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Yr 11 Business Studies > Nature of Business > Flashcards

Nature of Business Flashcards

1
Q

Define business

A

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

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2
Q

What is the primary role of a business?

A

Production of goods and services

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3
Q

Name the 8 secondary business roles

A

profit, employment, income, choice, innovation, entrepreneurship, wealth creation, quality of life

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4
Q

4 ways businesses are classified

A

size, geographic location, industry, legal structure

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5
Q

Micro business?

A

less than 5 people

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6
Q

Small business?

A

more than 5 but less than 20 people

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7
Q

Medium business?

A

employing 20 or more people, but less than 200

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8
Q

Large business?

A

employing 200 or more people

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9
Q

Characteristics of an SME

A

closely controlled, local, personalised, capital comes from owner.

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10
Q

Local business?

A

within immediate environment

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11
Q

National business? (example)

A

operate throughout aus (coles)

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12
Q

Global business? (example)

A

conduct operations not only in Australia but also in other countries (BHP)

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13
Q

International - global?

A

produces products in one country and exports them to the global market

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14
Q

Transnational - global?

A

home country which operates in other countries

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15
Q

Define industry

A

consists of businesses which are involved in similar types of production

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16
Q

Primary industry

A

Extraction of raw materials and production of natural resources

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17
Q

Example of primary industry

A

farming, mining, fishing, grazing and forestry

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18
Q

Secondary industry

A

Transform raw materials into finished products – “manufacturing”

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19
Q

Example of secondary industry

A

iron ore into steel

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20
Q

Tertiary industry

A

Business that provides a service

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21
Q

Example of tertiary industry

A

retailers, dentists, solicitors

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22
Q

2 types of tertiary

A

quaternary, quinary

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23
Q

Quaternary meaning (example)

A

Transfer and processing of info

E.g. telecommunications, finance, education

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24
Q

Quinary meaning (example)

A

Domestic duties or services, traditionally performed at home

E.g. childcare, cleaning, maintenance

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25
Q

Sole trader

A

Business is owned and operated by one person

Provide all finances, decision – making and responsibility for the operation

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26
Q

Example of sole trader

A

Hairdresser, tutor and tradie

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27
Q

Type of liability (sole trader)

A

unlimited liability

28
Q

Advantages of sole trader

A

make decisions for yourself, easy to create, gain all profit for yourself, minimal legal requirements

29
Q

Disadvantages of sole trader

A

hold all legal responsibility, risk of revenue/start up costs, perform wide variety of tasks, pressure

30
Q

Partnership

A

Owned and operated by between 2 and 20 people with the aim of making profit
Business can operate without legally binding agreement (verbally, in writing)

31
Q

Type of liability (partnership)

A

unlimited liability

32
Q

Advantages of partnership

A

shared responsibility, choice of employees

33
Q

Disadvantages of partnership

A

amount of liability, provision of start-up costs, reliability on partner

34
Q

Trust

A

Trustee carries out the operations of the business on behalf of the beneficiary

35
Q

Private company

A

Has between 1 and 50 private shareholders (offer or invite must be approved by director).
Company must have ‘Pty Ltd’ after name

36
Q

Type of liability (private)

A

limited liability

37
Q

Advantages of private company

A

choice of shareholders, limited liability.

38
Q

Disadvantages of private company

A

limited input in decisions, every decision must be approved by director, split profits

39
Q

Public company

A
  • Usually large in size with a range of products
  • Seeking funding through selling ownership on stock exchange
  • Word limited or Ltd in name
  • Must publish a financial report each year
40
Q

Advantages of public company

A

large (more successful/big impact), funding through selling of ownership, very limited liability.

41
Q

Disadvantages of public company

A

less input, pay out dividends, no choice in who owns shares

42
Q

Cooperative

A

Collection of businesses which join together to have stronger power in the market

43
Q

Gov business enterprise

A
  • Commonwealth entity that operates as a profit-making business
  • Government owned and operated and are typically large employers
  • Sometimes businesses are privatised in order to raise revenue from sale
44
Q

Example of GBE

A

Qantas, Medibank

45
Q

Franchise

A

License to operate an individually owned business as if it were part of a chain or outlet stores

46
Q

Advantages of franchise

A

no need to advertise, expanding business, processes are already routine

47
Q

Disadvantages of franchise

A

costs, application of license

48
Q

Define external influence

A

factors which a business has little or no control.

49
Q

List external influences

A

economic, financial, geographical, social, political, legal, institutional, technological, competitive situation, markets

50
Q

Define internal influence

A

factors which the business has some degree of control e.g. products + business culture

51
Q

List internal influences

A

products, resources, management + business culture

52
Q

What is a stakeholder?

A

any individual or group who interacts with the business and who will be affected by business decisions

53
Q

List types of stakeholders

A
  • Managers
  • Shareholders
  • Employees
  • Society
  • Consumers
  • Environment
54
Q

4 stages of business life cycle

A
  • Establishment
  • Growth
  • Maturity
  • Post-maturity
55
Q

Establishment phase

A

o Initial period in which a business is set up
o Costs will be high
o Sales will be low
o Business will rely on finance from owner

56
Q

Growth phase

A

o Considerable rise in sales revenue + customer awareness
o Allow management skills and product/service quality to improve
o Growth in number and difficulty of tasks
o Need to seek support

57
Q

Maturity phase

A

o ‘Plateauing’ of sales
o Emphasis on efficiency rather than growth
o Owners need to rethink future

58
Q

Post maturity phase

A

Effort of managers to try to revitalise or renew the business

59
Q

3 scenarios of post maturity

A

decline, steady state, renewal

60
Q

Internal factors of decline

A
  • Poor management
  • Lack of management knowledge
  • Inadequate planning
  • Lack of finance + poor cash flow
  • Poor location
61
Q

External factors of decline

A
  • Unexpected competition
  • Government Policies
  • Natural disasters/pandemics
62
Q

Business cessation

A

period where business stops operating either voluntarily or involuntarily.

63
Q

Reasons of voluntary cessation

A

Retirement, loss of interest/commitment

64
Q

Reasons of involuntary cessation

A
  • Bankruptcy (cannot pay debts)
  • Death of owner
  • Insolvency (inability to pay debts in long term)
65
Q

What is voluntary administration

A

Individual appointed to operate business in hope of trading out of financial problems

66
Q

What is liquidation

A

Independent third party is appointed to take control and sell company’s assets to pay creditors

Yr 11 Business Studies (3 decks)

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