Objective
Students will be able to:
- Explain the three types of business organizations: sole proprietor, partnership and corporation.
- Compare the costs and benefits of sole proprietorship, partnerships and corporations.
Concepts
In this economics lesson, students will learn about 3 types of business organizations using candy companies.
Procedure
Warm-up
Show students a bag of M&Ms or Hershey’s kisses. Tell them the chocolate candy is a hint for today’s lesson. Ask them to take out a sheet of paper and write down what they think the topic will be and how it will relate to the candy. Have them write their names on their papers with their predictions and hand them in.
After collecting their predictions, review their guesses and give the bag of candy as a reward to the student with the closest correct answer. In case of a tie, divide the bag or have multiple bags available. Tell students they will be learning about the U.S. “sweets” industry — more specifically, some of the people and businesses that produce chocolate and chocolate-related products.
Remind students that chocolate companies are a business, much like another business firm. Regardless of size or the number of candies made, a business must have some type of structure. In the U.S., the three types of business organizations are sole proprietorships, partnerships, and corporations. Today’s lesson will use the chocolate candy industry to help them understand the costs and benefits of each type of organization.
Modeling
Open the PowerPoint Slides and project them on a screen. Begin by reviewing slides 1-2 to present the terms and concepts related to the benefits and costs of the three types of business organizations: sole proprietorship, partnership, and corporations. See the notes section on each slide for talking points and supporting information.
Group Activity
Divide students into four groups and assign each group one of the clients, which are all confection businesses. Distribute copies of the Sweet Opportunities handout to each group. Have the groups read the description of their assigned client and determine which type of business organization their group would recommend. Students are required to list four reasons for their recommendation – three that are benefits/advantages and one that is a cost/disadvantage. With the cost, students should include a suggestion for how to overcome it or minimize its impact on the candy maker’s business. Review the answers as a class and share the names of the companies that were formed by these four entrepreneurs. Debrief the activity using questions from the Sweet Opportunities Teacher’s Guide.
Individual Activity
Distribute a copy of the Types of Business Organizations to each student. The activity requires students to examine seven key factors used in selecting a type of business organization. Have students complete the activity by determining if the factors are costs or benefits to the three types of business organizations. Review the answers as a class using the Types of Business Organizations Answer Key.
Assessment
Review the list of factors to consider when selecting a business organization. Ask students if they see any omissions or want to make any additions to the list. Have students circle the three factors from the Types of Business Organizations worksheet that they think are most important things for potential owners to consider when starting a business. Read the list of factors and have students give a show of hands for the three they selected. The one with the most votes is the class winner. Have students write one or two sentences on the back of their paper explaining the importance of understanding these factors when selecting a business organization.
Extension
Activity 1
Have each group research what has happened to the founders and businesses featured in the case studies and prepare a three-minute class presentation. Encourage students to use images as well as text, such as a PowerPoint. Students must include answers to the following questions:
- What has happened to the founder of the business?
- Is he or she still involved with the company?
- What other things has he or she done?
- Who owns the business?
- How has the business changed?
- Has the company been involved in any mergers or acquisitions?
- What products does the company sell?
- If the business is incorporated, is it publicly or privately held?
If a group selects The Chocolate Farm in Englewood in CO, then have students research focus on why the company closed.
Activity 2
Have students identify key businesses in their area or state. Have students research the companies to determine their business structure. If students select a corporation, have students categorize them as either publicly or privately-held.