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NATURE OF BUSINESS Flashcards

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1
Q

in brief terms what is the purpose of a business

A

Providing buyers with goods and/or services, business’ are usually either good or service orientated

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2
Q

why do we need business’?

A

As consumers we all have wants and needs if businesses were not available then we would need to be totally self sufficient

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3
Q

official definition of business

A

A business an be defined as the organised effort of individuals to produce sell for a profit, the products (goods and services) that satisfies consumers needs and wants

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4
Q

buying a good or service is a L….

A

Buying a good or service is a legal contract in which both parties have obligations- company must ensure that you get what you are buying you must pay for the good or service

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5
Q

what is production?

A

refers to the activities of a business that combine the resources to create products that satisfy customers needs and wants

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6
Q

what is profit?

A

This is the return or reward, that business owners receive for producing products that consumers need and want

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7
Q

Business provide employment to

A

people in their local community and further

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8
Q

business’ provide income to…

A

business provide income to business owners shareholders and employees

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9
Q

what are Shareholder dividends

A

companies make profit and as a shareholder you are entitled to some of that profit on a quarterly, bi yearly or annual basis

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10
Q

Consumers have freedom of

A

choice and the opportunity to purchase a wide array of products at a competitive price

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11
Q

explain innovation in business

A

Through research and development existing products are improved and new products are created

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12
Q

entrepreneurship in business?

A

Businesses provide individuals with the opportunity to turn their ideas and passions into livelihood

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13
Q

Business activity results in

A

higher level of economic growth and wealth

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14
Q

business’ contribute to wealth creation for

A

governments, business owners and shareholders, the business itself, lenders, employees

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15
Q

what are the 3 different sizes of business

A

micro business, small to medium enterprise (sme), large

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16
Q

what are the characteristics that determine the size of a business

A

Number of employees, Number of owners, Market share, Legal structure

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17
Q

in sme business’ the owners…

A

make managerial decisions, providing the capital (land, vehicle, money).

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18
Q

Small: Independently.. owned and operated

A

owned and operated

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19
Q

Medium: owned and operated by a few …

A

people and/or private shareholders

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20
Q

how many employees for a small business

A

less then 20 employees

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21
Q

how many employees for a medium business

A

20-199 employees

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22
Q

how many employees for a large business

A

200 or more employees. example: woolworths, qantas

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23
Q

is a large business usually public or private

A

Owned by usually thousands of public shareholders - Public Company

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24
Q

general info about micro business’

A

Micro businesses: makes up about 90% of small businesses, they have less than 5 people working at the SOHO (Small office, home office), 54% have no employees dominated by women and young people trying to seek self employment

