Business Management

Question 1

Why do people start a business?

Answer 1

1) Financial independence
2) Personal independence
3) Make a profit
4) Fulfil a market need/social need

Question 2

What are the sources of business opportunities?

Answer 2

1) Innovation
2) Entrepreneurship
3) Market opportunities
4) Changing customer needs

Question 3

What is the definition of Innovation when referring to business opportunities?
-list characteristics and examples

Answer 3

Innovation is transforming into reality a new idea about a product or a service, or it could be a new way of doing things.

Characteristics:
1) new efficient processes can save time + money + create less waste
2) Allow business to grow

examples: virgin Atlantic = a new way of traveling

Question 4

What is the definition of Entrepreneurship when referring to business opportunities?
-list characteristics and examples

Answer 4

Entrepreneurship refers to the concept of developing and managing a business venture in order to gain profit by taking several risks.

Characteristics:
1) Seeks out new opportunities
2) Manages business activities

Examples: Elon Musk –> tesla & Jeff Bezos –> Amazon

Question 5

What is the definition of market opportunities when referring to business opportunities?
-list characteristics and examples

Answer 5

Market opportunities refers to chances to increase trade caused by the changing trends in a market.

Characteristics: The key is to be able to recognize a market trend. This could also be an opportunity where there is a gap in the market.

Examples: The increasing Chinese demand for Australian wine poses an opportunity for Australian wineries.

Question 6

What is the definition of Changing customer needs when referring to business opportunities?
-list characteristics and examples

Answer 6

Today consumers have many needs e.g.

Busy - wanting convenience
Technologically savvy- they have access to information, can compare it to competitors, shop online, and can give social media reviews
Demanding- has high expectations of corporate social responsibility to people and environment + product quality + health & safety + know consumer laws

examples: Hello Fresh + Maccas offering McDelivery

Question 7

What is a gap in the market?

Answer 7

It is a business opportunity. It’s when you’ve identified something that consumers need but isn’t currently available.

This could be something that’s completely unique, an improvement on an existing idea, or a way to introduce something to a market trend.

Question 8

What are the Business objectives?

Answer 8

1) make a profit
2) increase market share
3) Meet shareholder expectations
4) Fulfil a market need
5) fulfil a social need

Question 9

What are Key performance indicators?

Answer 9

Criteria that measure how efficient and effective a business is at achieving business objectives

Question 10

What is a business objective?

Answer 10

The goals a business intends to achieve

Question 11

Efficiency

Answer 11

How productive a business uses its resources when producing a good or service > less resources used for the same number of products = higher efficiency

Question 12

Effectiveness

Answer 12

The extent to which the business achieves its business objectives

Question 13

Definition: make a profit

Answer 13

Generate more revenue then expenses from running a business

Question 14

Definition: increase market share

Answer 14

Grow the proportion of sales of a business within a particular industry (control more of the market)

Question 15

Definition: Meet shareholder expectations

Answer 15

Provide return on money they have invested into the business

Question 16

Definition: Fulfil a market need

Answer 16

Provide customers with a good service that is desired and meets their expectations

Question 17

Definition: fulfil a social need

Answer 17

Conduct business activities that improve the community and environment

Question 18

Why is making a profit important?

Answer 18

Essential for survival

Question 19

Why is an increased market share important?

Answer 19

Increased customer loyalty = increased stability - can also lead to increased profit

Question 20

Why is meeting shareholder expectations important?

Answer 20

Attract new shareholders b/c seen as strong investment + prevent conflict between management and shareholders

Question 21

Why is fulfilling a market need important?

Answer 21

Increases sales > increased revenue > increases profit + if the only organisation fulfilling a ‘gap in the market’ then creates customer loyalty

Question 22

Why is fulfilling a social need important?

Answer 22

Improves reputation which can increase sales + market share OR because it’s the organisations purpose > NB can make profit at the same time

Question 23

Make a profit
How achieved?

Answer 23

Any strategy that will increase revenue (e.g marketing campaign/ new product/ improved quality of products) or reduce expenses (eliminate waste, lower staff requirements, cheaper materials)

Question 24

Increase market share how achieved?

Answer 24

Make price lower then competitor, provide a unique Benicia of your product (e.g loyalty or market based on sustainability or higher quality or higher flexibility)