ORMS OF OWNERSHIP

FIND THE RIGHT KIND OF BUSINESS

 SOLE PROPRIETORSHIPS
A business owned by a single person
•Unlimited liability
 A legal condition under which any damages or debts incurred by a business are the owner’s
personal responsibility

Advantages Disadvantages
Simplicity Financial liability
Single layer of taxation Demands on the owner
Privacy Limited managerial perspective
Flexibility and control Resource limitations
Fewer limitations on personal income No employee benefits for the owner
Personal satisfaction Finite life span
 PARTNERSHIPS
An unincorporated company owned by two or more people

 Limited liability; each owner is liable for to whatever amount they invested in the business
• General partnership
• Limited partnership

Advantages Disadvantages
Simplicity Unlimited liability
Single layer of taxation Potential for conflict
(20% Taxation in Turkey)
Expansion, succession, and
More resources termination issues
Cost sharing
Broader skill and experience base
Longevity
WHAT TO INCLUDE IN A
PARTNERSHIP AGREEMENT?
CORPORATIONS
A legal entity, distinct from any individual persons, that has the power to own
property and conduct business

 Shareholders: Investors who purchase shares of stock in a corporation

ADVANTAGES DISADVANTAGES
Ability to raise capital Cost and complexity
Liquidity Reporting requirements
Longevity Managerial demands
Limited liability Possible loss of control
Double taxation
Short-term orientation of
the stock market
SPECIAL CORPORATE
STRUCTURES
 CORPORATIONS

https://www.youtube.com/watch?v=PVGT594oKkY
FORMS OF BUSINESS
OWNERSHIP
 CORPORATE GOVERNANCE
 All the policies, procedures, relationships, and systems in place to oversee the successful
and legal operation of the enterprise
 Also refers to the responsibilities and performance of the board of directors specifically

 Shareholders (stockholders)
 Proxy
 Board of Directors
 Corporate Officers (CEO, CFO, CTO)

https://www.youtube.com/watch?v=ZARpRhudx4g
MANAGING A CORPORATION
Corporate Governance
roles of shareholders, directors, and other managers in corporate
decision making and accountability
CORPORATE GOVERNANCE
OBJECTIVES
There are inherent conflicts of interest in
corporations in which the ownership and
management are separate.

Objectives of corporate governance:

• To eliminate or mitigate conflicts of interest.
• Particularly those between corporate managers and shareholders; and

• To ensure that the assets of the company are used efficiently and
productively and in the best interests of its investors and other
stakeholders.
CORPORATE GOVERNANCE
 AN EFFECTIVE CORPORATE
GOVERNANCE SYSTEM

Clearly defined manager and Identifiable and

director governance measureable
responsibilities accountabilities
Delineation of rights
of shareholders and
other stakeholders

Fairness and equitable Transparency and

treatment in dealings accuracy in disclosures
DISCUSSION QUESTION

For which type of companies or industries, do

you think corporate governance is strategically
important? Why?
OPTIONS FOR JOINING FORCES

Mergers

Acquisitions

Joint Ventures
Strategic Alliances
MERGERS AND
ACQUISITIONS
 MERGERS AND
ACQUISITIONS
Advantages
Increase their buying power as a result of
their larger size (economies of scale)
Increase revenue by cross-selling products
to each other’s customers
Increase market share by combining
product lines
Gain access to new expertise, systems,
and teams of employees
Increased bargaining power and reduced
rivalry
Disadvantages
Problems associated with merging very
different company cultures
High management turnover in the
acquired company when the acquisition is
a hostile one
Marketing departments need to figure out
how to blend product lines, branding
strategies, and advertising and sales
efforts.
Companies must often deal with layoffs.
https://www.youtube.com/watch?v=EWNZa4s0vlU
TYPES OF MERGERS
TYPES OF MERGERS &
ACQUISITONS

Group Activity: Find at least two real examples for each types of M&A
M&A PROCESS

https://www.youtube.com/watch?v=kJM1IHT0Yuc
 DUE DILIGENCE DISASTERS

firmex.com/resources/uncategorized/top-10-due-diligence-disasters/
 STRATEGIC ALLIANCES AND
JOINT VENTURES
Strategic alliance • Joint venture
 A long-term partnership between  A separate legal entity established
companies to jointly develop, produce, by two or more companies to pursue
or sell products
shared business objectives
 STRATEGIC ALLIANCES
 Enables creation of a stable long-term relationship
 Becomes a substitute for vertical integration
 Avoids the problems of having to manage a company located in an adjacent
industry

WEB OF ALLIANCE
OF SELF-DRIVING
CARS

http://www.sfchronicle.com/business/article/Partner-up-Self-driving-car-firms-form-tangled-11160522.php