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Business Studies > Business Planning > Flashcards

Business Planning Flashcards

1
Q

What is e-commerce? with example

A

E-commerce refers to buying and selling goods and services via the internet. E.g Amazon

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2
Q

What is e-business? with example

A

E-business refers to using the internet to conduct business. E.g. Email to communicate with customers and suppliers, proving online training for staff.

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3
Q

Advantages of using the internet to access information

A

-Being able to access specific information 24/7.
-It is also more time efficient and inexpensive.
-It is also designed to answer individual requests.

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4
Q

Disadvantages of using the internet to access information

A

-Expenses including software and service provider changes.
- Slowness to display webpages may result in consumer disatisfaction

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5
Q

How does using technology impact a business?

A
  • Gives them a competitive advantage (by having an online presence)
  • It helps businesses better inform their purchasing decisions
  • Helps the business grow their market share
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6
Q

What economic conditions promote business success?

A
  • High levels of consumer spending (Greater capacity to sell goods and services and therefore profits are maintained and improved.
  • Falling unemployment (Hire more employees to meet the demand for goods and services)
  • Increased production (output will increase as a result of a rise in consumer spending)
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7
Q

What economic conditions lead to business failure?

A
  • Lower levels of consumer spending (reduced capacity to sell goods and services, therefore profits decline)
  • Rising unemployment (Employees might be made redundant)
  • Decreased production (output will decrease as a result of a fall in consumer spending)
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8
Q

How does the government influence business names?

A
  • Business name, ASIC is responsible for making sure that businesses don’t have the same name
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9
Q

How does the government influence SME’s?

A
  • Health regulations
  • Business registration
  • Zoning
  • Consumer protection
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10
Q

How does the government influence business zoning?

A
  • Restrict where businesses can locate
  • Assists with the functioning of the local community
  • Ensures that activities that don’t belong together are kept seperate.
  • E.G wouldn’t put a factory needing heavy machinery in a residential area due to noise and pollution
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11
Q

How does the government influence health regulations?

A
  • Particularly in food places under the Public Health Act (2010) gives them requirements on temperature for food storage, kitchen layout, clothing, food handling and time food is kept.
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12
Q

How does the government influence consumer protection?

A
  • Consumer Protection Act (2010)
  • Protects consumers against misleading or deceptive content or bait advertising
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13
Q

Definition of an SME

A
  • It is a business with fewer than 200 employees.
  • Need to consider qualitative and quantitative measurements
  • Includes number of employees, type of ownership, legal structure etc.
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13
Q

What are the characteristics of SME’s?

A
  • Local markets
  • Personalised service
  • Independently owned and operated
  • Locally based
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14
Q

What is the role of SME’s?

A

Role within the economy is
- Employing around 68.3% of people in private sector
produce 55% of all products produced each year
- Increase amount of exports
- Provide a large range of products
- Earn more profits and pay more taxes than larger businesses

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15
Q

What is the economic contribution of SME’s?

A
  • Contribute to economic growth by producing a wide range of goods and services
  • Contribute to revenue through taxation
  • Export more than import which encourages economic growth
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16
Q

What is the level of success of SME’s?

A
  • Entrepreneurial ability (if the business owner is driven and enthusiastic more chance of business success)
  • Access to information (accurate and up-to-date information will allow owner to make better business decisions)
  • Flexibility (owner needs to be able to adapt quickly to changes in the external environment)
  • Focus on market niche (more specialised and higher level of service)
  • Reputation (good quality of products)
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17
Q

What is the level of failure of SME’s

A
  • 20% of business’ fail in the first year
  • Due to insufficient management, inadequate market research, poor financial management
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18
Q

When is a business classified as failed?

A
  • Unincorporated (declared bankruptcy)
  • Incorporated (forced into liquidation or voluntarily closed down)
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19
Q

What are the personal qualities that influence establishing an SME?

A
  • Skills
  • Qualifications
  • Motivation
  • Entrepreneurship
  • Cultural background
  • Gender
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20
Q

How do qualifications influence the establishment of an SME?

A
  • Academic qualifications
  • Any age with any classifications
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21
Q

How do skills influence the establishment of an SME?

A
  • Having prior experience and exposure to the operations of a business will help the owner understand the financial and personal demand having a business places on them
  • E.G experience in stock, administration, customer service
  • Education (uni or TAFE degrees) helps a business have employees or be specialised in certain places
  • E.G accounting skills, marketing
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22
Q

How does motivation influence the establishment of an SME?

