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What is a simple business structure in which one individual runs and owns the entire business.
Sole proprietorship
What business means turning your sole proprietorship or general partnership into a company formally recognized by your state of incorporation. This company becomes its own legal business structure set apart from the individuals who founded the business.
Incorporated business
What business does not possess a separate legal identity from its owner(s). The owner(s) bear full liability for any action or inaction of the business: they may sue and be sued for business activity or inactivity. They include sole proprietorships and partnerships.
Unincorporated businesses
This is a strategy that involves charging a low price, sometimes even below the cost, so as to damage the sales of rivals. It is also used by established market leaders to restrict new entrants, thereby limiting competition.
It can be a risky strategy to use as many governments impose anti-competitive laws, so firms can be fined for using this form of pricing with the intent to restrict competition. In some cases, It can lead to a price war, whereby existing firms repeatedly cut prices in an attempt to destroy the sales of their rivals. Quite often, this results in some (weaker) firms leaving the industry.
Predatory pricing
This is an essential set of final accounts that shows the value of a firm’s assets, liabilities and the owner's’ investment (or equity) in the business at a particular point in time. Hence, this is often referred to as a “snapshot” of a firm’s financial position.
Balance sheet
This means the organizational goal of keeping talented employees and reducing turnover by fostering a positive work atmosphere to promote engagement, showing appreciation to employees, and providing competitive pay and benefits and healthy work-life balance.
Employee retention
This refers to the ratio of a number of employees who leave a company through attrition, dismissal or resignation to the total number of employees on the payroll in that period.
Labour turnover
is a form of financial payment system, rewarding employees by time rather than volume or quality of output. Workers are paid the flat rate wage rate per hour they work.
Wage rate
enjoys privacy as it only needs to publish its financial accounts to the tax authorities rather than to the general public.
Sole proprietorship
This is a pricing strategy that involves a business charging different prices to different market segments for basically the same good or service. It is a widely used strategy in many industries. For example, adults and children pay different prices at cinemas, hotels and theme parks.
For this pricing strategy to work, three conditions must hold:
Price discrimination
(1908 – 1970) he was an American social psychologist. His most famous theory, discusses how people are motivated by different levels or categories of needs. According to this psychologist in 1943, he believes that needs are people’s unfulfilled physiological and/or psychological desires. The model suggests that only when one level of needs is met, is it then possible for the next level to be addressed.
Abraham Maslow’s hierarchy of needs
In (1923 – 2000), he/she was an American psychologist. In Work and Nature of Man (1966), he/she argued that in order to create any motivation in the workplace, it was essential to first remove the factors that cause dissatisfaction. He named these influences hygiene factors.
Professor Frederick Herzberg
This is a banking service that enables customers (personal and business customers) to take out more money from their account than exists in the account. This can help businesses to meet their short-term liquidity needs, especially in emergency situations. The has to be pre-approved to avoid expensive bank charges, as does the maximum amount that can be over taken.
Bank overdraft
This is a measure of the size of a business in comparison to others in the same industry by calculating its proportion of the total value of sales revenue in the industry. This is expressed as a percentage to show the firm’s sales as a proportion of the total sales in the market:
Market share
This American and Engineer consultant argued that the main reason for why people work is “what the workmen want from employers beyond anything else is higher wages.”
He believed that there should be a higher financial reward for more hard-working and productive workers. In this case, means using differentiated piece rate to motivate workers to be more efficient and productive. Such a payment system rewards those who meet or exceed targets.
As suggested by ? linking the pay of workers to their level of output through a piece rate payment system creates an incentive for workers to be more productive. This is based on his assumption that (all) workers are motivated by receiving more money for their work.
Frederick Winslow Taylor -FW Taylor (1856-1917)
When a private company first sells shares of stock to the public, this process is known as an ?. In essence, it means that a company's ownership is transitioning from private ownership to public ownership. For that reason, the process is sometimes referred to as "going public."
IPO: Initial Public Offering
This is finance raised through the issuing of shares via a stock exchange (or stock market). It is a long-term source of finance for limited liability companies, obtained by selling shares in the company.
Share capital
This enables a customer to purchase and obtain goods and services but to pay for these at a later date. The supplier provides this to the customer (another business organization), which helps the purchaser’s cash flow as they can obtain supplies without having to pay for these products immediately.
The typical period is between 30 to 90 days, depending on the industry in question. This means that it is possible to sell the goods bought before actually having to pay for them! Buying goods and services does not incur any interest charges if the amount owed is paid in full within the period
Trade credit
These are a type of financial aid for businesses, paid as a lump sum from the government. As a form of financial assistance, there is no interest charge nor does it need to be repaid. It is offered to certain businesses to support their operations by cutting costs of production. For example, They're often provided for small business start-ups, for firms to set up in areas with relatively high unemployment, and for firms involved in research and development (R&D).
Grants
These are a form of government assistance, provided to encourage firms to increase their output of certain goods or services, deemed to be beneficial for society as a whole. For example, farmers might be provided with this to increase the production of agricultural products and to keep prices relatively low for customers.
Subsidies
This is setting a low price in order to enter an industry. It allows the firm to compete against existing firms and to gain market share. Quite often, this pricing takes the form of a heavily advertised discounted price offer in order to attract a large number of customers in a short space of time. The low price can also allow the firm create brand awareness and brand recognition. As the firm establishes itself and gains brand recognition, the price can be raised.
Penetration pricing
This is a financial service provided to businesses who are struggling to collect money from the people owing them and/face liquidity problems. The service provider, such as a commercial bank, takes over the responsibility for collecting the money owed to the business.
Debt factoring
What pricing adds a profit margin to the costs of production in order to determine the selling price of a good or service. This ensures that each unit sold adds contribution by ensuring the selling price is higher than the production costs. The difference between the price and the cost is called the mark-up (or the profit margin), which is usually expressed as a percentage figure.
Cost plus pricing
This is a common option for businesses to access fixed assets without the high costs of capital expenditure. It involves the business or customer drawing up a contract with the company to use particular fixed assets for an agreed fee. Example of this fixed assets included: machinery, tools, equipment, photocopiers, computers, vehicles or premises.
Leasing
This pricing strategy consist of setting a high price during the introductory (launch) of a new and original product, such as new electronic products. It is often used to target the market segment known as early adopters, who are more interested in the uniqueness, quality and prestige of owning a new and original product (rather than the high price). Firms also charge a high price in order to recuperate their high costs of research and development (R&D) prior to the launch of the product.
Price skimming