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Business Studies > Nature Of business > Flashcards

Nature Of business Flashcards

1
Q

Definition of Business

A

The organised effort of individuals to produce and sell, for a profit, products that satisfy consumers needs and wants.

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2
Q

What do Business provide

A

Goods and Services

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3
Q

What are Goods

A
  • Tangible
  • Can be touched and seen (Woolworths)
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4
Q

What are Services

A
  • Intangible
  • Things done for us, more like an experience. (Taxi or Hairdresser)
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5
Q

How many roles of businesss?

A

7

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6
Q

Profit

A

The money left over after all the expenses have been decuted from the revenue.

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7
Q

How does profit work?

A

Revenue - Expenses = Profit

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7
Q

What is revenue

A

Money received from selling products

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8
Q

What is expenses?

A

Costs faced

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9
Q

Employment

A

When businesses hire people to work for them

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10
Q

Income

A

Money workers recieve in return

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11
Q

Choice

A

Consumers are allowed to choose the products that suits them best

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12
Q

Primary Industry

A

Businesses where production involve natrual resoruces
e.g. farming & minning

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12
Q

Entrepreneurship

A

When people start and operate their own busienss

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13
Q

Innovation

A

How businesses come up with new product ideas or improve existing ones.

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14
Q

Risk

A

Entrepreneurship comes with risks as entreprenuers will invest their time and money into ideas that might not always work out.

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15
Q

Quality of life

A

Improves consumer lives by providing employment and goods & services.

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16
Q

What are the different business sizes?

A

Small, Medium and Large

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16
Q

Wealth

A

Enabling the flow of money to pay for all expenses and operate.

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17
Q

What is a medium size business

A
  • 20-199 employees
  • Classifed as a aprtnerhsip or private company owned by a few private share holders.
  • Flexible decision making
  • Easier to get money from loans or private shareholders.
    Larger customer base
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17
Q

Teritiary Industry

A

Using things made in other industries to perform a service

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18
Q

What is a small business?

A
  • Less than 20 people
  • Usually owned by one person
  • Sole trader
  • Hard to recive finance
  • Less costumers
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19
Q

What is a large business?

A
  • Usually have more than 200 employess
  • Private company or public companies
  • Decision are usally made by shareholders or directors
  • Banks are likely to lend money
  • National or Global market share
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20
Q

What is Geographical Spread?

A

How big the area is that they sell to.

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21
Q

What is local business?

A

A family owned corner store

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21
Q

What is a Global Business?

A

Products you can find anywhere from Asia to South America
e.g. Coco Cola

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22
Q

What is an industry?

A

A group of busiensses that are involved in similar types of productions.
e.g. electronics & fast food

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22
Q

What is a National Business?

A

Stores within every state
e.g. David Jones

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22
Q

Secondary industry

A

Taking raw materials and making them into products
(raw materials from primary industry)

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23
Q

Quinary

A

All the services that used to be formed in the home.
e.g. hair dressing and childcare

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24
Q

Quaternary

A

Services that involve transferring and processing information and knowledge.
e.g. schools and banks

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25
Q

What is Liability?

A

Another word for legal responsibility

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25
Q

What is a Private Business Enterprise?

A

Owned by private individudals.
e.g. local resturants or mc donalds

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26
Q

What is a Public Business Enterprise?

A

Owned by the government.
e.g. Australian Post or Service NSW

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26
Q

What is Unlimited Liability?

A

The business and the owner are the same legal entity.
- Owner is fully responsible for all business debts
- Personal items can be sold to pay back business debts.

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27
Q

What is Limited Liability?

A

The business has a seperate legal entity to the owner.
- The corporation is responsible for business debts.

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28
Q

What are shareholders?

A

People that put money into the business in return for owning part of it.

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29
Q

Sole Trader

A

A business that is owned and operated by one person.
Advantage: owner can make all the decisions themsleves and have all the profits.
Disadvantage: Unlimited liability

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30
Q

Partnership

A

A business owned and operated between 2-20 people.
Advantage Workload is shared.
Disadvantage: unlimited liability and possibly not all agreeing on decisions.

30
Q

Private Company

A

Business owners can invite between 2-50 people to be private shareholders.
Advantage: Limited Liability
Disadvantage: Going through process of incorporation is expensive.

31
Q

What are Shareholders?

A

A person in the company that owns a sharemarket.

32
Q

Public company

A

Offers shares to members of the public and can buy shares on exchanges.
Advantage: limited liability
Disadvantage: Have to public financial reports for the public to see.
e.g. New York Stock Exchange & Australian Stock Exchange

33
Q

What are external influences?

A

Factors outside of a business’s control that cn affect their performance.

33
Q

List the external influences

A
  • Economic influences
  • Financial influences
  • Geographical influences
  • Social influences
  • Legal influences
34
Q

Why are external factors important?

A
  • Consumers might not buy their products.
  • They could end up paying lots of extra costs.
  • They wont make as much profit.
35
Q

Economic influence

A

Periods of growth and decline due to the general level of economic activity.
- changes how much people are spending.

