Commerce Flashcards
Define: Commerce
Examining how people earn their income, how they spend their money and what goods & services are produced, how the government and the law influence people’s commerce behaviour
Define: Consumer
Someone who purchases goods and services to satisfy their needs and wants.
Outline the four economic resources:
- Land (naturally occur resources)
- Labour (physical & mental efforts of people)
- Capital (goods used to make other goods)
- Enterprise (combine other resources to earn a profit)
Define: Scarcity
When people’s needs & wants is unlimited while the earth’s resource is limited
What’s the difference between needs and wants?
Needs are something essential for living, wants is something to satisfy yourself. A person’s wants are unlimited.
What are the 10 factors that influence consumer and financial decisions?
- Customer service
- Price
- Convenience
- Marketing & advertising
- Age
- Gender
- Disposable income
- Environmental considerations
- Social media
- Cultural factors
How does customer service influence consumer and financial decisions?
Makes you feel valued so will keep buying from them
How does price influence consumer and financial decisions?
Significant factor, consumers want the best value (lowest price & best quality)
How does convenience influence consumer and financial decisions?
Short travel time, long shopping hours or online shopping access
How does marketing & advertising influence consumer and financial decisions?
Influence consumers into thinking they need this product
How does age influence consumer and financial decisions?
A person’s needs and wants changes over time
How does gender influence consumer and financial decisions?
Males and females have common wants but gender can influence types of purchases
How does disposbale income influence consumer and financial decisions?
If they have the money to buy what they want or need.
How does environmental considerations influence consumer and financial decisions?
More consumers are buying environmentally friendly things
How does social media influence consumer and financial decisions?
Social media influencers can influence their follower’s purchasing decisions
How does cultural factors influence consumer and financial decisions?
Every person has their own values, beliefs and principles
Outline how grocery stores influence our consumer decisions:
- Shopping trolleys – can buy/hold more stuff.
- ‘Sale’ and ‘special’ signs – feel like got a bargain and would buy more.
- Bright lighting – visible for consumers
What’s the difference between comparison shopping and impulse buying?
Comparison shopping is looking at different shops to get the best deals. Impulse buying is not thinking enough when buying a product such as if you actually need it.
What are the steps involved in comparison shopping?
- Think carefully about what you want
- You can shop around for the best deal
- Investigate the product’s features
- Decide beforehand how you would like to pay
- Check the refund and return policy
- Don’t sign anything you don’t understand or a blank form
- Compare aftersales service and guarantees
- Keep all receipts and invoices.
What are the stages of the distribution/retail chain?
- Manufactured (product goods using raw material, labour and machine)
- wholesalers (purchases goods from the manufactured)
- retailers (sell small quantities)
- Consumer (buys and gets the product)
What are the advantages of different types of retail outlets?
Some outlets would have things that other outlets don’t have so you can still get what you want, some are also more convenient than others.
What are the disadvantages of different types of retail outlets?
Maybe some outlets are inconvenient to go to or don’t have what you wanted.
Outline: Cash
Notes and coins issued by the federal government
Outline: Credit
Using money that is not yours and pay it back later with interest
Outline: Layby
Pay a deposit and the store puts it aside for you
Outline: BNPL (Buy Now Pay Later)
‘Borrowed’ money to buy stuff first and pay it back later in 4 payments without interest.
Outline: Store Credit
A store’s own card that issues like credit cards
Outline: Paypal
Paying for the good using money stored in PayPal account.
Outline: EFTPOS/Debit Card
Using electronically accessing money
Outline: Book-up
Purchase in store then pay back later
Outline: BPAY
Uses internet/telephone to transfer funds from the cheque to an account
Outline: Direct Debit
Schedule bill payments from bank account
Outline: Cheque
Written way to pay a person a specific amount of money
Explain the trend in cash usage in Australia:
Less people using it, card has taken over cash since it’s more convenient. It’s harder to get cash too as there are less ATMs.
What are the advantages of using credit card?
Convenient, suitable for online/internet payment and easily accessible
What are the disadvantages of using a credit card?
Easy to overspend, get you in debt, can pay more than using cash, damage your credit rating and stolen credit card can make you have purchases unlawfully.
Define: Scam
A dishonest or illegal plan or activity designed to cheat someone out of something, especially money
What’s a example of a scam?
Investment scam – promising high investment and quick returns.
How to avoid investment scams?
Not listening to strangers and don’t believe in things that sounded too good to be true.
Where should Australians go for help if they have been scammed?
Can go to ACCC to report it, can contact their local consumer protection agency so they can advise and information
What are the three elements of a contract?