A
  • Personal drive and determination
  • Desire to be your own employee and do better for yourself than you believe you could under another employer
  • Freedom
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23
Q

How does entrepreneurship influence the establishment of an SME?

A
  • More open to taking bigger risks
  • Sets realistic goals and has a strong drive
  • Able to tolerate failure and try again
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24
Q

How does cultural background influence the establishment of an SME?

A
  • Influences work ethic
  • Might have cultural advantages
  • E.G someone from a Thai background would have a better chance at succeeding in a restaurant specialising in Thai food
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25
Q

What are the advantages and disadvantages of entrepreneurship?

A
  • Freedom
  • Will take bigger risks
  • Drive
  • Lots of money and responsibility
  • May not have a stable salary for a while
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26
Q

How does gender influence the establishment of an SME?

A
  • Success rate in women owning a business is higher
  • Women own one third of business operating in Australia
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27
Q

What are the sources of help and advice for SME owners?

A
  • Professional advisors
  • Government agencies
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28
Q

How are professional advisors sources of help and advice for SME’s?

A
  • Is able to examine the business more objectively and give an independent analysis of the organisation
  • More aware of changes in the legal, economic and financial environment
  • E.G Accountants, solicitors, bank managers and management consultants
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29
Q

How do government agencies provide help and advice for SME’s

A

Federal gov:
- ATO has information on their website on how to start and run a business with information on taxation
- Austrade - helps a business develop international markets (provides information, advice and services)

State gov:
- Business connect gives specialist and general advice to startups and SME’s

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30
Q

What is the key to creating a successful business?

A
  • Identifying a gap in the market will attracts customers away from exisiting businesses
  • This is called identifying a business opportunity
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31
Q

How does a business achieve competitiveness?

A
  1. Cost of production (producing a product at the lowest possible cost and selling it a low cost attracts a greater market share)
  2. Differentiation of a product to make it unique or better than its rivals
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32
Q

What does the situational analysis involve?

A
  • Business lifecycle
  • SWOT analysis
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33
Q

What is the SWOT analysis?

A
  • Strengths and Weakness (internal)
  • Opportunities and threats (external)
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34
Q

What are the benefits of developing a business plan?

A
  • Identifies the businesses strengths and weaknesses
    -Indicates owners ability and level of commitment
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35
Q

What is a vision statement?

A
  • States what the business aspires to become in the future
  • The main purpose is to guide and direct business owners, managers and employees
  • Creates business culture
  • It should be concise, creative, focused and realistic
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36
Q

What are the three levels of business goals?

A
  • Strategic goals
  • Tactical objectives
  • Operational objectives
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37
Q

What are strategic goals?

A
  • Long term (years)
  • Broad aims
  • Apply to the business as a whole
  • Determined by senior managements
  • Top of the hierarchy
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38
Q

What are tactical objectives?

A
  • Middle term (months)
  • Specific aims
  • Describes course of action to achieve strategic goals
  • Middle management
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39
Q

What is the purpose of creating a business plan?

A
  • Establish business goals
  • Understand your customers and competition
  • Reduce risk
  • Research market
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39
Q

What are operational objectives?

A
  • Short-term (days/weeks)
  • Specific aims
  • Describe course of action necessary to achieve the tactical and strategic goal
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40
Q

What are sources of advice for a business?

A
  • Accountant
  • Solicitor
  • Chambers of commerce
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41
Q

What is the chamber of commerce?

A
  • Local association of business people
  • Provide legal and financial help
  • Tax advice
  • Explanation of legislation and industrial relations
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42
Q

How do you find the total revenue?

A

Quantity of goods sold x Selling Price

43
Q

How do you find the total cost?

A

Variable cost + Fixed costs

44
Q

How do you calculate profit?

A

Profit = Total revenue - total cost

45
Q

What is total revenue?

A

Amount of money received from the sales of goods and services.

46
Q

What are fixed costs?

A

Costs that don’t change no matter how many units of a good or service is produced

47
Q

What are variable costs?

A

Costs that depend on the number of goods or services produced.

48
Q

What is forecasting?

A

The business’ predictions about the future

49
Q

What is a break-even analysis?

