Edexcel Business A Level Revision

Public limited company - (INCORPORATED) A public limited company ('PLC') is a company that is able to offer its shares to the public . They don't have to offer those shares to the public, but they can. When shares are publicly traded on the public stock market, Plc companies have substantially more shareholders. Public companies are subject to significantly greater regulation in terms of public disclosure of financial records and other information ADVANTAGES Have limited liability Can easily raise capital by selling shares on the stock exchange, more people to buy them. The increased capital allows company to grow and diversify. The status of company increased, banks more willing to lend. DISADVANTAGES The shareholders own company but directors control it, ‘divorce of ownership and control’ – the directors may make decisions that don’t directly benefit the shareholders, this can create disagreements. There is always threat that someone will buy enough shares...

Liability - is a company's financial debt or obligations that arise during the course of its business Limited liability - An investor's liability/financial commitment is limited to the total amount invested or promised in share capital. An investor's personal belongings beyond this venture are protected. Unlimited liability - The owners of a business are responsible for the total amount of debt of the business. The owner may lose their personal belongings, e.g. home and cars, if the value of these is needed to cover the debts of the business. UNLIMITED LIABILITY IS SEEN AS A HIGH RISK Incorporated - An incorporated business (also called a corporation) is a type of business that offers many benefits over being a sole proprietor or partnership, including liability protection and additional tax deductions. Forming a corporation also allows you raise capital through sale of shares of your company . Creditors - is owed money, either by a business or an individual f...

Share capital -   Finance raised through the sales of shares by ONLY private and public limited companies. SHARE CAPITAL IS A FORM OF EQUITY CAPITAL e.g. the shareholder becomes a part owner of the business. Shareholders will be rewarded for their investment by the repayment of dividends but may also benefit from an increase in share pricing increasing the value of their shares. Issuing shares is a complex and costly process so only really an option for raising larger amounts of finance to fund long term projects. ADVANTAGES OF SHARE CAPITAL Only need to pay dividends if a profit is being made and the amount of dividend is not fixed. Possible to raise large amounts of finance No interest repayments DISADVANTAGES OF SHARE CAPITAL Loss of ownership as shareholders are part owners (ownership diluted) Potential risk of loss of control for a Plc with a threat of hostile takeovers. Complex and costly process of issuing shares, especially for a Plc.

Pricing is often one of the most difficult things to get right in business. There are several factors a business needs to consider in setting a price: COMPETITORS – a huge impact on pricing decisions. The relative market shares (or market strength) of competitors influences whether a business can set prices independently, or whether it has to follow the lead shown by competitors COSTS – a business cannot ignore the cost of production or buying a product when it comes to setting a selling price. In the long-term, a business will fail if it sells for less than cost, or if its gross profit margin is too low to cover the fixed costs of the business. THE STATE OF THE MARKET FOR THE PRODUCT ( SUPPLY AND DEMAND) – if there is a high demand for the product, but a shortage of supply, then the business can put prices up. THE STATE OF THE ECONOMY (EXTERNAL SHOCKS) – some products are more sensitive to changes in unemployment and workers wages than others. Makers of luxury pr...