Chapter 1 - Role Of Business Flashcards
5 different functions of business include:
- innovation (improving existing products or creating a new one)
- entrepreneurship and risk
- employment (businesses provide about 80% of all private sector jobs)
- quality of life (provide vast range of products that improve our lives)
- wealth creation (business activity results in higher levels of economic growth and wealth)
What is revenue
The money a business receives as payment for its products
What are SMEs
Small to medium enterprises
What percentage of businesses in Australia are SMEs
98%
What are examples of some of the main activities undertaken by a business?
- marketing products
- planning finances, production and business needs
- production (creating the products)
- forecasting sales, expenses and profit
- controlling production -> quantity and quality
If the business’s sales revenue is larger that its operating expenses, has it or has it not made a profit?
It has made a profit
If the business’s operating expenses is larger than its revenue sales, has it or has it not made a profit?, has it or has it not made a profit?
It hasn’t made a profit
What is the difference between a wage and a salary
Wages are usually received on a weekly basis for the services they provide to their employer. The amount is dependent on hours worked that week.
Salary is a fixed amount paid on a regular basis, usually fortnightly or monthly, to a permanent employee of the business.
What kind of company has shareholders
A private or public company
What is a dividend
Where part of a business’s profit is divided among the shareholders
What percentage of Australia’s private sector does the SME provide employment for
About 70%
What is R&D, and what is it short for?
Research and Development
Set of activities undertaken to improve existing products, create new products and improve priduction
What has Research and Development (R&D) resulted in?
Improved efficiency
Increased productivity
Risks taken by entrepreneurs?
- they usually explore untapped markets with no track record of proven consumer demand or guaranteed returns
- if the business fails, the entrepreneur may lose all or part of the money they put into it
- the owner must first pay everyone else, including their employees, suppliers and lenders, before they pay themselves
Who gets part of the wealth created by the business
- employees
- lenders
- business owners/shareholders
- governments (taxes, payroll tax, goods and services tax etc)
- the business itself (depreciation, retained profits)