A

Used to determine the levels of sales that needs to be generated to cover the total cost of production

50
Q

What is the break even sales formula?

A

Quantity = Total fixed costs/ unit price - variable costs per unit

51
Q

Why is a break-even analysis important?

A

It is an effective planning tool to determine the level of sales required to make a profit and determine the effect on profit if sales increase or decrease.

52
Q

What is the difference between a cash flow statement and a cash flow projection?

A

Cash flow statement - how much money has flowed in and out of the business for a past period of time.

Cash flow projection - Cash that is expected to be made or spent over a period of time in the future.

53
Q

What is a cash flow projection?

A

Shows changes to the cash position brought about by the operating, investing and financial activities of the business. Month by month (cash inflows and outflows)

54
Q

Why is a cash flow projection useful?

A
  • Estimate the business’ bank balance for each month
  • Points of periods when business expenses are too high or when short-term investment is possible to deal with a cash surplus
55
Q

Why is cash flow projection useful for cash flow management?

A
  • Indication of how much capital investment the business requires
  • Gives bank loaners evidence that the business is a good credit risk
56
Q

What does it mean to monitor and evaluate sales?

A

Monitoring sales helps a business evaluate its performance, in particular its marketing strategies.

57
Q

What does it mean to monitor and evaluate budget?

A

They emphasis the goals of the business, provide a basis for administration, production planning, direction of sales, stock control etc.

58
Q

What are the budget formats?

A
  • Cashflow statement (ensures business has enough cash on hand to pay short term debts)
  • Income statement (business’ future profitability)
  • Balance sheet
59
Q

What should you keep in mind when creating a budget?

A
  • External environment
  • Past figures, trends and estimates from departments in the business
  • Proposals to alter the price and quality of the product
60
Q

What are the five main reasons profit levels should be closely monitored?

A
  • Profit as a reward
  • Profit maximisation
  • Sources of finance (retained and reinvested)
  • Performance indicator
  • Dividend payment (pay to shareholders)
61
Q

Why is looking at profit levels important?

A

Can determine positive and negative changes in the business.

62
Q

What does it mean if a business takes corrective action?

A
  • Changing existing plans in the business to correct something that has not gone to plan
  • E.g changing materials, management practices, production costs.
63
Q

What is a business plan?

A
  • Written summary and evaluation of all the research the SME owner has done in the development of a business idea.
  • Should include factors (ops, marketing, fin, hr)
64
Q

What three things should a business plan include?

A
  1. Clear and concise statement of the business’ goals
  2. Plans for how the business will achieve the goals
  3. Reliable and control standards for measuring performance
65
Q

What key skills should management have to perform well?

A
  • Solve problems
  • Implement change
  • Positive business culture
  • Monitor internal and external environments
66
Q

What does it mean to manage staffing?

A
  • External recruitment (pay an agency to interview employees and recommend them to the business , expensive)
  • Do a skills audit to determine the skills that give the business a competitive advantage and shortfalls in skills
67
Q

Why can it be better to manage a business in teams rather than individuals?

A
  • Creative responses
  • Employee cooperation
  • Improves output
  • Develops team leaders
68
Q

What is a trend analysis and its benefits?

A
  • Investigate changes overtime to predict the future
    Benefits:
  • More reliable data
  • Helps a business forecast sales, profits, revenue, operating costs, need for labour
69
Q

What are three strategies to gain and maintain a competitive advantage?

A
  1. Price/cost strategy
  2. Differentiation strategy
  3. Long term success
70
Q

What is the overextension of finance and other resources?

A
  • Over extending during establishment stage
  • Purchase too much initial stock
  • Overstaff
  • Fixed expenses
71
Q

What are strategies to avoid the overextension of finance and other resources?

A
  1. Planning (budgets, projections)
  2. Don’t rely on debt financing
  3. Plan for future growth
  4. Start small
72
Q

What can a business do to manage changing economic conditions?

A
  1. Make plans
  2. Adapt strategies
  3. Refinance to account for less cash
73
Q

What are goals for the business in the long term?

A
  1. Maximising profit
  2. Growth
  3. Increase market share
  4. Social and environmental
74
Q

What are the state taxes?

A

Stamp duty
Land tax
Payroll tax

75
Q

What are the federal taxes?

A

PAYG
Fringe benefits tax
Capital gains tax
GST
Company tax

76
Q

What is stamp duty?

