commerce questions Flashcards
what are 4 characteristics of an entrepreneur
ability to identify and take advantage of an opportunity, establishing a shared vision, demonstrating initiative, innovation and resilience, appreciating the role of failure in success.
what are advantages of being an entrepreneur?
Be your own boss – independence.
Possibility of making a profit
Challenge, reward and satisfaction
Increase personal wealth.
Contribute to society.
Develop own creative ideas.
Overcome unemployment.
Achieve a better lifestyle.
Employ family members.
Possible tax advantages
what are disadvantages of being an entrepreneur?
· Hard work and long hours · Other ‘bosses’ – customers, suppliers, financiers · Income may fluctuate and be uncertain. · Risk of failure · Stress and worry · High levels of responsibility · Constantly solving problems · Difficulty in selling the business
types of market research
primary, secondary, qualitative, quantitative
what are demographic factors and why are they important
Demographic factors are population characteristics that affect customer spending and include age, ethnicity, gender, marital status, family size and income. An examination of a region’s demographic pattern will provide a clearer picture of a business’s possible customers.
define competition and competitors
Competition refers to rivalry among businesses that try to supply the needs and wants of a market. Competitors, therefore, are other businesses that offer rival products or services.
why should businesses aim to maintain a competitive advantage
Business owners should aim to achieve a sustainable competitive advantage over their competitors so they can capture a larger share of the market.
whats a sustainable competitive advantage
A sustainable competitive advantage refers to the ability of a business to develop strategies that will ensure it has an ‘edge’ over its competitors for a long period of time.
How can competition benefit a business?
It creates more productivity and better quality of products and services. They can satisfy consumer preferences and attain a better position in the market.
How can competition be detrimental to a business?
It can force lower prices to stay competitive, decreasing profit margins for each sale or service.
define target market
Target market refers to the group of customers to whom the business intends to sell its products
examples of unincorporated business entity
sole trader, partnership
examples of incorporated business entity
incorporated association, public company, private company
list five types of organisational structures
sole trader, partnership, private company, public company, incorporated business entity
What’s a sole trader?
A sole trader is a business that is owned and operated by one person.
Describe the advantages of establishing a sole trader business.
The owner gets to keep all profits, has maximum control over business decisions and activity, it’s easy to establish, and they choose their work hours.
Describe the disadvantages of establishing a sole trader business.
The owner has unlimited liability, they are prone to working all the time, limited access to finance the business, and the life of the business is limited.
What’s a partnership?
A partnership is a business usually owned and operated by between two and 20 people, called partners.
Describe advantages of a partnership.
There is more capital as all partners help finance the business, losses r shared, partners keep all the profit, more ppl to make decisions, and easier to borrow money
Describe disadvantages of a partnership.
partners share profit, may be disagreements, unlimited liability, all partners are responsible for actions of other partners, if a partner leaves or a new partner joins, then the partnership agreement must be renegotiated.
define private (proprietary) Company
A private company usually has between two and 50 private owners called shareholders. These businesses tend to be small to medium in size. Often, they are family-owned.
Note: Shares in private companies are offered only to those people the business wants as part-owners. This is why it is called a ‘private’ company.
advantages of a private company?
· If anything happens to the company, its members are not personally affected (limited liability); members are only liable for unpaid shares.
· Tax advantages: private companies pay corporation taxes on their taxable profits and tend to be exempt from higher personal income tax returns.
· Enjoy permanent succession because the company is its legal entity. Shareholders and employees act “as agents of the company” and therefore, do not affect the company if they leave.
- Private companies tend to have have fewer regulatory requirements than public companies,
-more control on decision-making giving them a greater drive
disadvantages of proprietary limited company?
· Shared profits
· Must pay taxes and insurance for their employees.
· Shareholders in are not able to sell or transfer their shares to the general public.
· Starting a private company can be quite complex, meaning that lawyers and accountants almost always need to be involved in the Company from the start, which can be costly.
· Lack of privacy: even though shares in a Private Limited Company cannot be publicly traded, information concerning the company is made public.
What’s a public company?
A public company can have an unlimited number of shareholders. The shares for public companies are listed on the Australian Securities Exchange (ASX), and the general public may buy and sell shares in those companies. Most public companies are large. Shareholders in public companies have limited liability.