chapter 1 SAC

Question 1

Sources of business opportunity include:

1. Changing customer need

Answer 1

1. Changing customer need
   Customer needs and preferences change due to:

-changing incomes - if income increases then more luxuries, if income decreases then
basic necessities become the priority

-fashions and trends - increase or reduce demand

-prices of substitute goods – these are replaceable e.g. butter instead of margarine

-prices of complimentary goods - go together if one increases then will change the buying power think lettuce and cucumbers

-changing population - age, gender etc.

-changing health needs – lactose intolerant, gluten free etc.

Question 1

Identify two reasons why people start their own business.

Answer 1

-To be their own boss - work own hours, from a preferred location to be able to earn a
profit rather than rely on a wage or salary –
-To make money - willing to put in long hours to make more than in a normal 9 - 5
job
See a gap in the market - seize an opportunity or see a specific need to then start a business to address this need.

Question 2

Sources of business opportunity include:

2. Global Markets:

Answer 2

2. Global Markets:

-Because of the internet and reduced transport costs consumers can buy goods and services anywhere in the world; much easier and quicker today

-Can find new markets overseas

-Extend the life of a product

-Offer something that is unique

Question 3

Sources of business opportunity include:

3. Research and Development:

Answer 3

3. Research and Development:

-Businesses spend money to improve current products or develop new ones

-May be because of competition

-Changing consumer tastes and preferences - less fat in food, changed dietary needs like being lactose intolerant

Question 4

goal setting

Answer 4

A goal in business is what a business wants to achieve over a specific time period

Question 5

Goal setting is important to a business because it:

Answer 5

 Gives purpose to the business - so it knows why it exists

 Gives direction to the business - so it knows where it is going

 Helps measure results – ensures Alex is achieving what he wants and has regular cash flow to continue to operate ensure achieving what owners wants and has a cash flow to continue operating

Question 6

goal set when planning a business

Answer 6

FINANCIAL GOALS:

 To make a profit - revenue minus expenses, driver of many businesses

 Increased sales – Over the Moo wants to attract more customers to sell more products, earning more profit and expand the business - if this business idea is continuing to be successful then Alex could consider expanding overseas to increase his wealth and earnings

Question 7

goal set when planning a business

Answer 7

SOCIAL GOALS:
 Provide jobs which then helps the Australian economy as the business grows

 Be more environmentally friendly aiming to reduce, reuse, recycle where possible to

 minimise waste

 Social justice – Alex could aim to help the less fortune in the community by supporting charities or foundations, or offering jobs to the long term unemployed

Question 8

goal set when planning a business

Answer 8

PERSONAL GOALS for Alex:
 More money, wealth, and assets

 A higher standard of living

 Financial security and status

Question 9

contributions that a business can make to the Australian economy.

Answer 9

Provider of jobs - which has a multiplier effect of jobs creating more jobs through
increased customer demand and sales. (1 mark) If Over the Moo is making and distribution more ice-cream products then they will hire more people to facilitate this. (1 mark) These employers will then spend their income to create more wealth in the economy. (1 mark)

OR

b. Payment of taxes (1 mark) - Over the Moo will pay various taxes including GST and employees will pay income tax. (1 mark) This means that both the state and federal governments can then provide community goods and services e.g. police, schools, hospitals, prisons or social security. (1 mark) Without the collection of these taxes these services could not be provided for the benefit of the community. (1 mark)

OR

c. Export dollars (1 mark)- products sold overseas help the Australian economy by creating and keeping jobs in Australia and helping Australia’s balance of payments which is a record of trade and financial dealing with the rest of the world (2 marks). Over the Moo is looking to export its ice –cream products overseas which will generate more income and jobs.

Question 10

innovation

Answer 10

Innovation can be defined as the creation or improvement of a product or process (way of
doing something)

Question 11

entrepreneurship

Answer 11

Entrepreneurship can be defined as willing to take a risk to start up a business to then
make money

Question 12

ways that the government could help entrepreneurs

Answer 12

Research and development tax incentives - reduce tax payments for businesses as they are looking to be innovative and to fill a gap in
the market meeting the needs of customers or by creating export products.

OR

Entrepreneur’s program - government funded advice and support for businesses from business people with private sector experience and the opportunity to work opportunities to work with business specialists to identify business opportunities

OR

Council grants for new businesses - councils (LOCAL GOVERNMENT)
can offer small grants of money to help provide financial assistance to businesses in the initial establishment phase or as they continue to grow

Question 12

feasibility study

Answer 12

Feasibility study can be defined as working out/investigating if there is potential success
for a business idea

Question 13

Explain two characteristics of a successful business entrepreneur

Answer 13

Flexibility – being able to handle obstacles and issues as they arise in the business
and finding solutions to problems not allowing setbacks to stop them from achieving
their goals

• Shared vision – having a clear understanding of the direction the business is taking and ensuring that everyone in the business works collaboratively and with enthusiasm to achieve the both the goals and the long-term vision of the business
• Initiative, self-motivation and determination – they need to be able to make
  decisions quickly and effectively and continue to work towards set goals to keep the
  business operating successfully
• Innovation and enterprise - entrepreneurs need to continue to develop or improve their product to maintain customer interest and demand; they need to take risks to
  expand the business and conduct ongoing market research to ensure that the products
  they offer continue meet customer needs and expectations