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Business Management / Accounting > Busman Book 1 > Flashcards

Busman Book 1 Flashcards

1
Q

What is business Motivation

A

the reason why someone chose to start a business.

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2
Q

What is source of business opportunities

A

where or how the opportunity arose for them to start their own business

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3
Q

What are the 4 business motivations

A
  1. Financial independance
  2. Personal independance
  3. Make profit
  4. Fulfil a market need
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4
Q

what does financial independance mean?

A

being able to support yourself without relying on other people/a job

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5
Q

what is personal independance?

A

being able to make your own decisions, decide your role, working hours, holidays, etc.

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6
Q

what does make a profit mean?

A

to benefit financially from capitalizing on a business opportunity.

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7
Q

what does fulfil a market and/or society need mean?

A

Create a product to meet customer demand or improve on an existing product to better meet the need of customers

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8
Q

what are the 4 sources of business opportunties?

A
  1. Innovation
  2. Entrepreneurship
  3. Market opportunities
  4. Changing customer needs
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9
Q

What does Innovation mean?

A

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

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10
Q

What are some characteristics of Innovation?

A

1.new efficient processes can save time, money and create less waste
2.allows business to grow
3.helps business to adapt to the changing marketplace
4.gives a competitive adavantage

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11
Q

What is Entrepreneurship?

A

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

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12
Q

what are some characteristics of Entrepreneurship?

A

1.seeks out new opportunities
2. Manages business activities
3.Takes calculataed financial risks
4. Experiences business success

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13
Q

What is Market opportunities?

A

refers to chances to increase trade caused by the changing trends in a market. They key is able to recognise a market trend. This could also be an opportunity where there is a gap market

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14
Q

What is a gap in the market?

A

a gap in the market is a business opportunity. It’s when you’ve identified something that customer need, but it isn’t currently available.

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15
Q

What are some examples of Changing Customer needs

A

hello fresh –> people are becoming increasingly busy so HF provides meal kits delivered yo your door to remove the stress of meal planning and grocery shopping so that people can still enjoy a health balanced diet

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16
Q

What is a sole trader

A

an unincorporated business structure with only one owner who also operates the business

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17
Q

what are characteristics of a sole trader?

A
  1. owned and operated by a single person- but can have employees who are not owners
  2. Owners have unlimited liability for all business debts
  3. Owner retains all profits after personal income tax (not subject to company tax)
  4. May have employees but owner is the only one responsible for making decisions of the business
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18
Q

what are strengths of soletraders?

A
  1. low set up costs
  2. low level of government regulation (easy to set up and run)
  3. Centralised decision making = no conflict for owner
  4. Owner retains all profits ( can decide to reinvest into business but has control)
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19
Q

what are limitation to sole traders?

A
  1. unlimited liability = risk for personal assets (e.g house)
  2. Difficult to raise funds
  3. High level of responsiblity for owner
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20
Q

What are partnerships?

A

an unincorporated business structure owned by 2-20 owners

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21
Q

what are characteristics of partnerships?

A
  1. partners share responsiblity for the organisation
  2. partners have unlimited liability for a ll business debts
  3. partners have to source all funding for the business
  4. partners can divide and retain all profits after personal income tax
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22
Q

what are some strengths to have partnerships?

A
  1. low cost of set up
  2. low level of government regulation
  3. multiple ownersip –> increase knowledge base/quality of decisions + different skill sets/areas of expertise
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23
Q

what are limitaions of partnerships?

A
  1. unlimited liablity= risk for personal assets (e.g house)
  2. Difficult to raise funds = partner investment + loans from banks
  3. potential for conflict between partners
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24
Q

what are private limited companies?

A

an incorporated business with at least 1 and up to 50 selected shareholders

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25
Q

what are some characteristics of private limited companies?

A
  1. Business name must always followed by Pty Ltd.
  2. The company is a separate legal entity
  3. High level of control retained by shareholders as new shareholders are selected by the board
  4. Overseen by directors ( can be 1 or a board of directors) = decision makers
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26
Q

what are some strengths of private limited companies?

A
  1. incorporation mean that liability is limited to the business= protection of shareholders
  2. Directors can be shareholders or can be appointed by shareholders= increased expertise
  3. Revenue can be raised by selling shared in the org ( but not ASX)
  4. Company tax rate is lower than personal income tax rate - so tax for business itself is less
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27
Q

what are limitations of private limited companies?

