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Business Studies Topic One: The Nature of Business Flashcards

1
Q

What is the definition of Business?

A

the organised effort of individuals to produce and sell, for a profit, the products that satisfy individuals needs and wants

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2
Q

Define a Good.

A

a tangible item

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3
Q

What is a Service?

A

Actions performed which are valued by someone

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4
Q

What is the difference between Need and Want?

A

Need: Things needed to live
Want: Goods and services that aren’t required, but desired

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5
Q

How is Profit calculated?

A

total revenue - costs (or outlay) = profit

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6
Q

What does it mean for a business to be Incorporated?

A

The process companies go through to become a separate legal entity from the owner(s)

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7
Q

Who are Silent Partners?

A

people that own in a business but don’t have any say in decisions

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8
Q

What is a Prospectus?

A

key info about a company including risks, owners, management, financials and more (only for public companies)

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9
Q

What does ASIC stand for?

A

Australian Securities and Investment Commission

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10
Q

What does ACCC stand for?

A

Australian Competition and Consumer Commission

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11
Q

What is the EPA?

A

Environmental Protection Agency

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12
Q

What does Ecologically Sustainable mean?

A

the environmental component of sustainable development, including investing in nature protection, protecting biodiversity etc.

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13
Q

List the roles of Business.

A
  • Provide employment
  • Make a profit (revenue - expenses)
  • Provide incomes for people
  • Provide quality of life for people (friendships)
  • Creates wealth in an economy from its profits
  • Gives consumers choice
  • Innovate/invent new ways to make and do things
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14
Q

What are the four sizes of business and how many employees at each size?

A
  • Micro: under 5 employees
  • Small: 5-19
  • Medium: 20-199
  • Large: 200+
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15
Q

What percentage of total employment in Australia do SMEs make up?

A

98%

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16
Q

Define Local, National, and Global businesses.

A
  • Local: services the local area (newsagent, corner store)
  • National: operates in one country
  • Global: operates in many countries across the world
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17
Q

List the types of industry.

A
  • Primary: working with raw materials
  • Secondary: takes primary resources and turns them into semi-finished or finished products
  • Tertiary: services
  • Quaternary: information processing
  • Quinary: domestic services
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18
Q

What does legal structure refer to?

A

how a business is viewed under the law

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19
Q

What is the difference between Incorporated and Unincorporated?

A

Incorporated: Seperate legal entity under the law and owners have limited liability
Unincorporated: Owners and business are viewed as one entity under the law and owners have unlimited liability

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20
Q

What is a Sole Trader?

A

Owned by 1 person, owner makes decisions and takes responsibility

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21
Q

What is a Partnership?

A

Owned and operated by 2-20 people with a verbal, written or implied agreement

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22
Q

What are the two types of companies?
Which type has (Ltd) and which type has (Pty Ltd)?

A
  • Public Company (Ltd)
  • Private Company (Pty Ltd)
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23
Q

What is required for a Public Company?

A

Must have Ltd in name, large company with shares on the ASX, at least 3 directors

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24
Q

What is the main characteristic of a Private Company?

