Final Short Answer Revision

Question 1

Outline ONE advantage of establishing a new business, compared to purchasing an existing one (4)

Answer 1

• The owner can set up the business as they want
• The owner can determine the pace of growth and change
• The owner does not have to pay for goodwill
• Cheaper options as the owner can start on a smaller scale

Question 2

Describe TWO legal factors that Ronda needs to consider when operating a business (6)

Answer 2

Registering a business name with ASIC
Zoning regulations
Health regulations
Competition and consumer act. (regulation of marketing and advertising practices)
Legal structure and is obligations
Use of ABN

Question 3

Examine how a SWOT analysis can be used in the planning process (4)

Answer 3

SWOT allows for a situational analysis to take place.
By examining business’ strengths and weaknesses it enabled understanding of the internal environment
Examination of opportunities and threats allows for an understanding of the external environment.
This information can be used to help business modify and reevaluate their goals and objectives.

Question 4

Outline the importance of income statements for managers of a business. (4)

Answer 4

The income statement is a summary of the income earned and the expenses over a period of trading.
It helps managers identify money coming into the business as revenue, and how much is going out as expenses.
It shows where profit or loss has been generates
It can be used to assess financial performance and assist with future planning.

Question 5

Recommend TWO strategies this business could use to improve its net profit. (3)

Answer 5

Reduce COGS - this could be inventory control (JIT)
Marketing to increase sales and market share; increasing gross profit therefore net profit
Reducing expense

Question 6

Calculate gross profit (Formular)

Answer 6

Gross sales = sales - COGS

Question 7

Calculate net profit (Formular)

Answer 7

Net profit = gross profit - expenses

Question 8

Identify TWO management skills that may effectively manage this change (7)

Answer 8

Interpersonal
Communication
Vision
Problem-solving
Decision-making
Flexibility
Adaptability to change

Question 9

Discuss TWO factors that may cause resistance to change (7)

Answer 9

Management (may be hasty to make decisions)
Fear of job loss (change may threaten the security or need for certain jobs)
Disruption to routine (New procedures can threaten established work routines)
Time (Either poor timing or lack of timing.)
Fear of the unknown (Feeling lack of control)
Inertia (preferring to stay the same with the safe, predicable, status quo)
Cost

Question 10

Recommend TWO strategies that can be used to manage change effectively (8)

Answer 10

Creating a positive culture of change
Model positive leadership
Creating a culture of change
Using a change agent
Using management consultants who are aware of best practices
Specify the nature of change
Allow employees to participate in the change process
Support change with new learning

Question 11

Identify TWO types of legal structures, other than a company (2)

Answer 11

Sole trader
Partnership

Question 12

Explain TWO factors that influence choice of legal structure for a business (3)

Answer 12

Size
Ownership
Finance

Question 13

Establish TWO factors that contribute to business decline (5)

Answer 13

Failure to meet customer needs
Failure to plan
Increased competition
Lack of management skills
Lack of demand for the product

Question 14

Identify TWO benefits of staff involvement within a business (5)

Answer 14

Increased staff morale
Higher productivity and efficiency
Better ideas
Team cohesion
Innovation

Question 15

Describe TWO non-monetary strategies used by a business to motivate staff (2)

Answer 15

Paid training opportunities and professional development
Fringe benefits (i.e company car, housing, mobile phone)

Question 16

Discuss TWO types of involuntary separation that may occur in a business (3)

Answer 16

Retrenchment
Redundancy
When a job is no longer needed, due to technological or merger/acquisitions, and not enough employees voluntarily leave, the business will be forced to ‘let go’ of employees.
Dismissal
When the behaviours of an employee is unacceptable the business may terminate the employment contract.

Question 17

Identify TWO economic contributors of SMEs to the Australian economy (4)

Answer 17

Contribute to GDP
Contribute to employment
Contribute to the balance of payments
Contribute to invention and innovation

Question 18

Outline TWO sources of information an individual can access for advice about establishing a small business (7)

Answer 18

Trade associations
Management consultants
Government agencies
ABS
Lawyers
Bank managers
Australian chamber of commerce and Industry

Question 19

Describe TWO benefits of quality management practices (5)

Answer 19

Reduced waste and defects
Increased productivity and products
Improved reputation and customer satisfaction
Sternchtehnd competitive position
Reduced costs

Question 20

Why is a business plan important? (3)

Answer 20

A business plan gives business focus and direction.
It identifies goals and objectives and plans how to achieve them.
It identifies the strengths and weaknesses, assessing possible challenges and strategies to overcome them

Question 21

What is the role of operations in a business? (1)

Answer 21

Operations is the function which takes inputs, transforms them, and produces outputs(goods and services).

Question 22

Discuss TWO strategies that can help to manage change effectively (8)

Answer 22

Creating a positive culture of change
Model positive leadership
Creating a culture of change
Using a change agent
Using management consultants who are aware of best practices
Specify the nature of change
Allow employees to participate in the change process
Support change with new learning

Question 23

Identify THREE goals of a business (6)

Answer 23

Profit
Market share
Growth
Share price
Social
Environmental

Question 24

Explain TWO external influences on SMEs in Australia (10)

Answer 24

Social
Geographic
Technological
Institutional
Economic
Financial
Legal
Political
Competitive situation
Market

Question 25

Outline how an income statement can provide useful information to a business (4)

Answer 25

To provide a representation of the business during a certain period
To determine how successful a business is / was
To look at areas that need improvement , and to assess if theri strategies are working to achieve their goals
Financial institutions can use it to decide how much money to lend the business

Question 26

Explain how a change in the marketing mix can help improve gross profits (4)

Answer 26

Changing pricing: competition based, such as penetration pricing, to increase sales and boost market share
Promotion: sales promotion, publicity, public relations, personal selling
Place: producer to customer, producer to retailer to customer, mobile commerce, e-commerce
Product: quality, design, packaging, labelling, guarantees, branding.

