Understanding Corporations: Incorporation Process, Pros, Cons, and Employment - Prof. Stev, Study notes of Introduction to Business Management

Download Understanding Corporations: Incorporation Process, Pros, Cons, and Employment - Prof. Stev and more Study notes Introduction to Business Management in PDF only on Docsity! Corporation Articles of Incorporation – filed with state The Incorporation Process Where to Incorporate  Can incorporate in any state  More than half of Forbes 500 companies are incorporated in Delaware The Corporate Charter  Incorporate file articles of incorporation (permission from the state)  State grants a corporate charter, a legal document that formally establishes a corporation Typical Corporate Structure 1. Owners/ stockholder elect board of directors  2. Board of directors (hire officers) – only companies have these 3. Officers (set corporation objectives and select managers)  4. Managers (supervise employees)  5. Employees  Stockholders own the company  Boards of Directors govern the corporation  Officers manage the company by making day to day decisions Dividend= share of the profit IPO= when the company first goes public (open up more, and sell stock basically) Proxy= when your not there to vote on stock things so you send in a paper that allows someone else to represent you Corporations Advantages:  Limited liability (owners are responsible for debts up to what they invest  Greater access to money – can sell shares of ownerships to others  Separation of ownership from management  Ease of ownership transfer Disadvantages  More costly to form  Must keep secure records  Potential for conflict with the Board of Directors  Double taxation if dividends given 04/13/09 Moe on Business Forms Major Considerations:  Resources needed, both Financial and human  Liability amount of financial risk Unlimited liability= all responsibility to pay for all debts of business Limited liability= owners responsible for losses only up to what they invest Basic Forms of Ownership  Sole Prop=72% of business but only 6% of sales  Partnerships=8% and 13%  Corporation=20% and 81% Public vs. Private Corporations Corporations can be Private  Stock is held and not traded on a public exchange Corporations can be public  Stock is traded on a public exchange Private Corporation Examples:  Halmark  Amway  Koch Industries  Levi Straus and Co.  Baseball teams Corporations whose stock is not traded  There can be many owners  There can be trades or sales (its not common though) Cannot trade on open exchanges and thus are limited to private deals Sports teams are a good example  Almost all teams are corporations (some are partnership) 04/15/09  As the sweater factory expands it needs more labor than the family can manage  Must look outside  Who will you hire and how will you find them? Issues in Hiring: Diversity  The initial reaction - hire people like the people we have - our family is who we have - hire more people like us  Why hire people who are different 1. Image 2. New Perspective 3. New Ideas 4. Work force to reflect customers 5. Social Progress The Changing Work Place  Women in the Work Place - In the ‘50s there were few women in the work place - Traditional Women’s jobs 1. Teachers 2. Nurses 3. Secretarys - Women married an left the workplace - women who worked were unmarried - Paid less than men Compensation and Benefits Program Objectives  Attract the rights people  Employees incentives  Retrain valued employees  Maintain competitiveness  Financial and security for employees Pay Systems  Salary – what they get every few weeks or so…it doesn’t change (no overtime)…if you don’t have work for them, you don’t have to pay them  Hour wage and day work – paid the amount they put in  Piecework system – pay by amount produced… paid by the sweater produced  Commission plans – paid on how much you sell (% of the sale) 4/22/09 Benefits of Providing Flexibility  Higher employee retention  Higher employee job satisfaction  Better relations with workers What do most of these laws have to do with?  About getting a job and life at work  Firing? For any reason, no reason, unfair reason=work at will  Few laws to protect against wrongful termination Employment at Will Doctrine  Means that employment is presumed to be voluntary and indefinite for both employees or employers  Neither party may breach contract  Employers cant violate state of federal laws  Cant terminate employees who refuse to do something contrary to sound morality (breaking the law) 04/24/09 Employment At-Will Doctrine  Employment At-Will doctrine means that employment is presumed to be voluntary and indefinite for both employees and employers  You may quit you job or employers may terminate for whatever reason you want usually w.o. consequences  Neither party may breach contracts, Employers cannot violate estate or Federal laws, and cannot terminate employees who refuse to do something that is contrary to sound morality, such as breaking the law  With these few aside, you can be fired for any reason  In 1980s, lawsuits spawned the Model Employment Termination Act, which requires employers to at least show “good cause” for terminating you in states that have adopted it  To determine whether or not you employer honestly had goo d cause check: - Were you aware of the policy and consequences? - did you have a chance to explain your side of the story? - Is it a frivolous policy and did you really do anything wrong? -how were other employees for similar violation disciplined? - was the policy in place before or after you violated?  Employment At-Will Doctrine is so strong in the U.S., that the courts have sometimes upheld it even though employers proved only weak cause for termination  As long as employers don’t violate other laws, the courts tend to uphold the at-will common law What is “Due Process of Law”  The fifth amendment to the US Constitution  The first step is to examine the constitution itself to see whether this process be in conflict with of of its provisions  Substantive- Right to Fair Treatment” - bill o frights and constitution  Procedural- Right to Fair System of Decision Making - includes an individual’s right to be adequately notified of charges or proceedings, and the opportunity to be heard at the proceedings  Substantive= employment contract, company policies  Procedural= consistent procedure for dealing with termination of employees= visible, equitable, written, personnel procedures Whistle Blowing  Fiduciary relationship between Corporate Employer and Employee requires loyalty, obedience, confidentiality  Which then have a right to the public so that they know what the business is doing  Whistle-Blowers are legally protected from retaliation by employers  Managers Preemptive Response: - assure employees that the company will not interfere with basic political freedoms - create a streamlined internal grievance procedure - reward the individual conscience of employees Hiring Process  Recruit  Select - application - interview - test - investigate - examine - probation  Train/develop - orientation - on the job training - apprenticeship - off-the-job training - online training - vestibule training - job stimulation