Offer, Acceptance, Consideration
What are the 2 key laws that protect consumers?
The Competition And Consumer Act 2010 and Fair Trading Act 1987 NSW
What are the organisations that protect consumers?
Office Of Fair Trading, Ombudsman, ASIC, ACCC…
What are the organisations that protect consumers?
Office Of Fair Trading, Ombudsman, ASIC, ACCC…
What are the 4 legal rights of consumers?
- safe products (direction for use, tested and good quality)
- Accurate product information and descriptions (clear labels)
- Full disclosure of the terms of sale (full price is displayed)
- Warranties and guarantees are honoured (customer can receive a refund/exchange if faulty)
What’s the process of consumer redness?
- Identify the problem – gather evidence
- Contact the business without delay – seek a remedy
- Contact the relevant industry association or ombudsman
- Contact the state government’s consumer affairs department – can inform you of your rights and suggest further action
- Contact a mediation/conflict resolution service – mediator can hear both sides without bias and suggest a solution acceptable to both you and the retailer
- Contact a court or tribunal – last option as it is costly but can make legal decisions.
Define: Income
Money received on a regular basis from work, property, business, investment or government.
Explain: Salary
A fixed income paid monthly but express annual
Explain: Fee
Payment made to professionals for advice or service
Explain: Rent
Regular payment for the use of land
Explain: Social Welfare Payment
Payments from the government to assist people with basic living.
Explain: Wage
A fixed payment earned for work or services
Explain: Commission
A sum of money paid to employee upon completion of a task
Explain: Dividend
A sum of money paid by a company to its shareholders out of the profits
Explain: Royalties
Payment to owner for ongoing use of their asset or property
Explain: Profit
Money eared in trade or business after the cost of producing, selling and service
What is the difference between full-time and part-time job?
Full time work have a standard time fixed, usually 35-40 hours a week while part time work works less than 35 hours.
What are the benefits of permanent compared to casual employment?
Have posterity leave (get paid when still on leaves/holidays), have job security and more scope for promotion while part-time don’t get entitlements and not as much job security.
What are the disadvantages of permanent compared to casual employment?
Not paid for extra work, less flexibility and less wage than part-time (if divided into hours). Can be paid higher part-time, more flexibility and can work more than 1 job
What’s the gig economy?
Its enterprise and associated jobs are based online and on-demand services such as Uber, Deliveroo…
How to calculate total weekly income including overtime and penalty rates?
Income = hours worked x hourly rate x penalty rates (if applicable)
What’s the purpose of tax?
To fund services and make social welfare payments to those in need of assistance.
Define: Disposable income
Your income that’s left after all the levies is taken away
What’s the difference between fixed and variable expenses?
Fixed expenditure is the recurring spenses that must be met on a ongoing basis. Variable expenditure is your irregular spending that may need a discretionary
Why do people save?
To have enough money to buy their wants, to be there in emergencies and finical independence.
What’s the relationship between risk and return when investing your savings?
The higher the possible return the greater the risk of you losing all your money.
How to calculate simple interest?
I = PRN/T
What’s the difference between simple and compound interest?
Simple interest is paid at the end of the investment. Compound interest is paid regularly throughout the period – easier to make money in compound than simple. Compound doubles up.
Define: Superannuation
A portion of one’s earnings that is invested for your retirement and it’s compulsory.
What’s the purpose of superannuation?
To make sure you have money to have a comfortable retire.
What’s simple budget?
A personal plan to predict, record, compare and track changes in one’s investment, expenditure and savings.
How to calculate savings from income and expenses?
Saving = income – expenses
What are the benefits of borrowing money?
Immediate satisfactions, convenience, possible savings/’force’ savings, emergencies, improve quality of life
What are the disadvantages of borrowing money?
Interest charge, impulse buying, additional costs, loss of control, inability to repay, false sense of security
What’s a secured loan?
When something deposited or promoted as a guarantee to fulfill the payment of the loan
What’s an unsecured loan?
When nothing is deposited as a guarantee for a loan.
What are the impacts of poor financial management
Could get into debt and become bankrupt because the interest is just too much and you don’t have enough money to pay it back
What are the options for addressing financial difficultly?
- Alternative payment plans
- Debt consolidation: roll all debts into one – easier to manage.
- Bankruptcy
- Support from financial institutions
How can alternative payment plans help addressing financial difficultly?
can apply to credit provider for hardship variation, can pay over instalments, extending loan period, smaller repayments or postponing repayments
How can debt consolidation help addressing financial difficultly?
Roll all debts into one – easier to manage
How can bankruptcy help addressing financial difficultly?
