3.9 - Types of Business Models

Question 1

Online

2 - 3

Answer 1

To meet their customer a business will have a web page that their customer can go to, to contract the business and purchase items.

• Advantages
  
  • Able to reach a large customer group rather than those that are local to the business.
  • Cheaper to set up the web page than have a shop for customers as the business can locate into a cheaper location.
• Disadvantages
  
  • It may be hard for your potential customers to find your webpage
  • It is expensive to setup and regularly update a webpage
  • The website could be subject to Cyberattack

Question 2

Bricks and Mortar

Answer 2

This is where the business has a physical shop that customers can visit to purchase items. An example of a Brick and Mortar business is a Cafe.

• Advantages
  
  • Will attract customers that want to see the physical item that they want.
• Disadvantages
  
  • Generally will only sell locally which is a small customer base.
  • It is Expensive to set up and operate, rent, staff, bills.

Question 3

Social Enterprise

Answer 3

A Social Enterprise has the objective to assist society like the Red Cross which is a charity. To fund its operations it will need to seek donations from the government. Some socially responsible businesses will earn an income through

• Advantages
  
  • They provide value back to the community.
• Disadvantages
  
  • They need to source funding or they will be unable to operate.
  • Unable to use traditional finance sources like banks to commence as they don’t have a clear objective to earn an income.

Question 4

Franchise

2 - 3

Answer 4

A franchise is when you are paying to use someone’s idea. You have the ability to generate an income faster because the public knows the brand. An example of a franchise is Mcdonald’s, Boost Juice.

• Advantages
  
  • Income source quickly as the brand is known
  • Support in training and equipment can be provided
• Disadvantages
  
  • High fees need to be paid to belong to the franchise that may leave little return to the owner.
  • The franchise company will have set procedures that must be followed that reduces the owner’s ability to change things.
  • Promotional Campaigns, like McDonald’s Monopoly game will require to be followed which will be a high cost to the franchise.

Question 5

Import and Export

Answer 5

An Import Business is one that purchases items overseas and then resells the item into the local market. An example is a car and electrical companies.

An Export Business is one that takes locally produced products and sells them overseas. In Australia, an example can be seafood and meat exported to the Asian Market. Australian Primary production items are seen as safe.

• Advantages
  
  • As an Exporter, you are looking are a larger market that you can sell to.
  • As an Importer, you can source a cheaper product that is not available that can increase sales for you.
• Disadvantages
  
  • You cant control the overseas political exchange rates which can lead to an increase in costs of the item if you import at a position where the import can not be sold or if the price changes that no longer makes it competitive.
  • Covid-19 has impacted the ability to import or export items due to reduced flights and ship movements. Also, the costs to move a container have increased significantly. This means you can’t get items to or from a market.
  • You can’t control the items being produced overseas and the items may not meet the expectations of the customer.