AOS2 Flashcards
The internal environment
Factors over which a business has some degree of control over
the external environment
factors which the business has little to no control over
the external environment: macro factors
legal and government regulations, societal attitudes and behaviours, economic conditions, technological considerations, global considerations, CSR
the external environment: operating environment listed
*customer needs and expectations
*competitors behaviours
*suppliers and the supply chain
the relationship between internal and external environments
both environments affect eachother
how the internal environment affects the external environment listed
*types of business models
*business resource needs
* business locations
*business planning
types of businesses listed
sole trader
partnership
private limited company
public listed company
social enterprise
government business eneterprise
sole trader
a business structure that’s owned and operated by one individual
partnership
a business structure that’s owned by 2 to 20 owners
private limited company
an incorporated business structure that has at least one director and a max of 50 shareholders
public listed company
an incorporated business that has an unlimited amount of shareholders
social enterprise
a type of business that aims to fulfill a community or environmental need by selling goods or services
government business enterprise (GBE)
a business that’s owned and operated by the government
main business models listed
online businesses
bricks and mortar
direct to consumer
franchise
importer
exporter
business model
the way in which a business conducts operations in order to generate profit
online businesses
a business model where goods and services are traded via the internet
types of online businesses listed
advertising based websites
freemium
brokerage
merchant
bricks and mortar
a business model that has a physical store presence
direct to consumer
a business model where products are sold directly to consumers with no intermediaries involved
franchise
a business model that grants another person the right to operate under its name, use its systems and sell it’s good services
importer
purchases goods and services from overseas and sells them in its home country
exporter
produces goods and services in its home country and sells them to overseas buyers
private limited company
an incorporated business structure that has at least one director and a max of 50 shareholders
advantages of private limited company listed
*limited liabilities
*pay company tax rate
*life of the company can live longer than directors
disadvantages of private limited company listed
*more complex and expensive to establish
*shares cannot be traded freely
public listed company definition
an incorporated business that has an unlimited amount of shareholders
advantages of public listed company listed
*limited liability
*easier to raise capital by selling more shares to public
*life of company can live longer than directors (perpetuity)
disadvantages of public listed company listed
*high costs in establishment
* time consuming to establish
*possible loss of control
social entreprise definition
a type of business that aims to fulfill a community or environmental need by selling goods and services
social entreprises are not…..
charities
advantages of social enterprise listed
*meeting a social need can encourage community support, increasing profit
*improved morale within the business as employees value the work they’re doing
disadvantages of social enterprise listed
*difficult to focus on financial and social objectives
*difficult to obtain finance to begin the business
government business enterprise (GBE) defintion
a business thats owned and operated by the government
advantages of government business enterprise (GBE) listed
*provides healthy competition to private sector
*maybe invest in areas that the private sector may hesitate to invest
disadvantages of government business enterprise (GBE) listed
*strategic directions can change with changing governments
*there can be political inferences
*GBEs may not be as productive as private sector businesses (possible lack of accountability)
business models definition
the way in which a business conducts operations in order to generate profit
main business models listed
*online businesses
*bricks and mortar
*direct-to-consumer businesses
*franchise
*import and export
online businesses defintion
a business model where goods and services are traded via the internet
advantages of online businesses listed
*easy access for customers
*websites set up easily
*money saved on business location
disadvantages of online businesses listed
*customers unable to try product, may be reluctant to purchase
*customer service isn’t as straight forward
*development and maintenance can be costly
types of online businesses listed
*advertising-based websites
*freemium
*brokerage
*merchant
types of online businesses listed
*advertising-based websites
*freemium
*brokerage
*merchant
bricks and mortar definition
a business model that has a physical store presence
bricks and mortar definition
a business model that has a physical store presence
bricks and mortar advantages listed
*face to face interaction, allowing for strong customer relationships
*customer ability to test products and see them in person before purchase
disadvantages of bricks and mortar listed
*customers must be able to physically access store
*in busy periods customers will be forced to wait and employees may feel overwhelmed
*time consuming both when it comes to the establishment and operation costs
disadvantages of bricks and mortar listed
*customers must be able to physically access store
*in busy periods customers will be forced to wait and employees may feel overwhelmed
