Sole proprietorships
What are the key differences between sole proprietorships, partner-
ships, and corporations?
How do some firms get to enjoy the benefits of the corporate form
of organization yet avoid corporate income taxes? Why don’t all
firms—for example, IBM or GE—do this?
Why is the value of a business other than a small one generally max-
imized if it is organized as a corporation?
What is management’s primary goal?
What do investors expect to receive when they buy a share of stock?
Do investors know for sure what they will receive? Explain.
Based just on the name, which company would you regard as being
riskier, General Foods or South Seas Oil Exploration Company?
Explain.
When a company like Boeing decides to invest $5 billion in a new jet
airliner, are its managers positive about the project’s effect on
Boeing’s future profits and stock price? Explain.
Would Boeing’s managers or its stockholders be better able to judge
the effect of a new airliner on profits and the stock price? Explain.
Would all Boeing stockholders expect the same outcome from an air-
liner project, and how would these expectations affect the stock
price? Explain
How would you define “business ethics”?
Can a firm’s incentive compensation plan lead to unethical behavior?
Explain.
Unethical acts are generally committed by unethical people. What
are some things companies can do to help ensure that their employ-
ees act ethically?
