Role Of Business

Question 1

The nature of a business

Answer 1

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

Question 2

Goods

Answer 2

Items that can be seen or touched ( tangible)

Question 3

Services

Answer 3

Things done for you (intangible)

Question 4

Finished products

Answer 4

One that is ready for customer to buy and use

Question 5

Transformation process

Answer 5

The business process that involves adding value through transformation of inputs ( raw material) to outputs (goods and services).” production of goods and services “

Question 6

Transformation

Answer 6

Conversion of inputs (resources) into outputs ( goods and services)

Question 7

Value adding

Answer 7

Refers to the creation of extra or added value as inputs are transformed into outputs

Question 8

Inputs/raw materials

Answer 8

Transformed resources = inputs that are changed or converted in the operations process

Transforming resources = inputs that carry out the transformation process

Question 9

Operates / transformation process

Answer 9

Transformation + adding value

Question 10

Contribution of businesses

Answer 10

Economic, commercial, social

Question 11

Economic contribution

Answer 11

Broad contribution of businesses to the economy
- employment and development of human capital
- provision of income
- wealth creation
- improvements in quality of life

Question 13

Development of human capital

Answer 13

Skills, knowledge, experience, ability

Crucial to the future success of our economy and living standards

Question 14

Wealth

Answer 14

Accumulation of income, total market value of all physical and intangible assets owned by an individual minus debts, shares, opportunity to purchase assets

Question 15

↑ quality life

Answer 15

↑ income =↑ choice and competition =↑ ability to satisfy needs and wants = ↑ quality of life

Question 16

Commercial contribution

Answer 16

Broader contribution of the business, to industry productivity, business investment, and consumer choice

• choice
• profit
• taxes
• entrepreneurship and risk

Question 17

Choice

Answer 17

Businesses offer more choice via product differentiation as competition leads to businesses toying to offer more choice to appeal to greater number of customers.

Question 18

Profit

Answer 18

Second largest source of household income

Question 19

Taxes

Answer 19

Company taxes are the second largest contributor to the federal budget

Question 20

Entrepreneur

Answer 20

Person who sets up a business, taking on financial risk in the hope of profit

Question 21

Innovation

Answer 21

Improving existing creation or processes

Question 22

Invention

Answer 22

Creating something entirely new

Question 23

Importance. of entrepreneurship and risk

Answer 23

Creates new businesses, contribute to national income, social and community change / development, steer government policy making

Question 24

Social contribution

Answer 24

Broader contribution of businesses to society, community, and future generation, and often results in businesses forgoing short term profits, adversely impacting the bottom line though ultimately improving the triple bottom line
- ethical business behaviour
- environment
- corporate social responsibility

Question 25

Ethical business behaviour

Answer 25

Ethics = doing what is right morally often deemed by society - often a trade off between ethics and profit

Question 26

Environment responsibility

Answer 26

The act or acts of contribution to the environment positively

Question 27

Corporate social responsibility

Answer 27

Open and accountable business actions based on respect for people, community/society, and the broader environment that usually involves businesses doing more than just complying with laws and regulations - places value on triple bottom line

Question 28

Triple bottom line

Answer 28

= financial returns, social responsibility, environmental sustainability, Broadens business focus on financial bottom line to include social and environmental considerations Measures degree of social responsibility, economic value and environmental impact

Question 29

Business goals

Answer 29

- Profit maximisation - market share - growth, an increase in net worth - share price - social - environmental

Question 30

Profit maximisation

Answer 30

Profit is an indicator of business success as it reflects the level of sales revenue, relative to the expertise required to lower costs Profit: total revenue- total costs Tr = sales X price Tc= FC + VC Break even: Tr = TC Profit: tr > TC Loss: tr < TC Businesses seek the largest amount of profit as this creat the largest return. on their investments and assist in funding future business growth

Question 31

Fixed costs

Answer 31

Costs that do not vary regardless of how many units of a good or service are produced

Question 32

Variable costs

Answer 32

Costs that depend on the number of goods or services produced

Question 33

Market share

Answer 33

= business's share of the total industry sales for a particular product -↑ in market share occur when new customers purchase products from a business that they have not purchased from before or by existing customer buying more - often done through promotion -↑ market share = ↑ sales =↑ potential for higher profit

Question 34

Growth

Answer 34

Increase in the networth/ value and/or physics expansion of a business e.g. Accumulation of assets, increase sales, market share, new outlets

Question 35

Share price

Answer 35

Part ownership of a company, share price reflects the value of a company at a given point in time, by assessing future profitability and market expectations - public company= ASX - private company= sold privately via negotiation - owner of shares: right to vote for board of directed and dividends - ↑ share price = ↑ profitable and ↑ reputation =↑ investors

Question 36

Social goals

Answer 36

= businesses responsibilities to individuals and society - contributes to building positive reputation about a business, leading to increased sales and profit - community service, provision of employment, social justice

Question 37

Environmental goals

Answer 37

Businesses understand that customers expect environmentally sustainable product decisions. Develop processes and policies to achieve sustainable development = meeting the needs and wants of the present without diminishing the ability of future generations to meet their own needs ↑ brand image