BUSINESS UNIT ONE EVERYTHING

Everything.

Good

Physical product, such as a car

service

an intangible product or action

Customer

Someone who buys a product from a business

Consumer

Someone who uses goods and services produced by other businesses

Reasons for starting a business

• Own boss vibe

• Want all the PROFIT (greedy)

-Need a job DUHH

• Unsatisfied with current job

-Want flexible working hours

-Provide a service for others

Factors of production

• Land

-labour

-Capital

• Enterprise

Recourses

Are the inputs that businesses use to provide their goods or services

Enterprise

Refers to the skills of the people involved in the business to identify business opportunities and bring together resources to meet these opportunities

Interest

Is the money paid by banks as a reward to attract people to save with them

Characteristics of entrepreneurs

• Innovative

• Risk takers

• Hard working and determined

• Organised

Interest rates

Refer to the cost of borrowing money or the reward for saving money, expressed as a percentage

Inflation

Refers to the rate at which prices are increasing.

Gross domestic product

Measures all the income earned in a country's economy in a year

Sole trader

Someone who sets up in businesses on his/her own

Advantages of being sole trader

• Quick and easy to set up

• Make all decisions for yourself

• Keep all profits yourself

Disadvantages of sole trader

-Stressful

-UNLIMITED LIABILITY (gASP)

• LOTS OF WORK

-If you die, the business dies.

• Hard to raise moneyyyyy

• Smol business, so HIGH costs and LOW profits

Profit

Measures the difference between the values of a business's revenue and its total costs

Unlimited liability

The personal possessions IF the owner a business are at risk if there are any problems.

Partnership

Occurs when two or more people join together in a business enterprise to pursue profit

Deed of partnership

An agreement between partners that sets out the rules of the partnership, such as how profits will be divided and how the partnership will be valued if someone wants to leave

Stakeholders

Individuals and organisations that are affected by and affect the activities of a business

Advantages of Partnership

• Sharing workload (sharing is caringggg)

• More sources of finance than sole trader

-Share skillsssss

Disadvantages of partnerships

• May disagree with the other partners

• Unlimited liability (gASP)

• Liable for the ACTIONS of the other partners

-Sharing profits (sharing is caring)

Company

A business that has its own legal identity

Shareholders

A person or an organisation that owns a part of a company

Advantages of a company

-Limited Liability

-Better status in the eyes of some customers

-Continues after the death of the founders (deep)

-Can bring in investors

disadvantages of a company

• Have to register

• Have to disclose information on sales and profits

• Have to have accounts independently checked

• If there are other investors the original founder is not in full control of the business

STOCK EXCHANGE

a market for buying and selling stock

FLOTATION

When a private limited company becomes a PUBLIC limited company

Private limited company

A business owned by shareholders with limited liability but whose shares cannot be bought by or sold to the general public.

Advantages of private limited company

• LIMITED LIABILITY

• MORE STATUSSSS

• if founders die, company still EXISTSSSS (legends never die)

Disadvantage of private limited company

• Legal procedures (ugh)

• Business's financial accounts must be available to PUBLIC

• Accounts must be checked by an independent accountant, so COSTS

• CORPORATION TAX

• Investors will become STAKEHOLDERS.

Public limited company

A public limited company is one that has shares that are sold to the general public

Advantages of public limited companies

• Advertise shares to general public

• ATTRACT MORE MEDIAAAAA

• more STATUS

• Investors want shares. they will buy shares.

Disadvantages of public limited company

• Bad media coverage (za GOSSIP)

• TAKEOVER RISK!!!

• More regulated to law (boo.)

• Outside investors may not agree with how things are run.

Not-for-profit organisation

Set up to achieve objectives other than profit

Aim

General goal of a business

Objective

Specific target that is set for a business to achieve

Why set objectives?

• HELPS WITH DECISION MAKING

• Understand the direction in which the business is heading to investors

-Provides targets to measure SUCCESS

• Motivate ppl

Role of objectives

• Survival

• Earning a profit

• Shareholder value

• Customer satisfaction

• Market share

• Growth

• Being ethical

• Environmental targets

Private sector organisations

Owned by individuals

Public sector organisations

Owned by the government

Dividens

Financial rewards paid out to shareholders each year

Objective of skateholders

• Employees want to just have a secure job and get earnings bro

• Owners/shareholders want more DIVIDENS and share price

• The loco locals want loco local jobs and less environmental impact

• Government wants LEGAL behaviour, wants TAXES, wants GROWTH

• Customers want good info, good service, good value for money

Negotiation

Occurs when two sides discuss what they want and try to reach a solution