Business Structures and Market Analysis
Market Structures
Perfectly Competitive Market
Characterized by homogeneous products, numerous buyers and sellers, none powerful enough to influence prices. All participants are price-takers, and there is free entry and exit to the market.
Monopoly
A single company controls prices and quantities. Monopolies are typically justified for essential services requiring significant infrastructure (e.g., water, electricity). Legal monopolies also exist.
Oligopoly
A few companies share the market, each with enough power to influence prices and quantities (e.g., cars, oil).
Monopolistic Competition
Many companies offer similar products but differentiate them through branding and marketing (e.g., clothing, restaurants).
Business Structures
Partnership
- No minimum capital requirement.
- Minimum of two partners.
- Based on mutual trust; membership is not transferable without consent.
- Each partner has unlimited liability.
- Decisions are made by mutual agreement.
Limited Partnership
- Combines general partners (unlimited liability) and limited partners (limited liability).
Limited Liability Company (LLC)
- Capital is divided into shares.
- Minimum capital requirement.
- Limited liability.
- Can be formed by a single person.
- Managed by a board of members and administration.
- Suitable for small businesses or family-type enterprises.
Public Limited Company (PLC)
- Capital is divided into shares.
- Higher minimum capital requirement.
- Can be formed by one or more partners.
- Limited liability.
- Shares are freely traded.
- Governed by a shareholders’ meeting and board of directors.
Cooperative Society
- Formed by people with common interests.
- Democratic functioning (one person, one vote).
- Non-profit; profits are reinvested.
- Limited liability.
- Various types: first grade, second grade, work cooperatives, retail cooperatives, consumer cooperatives.
Industrial Society
- Limited liability.
- Majority shareholder (51%) is owned by employees.
- No member can hold more than one-third of social capital.
Business Analysis
SWOT Analysis
- How to reduce weaknesses?
- How to use each strength?
- How to exploit every opportunity?
- How to avoid threats?
Competition Analysis
- Degree of rivalry.
- Potential competitors.
- Threat of substitutes.
- Bargaining power with customers and suppliers.
Valuation Metrics
- Nominal Value: Capital / Number of shares
- Theoretical Value: (Equity capital + Reserves) / Number of shares
- Market Value: Nominal value * Listed market price
Business Environments
General Environment
Factors affecting all businesses, regardless of sector:
- Economic factors (interest rates, unemployment rate)
- Political and legal factors (taxation, minimum wage)
- Socio-cultural factors (lifestyle, fashion)
- Technological factors (degree of modernization)
Specific Environment
Factors affecting a particular business sector:
- Suppliers
- Customers and consumers
- Dealers and distributors
- Competitors
Competitive Strategies
Actions taken by a company to compete successfully:
- Market segmentation
- Differentiation (branding, advertising)
- Cost leadership