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Business management > Business foundations sac 1A > Flashcards

Business foundations sac 1A Flashcards

1
Q

What is a business?

A
  • lawful commercial activities
  • aims to satisfy the wants and/or needs of consumers
  • aims to make a profit
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2
Q

Types of businesses: sole trader

A
  • one individual owns the business
  • sole person legally responsible for all aspects of the business
  • has unlimited liability
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3
Q

Types of businesses pros and cons: sole trader

A

Pros

  • simple and inexpensive to set up
  • owner keeps all profits
  • owner has complete control

Cons

  • burden of managing entire business
  • unlimited liability
  • difficult to gain finance
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4
Q

Types of businesses: partnership

A
  • 2-20 individuals who carry the business together, shared control and management
  • has the same legal entity as the owners
  • requires a seperate tax file number
  • unlimited liability
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5
Q

Types of businesses pros and cons: partnership

A

Pros

  • simple and inexpensive to set up
  • workload can be shared among partners
  • risk/debt can be shared among partners

Cons

  • unlimited liability
  • potential disagreement over key decisions
  • profits are shared among partners
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6
Q

Types of businesses: private limited company

A
  • incorporated business owned by up to 50 shareholders
  • controlled by director
  • shares aren’t freely available to the public
  • has limited liability
  • has ‘Pty’ after its name
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7
Q

Types of businesses pros and cons: private limited company

A

Pros

  • limited liability
  • life of company can live longer than directors
  • pay company tax rate

Cons

  • more complex and expensive to set up
  • shares cannot be traded freely
  • more reporting requirements to the owners and government
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8
Q

Types of businesses: public listed company

A
  • owned by shareholders
  • shares can be purchased or sold on an open market
  • listed on the stock exchange
  • public has access to buy and trade the shares
  • limited liability
  • has ‘ltd’ at the end of their name
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9
Q

Types of businesses pros and cons: public listed company

A

Pros

  • limited liability
  • life of company can live longer than directors
  • easier to raise more capital by selling shares to the public

Cons

  • high costs in establishment
  • possible loss of control
  • highly complex and time consuming to establish
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10
Q

Types of businesses: social enterprise

A
  • primarily exists to fulfil a vision that benefits the community or a social need
  • profit is used towards a social cause e.g. thank you
  • can be self sustaining or rely heavily on grants and donations
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11
Q

Types of businesses pros and cons: social enterprise

A

Pros

  • metting a social need can encourage community support, increasing profits
  • improved morale as employees value the work they are doing

Cons

  • difficult to obtain finance to begin the business
  • difficult to focus on financial and social objectives
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12
Q

Types of businesses: government business enterprise

A
  • owned and operated by the government
  • commonwealth entity, that unlike government department aims to act under general business principles
  • aims to make a profit e.g. Aust post
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13
Q

Types of businesses pros and cons: government business enterprise

A

Pros

  • provides healthy competitions to private sectors
  • may invest in areas private sectors may hesitate in

Cons

  • can be political interference
  • may not be as productive as private sector business (possible lack of accountability)
  • strategic directors can change with changing governments
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14
Q

what are business objectives?

A
  • goals the business is aiming to achieve in the future
  • give the business a sense of purpose and direction
  • having measurable objectives can help give clarity for people within the business
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15
Q

Types of objectives (5)

A
  • profit
  • increase market share
  • fulfilled a market need
  • meet shareholder expectations
  • fulfil a social need
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16
Q

Types of objectives: profit

A
  • surplus remaining after total costs are deducted from total revenue
  • basis on which tax is calculated and dividends are paid
  • important so the business can survive and grow
17
Q

Types of objectives: increase marketshare

A
  • percentage/portion of the total sales the business has in an industry for a particular good or service
18
Q

Types of objectives: fulfil a market need

A
  • a market is a specific group that has similar characteristics
  • a need is a groups desire for a specific product or benefit
  • identifying what customers require allows the business to build a market for their goods
19
Q

Types of objectives: meet shareholder expectations

A
  • those that own the business
  • expect to make a return on their investment through capital gains and dividends
  • capital gains: the value of the business increases
  • divid ends: individuals share in the companies profits
20
Q

Types of objectives: fulfil a social need

A
  • focused on the community

- how the business can improve the lives of others

21
Q

What is a stakeholder?

