Business Management AT 1

Question 1

Define entrepreneurship

Answer 1

The act of starting and operating a new business in response to opportunities, assuming all the risk in the hope of making a profit.

Question 2

Define business

Answer 2

Any activity conducted by an individual or individuals to produce and sell goods and services that satisfy the needs of society, as well as making profit.

Question 3

Define profit

Answer 3

What is left after business expenses have been deducted from money earned from revenue.

Question 4

What are the three key features of entrepreneurship?

Answer 4

The pursuit of business opportunities, innovation and seeking growth.

Question 5

Explain what the pursuit of business opportunities is

Answer 5

Gaps in the market that no one has noticed or paid attention to.

Changes in customer needs.

Technological developments.

Changes in the global markets.

Question 6

Explain what innovation is

Answer 6

Innovation is either creating a new good, service or process, or significantly improving an existing one.

Entrepreneurs blend their flair, imagination and creativity to develop new products or ways of doing business.

A source of business opportunity.
To meet the needs and wants of customers.

Take advantage of change.

Question 7

Explain what seeking growth is

Answer 7

Entrepreneurs work hard to pursue growth.

Seek new trends.

Explore new products and new approaches so that the business can increase in size.

Growth is necessary for the survival of a new business.

Becoming bigger would be expected to lead to increasing sales and market share, and greater profit.

Question 8

What are the four motivations for starting a business?

Answer 8

The desire for financial and personal independence, to make a profit, to fufil a market need and to fufil a social need.

Question 9

Explain what the desire for finanicial and personal independence is

Answer 9

Financial independence: the capacity to support a lifestyle without having to be employed or be dependent on others.
Will not have to rely on an income from an employer.
Will not have to be dependent on other people to pay for living expenses.

Personal independence: the capacity to be in control of decisions that affect one’s everyday actions or activities.
Self-employment.
Desire the freedom to choose when and where they work, the tasks they undertake, with whom they work and whether to work from home.

Question 10

Explain what to make a profit is

Answer 10

Monetary reward (someone willing to work hard may believe they can earn much more by working for themselves than they would be working for someone else).

Question 11

Explain what to fufil a market need is

Answer 11

Identifying a gap in the market.
Invention or development of a new product or service.

Products that customers require that may not be available.

Particular goods or services for which there is a demand are not readily available in a particular suburb or town.

Question 12

Explain what to fufil a social need is

Answer 12

The production or selling of goods and services for the purpose of making the world (or the community) a better place.
To help others or the environment.

Examples are:
Providing opportunities for local unemployed people.
Developing skills, providing vocational training or lifelong learning opportunities for disadvantaged people in the community.
Creating access to a better quality of life for the disadvantaged members of the community.
Focusing on some sort of environmental need.

Question 13

What are the benefits of owning a business?

Answer 13

Possibility of making a profit.
Contributing positively to society.
Independence.
Achieving a better lifestyle.

Question 14

What are the limitations of owning a business?

Answer 14

Hard work and long hours.
Fluctuating or uncertain income.
High levels of responsibility.
Stress and worry.

Question 15

Define business manager

Answer 15

A person who has the responsibility for overseeing the operations of the business to ensure that it successfully achieves its goal.

A business manager runs a business smoothly on a day-to-day basis so that it makes a profit.

Minimise risk and make calculated decisions.

Dealing with staff.

Question 16

Define business entrepreneur

Answer 16

A person who is willing to seize opportunities to start and operate a business, and is prepared to take risks in the hope of making a profit.

Come up with the initial business idea but they do not know if their ideas are achievable or not.

They often have the vision, initiative and business skills to make change.

Question 17

What are the characteristics of a business manager?

Answer 17

Self motivation.
Prepared to work long hours.
Organisation skills.
Communication skills.
Leadership.
The ability to calculate risks.

Question 18

What are the characteristics of a business entrepreneur?

Answer 18

Courage.
Determination.
Energy.
Strategic thinking.
Technical skills and appropriate qualifications.
Negotiation skills.

Question 19

What are the qualities of successful business managers and entrepreneurs?

Answer 19

Being prepared to take risks.
Having the ability to think outside the square.
Being an innovative thinker.
Resilience.
Vision.
Processing confidence.

