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The Scope of Business
Chapter 3
Business Size
Definition of Small Business
Larger, more developed countries (U.S.) –
Any company with 500 or fewer
Smaller, less developed countries – Any
company with 100 or fewer employees
Largest Business
Top 10 Most Valuable Companies
Fortune 500 List:
Why do Businesses get Large?
Diversification – when a business is
involved in more than one type of
business activity
Merger – occurs whenever two companies
join to form a combined company
Acquisition – occurs whenever one
company buys another company
General Electric’s Businesses
Size of some US Corporations
GDP (Gross Domestic Product)
is defined as the total
value of goods and services
produced within a territory
during a specified period
regardless of ownership
Importance of Small Business
Small businesses employee most of the US
In Hawai’i, chances are you will work in a
small business
Small businesses are responsible for most
of the new innovations
Each year in the US, 600,000 people start
their own businesses
– Purchase of an existing small business
– Development of a new small business
– Purchase of a franchise
– Family business
Entrepreneurship is the act of starting,
buying, or expanding a business
Forms of Business Ownership
Sole Proprietorship – business owned by a
single person
 Partnership – business owned by two or
more individuals
 Corporation – a separate business entity
owned by stockholders
Sole Proprietorship
– Working partners
– Silent partners
– Partnership agreement
Corporate Ownership
Privately held corporation – a business
that has a few stockholders and the stock
is not open for public sale
Publicly held corporation – a business with
stock that is open for public sale
*Stockholder – any person who owns at least one share in a
Employee Ownership
ESOP – employee stock ownership plan
– Powerful motivator
Another form of Ownership
One business owns another
 Best Buy owns Musicland and Sam Goody
 Best Buy is the parent company and Sam
Goody is a subsidiary