SAC 1A Flashcards
Define sole trader.
A sole trader is an individual operating as the sole person responsible for all aspects of the business. The sole trader ownership gives the owner all decision making power and they are cheap to set up.
Define business objectives and provide examples.
Business objectives are goals organisations set and work to achieve. They provide some direction and could be related to the short or long term future of the business. Some examples of business objectives are to make a profit, increase market share and to fulfil a market need.
Define market share.
Market share is the percentage of the total sales in an industry that one firm has compared to its competitors. For an example, Holden could have 20% of total sales in the car industry.
Define stakeholder.
A stakeholder is a group or individual that has a vested interest in the operations of an organisation. An example of a stakeholder would be the customers of a business as they are interested in the price and range of product.
Define partnerships.
A partnership is a business run by 2-20 owners who all have equal responsibilities and authority. Partnerships are agreed upon using a contract and similar to sole trader, they are cheap to set up.
Define private limited companies.
Private limited companies are businesses divided into equal parts called shares. Shareholders cannot buy into private limited companies, they have to be invited by the business. Higher costs are more complex to start.
Explain a public listed company.
Public listed companies are businesses, where ownership is divided into shares and any individual can purchase shares in the business, if it is listed on the ASX. Shareholders are the owners, but a board of directors runs and makes the decisions for the business. Limited liability - assets not at stake.
Explain a social enterprise.
Social enterprise is a revenue generating business that is driven by a social objective, where the profits are reinvested to further the work of the mission. The wider objective could be related to environmental, economic or social aspects.
Explain a government business enterprise.
Government business enterprises are owned by the government and involve a board of directors making decisions, with the main goal to generate a profit. GBE’s provide a service to the public and operate directly under the influence of the government.
List business objectives.
- Make a profit
- Increase market share
- Fulfil a market need/social need
- Meet shareholders expectations
Explain a potential conflict between shareholders.
Customers want cheap prices, ethically sourced goods and quality, whereas shareholders want the highest profit return possible. This means that prices of goods may need to be raised to satisfy the shareholders, however this may mean a loss of customers as the price may just be too much.
Employees and shareholders - shareholders may influence the wages of employees
CSR and stakeholders considerations.
Customers - source ethical goods, provide a product that the customers get their moneys worth
Employees - providing safe working conditions, breaks when necessary and fair pay
Explain how operations contributes to the achievement of business objectives.
Operations is responsible for converting inputs into outputs. This involves all processes that produce the end product. Important because if the right amount of stock isn’t ordered, unethical goods are sourced or efficiency decreases, the business is not performing how it should be, and objectives will not be reached.
Explain how finance contributes to the achievement of business objectives.
Finance is responsible for all activities concerning the spending and receiving of money. Important because if financial planning is not conducted and accurate records are not kept of expenditures, the business could fall into problems with governing bodies and may struggle to spend the money the right way.
Explain how sales and marketing contributes to the achievement of business objectives.
Sales and marketing is responsible for gaining feedback from customers and producing what the customer wants and needs. Without sales and marketing, the wishes of the customers would not be heard and therefore would see a decrease in sales as the customers no longer buy the business’ product.
