BUAD100 Lecture 1:

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Published on 21 Feb 2019
Week One:
Stakeholder’s Reading:
- Stakeholder: a party that has an interest in a company and can either affect or be
affected by the business
o Primary stakeholders = investors, employees, customers, and suppliers
o can include community, government, etc.
o important to balance all stakeholder interests
- stakeholders can be internal or external
o internal = direct = employment, ownership, or investment
o external = not work directly, but are affected in some ways by company actions
- agency problem = conflict of interest where one party who is naturally motivated by
self-interest, is expected to act in another’s best interest
- cockroach theory = market theory posting that when a company issues bad news, there
may be more related negative events yet to be revealed
- country risk = set of risks associated with investing in a particular country
- corporate governance = structure of rules and practices and processes by which a
company is directed
- agency cost of debt = a problem arising from the conflict of interest created by the
separation of management from ownership in a public company
- inside director = board member who is an employee, officer, or direct stakeholder in the
“economic Basics: competition, monopoly, oligopoly”
- Large number of different buyers and sellers in the market which allows for competition
within in the market prices changes in response to supply and demand
- Substitutes for products with in the market
- Competition is crucial to the invisible hand to keep an economy efficient
- Smith predicts that profit rates for all industries will converge to the same rate of profit
perfect competition
o There are few barriers to entry for new companies and prices are determined by
supply and demand in Perfectly Competitive Market prices do not have
- Monopoly = market structure in which there is only one producer and seller for a
- Oligopoly only a few firms that make u an industry
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