Final measure, no longer has to repay your debts but is recorded on your credit history. Might have portion of your wages taken out to repay the debt or have your assts seized
How can support from financial institutions help addressing financial difficultly?
Can do research online for information tips and tools, can find assisted support from specialists, advisors, counsellors, lawyers, free government service, community counselling service and/or customer service.
Define: Entrepreneur
A person who sets out to build a successful business in a new field
What are the 5 considerations when exploring opportunities to run a business
- Market Research
- Location
- Demographics
- Competition
- Target Market
What are the advantages of establishing a new business?
- Freedom to set up the business as he/she wants
- Owner can determine pace of growth and change
- Owner has more flexibility
- No goodwill for the owner to pay
What are the disadvantages of establishing a new business?
- High risk and a measure of uncertainty
- Difficult to secure finance
- Time is needed to get the business running well
- Profits may not be generated for some time
- Potential customers may be more difficult to attract
When should you establish a new business?
- Better when a new product or service is developed
- Better when an existing small business doesn’t satisfy the needs of customers
- Better when the market grow and existing business can’t support the additional customers
What are the advantages of purchasing established business?
- Can generate instant income
- Good business history increases the likelihood of business success
- Have stock and is ready for sale
- Available for immediate use
- Existing employees can provide valuable assistance
What are the disadvantages of purchasing established business?
- Existing image of the business may be difficult to change
- Contacts which may be lost when business is sold
- May be difficult to assess the value of goodwill
- Some employees may resent changes to the business operation
What are the advantages of purchasing a franchise?
- Simple, safe time (can go straight to the final product) and easy
- No research needed
- Franchisee band would help with business growth
What are the disadvantages of purchasing a franchise?
- Taking other’s profits and the parent company didn’t care
- Anything bad to the brand can be bad to franchisee
- Not a lot of flexibility as franchisee control the direction of how the business is going
When should you purchasing established business?
The business already is operating and everything is included in the purchase
When should you purchasing a franchise?
A person has the right to use the business name and distribute the good or service of an existing business
Define: Incorporation
Company becoming a separate legal entity from its owners (shareholders)
Define: Limited Liability
When a shareholder generally loses only the money he/she invested in the business
Define: Unlimited Liability
When a business owner is personally responsible for all debts of his/her business
What is a sole trader?
- A business owned and operated by one person.
- The most common type of business
- Simplest and cheapest
- Unlimited liability
What is partnership?
- Usually owned and operated by 2 to 20 people – partners
- Share profits and losses
- Common for people with common skills
- Unlimited liability
What is corporations (both public and private)?
- Big and have a lot of people in it
- Limited liability
- Shares can be brought on ASX or offered only to those want as part-owners
What is incorporated association?
Small scale, non-profit and non-commercial
What are the advantages of being a sole trader?
- Can keep all profits
- Easy to establish
- Are their own boss
- Sense of personal satisfaction
- Work the hours they want to
What are the disadvantages of being a sole trader?
- Unlimited liability
- Limited access to finance to ‘grow’ business
- Pay income tax rather than company tax
- Difficult to take time off
What are the advantages of partnership?
- Keep all profits and share any losses
- More capital to establish business
- Work shared
- More people to make decisions
- Easier to borrow money
What are the disadvantages of partnership?
- Unlimited liability
- Must share profits
- Possibility of disagreement among parents
- All parents are reasonable for actions of other
- If 1 person leaves, partner agreement must be renegotiated
What are the advantages of corporations (both public and private)?
- More capital - easier to borrow money
- liability of shareholders is limited
- legal entity
- specialised people can be employed
- ownership and control can be changed frequently
What are the disadvantages of corporations (both public and private)?
- Many government regulations must be taken into account
- Limits are placed on the bound of directors
- Owners don’t always have control
- Can be expensive to set up, maintain and organise
- May be too large and inefficient
What is debt finance?
- Money obtained through loans from other people/institutions
- Most popular form of finance or small business owners
What is equity finance?
Money received from the sale of shares of ownership in the business, meaning it’s the business owner’s money
What are the advantages of debt finance?
- Owner doesn’t have to sell any ownership of the business
- Can have tax advantages
What are the disadvantages of debt finance?
- Interest must be repaired on loans which can be very costly
- Reduce profits
What are the advantages of equity finance?
- Doesn’t have to be repaid unless owner leave the business
- Cheaper than debt finance as there’re no interest
What are the disadvantages of eqity finance?
- Involves ‘selling’ ownership of your business
- Giving up ownership and control over your company
- Important decisions may be on hands of others
- Shareholders entitled to a portion of profits
Why it is important for businesses to maintain finical records?
