BUSINESS FOUNDATIONS - 1A Flashcards
define sole trader
business with one person who owns and runs the business. owner is legally responsible for all aspects of the business including unlimited liability
advantage/disadvantage of sole trader
complete control, unlimited liability
define partnership
business with 2-20 owners. general is where all partners are equally responsible, limited is where liability for one or more partners is limited
define company
owners within the business are called shareholders who have limited liability meaning their legal liability is limited to the extent of value of their shareholdings
define private limited company
restricted to 50 shareholders with shares sold privately, not open to public trade
advantage/disadvantage of partnership
inexpensive to set up, unlimited liability
advantage/disadvantage of private company
limited liability, reporting requirements
define public listed company
company has shareholders who own and directors who run it. listed on ASX for public to trade shares
advantage/disadvantage of public company
limited liability, large expense to set up
define social enterprise
business exists primarily to fulfil a vision that benefits the public rather than for profits, there to make a positive social impact on the community
advantage/disadvantage of social enterprise
good reputation, can be hard to raise money
define government business enterprise
organisation that undertakes a commercial activity ob behalf of the government, however are still run by an owner
advantage/disadvantage of gbe
shared workload, may not gain as much profit
define businesses
lawful commercial activities to earn a profit. is an entity involved in the provision of goods and services to customers
define business objectives
business objectives are the goals or the direction that the business aims to achieve within a certain period of time. an example of this is the objective to increase market share
what are the 4 shareholder expectations
to make a profit
to increase market share
to fulfil a market or social need
to meet shareholder expectations
define to make a profit
the idea of making enough sales to exceed expenses, generating a profit through the sales of goods and services
define to increase market share
market share is the proportion of the market controlled or owned by a particular business or product, in which businesses compete against each other to gain the most
define to fulfil a market or social need
if enough people have a want or need, it creates a gap in the market which businesses can try to satisfy and fulfil the market or social need
define to meet shareholder expectations
shareholders are the people who own the business which have an expectation to make a return on their investment, which is businesses fulfil, it means other people will be attracted to buy shares
list the 8 stakeholders
managers employees community government suppliers competitors shareholders customers
define managers
responsible for different functions of the business, making decisions and giving directions helping to achieve objectives
interests of managers
involved in setting objectives and ensuring the business is achieving them
CSR consideration of managers
managers need to make decisions considering CSR and achieving long term goals
define shareholders
those that own part of the company and expect some sort of return on their investment
interests of shareholders
strive for a return on investments through capital gains and improved profits
CSR of shareholders
managers being transparent with shareholders about future of the business
define employees
those that work for the business, dedicating their time and efforts in exchange for money
interests of employees
fair pay, safe working conditions and ongoing employment
CSR of employees
ongoing training, extra pay / rates
define customers
purchases goods or services for the business
interests of customers
expect good quality at a fair price
CSR of customers
sourcing from ethical suppliers
define suppliers
those that provide a business with materials and other resources so they can produce products
interests of suppliers
expect strong relationships and to be paid on time
CSR of suppliers
local and ethical suppliers
define competitors
rival businesses that sell similar products in the same market, creating possible combative advantage against the other
interests of competitors
expect fair and healthy competition
CSR of competitors
fair competition and not going out of their way to ruin another business
define government
group of people with the authority to govern a particular area in which businesses need to adhere to
interests of government
expect to help the economy and community by providing local employment and paying taxes
CSR of government
using local employees
define community
businesses have a responsibility to the community they operate in
interests of community
expect businesses to give back to community and providing employment for locals
CSR of community
ethical waste disposal, minimising environmental impact
define CSR
commitment displayed by a business to consider ethical, environmental and community based mannerisms. involves the business’s ability to go beyond legal requirements within social, environmental and economical aspects
potential conflicts between employees and shareholders
employees require safe working conditions and reasonable wages, which would decrease profit and dividends to shareholders
potential conflicts between management and customers
management attempts to make a profit and high prices to satisfy shareholders needs whereas customers want low prices
potential conflicts between management and suppliers
management wishes to keep costs low but suppliers providing ethical materials will charge more
define operations
responsible for production of the businesses product with managers ensuring they are produced correctly
what does operations involve
planning activities
purchasing inputs
operations relation to BO
allows the business to produce a good product which will increase sales, increasing product
define finance
responsible for managing the financial aspects of the business
what does finance involve
developing financial policies
raising finance
finance relation to BO
important that a business is able to manage its finances well so that profit can be increased
define human resources
responsible for coordinating all activities involved from acquiring to terminating employees and managing performance
what does human resources involve
establishment, maintenance and termination of employees
human resources relation to BO
employees need to have a good understanding of business and products to be able to efficiently sell the product
define sales and marketing
responsible for marketing mix, promoting the business and selling to potential customers
what does sales and marketing involve
promoting the business
selling products
sales and marketing relation to BO
important for increasing market share, profit and sales
define technology support
responsible for installing and maintaining technology, as well as providing assistance to employees
what does technology involve
installing software
laptops, PC’s, mobile phones
technology relation to BO
important for business objectives because you need to be up to date with technology including having an online store to increase sales