A

2-50 shareholders, shares aren’t publicly traded

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25
What factors influence the choice of legal structure?
* Size * Ownership * Finance
26
What is the External Influences Mnemonic? What is each part called?
Every Monday I Go Swimming To Compete For Last Place: Economic, market, institutional, geographic, social, technological, competition situation, finance, legal, political
27
What factors are included under Economic influences?
* Interest rates * Wages * Unemployment
28
What does the term 'Compliance costs' refer to?
the money/time it takes to follow the laws
29
What is the role of the Regulatory bodies?
monitor actions in certain, specific areas
30
What does the acronym TNC stand for?
Transnational Corperation
31
True or False: A Public Company can have an unlimited number of shareholders.
True
32
Fill in the blank: The _____ market provides access to capital investment, loans, and shares.
Financial
33
What is the significance of technology in business?
Technology revolutionised the workplace, including AI and automation
34
What is the purpose of competition in the market?
provides consumers with more choice, qualities and prices to choose from
35
What are internal influences in a business?
Influences that happen inside the business, which the business has control over.
36
What factors are included in the products aspect of internal influences?
Type and size of the goods and services, staff requirements, cost of production.
37
How does location affect a business?
It affects how many people will visit the business, visibility, and costs.
38
What are the key aspects of a prime location for a business?
Customer convenience and visibility.
39
What is crucial for retailers regarding location?
Visibility.
40
What are the proximity considerations for a business's location?
* Proximity to suppliers * Proximity to customers * Proximity to support services (lawyers, accountants, etc.)
41
What are the types of resources a business needs to use effectively?
* Human Resources * Information resources * Physical resources * Financial resources
42
What do human resources include?
Employees, which are generally the most important.
43
What are physical resources in a business?
Equipment, machinery, buildings.
44
What is the role of management in a business?
maximum profits and manage employees
45
What are the two styles of management? Main points for each?
* Traditional: very hierarchical, rigid * Fluid: not as hierarchical, people-centered, less rigid
46
What is business culture?
Ideas, values, and expectations of a business, reflected in policy and goods/customer treatment.
47
Who are the owners/shareholders?
Owners make decisions in the business; shareholders are part owners and take risks by investing.
48
What is the responsibility of managers in a business?
Running the business and maintaining business growth.
49
What role do employees play in a business?
Manage/make/serve what is provided and sold by the business.
50
What is the importance of customers to a business?
They buy goods and services; if not satisfied, they will not buy.
51
What responsibility does a business have towards society?
To be good corporate citizens and have responsibility to the general public.
52
What is the environmental responsibility of a business?
Adopt ecologically sustainable practices.
53
What are the stages of the business life cycle?
* Establishment * Growth * Maturity * Post-maturity
54
What happens during the establishment stage?
Business/new product is launched; it is a risky time with high costs and limited market.
55
What challenges does a business face during the establishment stage?
Difficult to get finance, customers may be unaware of the business.
56
What occurs during the growth stage of a business?
Accelerating growth with more sales, more staff, more profit, and more competition.
57
What does a business do to expand in the growth phase?
* Mergers * Takeover
58
What are the three types of merger/takeover?
* Diversification * Horizontal integration * Vertical integration
59
What characterizes the maturity stage of a business?
Growth levels out; businesses think about diversification to grow sales again.
60
What can happen in the post-maturity stage?
Sales can fall; can go three ways including steady state, renewal, or decline.
61
What does 'steady state' mean in the context of business post-maturity?
Neither declining nor expanding.
62
What is meant by 'renewal' in the post-maturity phase?
A new growth phase from research, marketing, innovation.
63
What happens during the decline phase of a business?
Falling sales and profit leads to failure.
64
What are the main challenges during the establishment stage of the business life cycle?
Maintain a positive cash flow and establish a solid customer base ## Footnote Detailed planning is essential for business owners to achieve these goals.
65
What is the primary challenge during the growth stage of a business?
Continue to improve the competitive edge of its practices and products ## Footnote Business owners must balance changes to maintain competitive advantage without disrupting successful practices.
66
What is the main challenge during the maturity stage of a business?
Maintain growth and avoid decline ## Footnote Owners must preserve the entrepreneurial spirit that contributed to the business's original success.
67
What is the main challenge in the post-maturity stage?
Regenerate the business and avoid administration or liquidation.
68
Name three factors that can contribute to business decline.
* Failure to meet customer needs * Lack of demand * Failure to plan ## Footnote Other factors include increase in competition, lack of adequate cash flow, poor location, lack of management skill, uncontrolled growth, failure to adapt, failure to price correctly, unfavorable economic conditions, ignorance of competition, and ill-conceived business data.
69
What is voluntary cessation in the context of liquidation?
Selling off assets and paying debts before accumulating more debt ## Footnote Owners take earnings after settling debts and may choose this option for various personal reasons.
70
What triggers involuntary cessation in business?
Forced to stop trading by creditors due to non-payment.
71
What happens to sole traders and partnerships during bankruptcy?
Assets and money are taken, including some personal assets, and paid to creditors; owners take what is left.
72
What are the two outcomes for companies facing financial difficulties?
* Voluntary administration * Liquidation ## Footnote Administration involves attempting to save the company, while liquidation involves selling off assets and paying creditors.
73
How can creditors initiate bankruptcy or liquidation for a business?
By going to court and applying for a permit.

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