11Bst The Nature Of Business

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g&s

Back 1

Goods and Services

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Business

Back 2

An organised effort of individuals to
produce and sell, for a profit, the
products that satisfy individuals’
needs and wants.

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Product

Back 3

A good or service that can be bought or sold.

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What are the main functions of business?

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Wealth Creation

Profit

Employment

Income

Choice

Innovation

Quality of Life

Entrepreneurship

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The profit equation?

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Sales/ Income - Expenses = Profit

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Risk

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The possibility of loss

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Income

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Wages, Salary

Business owners profit = dividends

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Dividends

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A shareholders income (or share in profits)

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Innovation

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Improvement on something already established.

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Invention

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The creation of a new product

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Entreprenuer

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Someone who starts, operates and assumes the
risk of a business venture in the hope of making a profit.

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Gordon Merchant

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The Billabong guy

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4 measurements for the size of a business

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1. the number of employees

2. the number of owners (of the business)

3. market share

4. the legal structure

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TNC

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TransNational Corporation

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SME

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Small to Medium Enterprise

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GBE

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Government Business Enterprise

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MicroBusiness

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Employees less than 5 people

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3 basic classifications of geographical spread of a business

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local

national

global

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The 5 key industries

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primary

secondary

tertiary

quaternary

quinary

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refers to the process companies go through to become a separate legal entity from the
owner/s.

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Incorporated

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The 2 main types of unincorporated businesses

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Sole Trader

Partnerships

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The 2 main types of incorporated businesses

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Private companies

Public companies

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Sole trader

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a business that is owned and operated by only one person.

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Unincorporated business

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a sole trader or partnership where the business
entity and the owner are one and the same

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This occurs when the business owner is personally responsible for all the debts of his
or her business.

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Unlimited liability

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Partnership

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A legal business structure that is owned and
operated by between two and 20 people with the aim of making a profit.

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Incorporation

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the process that companies go through to become incorporated, i.e. to become a
registered company and a separate
legal entity.

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Limited Liability

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A feature of corporate ownership that limits
each owner’s fi nancial liability to
the amount of money he or she
has paid for the business’s shares.

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A proprietary (private) company

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an incorporated business and usually has between two and 50 private shareholders.

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The process of transferring the ownership of a
government business to the private sector.

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Privatisation

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Franchise

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means buying the rights from another business to distribute its product under its name.

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Float

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The raising of capital in a company through the sale of shares to the public.

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A prospectus

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A document giving details of a company and inviting the public to buy shares in it.

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Dividends

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Profits paid out to shareholders