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Business > Topic 1: Nature of Business > Flashcards

Topic 1: Nature of Business Flashcards

1
Q

Role of Businesses

Defintion of Business

A

Organised efforts of indivisuals to produce and sell, for a profit

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2
Q

Role of Businesses

What is a finished product

A

Products that are ready for use and to sell

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3
Q

Role of Businesses

What is the Production

A

Refers to the activities undertaken by the business to create the product

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4
Q

Role of Businesses

What is Profit

A

What remains after all business expenses have been deducted from sales revenue

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5
Q

Role of Businesses

What is Employment

A

The knowledge and efforts of human resources to work

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6
Q

Role of Businesses

What is income

A

The amount of money recevied for providing his or her labour

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7
Q

Role of Businesses

What is choice

A

The act of selecting among alternatives

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8
Q

Role of Businesses

What is Inovation

A

Businesses creating more effective processes, products and ideas

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9
Q

Role of Businesses

What is Entrepreneurship and risk

A

The ability and willingness to start, operate and assume the risk of a business in hope of mkaing a profit

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10
Q

Role of Businesses

What is Quality of Life

A

overall wellbeing of an indivisual and is a combination of both material and non-material benefits

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11
Q

Types of Businesses

4 ways to classify a business

A
  • size
  • geographical spread
  • industry sector
  • legal structure
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12
Q

Types of Businesses: Size

Small Business

A

5-20 employees

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13
Q

Types of Businesses: Size

Medium Business

A

20-200 employees

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14
Q

Types of Businesses: Size

Large Business

A

200+ employees

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15
Q

Types of Businesses: Geo Spread

Local Spread

A

Group of people living and working in the same locality

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16
Q

Types of Businesses: Geo Spread

National Spread

A

A business that operates in just one country

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17
Q

Types of Businesses: Geo Spread

Global Spread

A

A large company that have branches in different countries

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18
Q

Types of Businesses: Industry Sector

Primary

A

Business involved in the collection of raw/natural resources and materials

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19
Q

Types of Businesses: Industry Sector

Secondary

A

Businesses that take the raw material and make it into a finished /semi finished product

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20
Q

Types of Businesses: Industry Sector

Tertiary

A

People performing a vast range of services for people

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21
Q

Types of Businesses: Industry Sector

Quaternary

A

services that involve the transfer and processing of information and knowledge

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22
Q

Types of Businesses: Industry Sector

Quinary

A

all services that have traditionally been completed at home

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23
Q

Types of Businesses: Legal Structure

Sole Trader

A

Business is owned and operated by one person, unincoporated and unlimited liability

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24
Q

Types of Businesses: Legal Structure

Advantages of Sole Trader

A
  • easy and inexpensive to establish
  • the owner receives all profits
  • the owner has total control
25
Q

Types of Businesses: Legal Structure

Disadvantages of Sole Trader

A
  • unlimited liability

- often harder to raise finance

26
Q

Types of Businesses: Legal Structure

Partnership

A

a business structure that is owned and operated by 2-20 people, unlimited liability

27
Q

Types of Businesses: Legal Structure

Advantages of Partnership

A
  • easy and inexpensive to establish compared to a company
  • less costly to operate than a company
  • greater access to finances from the resources of all partners
28
Q

Types of Businesses: Legal Structure

Disadvantages to Partnership

A
  • unlimited liability
  • potential conflict and clashes between partners
  • transferring ownership is difficult
29
Q

Types of Businesses: Legal Structure

Private Company

A

An incoporated business structure which contains 2-50 shareholders, limited liability

30
Q

Types of Businesses: Legal Structure

Advantages of a Private Company

A
  • limited liability
  • transferring partnership is much simpler
  • much easier to attract finance an grow
31
Q

Types of Businesses: Legal Structure

Disadvantages of a Private Company

A
  • Forming a company is inexpensive and time consuming to set up
  • there is much greater government regulation
32
Q

Types of Businesses: Legal Structure

Public Company

A

an incorporated business structure which generally is large in size and has no max of the number of shareholders

33
Q

Types of Businesses: Legal Structure

Advantages of a Public Company

A
  • limited liability
  • tranfering partnership is much simpler
  • much easier to attract finance and grow
34
Q