Question 27

Identify TWO sources of information for establishing a business (7)

Answer 27

Trade associations
Management consultants
Government agencies
ABS
Lawyers
Bank managers
Australian chamber of commerce and Industry

Question 28

Identify TWO legal issues to consider when establishing a new business (6)

Answer 28

Registering a business name with ASIC
Zoning regulations
Health regulations
Competition and consumer act. (regulation of marketing and advertising practices)
Legal structure and is obligations
Use of ABN

Question 29

Outline ONE advantage and ONE disadvantage of establishing a sole trader

Answer 29

(i) Business is owned and operated by one [person with complete control.
There is a low cost of entry
No partner disputes
(ii) Unlimited liability
Business ends with owner dies
Burden of management
Difficulty raising funds for expansion

Question 30

Outline ONE advantage and ONE disadvantage of establishing a partnership

Answer 30

(i) Operated by 2-20 people
Low cost of entry
Shared responsibility and workload
Pooled funds and talent
(ii) Personal unlimited liability
Liable for all debts including partner
Possibility for disputes
Divided loyalty and authorityq

Question 31

Outline ONE advantage and ONE disadvantage of establishing a private company

Answer 31

(i) It is easy to raise capital from selling shares to private investors.
Limited liability
(ii) Cot of formation
Double taxation

Question 32

(i) It is easy to raise capital from selling shares to private investors.
Limited liability
(ii) Cot of formation
Double taxation

Answer 32

(i) Easy to obtain finance by selling shares to public
Limited liability
(ii) Cost of formation
Double taxation
To publish its audited financial accounts each year, its annual report.

Question 33

Describe TWO strategies that may be used in response to challenges faced by a business in the establishment stage.

Answer 33

(i) The business has slow or erratic sales.
They must develop a solid foundation for future growth
They must establish a customer base large enough to sustain viability.
(ii) Securing initial investment. Start up capital can be sourced from the owner’s personal savings(equity), or a loan from a financial institution(debt).

Question 34

Describe TWO strategies that may be used in response to challenges face by a business in the growth stage.

Answer 34

(i) Continue growth. This can be done through emerging or acquiring. Vertical, horizontal, conglomerate diversification.
(ii) Innovate products to satisfy existing customers while tapping into new markets. Mass market becomes a possibility. Mass market techniques of extensive promotion can be used to widen distribution.

Question 35

Describe TWO strategies that may be used in response to challenges face by a business in the maturity stage.

Answer 35

(i) Profits slow or plateau.Fiance should be devoted to advertising and developing (invest in R&D for innovation of products)
(ii) Loss of interest in initial concept, complacency builds. They need to restructure or reorganise this business. This could include a work team approach, or TQM/quality circles.

Question 36

Describe TWO strategies that may be used in response to challenges face by a business in the post-maturity stage.

Answer 36

(i) Is marketing keeping the business relevant? Reassess marketing, conduct market analysis. Research & Development to improve quality of products.
(ii) Refine the business objective and vision by assigning a business plan. Evaluate and change.

Question 37

Explain ONE advantage and ONE disadvantage of starting a business from scratch

Answer 37

(i) The owner has the freedom to set up the business as they wish, determine the pace of growth and change.
There is no goodwill the owner must pay.
(ii) Time is needed to develop a customer base, employee staff, and develop credit with suppliers. If the startup period is too slow the business may not generate profit for so

Question 38

Explain ONE advantage and ONE disadvantage of buying an existing business

Answer 38

(i) Sales from existing customers will generate instant income.
Stock and employees already acquired.
(ii) Existing reputation and policies in the business may be hard to change.

Question 39

Explain ONE advantage and ONE disadvantage of buying a franchise

Answer 39

(i) Benefits from the franchisor’s goodwill, as the name is already established.
Franchisor provides training and backup.
(ii) Profit must be shared with franchisors through ongoing franchisee fees.
Franchisees share the burden of the franchisor’s business mistakes.

Question 40

Explain how changes in external influences have contributed to the expansion of the primary industry

Answer 40

Technological advancement to increase the efficiency of mining/agricultural work.
Growing demand for sustainable sources products; focusing on environmentally friendly and ethically sourced raw materials.

Question 41

Explain how changes in external influences have contributed to the expansion of the secondary industry

Answer 41

Globalisation. The ability to sell goods worldwide created a demand for manufacturer products.
Increased competition. Many businesses have to respond by investing in technologies and expanding their production to stay competitive in the global market.

Question 42

Explain how changes in external influences have contributed to the expansion of the tertiary industry

Answer 42

Technological advancements improve online banking, or telecommunication services. Social changes: more people move to cities and demand for education, transportation, real estate. Ageing population has an increased demand for healthcare and aged care services.

Question 43

Explain how changes in external influences have contributed to the expansion of the quaternary industry

Answer 43

Economic and political influences - Government policies and economic cycles of booms and growth result in more income which demands for services provided by the quaternary industry.
Technological changes impact the quaternary sector.

Question 44

Explain how changes in external influences have contributed to the expansion of the quinary industry

Answer 44

Increased rate of employment for mothers has seen the need for child care services to expand. This leads to les home cooking, and an increased need for food outlets.
Technological advancements have made access to such services easier, with services like Uber Eats that have helped make domestic chores cheaper and accessible.
Ageing population requires access to health services.