- To inform decision making
- To fulfill legal requirements
- To meet your tax obligations
- To obtain funding for a loan
- To enable business owners to manage their cash flow
What are the legal obligations for keeping records?
- Sole traders and partnerships must keep records for at least 5 years
- Companies must keep records for a minimum of 7 years
Define: Purpose of profit and loss statements
A summary of the income earned and the expenses incurred over a period of trading
Define: Revenue
Income earned from sale of stock, sale of service and other sources such as interest or rent
Define: Expenses
The costs of running a business or other payment for purchasing stock, paying for service and other costs such as wages, advertising, insurance
Define: Gross Profit
Sale minus cost of goods sold
Define: COGS
Cost of goods sold
Define: Net Profit
Gross profit (plus other income) minus expenses
What factors contribute to success in business planning?
- Staffing
- Equipment
- Location
- Obtaining realistic valuations:
Outline risk management processes:
- Evaluating the risks faced
- Calculating the possible cost
- Implementing procedures to minimise such risks
How can financial records help minimise risk?
- Can tell if there’s theft happening by comparing the amount of stock that you brought and the amount you have (after subtracting the ones that you sold)
- Can make sure that your customers doesn’t own you a bad debt
- Can compare records to check the stock sales – can know why/when the sales would drop and why/when the sales would rise
List three strategies to minimise possible risks:
- Copyright infringement – obtain protection of your new product or idea (patent)
- Theft – put in place stock loss and crime prevention measures and improve security
- Tax obligations – keep up to date with changes to taxation and keep detailed records
Outline an example of regulations affecting businesses at the federal, state and local level:
- Federal government regulations: not engaging in misleading or deceptive advertising and deduct the income tax from employees who earn above the minimum taxable wage level.
- State government regulations: abiding by work health and safety regulations.
- Local government regulations: health regulations, especially the safety of handling of food.
Explain the purpose of WHS legislation and main obligations of employers:
The purpose of WHS (Work, Health and Safety) Legislation is to make sure that by ducting the risks employees can have the highest level of protection. The main obligations are that employers must make sure that all employees are adequately trained in relation to WHS
What are the two types of tax that you must pay to the goverment?
- Income tax (pay-as-you-go (PAYG))
- Goods and services tax (GST)
List three options for support and advice for small businesses in Australia:
- NSW Fair trading
- Australian Small Business and Family Enterprise Ombudsman (ASBFEO)
- Fair Work Ombudsman (FWO)
Define: Direct marketing
Communication that are targeted directly at a business’ key audience
Define: In-direct marketing
Works to establish a relationship between a brand and its customers by building brand image and awareness
What are the 4 P’s in marketing mix?
- Product
- Price
- Promotion
- Place
What is the order of the business cycle?
- Expansion
- Contraction
- Peaks
- Troughs
How do businesses respond to peaks?
– Increase employee’s wages and salaries
– Increase production to take advantage of an increase in sale
– Hire more stuff
– Increase pricing
– Expand business
– Invest in new equipment, technology or assets
How do businesses respond to troughs?
– Keep employees’ wages and salaries at current levels
– Decrease or maintain production at current levels
– Decrease the size of the workforce
– Keep prices at the same level
– Put a top to an expansion or possibility close some stores
How has COVID-19 has impacted small businesses in troughs?
Many business had to temporarily close, employees had to work from home, cafes, shops, stores had to adopt to covid safe places, a significant rise of unemployment, a fall in spending in consumers
What are the challenges to business in 2022 during post COVID-19 economic growth (peaks)?
A rise in minimum wage – to attract workers to work, to cost of good that was selling, or product was going up, profit has to decrease/suck it up – giving the consumers the increase of cost slowly
How are businesses responding to peaks in COVID times?
Shutting down one day a week and opening later in the day – decrease electricity bill, decrease worker wage, not passing down all the cost increase at one time but instead do it slowly.
Define: Corporate Social Responsibility
The way that a business considers the finical, environmental and social impacts of its decisions
What are some socially responsible approaches to business?
- Environmentally friendly things/throw out staff responsibly
- Good working conditions
- Underpay of wages
- Get involved in the community
What are the benefits of ethical decision making for businesses?
- Improvement in staff turnover and absent rates going down as staff feel more valued and motivated
- Lower business costs
- Increase in employee productivity
How is ‘Who Give A Crap’ a socially responsible company?
- Made from either 100% bamboo or recycled material
- Donating 50% of profits to charity
- Partner up with other organizations to help people in need
