9.1 NATURE OF BUSINESS - Role of business (NOB)

Question 1

Business definition

Answer 1

Organization producing goods and services in exchange of profit

Question 2

Producing good and services

Answer 2

Goods: Tangible - can physically touch it.
EXAMPLE: A CHOCOLATE
Services: Intangible - Unable to touch physically
EXAMPLE: HAIRDRESSING

Question 3

Profit

Answer 3

Definition: Remains after all business expenses have been deducted from business sales revenue (income).

SALES REVENUE > OPERATION EXPENSES = PROFIT
GP = SALES - COGS
NP = GP - EXPENSES
NP provides:
- A return on investments 
- Wealth for the owner
- Tax income for the government.

Question 4

Employment

Answer 4

Employment ALLOWS:
- Income to purchase goods.

*Number of employees will depend on the success of product and customer loyalty.

MORE SOLD = MORE EMPLOYEES

Question 5

Income

Answer 5

Income comes from labour.
Wage: Money received hourly/ weekly basis.
Salary: FIXED amount of money paid regularly to a permanent employee.

Question 6

Choice

Answer 6

When customers have the freedom to shop and select a wide range of products.

Question 7

Innovation

Answer 7

Improving or creating a product, service process.

Research and developments = Innovation

Question 8

Entrepreneurship

Answer 8

Definition: A person who sets up a business or businesses, taking on financial risks in the hope of profit.

Entrepreneurs innovate new products and business ideas.

IF FAILS: They may lose all parts of money that is put into it.

Question 9

Wealth

Answer 9

More products sold = More wealth generated in the Australian economy.

Question 10

Quality of life (QOL)

Answer 10

definition: Well-being of individual through material and non material benefits.

Business provides:

• Provides jobs and income
• Provides goods and services
• Supports government tax = community benefits.