term 1 y11 Flashcards
business
an organisation that produces goods and services to sell at a profit, to satisfy the needs and wants of individuals
production
activities taken by the business to combine or transform resources into products to satisfy customers’
input
the resources used by a business in it’s production process
output
products that are ready for consumers to buy and use
goods
tangible or physical products such as clothing or food
services
intangible or non physical products including dental services, legal services
value added
the monetary value that is added at each stage of production
value of production formula
value of sales - value of materials
8 business roles
- quality of life
- wealth creation
- entrepreneurship
- employment
- choice
- incomes
- profit
- innovation
primary industry
production processes directly related to natural resources eg. farming
secondary industry
businesses that transform raw materials into finished and semi finished products eg. furniture manufacturers
tertiary industry
businesses that perform a service for other people eg. retailers
quaternary industry
service businesses that transfer and process information and knowledge eg. computing, finance, education
quinary industry
businesses that provide services that are traditionally performed at home eg. child care, restaurants
micro business
less than 5 employees including owner
small business
5-19 employees
medium business
20-200 employees
large business
200+ employees
public business enterprise (government enterprise)
owned and operated by Governments eg. sydney water
private business enterprise (private sector)
owned and operated by private individuals or groups of individuals
domestic business
produce and sell in only one country
global business
operate across national borders, with operations and customers in a number of countries
multinational business
an international business with a home base and ownership in one country and a number of business operations in other countries
transnational corporation
an international business with ownership, operations, products and customers in a number of countries
local business
a business located in one area in one country
national business
a business spread across a specific country
global business
a business located globally
unincorporated business
not a company – the business and its owners are together as a single entity. if the owner dies, the business ends. They have unlimited liability, meaning that the owner(s) are responsible for all business debts and may have to sell personal assets
sole trader
- 1 owner
- unlimited liability
partnership
- 2-20 owners
- unlimited reliability
- partnership agreement recommended to organise details of ownership
incorporated business
are companies – businesses and owners are separate legal entities. they have limited liability, meaning that shareholders responsibility is limited to the amount they paid for shares
private company
- 1-50 owners called shareholders
- name includes pty ltd
- limited liability
- shares bought and sold by shareholder agreement
public company
- at least 1 owner, no max
- name includes ltd
- limited liability
- listed on Australian securities exchange
- must publish annual reports
cooperative
- made up of a group of people with a common interest or purpose
- minimum of 7 members
- limited reliability
dividend
the portion of a companies profits that is given to shareholders. the more shares a shareholder has, the more dividends they recieve
trust
where an individual or business manages property or assets (the trust) for another person. Trusts are difficult and expensive to set up.
trustee
the individual or business who manages the trust
beneficiary
the person who’s trust is managed by the trustee
franchise
a license to operate in an independently owned business and use the production methods, products, trade marks, advertising of another business eg. McDonalds
GBE (Government Business Enterprise)
businesses owned and operated by governments eg. Sydney Water
Factors affecting legal structure
size, ownership, finance
business environment
all influences on the business
internal business environment
things that the business has control over eg. employees, managers, legal structure, production methods, goals, resources and shareholders
external business environment
things that the business cannot control eg. economic conditions, laws, competitors, technology, international influences, geographical influences, politics and social attitudes
economic cycle
the fluctuations in the general level of economic activity
boom
periods of economic growth
bust/recession
periods of economic decline
monetary policy
the bank will increase interest rates to slow economic activity, or lower interest rates to increase economic activity
fiscal policiy
the federal government will increase or reduce taxes to increase or reduce economic activity
microeconomic reforms
government actions that influence specific economic areas eg. competition, taxation, wages
regulatory bodies
set up to ensure that businesses obey laws and regulations, and act fairly
trade unions
represent, advise and assist employees on improving may and working conditions
Australian Securities Exchange (ASX)
provides guidelines for public companies
stakeholder
any individual, group or organisation which has an interest in, or is affected by, the activities or decisions made by a business
internal stakeholders
owners, employees, managers
external stakeholders
customers, suppliers, creditors, governments, society, the environment, future generations
business life cycle
a business passing through a number of stages as it grows and develops
business life cycle stages
- establishment
- growth
- maturity
- post maturity
- renewal
-steady state
- decline
merger
two businesses agree to combine resources and form a new organisation
takeover
one business takes control of ownership of another business
vertical integration
a business buys another step in the production process
backward vertical integration
integration with a suppliers business eg. bakery buys flour mill
forward vertical integration
buying a customers business eg. bakery buys supermarket that sells its bread
horizontal integration
a business integrates with another business selling the same or similar products eg. two bakeries merge
diversification
a business merges with another business in a different industry eg. bakery merges with furniture manufacturer
voluntary cessation
business assets are sold, creditors paid and the business closes down
involuntary cessation
when creditors force owners to cease trading because the business cannot pay debts
liquidation
sale of assets to pay creditors
administration
an administrator is appointed to operate the business in order to trade the business out of debt. if this succeeds, the business continues. if not, liquidation occurs
bankruptcy
a decleration that a business cannot pay debts.
