ENVIRONMENTS Flashcards
WHAT does SMEs stand for?
SME stands for small and medium-sized
enterprises
what do SMEs do
Represent the vast majority of
businesses in Australia, employ millions of
people, and are the engine of the economy,
responsible for 55% of GDP
what are business structures
sole trader
partnerships
Not-for-profit organizations
franchise
small proprietary company
what are the factors to consider when choosing a business structure?
size, tax, ownership liability, finance
what is a sole trader
An enterprise owned and run by one person and in which there is no
legal distinction between the owner and the business entity.
A sole trader does not necessarily work alone and may employ other people
what is a partnership
a business structure made up of 2 or more people who
distribute income or losses between themselves.
There is no legal distinction between the owners and the business entity.
What is a Small Proprietary Company Structure
A company, and the entities it controls, with fewer than 50 employees.
There is a legal distinction between the owners and the business entity
what is a Franchise
an arrangement where the franchisor (creator), licences the business
model to franchisees (the owners), in return for ongoing fees/royalties.
Franchises (the original business) can be held in the structure of a sole
trader, partnership or small proprietary company.
economic factors that affect business function
Interest rates,availability of skilled and unskilled labour,inflation and
what is inflation
an increase in the general price level of goods and services in an economy
what influences inflation
cost of production
price of goods
demand for goods
new tech
current money tech
Consumer Price Index
a metric that calculates the
increasing or decreasing average cost of a
list of typical household goods and
services.
what happens when inflation increases
Increase in production costs (everything will cost more to buy!)
Decrease in availability of inputs (e.g. timber, steel, microchips, tomatoes…)
Shortages might occur due to high demand and low supply
High prices
Hard to find workers (because unemployment rates are low)
Strong business spending/growth
what happens when inflation is low
Decrease in production costs (everything will cost more to buy!)
Increase in availability of inputs (e.g. timber, steel, microchips, tomatoes…)
Surpluses might occur due to low demand and high supply
Low prices
Easier to find workers (because unemployment rates are high)
Cash rate will likely be high, making borrowing money harder and expensive
Sluggish business spending/growth
what are interest rates
the amount a lender charges a borrower for borrowing a sum of money.
This is expressed as a percentage of the principal (the total amount loaned)
