BAB (Buiss Man)

• Types of Businesses


  • Sole Trader
  • Partnership
  • Private Limited Company
  • Public Listed Company
• Liability


  Being legally responsible for something
• Shareholders


  An owner of shares in a company
• Stock Exchange


  Is a marketplace where you buy stocks (shares in a company)
• Sole Trader


  • A business structure where one person owns the business
  • This person assumes unlimited liability for the debts of the business
• Partnership


  • A business that is owned by between 2 and 20 people
  • These owners have unlimited liability for the debts of the business
• Private Limited Company


  • A business that is owned by up to 50 shareholders, and shares are privately traded and not available to the public on a stock exchange
  • The business is a separate legal entity to its owners, and therefore their liability for the debts of the business is limited
• Public Listed Company


  • A type of business that has ownership shares that can be publicly bought and sold on a stock exchange, such as the ASX
  • This type of business has an unlimited number of owners and owners have limited liability for the debts of the business
• Business Objectives


  • Make a Profit
  • Increase Market Share
  • To Fulfill a Market Need
  • To Fulfill a Social Need
• Business Objective


  A goal or outcome that the business strives to achieve
• Financial Business Objective


  Goals or outcomes related to the financial performance of the business (making money)
• Non-financial Business Objective


  Goals or outcomes of the business that are not directly related to making money
• Most businesses have the objective of making a profit
• Profit


  The amount left after expenses have been deducted from revenues
• Actions a business can take with profit


  • Reinvesting it into the business
  • Owners may take the profit for themselves
  • Share it with investors (shareholders)
• Market Share


  The percentage of an industry's sales that a particular company owns
• Profit Margin


  The difference between the total cost to run your business and total revenue it brings in
• Competitive Advantage


  The ability of a company to outperform their rivals in the same industry
• The more businesses offer similar products, the more competitive the environment will be
• Businesses need to 'differentiate' to gain a competitive advantage
• Stakeholders


  • Owners
  • Managers
  • Employees
  • Customers
  • Suppliers
  • Community
• Stakeholder


  People and groups that interact in some way with the business and have a vested interest in its activities
• Owners


  • Owners have a vested interest in the success of the business and its ability to make profit
  • Depending on what type of business it is, there may be one or many owners
  • A Shareholder is person who has a financial investment in the business and are partial owners
• Managers


  • Managers are responsible for coordinating aspects of the business such as employees to ensure business objectives are met
  • Managers have a vested interest in ensuring the business is achieving its objectives (including making a profit)
  • Managers have a vested interest in having job security and receiving fair remuneration (pay and other benefits)
• Employees


  • Employees are those who work for the business in exchange for remuneration (pay and benefits)
  • Employees have a vested interest in job security, receiving fair remuneration, and having stimulating and satisfying work
• Customers


  • Customers are those who purchase goods and services from a business
  • Customers have interests in receiving high quality products at a low price
• Suppliers


  • Provide the resources that will be used by business to produce their output
  • Suppliers have a vested interest in receiving consistent and high volume orders from the business
• Community


  • Businesses operate within communities of people
  • Members of the community have a vested interest in receiving employment opportunities from the business, the business operating in a sustainable manner so the environment is not compromised, and the business giving back to the community through events such as fundraising
• Share


  Part ownership of a business
• A company can raise money to finance its business by 'going public'. This means being listed on share market and selling shares to investors. By paying for the shares, each investor buys part ownership of the company's business and becomes a shareholder in the company.
• Share market (stock exchange)

  A marketplace in which shares in publicly listed companies are bought and sold
• The Australian Securities Exchange, usually referred to as ASX, is the share market in Australia
• Primary market


  • Where companies raise money by issuing shares to investors
• Secondary market


  • Where investors buy and sell those shares at prices determined by market forces
• When a company seeks to raise funds on the sharemarket by offering new shares to the public, the process is referred to as a float or initial public offering (IPO). This process occurs on the primary market.
• The role of the secondary market is to help buyers and sellers come together, determine a price and then exchange shares for payment. Shares can only be bought and sold on ASX through a stockbroker.
• Factors influencing the share price of companies

  • Internal Factors
  • External Factors
• Internal Factors


  • Factors that a company can control that may impact on the business and its success
• External Factors


  • Factors that a company has no direct control over, and can only manage the impact it may have on a business
• Anticipated or actual profit made by the company

  If companies predict large future profits or if they produce higher profits than were predicted, then the share price usually rises. The opposite is also true - if future estimates are poor or if a company underperforms against its estimates, the share price will usually fall.