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business studies > topic 3 business planning > Flashcards

topic 3 business planning Flashcards

1
Q

what is sme

A

SME’s are defined by their size (small to medium)

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2
Q

what are the 4 ways to classify a business

A

legal structure
geographic spread
source of finance
number of employees

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3
Q

what is a micro business

A

less than 5 employees

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4
Q

what is a small business(number of employees)

A

5-19

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5
Q

what are smes in the geographic spread?

A

they are generally small market share and are locally based and maybe nationally if a medium

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6
Q

what is the legal structure of a sme

A

sole trader, or partnership if small
partnership or private company if the medium

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7
Q

what legal structure does sme not fit in

A

public because only large businesses can do this

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8
Q

what are the sources of finance for smes

A

For sole traders and partnerships its small loans or the owner’s money

and for private companies sources are small bank loans and private shares

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9
Q

what is the role and economic contribution? of an sme

A

97% of all businesses in australia

main role of smes
-provide employment
-provide a wide range of products

economic contribution
providing employment
contribution to exports
contribute to innovative products

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10
Q

why is the fail rate for smes so high

A

Because of the increased competition
i.e. think of how many cafes there are in Australia
online competition
i.e how many small clothing shops

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11
Q

what do you expect after three years for an sme

A

that around only 50 percent have survived

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12
Q

A family owned milk business has 250 employees and distributes milk to IGAs across NSW.

What size is this business?

Atomi Question
A

Small
B

Medium
C

Large
D

Extra large

A

c

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13
Q

An SME will generally NOT have which of the following legal structures?

Atomi Question
A
(Choice A)
Sole trader
B
(Choice B)
Partnership
C
(Choice C)
Private company
D
(Choice D)
Public company

A
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14
Q

An SME will generally NOT have which of the following legal structures?

Atomi Question
A
(Choice A)
Sole trader
B
(Choice B)
Partnership
C
(Choice C)
Private company
D
(Choice D)
Public company

A

d

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15
Q

SMEs usually have a small market share and are locally based.

Atomi Question
A
(Choice A)
True
B
(Choice B)
False

A

a

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16
Q

What percentage of actively trading businesses in Australia are SMEs?

Atomi Question
A
(Choice A)
10%
B
(Choice B)
50%
C
(Choice C)
75%
D
(Choice D)
99%

A

d

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17
Q

What is an advantage that SMEs provide to society that large companies generally don’t?

Atomi Question
A
(Choice A)
Provide employment
B
(Choice B)
Contribute to exports
C
(Choice C)
Provide niche products
D
(Choice D)
All of the above

A

c

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18
Q

what are the personal qualities influence the establishing of a SME enterprise

A

qualifications and skills
motivation
entrepreneurship
cultural background
gender

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19
Q

how does qualification skills affect the starting up of a business

A

because it influences the type of business you want to start up and who else is involved

i.e bad in food tech however you want to open a store, you would hire a cook

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20
Q

what is motivation in influencing the establishment of an SME

A

because the types of ways people are motivated influence how they will start up the business and their decisions

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21
Q

what is entrepreneurship in influencing the starting of an SME

A

how innovative someone is when starting up a business

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22
Q

how does cultural background influence the starting of a business

A

because traditions and beliefs that influence our business decisions(influences the type of products)

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23
Q

how does gender influence the establishment of SMEs

A

because women are more likely to start up their own business

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24
Q

what are the sources of information

A

the different places and ways people to get advice and assistance

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25
Q

what are the different places and ways people can get advice and assistance

A

business contracts
businesses in the market
online websites
trade associations
government agencies

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26
Q

how does business idea influence the establishment of an SME

A

because it’s the initial idea that the business is based off

How they can find the business idea is through
-asking around
-books
-the internet
-government statistics

i.e no one might not have different pizza flavour, with each slice

it must be competitve and provide a sustainable competitive advantage

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27
Q

What are personal qualities that will affect the establishment of an SME?

2019 Atomi Question
A
(Choice A)
Cultural background, gender, skills, entrepreneurship
B
(Choice B)
Entrepreneur, skills, motivation, sole trader
C
(Choice C)
Cultural background, family links, skills, entrepreneurship
D
(Choice D)
Your smile

A

a

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28
Q

What must any good business idea have?

