AOS2: Internal Environment Flashcards
Define and provide factors of the environments of a business
Internal environment: consists of factors within the business eg. employees, management, policies, procedures, corporate culture and resources
External environment: two subdivisions-
External operating environment: factors the business has some control over eg. customers, suppliers and competitors
External macro environment: factors the business has no control over eg. government policy, law, technology, trends, social attitudes and the economy
What are the three categories of resource and an example of each
Natural (sourced from the natural environment) eg. land
Labour (the people that provide their skills) eg. chef
Capital (tools, technology or machinery) eg. washing machine
What are four business locations?
Shopping centres, retail shopping strips, online presence, home based business.
What are factors affecting choice of location?
- customer access / visibility
- competitor proximity
- supplier proximity
- cost of land/property
- complementary business proximity
What are the costs and benefits of purchasing an existing business?
Costs -
- poor existing reputation
- can easily be conned into paying more than business is worth
- existing employees may not comply
Benefits -
- existing customer base (instant income)
- stock and equipment already acquired
- seller may provide training / advise
- existing employees
What are the costs and benefits of establishing a new business?
Costs-
- High risk / uncertainty
- can be difficult to secure finance
- requires a lot of time
- profits may not be generated for a while
Benefits -
- owner has freedom of choice
- scale and pace of growth is determined by owner
- no additional payments to any previous owner
What are the advantages and disadvantages of a sole trader business structure?
Advantages: low cost to start up, minimal government regulation, the owner can keep all profit
Disadvantages: unincorporated (owner and business are not separate legal entities), unlimited liability, lots of demand upon a sole individual, difficult to raise finance from one person
What are advantages and disadvantages of a partnership?
Advantages: shared responsibility and workload ( 2 - 20 people ), minimal government regulation, low cost to start up
Disadvantages: possibility of dispute amongst partners, unlimited liability, unincorporated
What are the advantages and disadvantages of a company? (5 + shareholders, on stock exchange)
Advantages: limited liability, incorporated (business and owners are separate legal entities), easier to gain finance through public, greater growth potential
Disadvantages: high cost of formation, greater taxation (double cause owner AND company tax), requirement to to publish annual reports
Explain limited liability
Limited liability is when the shareholders of a company are not held personally responsible for the debts of the business.
What are types of business model? 6 (technically 7)
Bricks and mortar (physical presence) Bricks and clicks (online + physical presence) Online presence (eBay) Social enterprise (thank you) Franchise (McDonald's) Importer and exporter
What are some examples of business legal and financial support services?
Bank manager Accountant Solicitor Formal and informal networks Technical support/ advise Community based support ie. Business enterprise centres Local and state government
What does SWOT stand for?
Strengths, weaknesses, opportunities, threats
What are the 4 sections of a business plan?
- executive summary : business objective summary
- operations plan : how the business will operated/set up, human resources required
- financial plan : how the business will acquire and utilise finance
- marketing plan : outlines marketing strategy and how it satisfies market needs
What is corporate social responsibility?
Managing a business in such a way that the broader social welfare of the community- including employees, customers, suppliers and the environment is taken into consideration when making business decisions.
