. Sole Proprietorship: going into business for yourself. Advantages: - Easy, quick, simple to set up- Full control with minimal administration or oversight- AdaptableChallenges: - Risk and personal exposure- Your assets are not protected if the business is sued- Credibility of the business is only as good as yours- It is difficult to raise additional capital from outside sourcesPartnerships: there are two kinds. Some things that hold true for both kinds: - Partners keep control of the business - Relatively unregulated - Voluntary association- Limited life- Limited access to capital- Single taxationGeneral Partnerships:- Mutual agency, where all partners have the right to act as agents for the normal business operations of the partnership, the authority to bind it to business agreements- Unlimited liability of the people who are in the company. Their assets are not protected- Share risk and reward equallyUneven Partnerships:- Not every partner can make binding business decisions- They do not necessarily share the risk and reward equallyPreparing for a partnership: need a partnership agreement, thinking ahead to if something happens to one member of the partnership. Can have a buy/sell clause, where the other partners have the right to buy back the ex-partner’s stock/ownership when they depart. Corporations: are a separate legal entity with limited liability and limited stockholder power. They have an unlimited life and easy access to capital. They are subject to a great deal of regulation from the government and double taxation. Corporations are governed in a pyramid format, with the stock holders voting (one vote per share of common stock) on a board of directors, who directly oversee the company, than a top officer (CEO or other) who directly manages the company, than other management and workers. Stockholders can lose control of acorporation if bought out. Types of Corporations: - Domestic: they operate in the state in which they are incorporated- Foreign: they operate outside of the state in which they are incorporated- Alien: they operate internationally- S Corp: limited liability, single taxation, unlimited life, limited number of shareholders- Limited Liability Company: limited liability like a regular corporation, but taxed like a partnership and not limited as to the number of stockholders, but instead to the type of shareholders.Types of Stock: - Common stock: voting rights and residual claims to assets- Preferred stock: no vote, but instead preferred claims on dividends and