2019 Atomi Question
A
(Choice A)
A sustainable competitive advantage
B
(Choice B)
A gadget
C
(Choice C)
Novelty value
D
(Choice D)
Money

A

a

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29
Q

What is an advantage of purchasing an existing business?

2019 Atomi Question
A
(Choice A)
Make all creative decisions
B
(Choice B)
Existing beliefs about the market
C
(Choice C)
Existing customer base
D
(Choice D)
Need to purchase new equipment

A

c

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30
Q

Which of the following is the definition of FRANCHISOR?

2019 Atomi Question
A
(Choice A)
An ancient French chisel
B
(Choice B)
The person who runs the franchise
C
(Choice C)
The store that uses another company’s name
D
(Choice D)
The business that allows someone to use their name

A

d

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31
Q

What is a disadvantage of running a franchise?

2019 Atomi Question
A
(Choice A)
Must pay royalties
B
(Choice B)
Share marketing efforts
C
(Choice C)
Established brand name
D
(Choice D)
Franchisor provides resources

A

a

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32
Q

The owners of an SME invest their own funds into the business. What source of finance has been used?

2019 Atomi Question
A
(Choice A)
Debt
B
(Choice B)
Loan
C
(Choice C)
Equity
D
(Choice D)
Pocket change

A

c

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32
Q
A
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33
Q

Starting a business from scratch has no benefits and is very risky.

2019 Atomi Question
A
(Choice A)
True
B
(Choice B)
False

A

b

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34
Q

define establishment options

A

the set up options faced when starting a business

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35
Q

what are the establishment options

A

new business
existing business
franchise

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36
Q

what are the advantages and disadvantages of a new business

A

advantanges
- we as the owners make all the decisons
disadvantages
- we dont have a existing customer base

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37
Q

what are the advantages of buying an existing business

A

advantages
-existing customer base and equipment

disadvantages
-previous bad business image and resistance to the change

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38
Q

what are the advantages and disadvantages of a franchise

A

advantages
use a well established name and advertising benefits

disadvantages
-franchisor can be controlling
-having to share profits

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39
Q

what is franchise

A

the store that uses another company’s name

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40
Q

who is the franchisee

A

the person who runs the franchise

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41
Q

who is the franchisor

A

the business that allows someone to use their name

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42
Q

what are the market considerations

A

Who will buy the product?
-involves research in the market

What is the best-selling price?
-involves
cost plus margining
market price
competitors price

wheres the best location
-wanting to have a visible store, and close to channels of distribution and supply(meaning it must be easy to sell buy also easy to get our products from production)

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43
Q

why are the types of finance

A

debt finance
or equity finance

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44
Q

what is equity finance

A

money put into the business, generally by the owners
(dont have to pay back)

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45
Q

what is debt finance

A

loans from banks and finance companies
(have to pay back)

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46
Q

what is the disadvantage of debt finance

A

have to pay interest

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47
Q

what are the disadvantages of debt finance

A

the cost of equity is that you might not get a return on your investment

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48
Q

Bob starts a pizza shop, and names it Bob’s Pizza. He is now legally required to register his business’s name.

Atomi Question
A
(Choice A)
True
B
(Choice B)
False

A

a

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49
Q

Which is NOT a legal influence on establishing an SME?

Atomi Question
A
(Choice A)
Business name
B
(Choice B)
Zoning
C
(Choice C)
Health regulations
D
(Choice D)
Personal qualities

A

d

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50
Q

what is the definition of legal factors?

A

they are the obligations of an SME to follow regulations when starting up and operating a business

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51
Q

why is it so important for a business to follow legal regulations

A

is businesses don’t follow laws they run the risk of losing customers and a bad reputation, fines and trading rights

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52
Q

what is the difference between federal, state and local laws

A

federal laws apply to the whole of australia
state- applies only to the state
local- applies to the local suburb or town

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53
Q

what are the 4 categories that legal factors impact and are influenced

A

zoning,
health regulations
business name
trading practices

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54
Q

what is the business names act 1962

A

that every business name must be registered, unless the name of the business is your own name then it is optional, however if you add pty, ltd if your a private company, an co

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55
Q

what is zoning

A

regulations to separate activities that don’t together

i.e residential and industrial

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56
Q

what is health regulations

A

the local government is responsible for the standard businesses have to follow to receive a license that allows them to operate

i.e
temperature for food storage
how long good can be kept for
kitchen layout
employee clothing requirements

57
Q

what is trade practices

A

its under the competition and consumer act 2010

which regulates deceptive practices, product stnadards and trading practices

58
Q

what is the competition and consumer act 2010?