Question 20

What are the three entrepreneurial traits?

Answer 20

A shared vision, initiative and innovation and enterprise.

Question 21

Define a shared vision

Answer 21

They have a clear understanding or hope of what the business will be like in the future.

Question 22

Define initiative

Answer 22

They take the first step in a series of actions or in a process.

They frequently do this without someone prompting or telling them to take this step.

Question 23

Define innovation and enterprise

Answer 23

Innovation is either creating a new good, service or process, or significantly improving an existing one.

Enterprise is the effort made by someone to creatively or boldly achieve something new.
Entrepreneurs exhibit enterprise by taking risks to determine if the market is interested in their ideas.

Question 24

What are the six sources of business opportunities?

Answer 24

Innovation, market opportunities, changing customer needs, research and development, technological development and global markets.

Question 25

Explain what innovation is

Answer 25

The process of creating a new good, service or process or significantly improving an existing one.

Development of something that is totally new.
The creation of something unique for the business.

Question 26

Explain what market opportunities are

Answer 26

The place where buyers and sellers interact to trade goods and services which are always changing.

Identify opportunities from these changes in markets and take advantage of them as potential business ideas.

Question 27

What are the reasons for changing customers needs

Answer 27

Any person considering starting a new business might find opportunities by focusing on meeting any of these changing needs.
The needs of customers in the market for any product can change due to:

Changing incomes
Incomes may be increasing - so customers are likely to demand more products, particularly luxury items, or diminishing - so it is likely that customers will demand fewer products.

Changing tastes and fashions
Changes can increase or reduce the demand for certain products.

Changing prices of complementary and substitute goods and services
Complementary - car and petrol or pen and paper. Substitutes are products that can replace each other such as tea and coffee. If price increases for a product then the demand for the other will fall. Replacing this increased product with another is considered as a substitute that will be more in demand than the complementary product.

Changing population
Changes in age and gender distribution will have an impact on demand.
An example is an ageing population that is likely to demand products related to the health and retirement industries.

Changing expectations about the market, including future prices and incomes
Customers will act in a certain way if they expect that something is going to happen.

Changes in the number of potential customers
An increasing number of customers often generates greater demand for products, whereas a decline in the number of potential customers is likely to reduce demand.

Question 28

Explain what research and development is

Answer 28

A set of activities undertaken to improve existing products, create new products and improve production processes.

Expand their knowledge of products and processes.

Allows a person to develop new products in response to the actions of any competitors.

Leads to technological development through robotics and information technology to improve existing products so that they become superior to those of competitors.

Improves the way the product is produced or the way it is delivered to customers.

Question 29

Explain what technological development is

Answer 29

Applications of knowledge that have changed people’s lives and changed the way in which businesses operate.

Question 30

Explain what global markets are

Answer 30

Goods and services are exchanged between businesses and customers across the world. This provides opportunities for people seeking ideas for new businesses because it means that the potential business owner can have more access to more customers and sales.

Advantages of global markets include:
The opportunity to grow and further expand a business.
Reduce dependence on local markets.
Sell new and existing products in new markets.
Reduce effects of fluctuations in the market caused by changes in season or demand by moving into markets with different patterns.

Question 31

Define goal

Answer 31

What a business expects to achieve over a set period of time.

Question 32

What is the importance of goal setting?

Answer 32

Describes what a business expects to accomplish over a set period.
Provides direction for employees.
Motivates managers and employees.
Gives a benchmark to measure performance.
Helps generate new ideas.

Question 33

What are the three types of goals?

Answer 33

Financial goal, social goal and personal goal.

Question 34

Explain the types of finanicial goals

Answer 34

Making a profit
What’s left after business expenses have been deducted from money earned from sales.
Make and maximise profit.

Increase sales
Deciding to sell products at a lower price so consumers purchase more.
Clever marketing or creating innovative products or delivering better service than other businesses.

Increase market share
Develop an extensive product range, using different brand names to increase percentage of sales.

Expand the business
Opening more outlets, employing more staff, starting new projects or introducing innovative products.
Merging with another business so that they become one or acquisition.