*time consuming both when it comes to the establishment and operation costs
direct to consumer defintion
a business model where products are sold directly to consumers with no intermediaries involved
direct to consumers advantages
*customer convenience, able to buy and receive products directly from one place
*reliable sales data, easier to understand customer base
*obtain higher profit margin
direct to consumer disadvantages
*difficulty growing business
*high competition, relatively easy to set up
*inability to reach as many customers
direct to consumer disadvantages
*difficulty growing business
*high competition, relatively easy to set up
*inability to reach as many customers
franchise definition
a business model that grants another person the right to operate under its name, use its systems and sell its goods or services
franchise definition
a business model that grants another person the right to operate under its name, use its systems and sell its goods or services
franchise advantages listed
*established and known business name and reputation
*establish customer base/suppliers
*training and development programs
franchise disadvantages listed
*establishment costs and purchasing licence can be expensive
*royalties go to franchiser
*limited flexibility
importer definition
purchases goods and services from overseas and sells them in its own country
importer advantages listed
*can expand sales
*cheaper labour overseas
*can create local job opportunites through exporting
imporer disadvantages listed
*can be difficult to deal with different systems and regulations
*jobs can be lost for domestic producers
*longer waiting times when importing
exporter defintiion
produce goods and services in its home country and sells them to overseas buyers
exporter advantages
*access to overseas customer bases increases sales
*growth in Aus industries, increases demand for products
*overseas customers may be willing to pay more, as they dont have access to similar products
exporter disadvantages listed
*may be difficult to understand overseas cultures and laws
*higher transportation costs
exporter disadvantages listed
*may be difficult to understand overseas cultures and laws
*higher transportation costs
purchasing an existing business definition
established businesses are already operating with all factors included with purchases
purchasing an existing business definition
established businesses are already operating with all factors included with purchases
establishing a new business definition
must bring a product or service to the table that’ll draw consumers in
establishing a new business benefits listed
*owner has freedom to set up the business exactly as he/she wishes
*owner can determine the pace of growth and change
*there is no goodwill for which the owner has to pay
*if funds are limited it’s possible to begin on a smaller scale
establishing a new business costs lists
*there’s a high risk and a measure of uncertainty.
*without a previous business reputation, it may prove difficult to secure finance
*if the start up period is slow then profits may not be generated for some time
establishing a new business costs lists
*there’s a high risk and a measure of uncertainty.
*without a previous business reputation, it may prove difficult to secure finance
*if the start up period is slow then profits may not be generated for some time
business resources definition
human, physical and knowledge factors that provide a business with a basis to perform the activities involved in its day-to-day operations
business resources are divided into
*natural
*labour
*capital
natural resources definition
raw materials from the environment that used in the production of goods and services
natural resources definition
raw materials from the environment that used in the production of goods and services
supplier considerations affecting use of natural resources listed
*cost
*quality
*location
*reliability
nature of resources affecting use of natural resources listed
*perishability
*storage requirements
*security requirements
*seasonal availability
CSR affecting use of natural resources listed
*environmental standards of suppliers
*social standards of suppliers
*environmental impact of sourcing
*location of suppliers
labour resources definition
the people who provide the business with their skills and qualifications to conduct business activities
cost affecting labour resources listed
*wages and salaries
*quantity
*timing
quality affecting use of labour resources listed
*qualifications
*skills and knowledge
*training
CSR affecting use of labour resources listed
*improving employees wellbeing
*providing job security
capital resources definition
made goods used in the production of goods services
capital resources definition
made goods used in the production of goods services
supplier considerations affecting use of capital resources listed
*cost
*quality
nature of resources affecting use of capital resources listed
*capability
*operation requirements
*maintenance requirements
csr affecting use of capital resources listed
*environmental sustainibility
*social sustainibility
business locations defintion
the physical or non-physical place that a business operates from
in business locations its always important to consider (listed)
*visibility
*accessibility
*proximity
*cost
business location types listed
*shopping centres
*retail shopping strips
*home businesses
*online businesses
factors affecting the choice of shopping centres listed
*visibility and accessibility
*cost
*proximity
*area demographics
*laws and regulations
advantages of shopping centres listed
*greater exposure to customers
*high foot traffic
*facilities provided
*parking available
*delivery options usually underground
*employees can catch public transport
disadvantages of shopping centres listed