A

regulations on deceptive practices, product standards and trading practices

i.e advertising, product standards

59
Q

human resources

A

Who to hire and how many people

you hire people with skills you don’t have

and how many people is based off investment is how much we pay and how much they earn for us
i.e superannuation, salary, sick leave

60
Q

what are federal taxes

A

pay as you go(PAYG)
- your employer takes part of what they pay you and put it towards your tax

fringe benefits(FPT)
-tax on fringe benifits that a business provides such as a company car

goods and services tax(GST)
10 percent tax on the supply of most goods and services

company tax
is a payment of proportion of what the company earns

capital gains tax
tax on any income recieve for selling assts

i.e selling a house

61
Q

who imposes taxation

A

federal and state governments

62
Q

what are some examples of state taxes?

A

stamp duty
-paid on documents that give evidence of transactions(which is paid by the borrower or purchaser)
i.e extra tax on a mortgages or the transfer of property

63
Q

What is zoning?

Atomi Question
A
(Choice A)
Legislation that limits the number of employees in a business
B
(Choice B)
Legislation that limits the size of a business’s market share
C
(Choice C)
Regulations to separate activities that don’t belong together
D
(Choice D)
Regulations regarding what the business is allowed to sell

A

c

64
Q

Which piece of legislation regulates a business’s trade practices?

Atomi Question
A
(Choice A)
Trade Practice Act 2012
B
(Choice B)
Competition and Consumer Act 2010
C
(Choice C)
Real Regulation Legislation 1999
D
(Choice D)
Unspoken law passed from generation to generation

A

b

64
Q

Tom is a hard-working and efficient employee. His boss rewards him with a new car on top of his usual wage.

How will Tom be taxed?

Atomi Question
A
(Choice A)
Fringe benefits tax
B
(Choice B)
Pay as you go (PAYG) tax
C
(Choice C)
GST
D
(Choice D)
Company tax

A

a

65
Q

An opal miner from owns a mine that’s not worth very much. One day he discovers a huge stockpile of opals and sells the mine for millions.

How will he be taxed?

Atomi Question
A
(Choice A)
Capital gains tax
B
(Choice B)
Fringe benefits tax
C
(Choice C)
GST
D
(Choice D)
Income tax

A

a

66
Q

what is a business plan

A

a document that outlines the plans for future growth and development of a business

-set out the desired goals and direction of the business

67
Q

what is another name for situation analysis

A

SWOT

68
Q

what is SWOT

A

strengths
weaknesses
opportunities
threat

69
Q

what is the internal business environment that is positive and negative that can be changed by managers?

A

top left of the table(internal % positive)
strengths
-because it tells us about the good things in a business

i.e good customer service, higher quality products, low costs, access to funds, qualified employees strong brand name

Top right of the table(internal & negative)
weakness
-because it tells us the bad things about a business
i.e based customer relationships, poor quality products, high costs, poor cash flow, unqualified employees, ineffective marketing strategies

70
Q

what are external business environment that the business cannot directly change

A

bottom left(external & positive)
opportunities
-tells us about the things that the business should take advantage of over

i.e social trends(increased demand), lack of competition(increased market share), low-interest rates, the boom in the economy, new legislation(laws such as the mandatory wearing of helmets), advances of technology

bottom right(external& negative)
-tells us about the bad external influences or things that could hurt the business

i.e. change in trend, high competition(less market share), high-interest rates, the downturn in the economy, new legislation(environmental changes)

71
Q

what is the vision in a business plan

A

the broad statement that states what the business is aiming for, its purpose and what it does

72
Q

what are the key components of a vision

A

the future of the business, and some level of motivation(so all levels of management are on the same page)

73
Q

when making goals what do they need to be

A

smart, and also to have financial and community goals(businesses can sponsor others)

74
Q

what is the objective in the business planning process

A

a specific statement detailing what needs to be achieved in order to accomplish the business vision

75
Q

what are the three types of objectives that managers can make

A

operation objectives
tactile objectives
strategic objectives

76
Q

what are operational objectives and the time frame

A

short term objectives that are usually over a couple days

77
Q

what are tacticle objectives and the time frame

A

short term but have a time frame of 1-2 years

78
Q

what are strategic objectives and the time frame

A

long term and planned to be achieved over 5 or more years

a series of plans to work towards the long term growth a of a business

allows for achieving of business goals and more market share

79
Q

why is high market share important

A

it can help improve sales when existing, brand loyalty customers buy more of a company’s product

80
Q

what is resource allocation

A

the distribution of resources to successfully meet the business goals that have been established

81
Q

A business hears that interest rates will probably increase.

