Forms of Business Ownership & Markets PDF

EMS Forms of Ownership: 1. Sole Trader: One person owns and runs the business. 2. Partnership: Two or more people own and run the business together. 3. Private Company: A company that is owned by private individuals or groups. 4. Public Company: A company that is owned by the public and trades...

EMS Forms of Ownership: 1. Sole Trader: One person owns and runs the business. 2. Partnership: Two or more people own and run the business together. 3. Private Company: A company that is owned by private individuals or groups. 4. Public Company: A company that is owned by the public and trades shares on the stock market. 5. Closed Corporation: A company that is owned by a small group of individuals, usually family members, friends, or business associates, and is not publicly traded. Two main types of partners: 1. General Partners: Owners who manage the business, share profits and losses equally, and have joint liability for debts. 2. Limited Partners: Investors who don't manage the business, have limited liability, and their personal assets are protected in case of debts or liabilities. Markets: 1. Factor Market: A market where resources such as labor, capital, and raw materials are bought and sold. 2. Goods Market: A market where finished goods and services are bought and sold. Types of Factors: There are four main types of factors that are traded in the factor market: 1. Labor: This includes the skills and work of employees, such as engineers, managers, and factory workers. 2. Capital: This includes the funds needed to start or expand a business, such as investments, loans, and savings. 3. Land/Natural resources: This includes the natural resources needed to produce goods, such as wood, steel, and oil. 4. Entrepreneurship: This includes the skills and efforts of entrepreneurs, such as starting and managing a business. Factors of production Remuneration Capital Receives interest Entrepreneurship Receives profits Labour Receives wages Land/Natural resources Receives rent How the Factor Market Works: In the factor market, businesses demand resources and households supply them. The price of each factor is determined by the forces of supply and demand. Labor Market: In the labor market, businesses demand labor and households supply it. The price of labor is determined by the wage rate. Capital Market: In the capital market, businesses demand capital and households supply it. The price of capital is determined by the interest rate. Raw Materials Market: In the raw materials market, businesses demand raw materials and households supply them. The price of raw materials is determined by the market forces of supply and demand. Types of Goods Markets Intermediate Goods Market: A market where businesses purchase goods and services for use in the production of other goods and services, such as raw materials and semi-finished goods. Final Goods: Finished product or service Example: Let's say a company wants to produce a new product, and it needs to hire engineers to design it. The company will demand labor in the labor market, and the price of labor will be determined by the wage rate. If the company needs to borrow money to finance the production, it will demand capital in the capital market, and the price of capital will be determined by the interest rate. Levels of Management: 1. Top Managers: The leaders of a company who make big decisions. (strategic) 2. Middle Managers: Managers who oversee departments and teams. (tactical) 3. Lower Managers: Supervisors who oversee employees and day-to-day tasks. (operational) Think of it like a school: The principal is like the top manager, making big decisions. The grade heads are like middle managers, overseeing teachers and classes. The teachers are like lower managers, supervising students and teaching lessons. The factor market and goods market are two important types of markets in economics: The factor market is where businesses buy the resources they need to produce goods and services, such as labor, capital, and raw materials. The goods market is where businesses sell the finished goods and services they produce. Controlling VS Monitoring Controlling: Controlling means measuring the business’ performance against its targets and goals Making sure targets are met Improving any areas in which targets aren’t met Making sure everything goes according to plan Learn from problems and to be prepared by having solutions in place of an early stage Monitoring: Monitoring is to prevent something going wrong Making sure everything is done quickly (to fix it) if something has gone wrong Characteristics of Good Management 1. Willing to put extra effort 2. Organised 3. Sets an example 4. Trustworthy 5. Makes sure employees are happy 6. Qualified 7. Good people skills 8. Takes responsibility 9. Positive attitude Management Styles 1. Autocratic: Manager makes all decisions without input from employees (Leader makes all the decisions without having employees involved. This leader gives the employees clear instructions on how to perform their task.) 2. Democratic: Manager involves employees in decision-making process 3. Laissez-faire: Manager gives employees freedom to make decisions and take actions Management VS Leadership Management Leadership A person becomes a manager when they are appointed to the position Born with natural leadership abilities A manager is task oriented A leader is people orientated Manages by planning, leading, organising and controlling A leader leads by example, trust and respect Enforces rules so employees can complete tasks Motivates employees to find efficient ways to complete tasks