A
  1. profits are taxed twice- company tax and then personal income tax
  2. cost of set up and level of government regulation are higher - must have a set of “company rules” + pay a registration free to ASIC + annual renewal fee
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28
Q

what are public listed companies?

A

an incorporated business that can sell shares in an open market to an unlimited numbers of shareholders

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29
Q

what are charactertistics of a public listed company?

A
  1. business name must always be followed LTD.
  2. the company name is a separate legal entity
  3. Shares are sold on the Australian Securities eXchange (ASX)
  4. Shareholders have limited decisions making influence but recieve a share of profit through dividends
  5. Decisions made by Board of directors
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30
Q

what is a business objective?

A

the goals a business intends to achieve

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30
Q

what is a key performance indicator?

A

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

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31
Q

what is efficiency?

A

how productively a business uses its resources when producing a good or service

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32
Q

what is effectiveness?

A

the extent to which the business achieves its business objectives.

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33
Q

what are the five business objectives?

A
  1. Make a profit
  2. Increase market share
  3. Meet shareholder expectations
  4. Fulfil a market need
  5. Fulfil a social need
34
Q

what is making a profit?

A

generat more revenue than expenses from running a business

35
Q

how is making a profit achieved?

A

any strategy that will increase revenue (e.g marketing campaign/new product/improved quality of product) OR reduce expenses (elimanate waste, lower staff requirements, cheaper materials)

36
Q

What is Increasing Market share?

A

grow the proportion of sales of a business with a particular industry (control more of the market).

37
Q

how is increasing market share achieved?

A

make price lower than competitor, provide a uinque benefit of your product (e.g loyalty or maket based on sustainability or higer quality or higher flexity)

38
Q

what is meeting shareholders expectations?

A

provide a return on the money they have invested into the business

39
Q

how is meeting shareholders expectations achieved?

A

increase profit

40
Q

what is fulfil a market need

A

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

41
Q

how is fulfil a market need achieved?

A

identify what needs the market is not currently meeting meeting and develop a prodcut or service to meet that need

42
Q

what is a fulfil social need?

A

condcut businesss activities that improve the community and environment.

43
Q

how is fulfil a social need achieved?

A

consider social and environmental impact when making decisions OR supporting other organisations work.

44
Q

what are the five KPI’s

A
  1. percentage of market share
  2. Net profit figures
  3. Number of sales
  4. Level of wastage
  5. Rate of productivity growth
45
Q

How can KPIs be used by businesses?

A

Businesses will base their decisions on data and objective information.

46
Q

Therefore KPI’s allows businesses to …

A
  1. Gather information about current performance of the business
  2. Set objectives
  3. Inform and initiate change
  4. Evaluate change
47
Q

what are some considerations for KPIs

A
  1. it is essential that performance indicators relate ti, and can be traced back to, objectives and strategies
  2. KPI’s won’t tell you exactly what to change but they will provide an indication as to where and what managers need to investigate
  3. KPI’s require and initial benchmark for comparison
48
Q

What is the number of sale?

A

Total quantity of a particular product or service purchased during a defined time period

49
Q

what can number of sales indicate?

A
  1. measures success of marketing campaigns, sales training and product innovatuon
  2. the most popular or unpopular products
50
Q

what does percentage of market share mean

A

a representation of the proportion of sales that a business has compared to the total sales for the industry or product, expressed as a percentage.

51
Q

what does percentage of market share indicate?

A
  1. provide an indication of their level of control in a market place
  2. can indicate that you have improved your quality or price compared to your competitors ( improve competitive advantage)
  3. If sales drop- measuring % of market share along side this figure can inform whether sales have dropped due to an issue within your organisations OR whether the market is shrinking
52
Q

what does net profit mean?

A

net profit figures are calculated by deducting total expenses incurred from total revenues earned over a period of time

53
Q

what can net profit indicate?

A
  1. capacity of organisation to use its resources to maximise profits
  2. whether selling price is right (if sales are increasing but profit is not there is something not right)
  3. Can indicate increasing revenue
54
Q

what does rate of productivity growth mean?

A

compares the amount of output produced to the amount of input (resources) going into production from one defined time period (e.g year) to the next

55
Q

wha can rate of productivty indicate?