What does this come under in a business’s situational analysis?

Atomi Question
A
(Choice A)
Strength
B
(Choice B)
Weakness
C
(Choice C)
Threat
D
(Choice D)
Opportunity

A

c

82
Q

A business has highly qualified employees.

What does this come under in a business’s situational analysis?

Atomi Question
A
(Choice A)
Strength
B
(Choice B)
Weakness
C
(Choice C)
Threat
D
(Choice D)
Opportunity

A

a

83
Q

New competition enters the market.

What would this come under in a business’s situational analysis?

Atomi Question
A
(Choice A)
Strength
B
(Choice B)
Weakness
C
(Choice C)
Threat
D
(Choice D)
Opportunity

A

c

84
Q

What is NOT a desirable feature when a business is creating business goals?

Atomi Question
A
(Choice A)
Realistic
B
(Choice B)
Time bound
C
(Choice C)
Measurable
D
(Choice D)
Ambiguous

A

d

85
Q

A business has the objective of increasing profitability by the next financial year.

What type of objective is this?

Atomi Question
A
(Choice A)
Operational
B
(Choice B)
Strategic
C
(Choice C)
Tactical
D
(Choice D)
Ambiguous

A

c

86
Q

A chocolate manufacturer has a daily objective to produce 2,000 chocolate bars per day.

What type of objective is this?

Atomi Question
A
(Choice A)
Strategic
B
(Choice B)
Operational
C
(Choice C)
Tactical
D
(Choice D)
None of the above

A

b

87
Q

Operations is concerned with the activities that make a consumer want to buy a product.

Atomi Question
A
(Choice A)
True
B
(Choice B)
False

A

b

88
Q

what is forecasting

A

forecasts or projections are the business predictions about the future whether it be financial, materials and labour

89
Q

what is financial forcasting

A

the predictions about the future finances of the business

90
Q

what is total revenue

A

The amount received from the sales the sales of a product

price x quantity = total revenue

91
Q

why do business use total revenue and total costs

A

they use total revenue and total costs to predict if the business is profitable/financially successful

92
Q

how is total revenue calculated

A

price x quantity = total revenue

93
Q

how is profit calculated

A

profit = revenue - total costs

94
Q

what are the 2 types of total costs

A

fixed and variable costs

95
Q

what are fixed costs

A

costs that stay the same no matter how much you sell

i.e rent, insurance, salary

96
Q

what are variable costs

A

costs that change depending on how much you produce

i.e wages, raw materials, transport

97
Q

how is total costs calculated

A

total costs = fixed costs + variable costs

98
Q
A
99
Q

what is a break even analysis

A

how much needs to be soled(total revenue) in order to cover costs(total costs)

100
Q

what is the break even point

A

total revenue equals total costs

101
Q

why do businesses use cash flow projections

A

businesses use cashflow statements and budgets to predict cash inflow/receipts and cash outflows/payments

to predict when there is a positve cash flow to decide when to pay bills

102
Q

what is the process of the monitoring and evaluation of the business planning process

A

it involves making sure the business is on track, improvement and change

103
Q
A
104
Q

what are the 3 steps after deciding business goals

A

goals –> monitoring –> evaluating –> taking corrective action

105
Q

what is monitoring

A

the process of measuring actual performance against forecasts

106
Q

what is evaluating

A

assessing how or why the outcome occurred

107
Q

what is taking corrective action

A

involves changes to the business as a result that will improve faults

108
Q

what do sales do

A

create revenue for the business

109
Q

what is the process of sales

for monitoring, evaluating, taking corrective action

A

monitoring –> forecast sales vs actual sales

evaluating –> why sales are higer or lower

taking corrective action –> making changes

110
Q

what do budgets do

A

the outline how the business finances will be used

111
Q

what is the process of budget

for monitoring, evaluating, and taking corrective action

A
112
Q

what is profit used as in a business planning process

A

its used as a performance indicator

113
Q

How would you best describe financial forecasting?

