Business Foundations 1

Question 1

Sole trader

Answer 1

Simple and inexpensive, total responsibility for managing the business, all profits and capital are entitled to owner
Unlimited liability
Registered Business Name (RBN), TFN, financial records must be kept for 5 years

Question 2

Partnership

Answer 2

Partnership
Combines the expertise and resources for two to twenty people, inexpensive to set up
No perpetuity, unlimited liability, potential for disputes and personality clashes
General partnership- each person is equally responsible for the business
Limited partnership- Partner in business who is not involved in day to day business, limited liability
Partnership agreement done by lawyer

Question 3

Company

Answer 3

Private ltd. company
Limited liability, has perpetuity, extra capital by selling shares (less than 50 shareholders only), separate legal entity
Harder to establish, higher establishment costs, additional compliance costs, governmental control (financial records of 7 years, tax return), usually pty ltd. after name
Public company
Extra capital through shares, limited liability, perpetuity
Complex structure, high establishment costs, additional compliance costs
Needs a prospectus, ASX, usually ltd. after name

Question 4

Social Enterprise

Answer 4

Distributes profit towards environmental or social causes

Deductible Gift Recipient (DGR), makes every donation above $2 tax deductible

Question 5

GBE

Answer 5

Government owned and run, operates like a company, different entity to government (e.g. NBN, Defence Housing Australia, Australia Post)

Question 6

Business objectives

Answer 6

Financial objectives- making a profit, increasing market share
Marketing objectives- maximise appeal of products and recognising trends
Social objectives- go beyond financial objectives and contribute to communities, ‘good citizen’

Question 7

SMART

Answer 7

specific, measurable, attainable, realistic, timely

Question 8

Vision, value and mission statement

Answer 8

Vision statement- aspirations and what the business is trying to achieve
Values statement- corporate values and cultural priorities that are important to the business
Mission- why they exist, core purpose and focus

Question 9

STO

Answer 9

Strategic objective, achieved in 2-5 years
Tactical objective, 1-2 years
Operational objective, less than 1 year

Question 10

Areas of management responsibility

Answer 10

Operations- responsible for planning, organising, coordinating, and controlling all resources needed to producing its goods and services
Finance- planning financial information, budgets, financial records, sales revenue, business expenses
Human resources- responsible for the management of employees, recruitment, selection, workplace relations
Sales and marketing- marketing is developing strategies, market research, advertising, sales
Technology support- assisting a business by using technology, increasing efficiency, productivity, and cost-effectiveness