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25
geography: example of a local business
services the local community eg. fish and chip shop, corner shop
26
geography: example of a national business
operates within one country eg. bunnings warehouse
27
geography: example of a global business
usually a TNC (Transnational corporation) that has a home base in one country and operates owned or partially owned businesses in other countries eg. Mcdonalds, KFC, Nike
28
what are the 4 reasons for business expansion
Increase in sales Increase profits Increase market share Enter the global community
29
what are the 3 sectors
primary, secondary, tertiary, subsets of tertiary - quaternary, quinary
30
what is an example of primary industry
primary : farmers Includes all those businesses in which production is directly associated with natural resources
31
what is an example of secondary
secondary : flour mill manufacturer Involves taking raw material and making it into a finished or semi finished product
32
what is an example of tertiary
tertiary: service based industry Involves performing a service for other people
33
what is an example of Quaternary
Quaternary: Includes services that involved the transfer and processing of information and knowledge
34
what is quinary
quinary: includes all services that have traditionally been performed in the home
35
what is a unincorporated business?
unincorporated business structures are sole traders and partnerships (Linked straight to the owners)
36
what is a incorporated business?
private company, public company, government enterprise, NFP
37
what is a sole trader
A sole trader is someone who owns and runs their own business as an individual, the individual is legally responsible for all aspects of the business including debts and losses
38
what is a partnership
A partnership is a business structure made up of 2 or more people who distribute income or losses between themselves.
39
what is a private company
A private company or a proprietary company, simply put, is a separate structure from you, as an individual. As the name suggests, a private company is an entity with private ownership i.e. shares are held by friends, family and colleagues
40
what is a public company
+ A public company is a company whose shares trade on a stock exchange. Typically, public companies have sold shares to the public through an initial public offering (IPO). + If company collapses they will take the assets and distribute their debts + Has to have at least one shareholder, no maximum + Must provide a prospectus for sales + Limited or LTD must be in the name + Financial records must be presented to asic annually
41
what is asic
Australian Securities and Investments Commission - WATCHDOG FOR BUSINESSES FOR THE GOVERNMENT
42
what is a government enterprise
Government Business Enterprises (GBE) is a Commonwealth entity or Commonwealth company that is prescribed by the rules (s8 of the PGPA Act) EX: AUSTRALIA POST
43
what is limited liability
a feature of corporate ownership that limits each owners financial liability to the amount of money paid for shares purchased LTD indicates limited liability
44
vocabulary in relation to the economy
Trough, peak, expansion (upswing), contraction (downturn), depression (lowest part of trough)
45
external influences are
uncontrollable EX: below
46
external influence: economic
The economic cycle and where the business is position on the life cycle
47
external influence: financial
Influences such as interest rate lowering and rising, products available for businesses to access debt finance locally and over seas
48
external influence: geographic
Includes climate, natural resources, resources, topography, physical infrastructure and location. These include regions for global businesses. Demographic factors would also be considered due to the high number of the population moving into retirement
49
external influence: social
attitudes, behaviours, values and beliefs, tastes, fashions, culture and traditions.
50
external influence: legal
look at changes in legislation around the workplace and over business activities. Remember the imposition of NSW Health regulations during the Covid-19 pandemic
51
external influence: political
labour market reforms, social reforms, environmental management and taxation
52
external influence: Technological
Use of tools, techniques and systems to solve problems. Consider communication devices and meeting software such as ‘zoom’. 3-D printers, etc
53
external influence: markets
includes changes in finance and capital, labour, consumer
54
other external influences include
competitive situation, Institutional
55
internal influences are
something that can be controlled
56
internal influences include
products, location, resources, management and business culture
57
what are stakeholders
Stakeholders are individuals or groups who have a vested interest in businesses activities including: + Owners/shareholders + Managers + Employees + Customers + Society + Environment
58
stages of the business life cycle include:
establishment, growth, maturity, post-maturity
59
characteristics of establishment
The overriding concern is to get the business on a solid foundation. This requires enough sales to be generated to bring in the much needed income, which will be used to pay expenses and to generate a positive cash flow. Characteristics: When a business first starts, development , high costs, low sales
60
challenges of establishment
Challenges: Making income that is going to cover costs. Paying your debts as they fall due
61
characteristics of growth
Characteristics: increase employees, increase in sales, options of expanding.
62
challenges of growth
Challenge: Increase of employees due to increase of profit and revenue, continuing to meet consumer demands
63
characteristics of maturity
Characteristics: levelling out, larger amount of sales, consolidation of the market, period of high sales and continuing profits
64
challenges of maturity
Challenges: what do do next, pay debts as they fall due. Not much that challenges the business, unless they start to reach a decline/ recession
65
characteristics of post maturity
Post-maturity: decision making time, how is your business going to keep up within society
66
factors that contribute to business decline..
Failure to satisfy the ‘marketing concept’
67
can management contribute to business decline
yes. Lack of management expertise - no business plan or the inability to be flexible and adapt to changing circumstances may lead to imminent failure
68
how can undercapitalisation effect a business
Undercapitalisation - the cash flow of a business is imperative to its success. Without the ability to purchase stock, pay wages and meet debt obligations as they fall due, a business will cease to exist
69
what is a marketing concept
meeting the needs and wants of its consumers
70
summary of factors that can contribute to business decline
- Initial bad idea - Producing unwanted product - No business plan - Ignorance of existing competition - Lack of management skills and experience
71
what is Cessation
: ceasing of business activities
72
what is voluntary cessation
Voluntary: when the owner/s of the business decide to cease business activities through retirement sale of business, change of lifestyle or death
73
what is involuntary cessation
Involuntary: when the owner/s of the business are forced to cease business activities by creditors. Courts may appoint a liquidator to take over the running of your business to ensure the recovery of debts
74
what/who are creditors?
Creditors: people or businesses that are owed money by another enterprise

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