A

Tax paid when buying properties.
E.G real estate, shares

77
Q

What is payroll tax?

A

Employer tax on the wages they pay

78
Q

What is fringe benefits tax?

A

Tax paid on benefits received by employers to employees (employers pay this tax)

79
Q

What is GST?

A

Goods and services tax
- 10% of goods and services
- Business’ are responsible for collecting it on behalf of the government

80
Q

What is capital gains tax?

A

Tax on profit made from the sale of assets.

81
Q

What are the local rates and charges?

A
  • local government also charges taxes on things like water, sewerage, building approval fees etc.
  • This income is used to provide facilities for the local community.
82
Q

Human resources - skills

A
  • It is important to recruit people who have the required skills since a business’ most important asset is its people
  • Skilled employees are more productive and create wealth for the business
  • If employees don’t have required skill business’ can train them or hire new people
83
Q

Human resources - costs

A
  • Business’ will employee people when the return is greater than the cost
  • Employer needs to pay for other employee benefits (on-costs)
  • Super, sick leave etc.
84
Q

What are the three establishment options?

A
  • Setting up a new business
  • Purchasing an existing business
  • Purchasing a franchise
85
Q

What are the advantages and disadvantages of starting a business from scratch?

A

Adv:
- Freedom
- Determine the pace of growth and change
- Begin on a smaller scale

Dis:
- High risk
- Time consuming
- May not generate profits for some time

86
Q

What are the advantages and disadvantages of purchasing an existing business?

A

Adv:
- Sales will generate instant income
- Good reputation - business success
- Seller may offer advice and training
- Existing employees

Dis:
- Existing image and policies are hard to change
- Hidden problems
- Employees may resent change

87
Q

What are the advantages and disadvantages of purchasing a franchise?

A

Adv:
- Business plan and methods already exist
- Don’t need too much experience
- Training and management backup
- Well planned advertising

Dis:
- Franchisor controls the operations
- Profits must be shared with franchisor
- Franchisee must burden franchisors mistakes

88
Q

What is debt finance?

A

The short term and long term borrowing from external sources by a business.

89
Q

What are the types of debt finance?

A
  • Overdrafts, commerical bills and factoring
90
Q

What are the advantages of debt finance?

A
  • Doesn’t have to sell ownership in the business
  • Taxation advantages (tax deductions)
91
Q

What is equity finance?

A
  • Funds contributed by the business owner(s) to start and then expand the business
92
Q

What are the advantages of equity finance?

A
  • Doesn’t have to be repaid unless the owners leave the business
  • Cheaper because there are no interest payments for the business
  • Owner has control over how the finance is used
93
Q

What are the disadvantages of equity finance?

A
  • Might expect a good return on their investments but the small amount of finance may generate only low profits and low returns.
94
Q

What are the common sources of equity finance?

A
  • self funding
  • Family and friends
  • Private investors
  • Shares
95
Q

What is the cost of debt finance?

A

Interest

96
Q

What is the cost of equity finance?

A
  • Liability
  • Return made at the end of the financial year if the business makes a profit in the form of dividends.
97
Q

What is a feasibility study?

A

An assessment of the business’ idea to potentially succeed.

98
Q

What decision does the business owner?

A
  • What good or service they need to sell
  • Where they will locate their business
  • How they will price their products
99
Q

What are the three main pricing methods?

A
  1. Cost based
  2. Market based
  3. Competition based
100
Q

What are the three steps of the market research process?

A
  1. Determining information needs
  2. Collecting data
  3. Analysing and interpreting data
101
Q

What is organisational structure?

A

Defines how tasks are divided and resources that are used.

102
Q

What is resource allocation?

A

Efficient distribution of resources to successfully meet the goals that have been established

103
Q

Why is it important to organise operational resources?

A
  • undertake a successful production
  • clarify changes needed to be made to the production process or structure
104
Q

Why is it important to organise marketing resources?

A
  • Adequate resources should be devoted to the marketing plan
  • Efforts in the marketing department must be coordinated
  • Be provided with the resources to do their job
105
Q

Why is it important to organise financial resources?

A
  • Amount of equity, means if owner provides equity they have financial control
106
Q

Why is it important to organise HR resources?

A
  • Keep in mind how many people were employed
  • doing what job etc.

Business Studies (3 decks)

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