Download Shareholders and share price

Shareholders and share price
Learning objectives
• Identify the factors that may influence share price
• Evaluate the impact of share prices on a company
Learning outcomes
Starter
1.
2.
3.
4.
5.
Who typically buys shares?
Why do shareholders invest in a company?
What is market capitalisation?
What is market capitalisation formula?
What percentage of shares do you need to buy to take ownership
control of a Plc?
Starter
1. Who typically buys shares? Individuals but mainly financial
institutions like banks, insurance companies
2. Why do shareholders invest in a company? To get a financial return,
long term or short term gain
3. What is market capitalisation? Total value of the issued shares of a
Plc
4. What is market capitalisation formula?
Share price x no of shares issued
5. What percentage of shares do you need to buy to take ownership
control of a Plc? 51% or more
LO Impact of share prices on a company
Influence on
share price
and impact of
share price
changes
Impact of share prices
Case study on Serco…
Stick it in your book and answer the questions
EXTENSION TASK:
What recommendations would you make to Serco to enable them to build back confidence in the
services they provide?
Shareholders
Ultimately a company would like to maintain a strong
share price to help attract new financial investors and
to demonstrate managerial competence. A falling
share price puts the company in danger of takeover
and can destabilise a company’s management team.
LO Impact of share prices on a company
What have we learnt so far
What can you tell me about impact of share price on a company?
Tell me 3 factors that influence share price?
Continue with presentation preparation (20 min MAX)
Case study – VW and the emissions scandal
https://www.youtube.com/watch?v=wGzyt5y2Q5c#action=share
Case study 2 – Merlin Entertainments
Impact of Smiler incident:
• Shares decreased
• Merlin Entertainments issued profit warning
• Visitor numbers in decline at Alton Towers
• Weak euro also impacted on London attractions
Case study - Greggs
http://www.bbc.co.uk/news/business-34451796
Group
Group A
Group B
Group C
Kieran
Francesca
Viennah
Beth
Mohammed
Ola
Charlie
Chris
Sara
Fatma
Ahmed
Ajmal
Justin
Yasser
Exam style question
Benacre plc manufactures a range of components for high technology
products such as mobile phones. It is very profitable and has a rising
share price.
Explain 2 risks in buying shares in Benacre plc. (6 marks)
Extension… what advice would you give a potential investor in Benacre
plc
20 min
Quick quiz
1.
2.
3.
4.
5.
What is the impact of a share price rising?
What is the impact of a share price decreasing?
What factors can influence share price?
Describe 1 impact of a falling share price on a business?
List 1 advantages and disadvantage for a business to float on the
stock exchange
Understand the role of shareholders
Describe why shareholders invest in a company
Impact of share prices on a company
Quick quiz
1. What is the impact of a share price rising? Confidence in company,
attracts potential investors, able to raise more capital
2. What is the impact of a share price decreasing? Worried investors, may
choose to sell their shares, difficult to get new investment, consumer
confidence and they may go to compeitior
3. What factors can influence share price? Company performance,
economy, consumer spending, weather?
4. Describe 1 impact of falling share price on a company? Hard to attract
top quality employees, harder to raise finance
5. List 1 advantage and disadvantage for a business to float on the stock
exchange can raise capital easily, raise profile, risk of take over, share
price decrease could result in less consumer confidence
Understand the role of shareholders
Describe why shareholders invest in a company
Impact of share prices on a company
Learning outcomes
ALL
E-D
MOST
C-B
SOME
A-A*
Identify what a shareholder is
Explain what influence the
shareholder can have on decision
making
Recommend 3 things a potential
shareholder should consider before
deciding on buying shares
State 1 reason for investing in a
business
Explain how a shareholder is
rewarded (or not)
Compare the benefits and risks of
buying shares
Describe 1 factor that might
influence the share price of a Plc
Describe 1 impact of share price
increase or decrease on a company
Evaluate the impact of share price
increase and decrease has on a
business
What’s your target grade? Are you confident you can answer your questions?
Further resources
http://www.telegraph.co.uk/finance/personalfinance/investing/shares/
11882164/Have-you-learned-the-lesson-from-VWs-35pc-share-pricefall.html