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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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