*increased competition
*set opening hours, less flexibility
*rent typically more expensive
factors affecting the choice of location of retail shopping strips
*high visibility and accessibility, can be easily seen and are generally accessible by public transport
*cost is dependant on locations popularity
*competitors dependent on size, bigger shopping centres=more competitors
*must consider demographic of locals, cater for their needs
*may impact ability to put up signage or renovate
advantages of retail shopping strips listed
*fewer competitors than shopping centres
*local member of area likely to visit, can create customer loyalty
*employees can save time and money travelling to work
disadvantages of retail shopping strips listed
*local customers may spend less time if they only come for specific items
*less foot traffic compared to shopping centre
*often less parking available for those who drive to work
*rent can be expensive if strip is located in established area
factors affecting the choice of home businesses listed
*low visibility and accessibility
*low cost as all operations are occuring from home
*competitors are unlikely
*usually advertised online, local demographic is irrelevant
*still register business name
advantages of home businesses listed
*flexibility in business hours
*if employee have family members and live on premises, easy to access
*travel time eliminated as employees most likely love on premise
*no need to rent business location
*business owners can access tax deductions for living expenses
home business disadvantages listed
*less visibility as business is located in residential area
*lack of privacy, customer may need to access the house
*less living space available
*difficult to establish work life balance
factors affecting the choice of online business listed
*no in person visibility
*no rental costs
*large group of competitors as all websites are easy to access
*convenient for owner, can work from any location = great flexibility
*need to consider laws and regulations regarding shipping, permits and taxes
advantages of online business listed
*wider customer base
*customers can access anywhere anytime
*easily advertised, social media
*work flexibility
*establishing or adapting can be much quicker
*no rent for a retail store location
disadvantages of online business listed
*many competitors that sell similar products
*no physical presence or visibility, need frequent advertising
*customers cannot touch, try feel product
*employees may work alone
*there can be costs associated with maintenance tech support
disadvantages of online business listed
*many competitors that sell similar products
*no physical presence or visibility, need frequent advertising
*customers cannot touch, try feel product
*employees may work alone
*there can be costs associated with maintenance tech support
sources of finance definition
businesses cannot start without the appropriate finance or funds to pay for its operating expenses
sources of finance listed
*equity (internal)
*debt (external)
*grants (external)
equity definition
the funds contributed by the owners of a business to start and build the business
types of equity listed
*personal equity
*private equity
*public equity
personal equity defintiion
acquired by the business owner contributing their own funds to a business
private equity definition
acquired by the business selling its shares to specific selected individuals who have been approved
public equity definition
acquired by the business selling its shares to general public
debt definition
money thats been lent to a business by an external source that must be paid back over time with interest
factors affecting debt
*debt capital mostly as the business has to pay interest
*loans can be suitable for various time periods
*high degree of control
*sole traders and partnerships
grant definition
money provided by a government or another organisation for a particular reason
factors affecting grants listed
*no cost
*low flexibility
*less control
*business structure has minimal impact
overdraft facilities definition
agreements between banks and businesses or individuals, that allow a bank account to be withdrawn below zero
factors affecting overdraft facilities listed
*high interest rates, relatively expensive
*highly flexible, use at anytime
*high level of control, but banks can terminate their service at anytime
*business structure has minimal impact, companies can access high overdraft
factors affecting overdraft facilities listed
*high interest rates, relatively expensive
*highly flexible, use at anytime
*high level of control, but banks can terminate their service at anytime
*business structure has minimal impact, companies can access high overdraft
business plan definition
a business plan is a written statement of the goals and objectives for a business, and the steps to be taken to achieve them
benefits of developing a business plan listed
*helps test the viability of the business
*identifies the business’s strengths and weaknesses
*forces the business owner to justify their plans and action
elements of the plan listed
*executive summary
*operations plan
*financial plan
*marketing plan
limitations of business plan
the owner may spend more time planning than actually creating and selling their product/service
SWOT analysis definition
is a planning analysis tool that helps a business identify its internal strengths and weaknesses, as well as any external oppurtunities and threats
SWOT analysis broken down (listed)
*Strengths - that should be maintained (internal)
*Weaknesses - that should be minimised (internal)
*Opportunities - to be taken advantage of (external)
*Threats that should be addressed (external)
csr in business planning definition
must actively plan csr initiatives in consultations with stakeholders