36
Q

Menaing of Boom

A

When the economy is expanding
-Consumers are more likely to spend more money during this period.

37
Q

Meaning of Recession

A

When the economy is contracting.
- Consumers are saving their money
- They dont need/make as much product, staff and sales.

38
Q

Financial Influence

A

How businesses gets money.
- become easier due to online banking.

38
Q

Geographical Influence

A

Where businesses can source inputs, to sell their products and what type of consumers they sell to.

39
Q

Social Influecne

A

Must identify and repsond to changes in taste, fashion and culture.

40
Q

Legal Influence

A

Ensure businesses comply with the laws and regulations.

40
Q

Political Influence

A

The government impacts businesses through the polices and decisions.

41
Q

Instituional influences

A

Different institutions place regulations on businesses that they need to stick to.
e.g. fair work commision

42
Q

Technologocial influence

A

Advances in technology that make practices more efficent and easier.

43
Q

Competition influence

A

Competition between businesses forces them to aim to produce the best possible product at a low cost.
e.g. coles and woolies

44
Q

Changes in financial market

A

Easier for businesses to access overseas funding.

45
Q

Changes in labour markets

A

Increased demand for skilled workers.

46
Q

Changes in consumer markets

A

Businesses can sell to a global market.

47
Q

What are internal influences?

A

Factors within the business that managers can change that affect their business performance.

48
Q

Product influence

A

The type of goods and services that are produced influences business.
e.g. different meals of the day in a caferteria

49
Q

Location influence

A

Where the managers decide to set up.
- Good visbility
- close to suppliers, costumers, support servics.

49
Q

Resoruce influence

A
  • Human: Who they hire
  • Information: What kind of information they need
  • Physical: Physical objects that are needed
  • Financial: where they can get their finance
50
Q

Managment influence

A

Owners decide the type of managment the business has.
e.g. training waitress to be a barista.

51
Q

Business culture influence

A

Ideas, values and beliefs shared by members of the business.
e.g. formal and strict or relxaed.

52
Q

What is a Stakeholder?

A

Anyone who is intersted in the business or affceted by what they do.
e.g. business gets shut down and you lose your job.

53
Q

Who are StakeHolders?

A
  • Shareholders
  • Consumers
  • Managers
  • Society
  • The environment
  • Employees
54
Q

ShareHolders

A

People who have bought ideas in a company, meaning they’re a part owner.
- only a stakeholder for private and public companies
- each shareholder gets a share of money.

55
Q

Stakeholder: Consumer

A

affected by things such as the products available and store locations.

55
Q

Stakeholder: Society

A

We’re all affected by what business do.
e.g. donations, supporting public events and setting trends.

55
Q

What is a dividend?

A

When a company gives some of its money to each shareholder.

56
Q

Stakeholder: Managers

A

Job is to run the business, any decision they make will affect their work and income.

57
Q

Stakeholder: Employee’s

A

Employee’s are stakeholders as they depend on getting paid.

58
Q

Stakeholder: Environment

A

Business production which realese polution into the earth contributing to global warming.

59
Q

Establishment stage

A

Beginning of a business, when they are small (sole trader or partnership)
- highest risk anf failure.

60
Q

Growth Stage

A

Growth of the business, when sales increase and new products are introduced.
- not to expand rapidly

61
Q

Merger

A

When two sepeate bsuiness join to form a new organisation.
- sell the same thing or different products.

62
Q

Acquistion

A

One business buys another to have control and use their resources.

63
Q

Vertical integration

A

business expands at different but related levels in the production and selling of a product.
e.g. buying a supplier

64
Q

Horizontal integration

A

Business expands with another firm that sells and makes similar products.
- share resources

64
Q

Post-Maturity Stage

A

Steady state: stay in maturity phase
Renewal: Expand into new markets, make new productions, acquire other companies.
Decline: Sales fall and busines fails.

65
Q

Diversification integration

A

When a business expands with another business in an unrelated industry

65
Q

Maturity Stage

A

When sales slow down and there’s no more room in the market to keep selling the product.
- meidum or large business
- private or public company

66
Q

Voluntary cessation

A

Choose to stop business

67
Q

Involuntary cessation

A

Forced to stop business operations by others.

68
Q

Bankruptcy

A

Unlimited lianility, personal items can be sold to pay back.

69
Q

Liquidation

A

company declares they are unable to pay back debts and assests are sold to pay back.

70
Q

Voluntary administration

A

independent person is hired to operate the business to get them out of debt if previous manager wasn;t effective.

71
Q

Reason for decline: Lacking managment expertise

A

bad manager that makes poor decisions or fails to update business plan.

72
Q

Reason for decline: Lacks sufficent capital

A

lacks of sufficent money
- purchase materials
- finance production
- paying workers

73
Q

Reason for decline: Not meeting consumers need

A

doesnt deliver a good or service that people want to buy.

74
Q

Reason for decline: Competiton

A

Competitors might offer better goods or servcies or lower costs that businesses cant compete with

75
Q

Process

A

A liquidator is hired to sell company to pay creditors

76
Q
A
77
Q
A

Business Studies (5 decks)

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