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business studies > topic 1 nature of a business > Flashcards

topic 1 nature of a business Flashcards

1
Q

what is the role of the business and list all 8.

A

profit, innovation, employment, income, choice, entrepreneurship and risk, wealth and quality of life

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2
Q

what is the 8 roles of the business explained

A
  1. Profit
    - What business owners receive for producing goods and services
    - Profit = Revenue - Expenses
  2. Employment
  3. Incomes
    - Businesses provide income to shareholders, employees and other business
    owners
  4. Choice
    - Consumers have freedom of choice to purchase goods and services
  5. Innovation
    - Existing products are improved or new products are created
  6. Entrepreneurship and risk
    - Businesses provide individuals with opportunities and ideas
  7. Wealth
    - Business activities result in high levels of economic growth
  8. Quality of life
    - Businesses offer a variety of products that improve our standard of living
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3
Q

what are the types of business structure

A

1- size
- small
- medium
-large
2-geographical
- local
-national
-global
3- Legal structure
-sole trader
-partnership
-public
-private
4- industry
-primary
-secondary
-tertiary
- quinary
-quaternary

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4
Q

what are the definitons or qualities of each industry sector

A

primary
- production of natural resources

-secondary
- defined as the production of all raw materials and turning them into products

Tertiary-
involves performing services for other people

Quaternary
- services that involve the processing and transferring of data

quinary-
defined as the services that are usually performed in the home

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5
Q

what is an example of a local area(geographical spread)

A

corner store

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6
Q

what is an example of a national area(geographical spread)

A

coles, woolworths

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7
Q

what is a global area(geographical spread)

A

mcdonalds

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8
Q

what are the external influences on businesses

A

markets
economic
technological
geographic
financial
competitive situation
social
legal
institutional
political

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9
Q

what are the internal influences on a business

A

product
-the type of goods and services produced influence the business

location
-where the managers decide to set up
-bad location causes people not to come, or dont know abt it

resources
- human resources
-information resources
-physical resources
-financial resources

management
-the type of organisational structure

business culture
-ideas, values and beliefs
-formal culture or casual culture

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10
Q

what is a “flatter organisational structure”

A

when the manager wants one person for each role or wants fewer employees who can do multiple roles

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11
Q

what is the acronym for internal influences on businesses

A

PLRMB

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12
Q

in the internal influences on businesses what is examples of resources

A

human
information
physical
financial

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13
Q

in the external influences on businesses what

A
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14
Q

what is the acronym for external influences on businesses

A

EFGSLPITCM

METGFCSLIP

M-
markets

E-
economic activity

T-
technological advancements

G-
geographic

F-
financial

C-
competition

S-social

L- legal

I-institutional

P-political

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15
Q

what are the different types of markets

A

financial
-meaning it is easier to access overseas funding

labour
-meaning increased demand for skilled labour

consumer
-meaning business can sell to the global market

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16
Q

what is the business responsibilities to internal stakeholders

A

managers-
job runs on the business
employees-
they depend on getting paid
shareholders-
They depend on the dividends as a result of their investments

17
Q

what is the business responsibilities to external stakeholders

A

society-
we are all affected by what a business does through i.e charity
environment
because of greenhouse gases
customers
affected by the changes from the business

18
Q

what are the 4 stages of the business lifecycle?

A

establishment

growth

maturity

post maturity
- renewal(continuing higher on the graph)

-decline
-Sales slow down due to over-saturation of the market or the business’s products are the same and there is no innovation

steady state
-sales continue

19
Q

what are the options for a business once they reach post maturity

A

renewal
keep sales going

decline
sales fall and the business fails

steady state
sell to other businesses

20
Q

what is the business structure during the maturity stage

A

medium or large and is private or public

21
Q

what are the challenges of each stage of the business life cycle

A

establishment
-lack of access to finance
sales are slow
highest risk of failure rate

growth
- not to expand the business too quickly as it can be expensive and leads to higher chances of going into debt and business failure
maturity

maturity
-no room is left in the market and sales level off

post maturity
1.Steady State (keep sales going)
2. Renewal (sell to other business)
3. Decline (sales fall and the business fails)

22
Q

what are the reasons for business decline or cessation

A
  1. lack of management expertise
  2. insufficient funds
    3.failure to meet consumer demands
    4.competition
23
Q

what are the options once a business reaches decline

A

voluntary cessation-
owner’s choice to wind up operations
involuntary cessation
forced by others to close down

24
Q

which does the 4 legal structures fit under “voluntary cessation and involuntary cessation”?

A

voluntary cessation
- private, public companies

involuntary cessation
- sole traders, partnerships

25
Q

what are the factors influencing the choice of legal structure

A

size
-small(sole trader)
-medium(private, partnership)
-large(public)

ownership
-complete control(sole trader)
-shared control(partnership or private)
-control reduced when divided by shareholders(public)

finance
- unlimited liability
limited finance
-limited liability
easier to get money from investors and banks

26
Q

what is the acronym for factors influencing choice of legal structure

A

sof

s-
size

o-
ownership

f-
finance

27
Q

what heading is the acronym SOF under

A

legal structure which is under business structure

28
Q

what heading the the acronym METGFCSLIP under

A

under external influences on businesses

29
Q

what is plmrbc

A

product, location, management, resources, and business culture

30
Q

what is market share

A

percentage of the total sales in a market earned by a business

business studies (3 decks)

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