Influences In Establishing A Business Flashcards

Question

Market analysis

Answer 1

Collecting, summarising, and analysing information allows a business to assess the market positioning of a product = sourced from primary/ secondary Able to asses advantages or disadvantages that the business is likely to have over its competitors

Answer 2

What a consumer pays Three type of pricing methods 1. Cost based 2. Market based 3. Competition based

Answer 3

Calculating the total cost of producing or purchasing a product and then adding a markup for profit

Answer 4

A method of setting prices according to the interaction between the levels of supply and demand - whatever the market is prepared to pay

Answer 5

Choosing a price that is either below, equal to or above that of the competitors

Answer 6

Where your product is sold - physical: shopping centre complex, retail shopping strips - home based - online

Answer 7

Money used by a business to purchase assets to enable a business to achieve business goals -↑ finance =↑ assets =↑ growth =↑ profit

Answer 8

The mixed use of debt and equity by the business

Answer 9

Source of finance borrowed from bank/ investor which requires repayment of loan and interest, external, can be influenced by interest rates set by the RBA. Advantages: - won't dilute current ownership in the business - interest payments are tax deductible - funds are usually readily available and can be acquired on little notice - flexible payment periods and types of debt are available Disadvantages; - security is require by the business - regular repayments have to be made - debt can be expense due to interest - lender have first claim on any money if the business ends in bankruptcy - ↑ risk, inquest, bank charges, and government charges may increase

Answer 10

Internal or external sources of finance contributed by the owners initial investment and through retained profits, or raised by selling shares in the company whether a public or private company. Investors are entitled to a share in the businesses profits paid to shareholders as dividends. Advantages: - does not have to be repaid unless owner leaves the business - no legal requirements - cheaper than rest as no interest - less risk Disadvantages: - lower profits and returns for the owner - expectation of the owner for return on investment - long, expensive way to obtain funds - ownership is diluted,↓ control

Answer 11

- Current liabilities: < 12 months 1. Overdraft 2. Commercial bills 3. Factoring

Answer 12

Negotiated use of bank funds ( up to a specified amount) on a bank's cheque account. Allows a business to draw on more funds than are available in the account - comes from banks, involves interest + admin charges, mainly used for the purchase of stocks and payment of expenses

Answer 13

Bank issued short term loans that allow the business to utilise up to $ 100,000 if it agrees to repay it with interest in an agreed time - comes from banks, involves interest, used for bulk purchases of stock with balances upto $ 100,000

Answer 14

Credit sales= when a business sells products to customers, and they pay at a date in the future, issue = some customers don't pay on tine or at all Factoring = the business sells its debtors (accounts receivable) to a factor ( debt collector), the factor will purchase the debtors at a discount - comes from banks or debt collecting compares, costs involve fees/charges and discount on debt, use the recovered cash to purchase stock, pay responses, make repayments on debt

Answer 15

-noncurrent liabilities ( >12 months ) 1. Mortgage 2. Debentures 3. Unsecured notes

Answer 16

Legal agreement by which a bank, building society etc, lends money at interest in exchange for the title of the debtors property, 30-40 years typically - comes from banks, costs include interest and admin fees and charges, used for the purchase of land and building that are not currently asset of the business

Answer 17

- Bundle pricing - price skimming - loss leader - premium pricing - price penetration

Answer 18

Debt securities issued by public companies, allowing company to borrow large sum of money from the public,the buyer is guaranteed repayment art a agreed schedule and fixed interest rate, secured against company assets, Cost = interest + returns Used for purchase of long term assets, investment in new technology, and business expansion

Answer 19

Similar to debentures but offer a higher rate of return to the buyers as not secured by company assets, less security Same cost but higher interest, source, uses

Answer 20

- Float shares - Private equity

Answer 21

Commonly traded shares on ASX, obtain voting rights and party of profit (dividends), Sold to public Costs portion of profits and dilute of ownership Used for company expansion, purchase of assets, refurbishment, investment in technology

Answer 22

Money invested in private compares by inviting new owners Sold to prospective investors by invite only, Cost is portion of profits and dilution of ownership Used to raise funds for business to expand/invest, expansion, purchase of assets, refurbishment, investment in technology

Answer 23

Laws that businesses need to adhere to, and it they don't comply they risk fines or the right to continue trading - zoning - business name -Health - ACCC - taxes

Answer 24

Local government establish zoning which dictate where businesses can locate and land is used for e.g. Industrial vs residential, ensures factories and residential areas not located close together A new business must inquire with the local council regarding the location of their business and zoning regulations

Answer 25

All businesses are legally obligated to register their business name with the Australian securities and investment commission to ensure ear business has a unique name, preventing business from trading under similar or the same business name

Answer 26

Compliance with food act 2003, public health act 2010 ensures business dealing with food sell products which are sate and safe for human consumption, health inspector assess premises regularly e.g. Temp for food storage, kitchen layout, employee clothing requirements, food handling

Answer 27

2010, legislation designed to protect public health E.g. Infections disease control, monitoring health risks, emergency powers

Answer 28

2003. Food produced and sold meets a specific safety and quality standard E.g. Food labelling, food safety, compliance with standards

Answer 29

Australian consumer and competition commission which overseas business compliance with Australian consumer law ACL = competition and consumer act of 2010 which ensures businesses do not engage in misleading or deceptive conduct and meet statutory obligations with regard to consumer guarantees - protects consumers - ensures business conduct e.g. Misleading, unconscionable, consumer guarantees, unfair practices

Answer 30

Compulsory payment of proportion of earnings to the government

Answer 31

ATO administer and collect taxes - payg/income tax = tax imposed on employes at a progressive rate, taken from salary - GST = 10% of most goods, customers pay when buying goods services - company tax = paid on company's earnings, usually 25%

Answer 32

Payroll tax = payable on wages paid by an employer to their employees on payroll that exceed $ 1.2 million

Answer 33

= business employees - key asset for the business as they generate income - staff need appropriate experience and skills to perform tasks required

Answer 34

Recruitment objective to attract pool of qualified applicants with most suitable skills ↑ skills =↑ productivity =↑ income - businesses only employ someone if the return is greater than the cost General skills = employability skills, looked for in every employee, communication, flexibility Specific skills = skills specify to certain job

Answer 35

Different types of contracts that determine both wage and non - wage outcomes for employees and employers - awards - enterprise agreements - common law contracts

Answer 36

- Wages and salaries - long service leave - holiday pay - sick leave - payroll tax - super - recruitment costs