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business > NATURE OF BUSINESS > Flashcards

NATURE OF BUSINESS Flashcards

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
Q

geography: example of a local business

A

services the local community eg. fish and chip shop, corner shop

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26
Q

geography: example of a national business

A

operates within one country eg. bunnings warehouse

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27
Q

geography: example of a global business

A

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

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28
Q

what are the 4 reasons for business expansion

A

Increase in sales
Increase profits
Increase market share
Enter the global community

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29
Q

what are the 3 sectors

A

primary, secondary, tertiary, subsets of tertiary - quaternary, quinary

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30
Q

what is an example of primary industry

A

primary : farmers
Includes all those businesses in which production is directly associated with natural resources

31
Q

what is an example of secondary

A

secondary : flour mill manufacturer
Involves taking raw material and making it into a finished or semi finished product

32
Q

what is an example of tertiary

A

tertiary: service based industry
Involves performing a service for other people

33
Q

what is an example of Quaternary

A

Quaternary:
Includes services that involved the transfer and processing of information and knowledge

34
Q

what is quinary

A

quinary: includes all services that have traditionally been performed in the home

35
Q

what is a unincorporated business?

A

unincorporated business structures are sole traders and partnerships
(Linked straight to the owners)

36
Q

what is a incorporated business?

A

private company, public company, government enterprise, NFP

37
Q

what is a sole trader

A

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
Q

what is a partnership

A

A partnership is a business structure made up of 2 or more people who distribute income or losses between themselves.

39
Q

what is a private company

A

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
Q

what is a public company

A

+ 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
Q

what is asic

A

Australian Securities and Investments Commission - WATCHDOG FOR BUSINESSES FOR THE GOVERNMENT

42
Q

what is a government enterprise

A

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
Q

what is limited liability

A

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
Q

vocabulary in relation to the economy

A

Trough, peak, expansion (upswing), contraction (downturn), depression (lowest part of trough)

45
Q

external influences are

A

uncontrollable
EX: below

46
Q

external influence: economic

A

The economic cycle and where the business is position on the life cycle

47
Q

external influence: financial

A

Influences such as interest rate lowering and rising, products available for businesses to access debt finance locally and over seas

48
Q

external influence: geographic

A

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
Q

external influence: social

A

attitudes, behaviours, values and beliefs, tastes, fashions, culture and
traditions.

50
Q

external influence: legal

A

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
Q

external influence: political

A

labour market reforms, social reforms, environmental management and taxation

52
Q

external influence: Technological

A

Use of tools, techniques and systems to solve problems. Consider communication devices and meeting software such as ‘zoom’. 3-D printers, etc

53
Q

external influence: markets

A

includes changes in finance and capital, labour, consumer

54
Q

other external influences include

A

competitive situation, Institutional

55
Q

internal influences are

A

something that can be controlled

56
Q

internal influences include

A

products, location, resources, management and business culture

57
Q

what are stakeholders

A

Stakeholders are individuals or groups who have a vested interest in businesses activities including:
+ Owners/shareholders
+ Managers
+ Employees
+ Customers
+ Society
+ Environment

58
Q

stages of the business life cycle include:

A

establishment, growth, maturity, post-maturity

59
Q

characteristics of establishment

A

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
Q

challenges of establishment

A

Challenges: Making income that is going to cover costs. Paying your debts as they fall due

61
Q

characteristics of growth

A

Characteristics: increase employees, increase in sales, options of expanding.

62
Q

challenges of growth

A

Challenge: Increase of employees due to increase of profit and revenue, continuing to meet consumer demands

63
Q

characteristics of maturity

A

Characteristics: levelling out, larger amount of sales, consolidation of the market, period of high sales and continuing profits

64
Q

challenges of maturity

A

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
Q

characteristics of post maturity

A

Post-maturity: decision making time, how is your business going to keep up within society

66
Q

factors that contribute to business decline..

A

Failure to satisfy the ‘marketing concept’

67
Q

can management contribute to business decline

A

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
Q

how can undercapitalisation effect a business

A

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
Q

what is a marketing concept

A

meeting the needs and wants of its consumers

70
Q

summary of factors that can contribute to business decline

A
  • Initial bad idea
  • Producing unwanted product
  • No business plan
  • Ignorance of existing competition
  • Lack of management skills and experience
71
Q

what is Cessation

A

: ceasing of business activities

72
Q

what is voluntary cessation

A

Voluntary: when the owner/s of the business decide to cease business activities through retirement sale of business, change of lifestyle or death

73
Q

what is involuntary cessation

A

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
Q

what/who are creditors?

A

Creditors: people or businesses that are owed money by another enterprise

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