BUSINESS SHORT NOTES

 Business – is an organization that satisfies human needs and wants by producing goods and
services. Example: Apple, Microsoft

 Needs – are essential things for human survival. Example: Water, Shelter, Education

 Wants – are desires other than needs that people would like to have of fulfill, but aren’t needed
for survival. Example: Cars, Branded Clothing, IPhone, Computer.

 Goods – are tangible (can be touched) resources that are used to satisfy needs & wants.
Example: Phone, Apple, Carrot, Vehicles.

 Services – are intangible (cannot be touched) products. Example: Cleaning Service, Medical
service, teaching service

 Business Objectives – refers to the aims a business makes and hopes to achieve within a given
time period. Example: Survival, Profit Growth

FINANCIAL OBJECTIVES:

 Survival – is a short-term financial objective, usually set by new, small businesses. It is also set
when a business if facing crisis or when there is heavy competition. Example: Twitter managed
to survive during Pandemic because of specific measures.

 Profit = Sales – Expenses

 Profit – is needed to expand business, research and development (new products), improve
infrastructure, etc.

 Marketshare – refers to the percentage/share of the total market owned by a business

organization or a specific product. Example: Windows holds 30.5 % of marketshare in the market
for Operating Systems.

NON-FINANCIAL OBJECTIVES:

 Social Enterprises – are businesses that are more concerned about the wellbeing of the society
and the environment. Example: Charities

 Personal Satisfaction – is a business objective that focuses on the satisfaction of the owner or
the entrepreneur.
 Control – refers to an entrepreneur’s goal of being able to control the business and make
decisions about how it is run.

 Financial Objectives – Profit, Sales, Marketshare, Financial Security, Survival

 Non-Financial Objectives – Personal Satisfaction, Challenge, Independence, Control

 Organization – is an individual or a group of people who joined together to achieve an objective.

Sole Traders:

 Sole trader – is a business owned by 1 person (Only 1 owner). It is also known as “Sole
Proprietor”. Example: Electrician, Plumber, Gardener, Cook, Small shop.

 Advantages
-Quick and easy to setup
-Decision making is easier
-Flexible working hours
-Owner keeps all profit
-Sole Traders don’t have to publish accounts

 Disadvantages
-May find hard to raise capital.
- Long hours for the owner.
- Unlimited liability.
- Limited skills

 Unlimited liability – is when the owner is personally liable for the loans/debts of the business. If
owner is unable to pay debts, personal property will be taken.
Partnerships:

 Partnerships – refers to a business owned by 2-20 owners The owners share all responsibilities
of running the business.

 Advantages
-Easy to set up
-Partners can specialize in their area of expertise
-Responsibilities are shared between owners
-More capital can be raised
-Financial Information is not published.

 Disadvantages
-Unlimited Liability
-Profit has to be shared
-Partners may have disagreements and arguments
-Partnerships tend to be small.
-Any partners’ decision is legally binding on all.

Private Limited company (Pvt):

 Refers to a company owned by friends and family with limited liability.

They cannot sell their shares to the general public.

 Shares – are known as ownership of a business. Each share has a value.

 Advantages
-Easier to raise finance through share issue.
-Increased sources of finance available.
-Shareholders have limited liability.
-Owners can keep control.
-Business is a separate legal identity to shareholders.

 Disadvantages
-Profits must be shared.
-Shares cannot be sold to the public, which limits how much capital can be raised through a
share issue.
-Needs to publish accounts, which means competitors can see financial information.
Public Limited Company (PLC)

 Is a company that has traded their shared on the stock exchange so everyone can purchase
them.

 Advantages
-Limited Liability.
-Able to raise large capital.
-Able to sell shares to the market.
-Has separate legal identity. (incorporated)
-Continuity is high

 Disadvantages
-Expensive to manage
-Financial information has to be released
-It has a greater risk of takeover.

Public Corporations:

 Companies owned by the state/government.

 Advantages
-Some businesses need to be owned by government.
-Reduces waste in an industry.
-Saves important businesses.
-Provides essential services.

 Disadvantages
-Motivation may not be high
-No competition
-Making decisions is difficult
-Makes firm’s efficiency drop
Franchise

 Is when a business uses a popular company/business’s name and products. This can be done by
requesting the popular business to lend their products and services. Example: McDonalds’ has
franchises worldwide.
(Franchisor – provider of name and idea)
(Franchisee – one who will manage franchise)

 Advantages
-Franchisor does national advertising
-Products, training, & systems will be provided by franchisor
-Well known brand name and reputation
-Customers have less risk

 Disadvantages
-Less control over business
-Franchisee has to buy machines
-Franchisee has to pay royalty fee
-Cannot change the product as per customer preference.

 There are 3 sectors in a business. These are: Primary, Secondary, Tertiary.

 Primary sector refers to extracting raw materials.

 Secondary sector refers to converting raw materials into finished goods.
 Tertiary sector refers to a provision of services.

 Business location is influenced by many factors. These factors include:

-Proximity to market
-Proximity to labour
-Proximity to materials
-Proximity to competitors
-Nature of business activities
-Impact of internet
 Globalization is the process by which the world is increasingly interconnected, & as a result of
massively increased trade & cultural exchange.

 Reasons for globalization:

-transport (has become cheaper and cheaper)
-communication (is much more efficient in today’s generation)

 Advantages
-Access to larger market
-Lower cost
-Access to labor
-reduce taxation

 Disadvantages
-Competition
-International takeovers
-increased risk of external shocks

 A multinational is a business which operates in more than one country. Example: Toyota

 Advantages
-To the business:
--larger customer base
--lower costs
--higher profile
--avoiding traveling barriers
--lower taxes
-To the country:
--increase in income
--increase in employment
--increase in tax revenue
--increase in exports
--transfer of technology
--improved quality of human capital
--enterprise development
 Exchange rate – refers to comparing one currency with another. Example: 1 OMR = 2 GBP

 Inflation – is gradual increase in prices of goods & services.

 Unemployment – refers to people without jobs and people who don’t want to work.

 Balance of payments – refers to the difference between imports and exports.

-If exports greater, there is surplus.
-If imports greater, there is deficit.

 Government Policies
-Fiscal Policy (Tax rates and government spending)
-Monetary Policy (Interest rates)

 External Factors – elements that cant be controlled by a business. Also known as PESTEL.
Political
Economical
Social
Technology
Environment
Legislation