Types of Businesses: Legal Structure

Disadvantages of a Public Company

A
  • Forming a company is expensive and time consuming to set up
  • there is much greater government regulation
35
Q

Types of Businesses: Legal Structure

What is Limited Liability

A

System that limits each owners financial liabilites to the amount of money they paid for the business shares

36
Q

Types of Businesses: Legal Structure

What is unlimited Liability

A

The owner is responsible for all the business debts and is respinsible for legal and financial difficulties

37
Q

Types of Businesses: Legal Structure

What is Government enterprise

A

government-owned and operated businesses which provide essential services to the community

38
Q

Influencing Choice of Legal Structure:

Size

A

As sales and demand increase the business may need to select s more appropriate legal structure

39
Q

Influencing Choice of Legal Structure:

Ownership

A

refers to how much control and ownership of the business does the owner require

40
Q

Influencing Choice of Legal Structure:

Finance

A

When a business expands it will require injections of finance to fund things such as equipment

41
Q

Influences in the Business Enviroment

What is an External Influence

A

the factors that influence the performance and operation of a business outside the businesses control

42
Q

Influences in the Business Enviroment

What are all the external influences

A
  • economic
  • financial
  • geographical
  • social
  • legal
  • political
  • insitutuional
  • technological
  • competitive situation
43
Q

Influences in the Business Enviroment

what is inside the economic external influence

A

Monetary Policy

Fiscal Policy

44
Q

Influences in the Business Enviroment

What inside the institutional external influence

A

EPA- environmental regulator to reduce pollution and waste, protect human health and prevent defradation

ATO- gov sector that collects revenue for the Aus. Gov. and enforces taxation law
ASIC- enforces and regulates company and financial services laws to protect consumers, investors and creditors

ACCC- enforce the competition and consumer act 2010 and promotes competition

ASX- regulates public companies and overseas operation of the Aus share market

TRADE UNIONS- organisation of workers that seek through collective bargaining with employers to protect and improve their real incomes, working conditions and job security of their members

45
Q

Influences in the Business Enviroment

What is an Internal Influence

A

range of factors that influence the performance and operation of a business that are within the businesses control

46
Q

Influences in the Business Enviroment

what are all the internal influences

A
  • products
  • location
  • resources
  • management and business culture
  • stakeholders
47
Q

Business Growth and decline

What is Establishment

A
  • slow growth in sales due to a lack of customer awareness

- initial profits are small

48
Q

Business Growth and decline

What are the challenges of the Establishment stage

A
  • finding good employees and implementing new staffing procedures
  • obtaining finance from financial institutions because it’s likely you have underestimated your financial needs
49
Q

Business Growth and decline

What is the growth stage

A
  • profits are strong

- sharp increase in sales because of greater customer awareness

50
Q

Business Growth and decline

What are the challenges of the Growth stage

A
  • dealing with increasing market competition

- ensuring the quality of the product/service is maintained as sales grow

51
Q

Business Growth and decline

what is maturity

A
  • high level of brand recognition

- sales level off because there is a lot more competition

52
Q

Business Growth and decline

What are the challenges of the maturity stage

A
  • adapting to the changing business environment

- staying responsive to consumer demand and identifying opportunities for innovation

53
Q

Business Growth and decline

What is post maturity

A
  • Renewal- new areas of growth cause sales and profits to increase
  • steady-state business continues to operate at the same level of maturity and maintains its position
  • decline profits and sales begin to fall
54
Q

Business Growth and decline

What are the challenges of Post Maturity

A
  • increased competition and changing consumer preferences create the need for change
  • manage legal processes and responsibilities ethically and legally
55
Q

Business Growth and decline

What are factors that contribute to business decline

A
  • financial difficulties
  • lack of management planning
  • Vulnerability to local economic conditions
56
Q

Business Growth and decline

What is cessation

A

business closes and stops trading

57
Q

Business Growth and decline

What is voluntary cessation

A

By the owners choice to end the business

58
Q

Business Growth and decline

What is involuntary cessation

A

usually occurs when a business is unable to pay its debts due to circumstances beyond owners control

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