Download - Motives and Functions of a Business
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CHAPTER 1: Motives and
Functions of a Business
1. Business Concept &
Definition
2. Stakeholders &
Shareholders3. Business Environment
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Business Defined
A business is an enterprise that
provides products or services
desired b customers.
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!he "ature of Business
!o create profits b#
$ Sellin% products Cars' food'clothin%
$ (rovidin% services )ealthcare'
insurance
(roducts have both tan%ible and
intan%ible characteristics.
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!he *oal of Business
!he primar %oal of all business is to earn aprofit.
Earnin% profits contributes to societ b providin%
emploment' +hich in turn provides mone that reinvested inthe econom.
But' not all or%ani,ations are business.
-ed Cross' Special /lmpics are nonprofit or%ani,ations0
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Business vs. "onprofit
/r%ani,ation
Business
An individual oror%ani,ation that tries
to earn a profit b
providin% products
that satisf peoples
needs' e. CocaCola.
Nonprofit
Organization
(rovides products'
especiall services'
for some purpose
other than profits'
e. ed Cross
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!o earn a profit' a person or or%ani,ation needs#mana%ement skills
marketin% epertise
Stakeholder#customers' emploees' investors'
%overnment re%ulators' the communit and
societ. Because these %roups have a stake in
the success and outcomes of a business.
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Stakeholders and
Shareholders
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A person' %roup' or
or%ani,ation that has
direct or indirect stake in
an or%ani,ation because
the can affect or beaffected b
the or%ani,ation4s actions
' ob5ectives' and policies.
Stakeholders
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INTERNALSTAKEHOLDE
R
EXTERNALSTAKEHOLDER
Employee
Shareholders
Board ofDirectors andManagement
EmployeesFamily
Supplier
Bank
Government
Competitor
Consumer
Community
Distributor
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Shareholders
A shareholderor stockholderis
an individual or institution' includin%
a corporation that le%all o+ns an part of
a share of stock in a public or private
corporation. Shareholders o+n the stock' but
not the corporation itself.
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INSTITUTIONAL
INVESTORS
Banks
Companies or
InvestmentCompanies
Insurance
INDIVIDUAL
INVESTORS
Person who buyshares with
his/her personalsavings.
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6rom tpes of stock7
Common-stockholder
!emporar dividend.Preferred-stockholder
6ied dividend.
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-Own more than 50% of stock.-Exerts complete control over the
company by being able to replacethe board of directors and themanagement.-Have a bigger voting rights.
-Own less than 50% of
stock.-Has less authority thanmajority shareholder.-Have less voting right.
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Business Environment
Consists of all eternal and internal factors
that influence the comple interaction of
market' production and finance.
!he most important factors#
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Features of Business
Environment
$ Totality of external forces
$ Specific and general forces$ ynamic Nature
$ !ncertainty
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The "xternal "n#ironments of Business
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The "xternal "n#ironments of Business
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