After , America was the only major industrial power to not be devastated by war. American corporations grew without major challenges for decades. This exalted status was eventually challenged by multinationa l Japanese and German corporations in the s and s.
A decade or more later, many corporations found themselves embroiled in financial scandals, like Freddie Mac and AIG, which led to the loss of billions of dollars. Two-thirds of Americans have a favorable opinion of major companies and even more hold positive views of small businesses, according to the Public Affairs Council's Public Affairs Pulse Survey. The organization reports that "while people think big businesses provide useful products and services and serve customers well, they are critical of companies for paying high executive salaries and not doing enough to protect the environment, create jobs and support communities.
Penguin Random House. Charles A. Accessed May 12, Adolf Berle and Gardiner Means. Public Affairs Council. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data.
We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Broadly speaking, two kinds of committee structures exist. A single committee or board of directors is the method favored in most common law countries.
The board of directors is composed of both executive and non-executive directors. A two-tiered committee structure with a supervisory board and a managing board is common in civil law countries.
Under this model, the executive directors sit on one committee while the non-executive directors sit on the other. He owns many companies through his investment firm Berkshire Hathaway. The Marketing department is considered by some business professionals as the most important entity in the corporate structure. Without this department, sales or new customers cannot be realized. The Finance department is also vitally important, as it is responsible for acquiring capital used in running an organization.
Other segments of corporate structure may consist of the Accounting department, HumanResources department, IT department, and the Operational aspect of the particular company. These main six corporate departments represent the major managing resources within a publicly traded company; though there are often smaller departments either within the major segments or in autonomous form. Another way a corporate structure can be defined is by business divisions.
A division of a business is a distinct part of the firm, however the company is legally responsible for all of the obligations and debts of each division. In a large organization, various parts of the business may be run by different subsidiaries, and a business division may include one or many subsidiaries. Each subsidiary is a separate legal entity owned by the primary business or by another subsidiary in the hierarchy.
Hewlett Packard HP is a good example of a corporate structure including multiple divisions. The divisions of HP — e. However, Compaq a part of HP since operates as a subsidiary, using the Compaq brand name. Corporate Structure : Hewlett Packard is an example of a corporation with multiple divisions and subsidiaries. Another example is Google. Google Video is a division of Google, and is part of the same corporate entity. However, the YouTube video service is a subsidiary of Google because it remains operated as YouTube, LLC — a separate business entity even though it is owned by Google.
As a result, their losses cannot exceed the amount which they contributed to the corporation as dues or payment for shares. This enables corporations to socialize their costs. Socializing a cost is to spread it to society in general. Without limited liability, a creditor would probably not allow any share to be sold to a buyer at least as creditworthy as the seller. They put the customer first and invest in their employees and communities. The Business Roundtable Statement on the Purpose of a Corporation is below and the full list of signatories is available here.
Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all. Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services.
Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth. If a corporation intends to conduct business solely within one state, it normally seeks incorporation in that state because most state laws are not as severe for domestic corporations as for foreign corporations.
Corporations conducting interstate business usually incorporate in the state that has laws most advantageous to the corporation being formed. Important considerations in choosing a state are the powers granted to the corporation, the taxes levied, the defenses permitted against hostile takeover attempts by others, and the reports required by the state.
Once incorporators agree on the state in which to incorporate, they apply for a corporate charter. A corporate charter is a contract between the state and the incorporators, and their successors, granting the corporation its legal existence. After supplying the information requested in the incorporation application form, incorporators file the articles with the proper office in the state of incorporation. Each state requires different information in the articles of incorporation, but most states ask for the following:.
As soon as the corporation obtains the charter, it is authorized to operate its business. The incorporators call the first meeting of the stockholders. Two of the purposes of this meeting are to elect a board of directors and to adopt the bylaws of the corporation. The bylaws are a set of rules or regulations adopted by the board of directors of a corporation to govern the conduct of corporate affairs. The bylaws must be in agreement with the laws of the state and the policies and purposes in the corporate charter.
Organization costs are the costs of organizing a corporation, such as state incorporation fees and legal fees applicable to incorporation. The firm debits these costs to an account called Organization Costs. The Organization Costs account is an asset because the costs yield benefits over the life of the corporation; if the fees had not been paid, no corporate entity would exist. Since the account is classified on the balance sheet as an intangible asset, it is amortized over its finite useful life.
Most organizations write off these costs fairly rapidly because they are small in amount. The entry to record these costs is:. Cash 15, To record costs incurred in organizing corporation. Assuming the corporation amortizes the organization costs over a year period, this entry records amortization at the end of the year:. Organization Costs 1, To record organization costs amortization expense.
Management of the corporation is through the delegation of authority from the stockholders to the directors to the officers. The stockholders elect the board of directors. The board of directors formulates the broad policies of the company and selects the principal officers, who execute the policies.
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