A
  1. indicates that the organisations is using resources efficently
  2. the organisation is using fewer inputs to obtain the same level of output OR more output is produced from the same input
56
Q

level of wastage mean?

A

the amount of resources discarded by the business during the production process?

57
Q

what does level of wastage indictae?

A
  1. Reduction of waste means that an organisations can cut costs leading to greater profit
  2. High levels of waste can indicate a negative impact on the environment.
58
Q

what are macro factors?

A

macro factors are influences over which a business has no contol.

59
Q

what are the four macro factors?

A
  1. Legal & government regulations
  2. Societal attitudes and behaviour
  3. Economic conditions
  4. Technological issues
60
Q

what are legal and government regulations mean?

A

refers to the business related legislation (laws) passed by local (council), state (Victorian) or fedral (Australian) governments, as well as decisions made by the courts, that protect consumers, the community and the environment while encouraging fair trade and competition.

61
Q

Societal attitudes and behaviours mean

A

includes external and internal customers’ (worker, suppliers) values, beliefs and customer trends. It includes what people currently think about ways of working, how businesses should be operating and purchasing patterns.

62
Q

postive impacts of societal attitudes and behaviour?

A
  • adapting to social change means the business is constantly up to date and can offer products in line with customer wants and needs.
  • can create new profit generating oppotunities for business
63
Q

negative impacts on societal attitudes and behaviour?

A
  • social changes can occur frequently and it may not always be possible for the business to respond, this could be a disaster in competitive industries
64
Q

economic conditions?

A

includes all things financial, meaning when planning, businesses must take into consideration interest rates, tax rates, business confidence and consumer confidence levels.

65
Q

what are examples of economic conditions

A
  1. Low interest rates
  2. Unemployment
    3 Inflation
66
Q

positive impacts of economic conditions?

A
  1. strong economic growth = expands the customer base = more sales/ revenue/profit
  2. Greater levels of consumer confidence
67
Q

negative impacts of economic conditions

A
  1. Weak economic growth (i.e recession) = reduces the customer base = damages sales
  2. Economic sanctions, restrictions etc.= leads to increase costs
  3. increased unemployment, inflation, interest rates –> all affect demand
68
Q

what does interest rates mean

A

the interest rate is the amount a lender charges a borrower and is a percentage of the principal- the amount loaned. It can also refer to the amount earned on savings and investments

69
Q

what is inflation

A

the rise in prices, which can be translated as the decline of purchasing power over time

70
Q

what is unemployment

A

the term of unemployment refers to situation where a person actively searches for employment but is unable to find work. Unemployment is considered to be a key measure of the health of then economy

71
Q

what are operating factors?

A

operating factors are external to the business, however they have some control over them

72
Q

what are the four operating factors?

A
  1. Customer needs and expectations
  2. Competitors behaviour
  3. Special interest groups
  4. Suppliers & supply chain
73
Q

examples of customer needs and expectations

A
  • Increased availability, use and application of smartphones
  • Drastically increased use of online shopping systems
  • widspread knowledge of consumer rights
74
Q

examples of competitor beahviour

A

Apple –> releases the AirPods
Samsung –> Galaxy buds

75
Q

what are Special interest groups?

A

a group of members with shared interests. They can put pressure on a business to act in line with these interests

76
Q

examples of special interest groups?

A
  1. environmental lobby groups
  2. Animal rights groups
  3. Business associations
  4. Unions
77
Q

whats are environmental lobby groups (SIGS)

A

are special interests groups that promote environemntal issues to the public, government and businesses

78
Q

what are business associations (SIGS)?

A

organisations that support businesses through the provisions of training and education programs, advice and information

79
Q

what are unions (SIGS)?

A

a organisation formed to represnt and protect the rights of workers in a particular industry

80
Q

what are thr trade union impacts?

A
  1. productivity
  2. Costs
  3. Profits
  4. Competitiveness
  5. Repuation
81
Q

what are consumer groups (SIGS)?

A

specific type of lobby group that monitor a businesses in terms of its productivity safety, packaging, pricing and advertising.

82
Q

examples of suppliers and supply chain

A

raw materical packaging, CSR issues like fair trade, production processes, distribution channels

Business Management / Accounting (5 decks)

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