Maximising the return on investment
Businesses will succeed when there are more people who invest in it.
When the profit gained by the business is returned to the investors - stable, not decreasing.
A ratio that relates the money gained or lost on an investment relative to the cost of the investment.

Improving the way the business operates
Productivity, efficiency and effectiveness.

Question 35

Explain the types of social goals

Answer 35

Community service
Business sponsorship of a wide range of community events, promotions and programs.
Financially support educational, cultural, sporting and welfare activities.

Provision of employment
Look at the continuity of their business by employing family members who may otherwise have been unemployed.

Social justice
Everyone is treated fairly.
Adopt a set of policies to ensure employees and other community members are treated fairly and equally.

Ecological sustainability
Increasing responsibility for the protection of the environment.
Adopt policies of conservation, recycling and restoration.

Question 36

Define personal goal

Answer 36

Personal goals of a higher income and improved financial security, for example, complement the business goals of growth.

Not normally made public.

Motivate the business owner and may underpin the viability of the business.

Question 37

Define mission statement

Answer 37

Describes what the business does and how it will achieve its vision.

Question 38

Define vision statement

Answer 38

Describes where the business wants to be in the future.

Question 39

Order the following:
MISSION VISION STRATEGIES GOALS

Answer 39

VISION -> MISSION -> STRATEGIES -> GOALS

Question 40

Define decision making

Answer 40

The ability to identify the options available and then choose a specific course of action from the alternatives.

Question 41

What is the process of decision-making?

Answer 41

Step 1 Develop goals
Step 2 Outline goals
Step 3 Identify alternative solutions
Step 4 Analyse the alternatives
Step 5 Choose one alternative and implement it

Question 42

Explain Step 1 Develop goals

Answer 42

Clearly state what the desired goal or position is.

Question 43

Explain Step 2 Outline goals

Answer 43

All the facts and information need to be outlined, including any circumstances that may cause a problem or issue or possible obstacles that may prevent the attainment of the desired goal or position.

Question 44

Explain Step 3 Identify alternatives solutions

Answer 44

Alternative decisions need to be generated that will possibly overcome any circumstances or obstacles identified.

Question 45

Explain analyse the alternatives

Answer 45

Alternatives are closely examined for the resources that would be needed to carry them out and their possible consequences.
Ranked in terms of costs and benefits, strengths and weaknesses or advantages and disadvantages.

Question 46

Explain choose one alternative and implement it

Answer 46

Choose the best alternative according to the criteria and implement it.

Question 47

Explain each factor of SMART GOAL

Answer 47

Specific (Clear and focused), Measurable (Quantifiable), Attainable (Challenging but realistic), Relevant (Worthwhile) and Time Bound (A deadline).

Question 48

Define business concept development

Answer 48

The starting point of a business concept.

An original idea for a good or service that is different from anything already in the market, or a distinct improvement on an existing good or service.

Question 49

What is the relationship between business opportunities and business concept development?

Answer 49

The development of the business concept is when the prospective business owner takes an idea that has arisen from an assessment of possible opportunities, and begins to turn it into an actual business.

Question 50

Define intellectual property (IP)

Answer 50

Any creation of the mind such as a new invention, brand, design or artistic creation.

These creations can have commercial value or provide a competitive advantage, so IP is used to protect the business idea.

Question 51

State the 5 methods to protect intellectual property

Answer 51

Trademark, patent, copyright, design rights, domain rights

Question 52

Define market research

Answer 52

The process of systematically collecting, recording and analysing information concerning a specific market.

Question 53

What are the 3 steps of market research?

Answer 53

1. Identify what information is needed to make a decision about the potential of the business.
2. Gathering the relevant information from appropriate sources. This includes surveys, interviews, and government statistics. Market research businesses can be hired to complete this step.
3. Analysing and interpreting the relevant results to extract clear information that will assist decision making. Help business owners to understand market conditions.

Question 54

Define market conditions and factors

Answer 54

The features of a market into which new goods or services are to be introduced, including factors such as the number of potential customers, levels or competition and potential for growth.

Question 55

Define initial feasibility studies

Answer 55

An assessment of the practicality and potential for success of a proposed business idea.

Question 56

What are the 5 elements included in feasibility studies?