2019 Atomi Question
A
(Choice A)
Taking corrective action
B
(Choice B)
Making predictions about the future finances of a business
C
(Choice C)
Monitoring a business’s financial statements
D
(Choice D)
A weather report but for money

A

b

114
Q

An energy drink company does a series of marketing campaigns involving risky stunts such as skydiving. What type of cost would the company’s insurance be?

2019 Atomi Question
A
(Choice A)
Fixed
B
(Choice B)
Direct
C
(Choice C)
Variable
D
(Choice D)
Indirect

A

a

115
Q

Total costs = Fixed costs + Variable costs?

2019 Atomi Question
A
(Choice A)
True
B
(Choice B)
False

A

a

116
Q

Which of the following best describes a break-even analysis?

2019 Atomi Question
A
(Choice A)
How much needs to be sold to be profitable
B
(Choice B)
How much the business aims to make
C
(Choice C)
An analysis of an Egyptian type of break dancing
D
(Choice D)
How much needs to be sold to cover total costs

A

d

117
Q

What is the correct order of business planning?

2019 Atomi Question
A
(Choice A)
Evaluating, monitoring, taking corrective action
B
(Choice B)
Monitoring, evaluating, taking corrective action
C
(Choice C)
Monitoring, controlling, observing
D
(Choice D)
Observing, monitoring, evaluating

A

b

118
Q

A budget will generally be used at what stage of business planning?

2019 Atomi Question
A
(Choice A)
Monitoring
B
(Choice B)
Implementing strategies
C
(Choice C)
Taking corrective action
D
(Choice D)
Not used at any stage

A

a

119
Q

what is the importance of a business plan

A

is a document that out lines the plans for future growth and the development of a business and because without a business plan there would be less planning and predicting the changing business environment

120
Q

what is the acrononym for critical issues in business success and failure

A

TECTOMB

121
Q

what is TEC TOMB

A

T:
Technology
E:
economic conditions
C:
competitive advantage
T:
trend analysis
O:
overextension of finance and other resources
M:
management
B:
business plan

122
Q

why do managers need a business plan

A

allows for organisation and planning

helps the manager be proactive

assess the internal and external business environment

123
Q

what is a manager

A

someone who coordinates the business’ limited resources in order to achieve goals

124
Q

what is the benefit of promoting internal staff

A

the person already knows and it’s in with the business culture
as well improves employee morale

125
Q

what is the benefit of external hiring

A

there is a wider skill range

126
Q

what is the benefit of teams

A

teams can have creative solutions, faster

127
Q

what is trend analysis

A

looking at changes over time for a pattern/trend to predict the future

127
Q

what should managers be aware of with teams

A

conflict
and only recruiting the right people

128
Q

what is the competitive advantage

A

the edge a business has over its competitors

129
Q

how does cost benefit the business success

A

by lowering production costs and selling to consumers for a lower price to have a price advantage

130
Q

what is economies of scale

A

cost savings a business makes as they increase their level of production

simple terms the more you produce the cheaper the inputs

131
Q

what is differentiation

A

offering customers something different compared to competitors

i.e new features, new version, new product

132
Q

why is having a sustainable competative advanteg so important

A

because it helps differentiate the business from competitors over a long period of time

133
Q

what is overextension of finance and other resources

A

over extending resources leads to waste and business inefficient hence increasing the risk of failure

134
Q

what are examples of over extension

A

borrowing too much money
buying too much assets
buying too much stock
having too many employees

135
Q

how to aviod over extension

A

use equity or debt
lease equipment/rent buildings
do more market research
adopt a flatter organisational structure

136
Q

why is it so important not to over extend resources

A

overextending resources leads to waste and business inefficacies, increasing the risk of failure

137
Q

what are the advantages of using technology

A

reduce costs
improved efficiency
improve products
allow for new product development

138
Q

Why is embracing technology so important

A

because keeping up with technology and embracing it as a business can keep you ahead of the game through cost savings and product development

139
Q
A

business studies (3 decks)

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