A
  • have a vested interest in the business
  • managers need to consider different interests when making decisions
  • can be from inside and outside the business
22
Q

what is corporate social responsibility?

A
  • going above and beyond legal obligations
  • ongoing commitment
  • operating in a economically, socially, environmentally sustainable manner
  • important to consider CSR when dealing with stakeholders
23
Q

Types of stakeholders, their interest and their CSR interest: owners/shareholders

A
  • those that own the business
  • interest is they want a return on their investment
  • CSR interest is the business should ensure the shareholders investment is safe and keep them informed about business operations and prospects
24
Q

Types of stakeholders, their interest and their CSR interest: directors

A
  • responsible for managing the company’s overall business activities
  • interest is to expect to be well remunerated
  • CSR consideration: ethical remuneration
25
Q

Types of stakeholders, their interest and their CSR interest: management

A
  • those responsible for different areas of the business
  • interest is they expect to be in decision making and remunerated fairly
  • CSR consideration need to make decisions demonstrating CSR and help the organisation achieve long term objectives
26
Q

Types of stakeholders, their interest and their CSR interest: employees

A
  • those that work for the business in exchange for money
  • interest is they expect fair pay, safe conditions and ongoing employment
  • CSR considerations is being open and honest about job security
27
Q

Types of stakeholders, their interest and their CSR interest: customers

A
  • those that purchase the goods or service
  • interest is they expect good quality products for fair prices
  • CSR considerations is ensuring customers get what they pay for (quality its price)
28
Q

Types of stakeholders, their interest and their CSR interest: suppliers

A
  • those that provide a business with materials and resources
  • interest is they expect strong relationships and to be paid on time
    CSR consideration: ensure suppliers implement CSR
29
Q

Types of stakeholders, their interest and their CSR interest: competitors

A
  • rival businesses that sell similar products
  • need to monitor businesses so they can respond to competitors and remain competitive
  • their interest is that they expect healthy and fair competition
  • CSR considerations is fair and honest competition that don’t undermine ethical practices
30
Q

Types of stakeholders, their interest and their CSR interest: governments

A
  • authority to govern a particular area, federal, state and local
  • their interest is they expect businesses to help the economy and the community
  • CSR considerations is for the business to use local employees
31
Q

Types of stakeholders, their interest and their CSR interest: community

A
  • people who live in the same place in which the business operates
  • their interest us that they expect the business to give back to the community
  • CSR considerations is for the business to give back to the community by supporting local programs, ethical waste disposal and reduce carbon foot print
32
Q

What is management responsibility?

A
  • managers take authority to oversee certain areas of the business
  • each area contributes to the achieve of business objectives
33
Q

Types of areas of management responsibility and achieve business objectives: operations management

A
  • produces the goods or services
  • needs to oversee operations to ensure goods and services are produced effectively and to the desire quality
  • converts inputs into outputs
  • activities involve sourcing stock, minimising etc
  • helps achieve business objectives because
34
Q

Types of areas of management responsibility and achieve business objectives: finance management

A
  • managing the money and budgets if the business
  • keeping track of finances allows a manager to make informed decisions
  • activities include budgeting, financial planning etc
  • helps achieve business objectives because if the business can manage it’s finances then business objectives such as profit can be achieved
35
Q

Types of areas of management responsibility and achieve business objectives: Human Resources

A
  • manages the relationships between the employees and the business
  • manages all aspects of their working relationship
  • activities include recruitment, selection, training, termination etc.
  • helps achieve business objectives because by having employees that are motivated and performing at a high-level helps a business achieve objectives e.g. increase profit
36
Q

Types of areas of management responsibility and achieve business objectives: sales and marketing management

A
  • responsible for promoting the business and its products/services
  • connects the goods and services produced and connects them with their end customer
  • responsible for product development, pricing strategies, promotion and product distribution
  • helps achieve business objectives such as profit, percentage of market share
37
Q

Types of areas of management responsibility and achieve business objectives: technology support

A
  • responsible for implementing and maintaining the technologies within the business
  • provides the business ad customers with user friendly assistance
  • important for communication data storage and processing and operations
  • technology needs to be monitored, updated and employees need to be supported in its use
  • can help achieve business objectives because it can help improve business objectives like increase profit and marketshare

Business management (5 decks)

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