Answer 56

1. Assessment of the market - analysing the demand, competitors, customers, competitive advantage.
2. Consideration of the operations - describing the product that will be sold, resources needed (plant, equipment, materials etc), location of the business and legal requirements.
3. Analysis of commercial feasibility - considering the financial aspects of the business idea, the price of the product, how long before a profit is made, how much money is needed at the start of operations.
4. Appraisal of potential owner’s management ability - what are the qualities of a successful business owner?
5. Understanding of whether others have tried this idea - determining whether anyone else has tried the business idea, and if they failed, finding out why they did.

Question 57

State two ways: contribution of businesses to the nation

Answer 57

Economic well being and social well being.

Question 58

Explain the economic social well being factors contribution to employment and taxation revenue and contribution to economic growth.

Answer 58

Contribution to employment and taxation revenue
Businesses contribute to revenue raised through taxation.
Businesses pay tax, and their employees pay income tax.
Tax is used by the government to provide goods and services that benefit the community such as infrastructure, health, education and welfare.

Contribution to economic growth
Economic growth: when the real value of goods and services increases over a set period of time.
This is measured by the growth of gross domestic product (GDP).
GDP: the monetary value of all the finished goods and services produced in Australia.

Question 59

Explain the economic social well being factors of contribution to export earnings and contribution to research and development.

Answer 59

Contribution to export earnings
Exports: the sale of goods and services in other countries.
This contributes to balance of payments (BOP), which records the trade and financial transactions between Australia and the rest of the world.
A positive BOP occurs when more payments are coming in than going out.

Contribution to research and development
Undertake R&D in order to expand their knowledge of products and processes, develop new products, improve existing products or develop new processes.
The federal government offers an R&D tax incentive which makes tax offsets available for eligible R&D expenditure.

Question 60

Define social well being

Answer 60

How well a nation’s people live. This may be impacted upon the access to basic needs, water, food and shelter as well as education. Well being can be determined through economic (GDP) and non economic (crime and death rate, environmental quality etc) measures.

Question 61

Explain the social well being factors of contribution to careers and social well being, contribution to innovation and contribution to corporate social responsibility

Answer 61

Contribution to career and social well being
Through employment for people, businesses do more than provide people with a source of income.
People have the ability to build self-esteem, establish a sense of belonging within a business that can contribute to a sense of happiness.

Contribution to innovation
The innovations of businesses large and small, and of individual entrepreneurs have also helped to solve some of the world’s urgent problems with new solutions.
Examples are fair trade, mobile money transfer and carbon reduction.

Contribution to corporate social responsibility
CSR: managing a business in such a way that the broader social welfare of the community, including its employees, customers, suppliers and the environment is taken into consideration when making business decisions.
Examples are reducing carbon footprint, improving labour policies, participating in fair trade, diversity, equity and inclusion and corporate policies that benefit the environment.

Question 62

What are the methods for fostering a culture of business innovation and entrepreneurship in a nation

Answer 62

Government investment in research and development, cousin grants for new businesses, business mentorships, school based education programs in entrepreneurship and creation of regional business start up hubs

Question 63

Explain the methods of government investment in research and development and cousin grants for new businesses

Answer 63

Government investment in research and development
Governments support businesses to conduct R&D via direct funding to universities, publicly funded research agencies, or businesses.
Governments also support R&D through programs such as the R&D Tax Incentive and the Entrepreneur’s Program.

Council grants for new business
Occasionally local councils will provide business grants and funding programs.
An example is the city of melbourne has a small business grant program that provides financial assistance to small businesses currently located within the city of melbourne.

Question 64

Explain the methods of school based education programs in entrepreneurship and creation of regional business start up hubs.

Answer 64

School-based educational programs in entrepreneurship
Awareness of entrepreneurship can be improved through education and information programs.
Schools teach courses in economics and businesses so that students will gain some knowledge of entrepreneurship.
Many programs also allow students to experience entrepreneurship.
Examples are the foundation for Young Australians and NAB and VCTA plan your own enterprise.

Creation of regional business start-up hubs
Business centres provide subsidised premises, advice, services and support to new and emerging businesses to assist to become established and profitable.
Examples are workshops and seminars, innovations resources, networking and tailored advice to meet specific needs.