U3: AOS1 (Business Foundations) Flashcards
What are the 6 types of Businesses?
1) Sole Trader
2) Partnership
3) Private Limited Company
4) Public Listed Company
5) Social Enterprise
6) Government Business Enterprise
1) What is a Sole Trader?
2) 2 Advantages
3) 2 Disadvantages
1) An individual owner of a business, entitled to keep all business profits and liable for all losses.
2) Advantages:
- Simple/Inexpensive to set up
- Total control over business
3) Disadvantages:
- Unlimited liability
- Difficult to get start-up finance
1) What is a Partnership?
2) 2 Advantages
3) 2 Disadvantages
1) A business which is owned by more than one person (2-20).
2) Advantages:
- Inexpensive/easy to set-up
- Broader knowledge + experience
3) Disadvantages:
- Unlimited liability
- Risk of partner disputes
1) What is a Private Limited Company?
2) 2 Advantages
3) 2 Disadvantages
1) Separate legal entity owned by shareholders which does not trade shares on ASX unless given permission.
2) Advantages:
- Limited liability
- Existence not threatened by removal of director/shareholder
3) Disadvantages:
- High government control/requirements
- High establishment costs
1) What is a Public Listed Company?
2) 2 Advantages
3) 2 Disadvantages?
1) Separate legal entity owned by shareholders which trades shares to the public through the ASX.
2) Advantages:
- Limited liability
- Existence not threatened by removal of director/shareholder
3) Disadvantages:
- Complex establishment
- High establishment costs
1) What is a Social Enterprise?
2) 2 Advantages
3) 2 Disadvantages
1) Private sector business that distributes at least 50% of profits to better community, not shareholders.
2) Advantages:
- Assisted by government (tax reductions)
- Employee morale boosted by work
3) Disadvantages:
- Not a large revenue stream (smaller business)
- Needs a lot of assistance from community
1) What is a Government Business Enterprise?
2) 2 Advantages
3) 2 Disadvantages
1) A business that is government owned and operated.
2) Advantages:
- Betters community
- Funded by taxes
3) Disadvantages:
- High-cost projects
- Large costs for workers
What are the 4 main objectives of a business?
1) Make a profit
2) Increase market share
3) Fulfill market/social need
4) Meet shareholder expectations
What is ‘making a profit’?
Gaining a specific amount of money from a business’ revenue stream that surpasses its expenditures.
What is ‘increasing market share’?
Increasing the percentage of the sales market which a business owns against competitors.
What is ‘fulfilling a market/social need’?
Market: Making a business’ products/services more appealing to its customers to satisfy their needs/wants.
Social: The involvement of a business in a community to better the people within it, usually through assisting with community problems.
What is ‘meeting shareholder expectations’?
Operating a business so that it meets the goals outlined by shareholders, usually by making a profit.
What are the 5 areas of management responsibility?
1) Operations
2) Finance
3) Human Resources
4) Sales + Marketing
5) Technology Support
1) What is ‘Operations’?
2) How does it contribute to achieving business objectives?
1) The functional area responsible for managing the process of creating goods + services. (Planning, organising, controlling resources needed.)
2)
- Provides revenue stream (producing goods)
- Saves costs (waste minimisation)
1) What is ‘Finance’?
2) How does it contribute to achieving business objectives?
1) The functional area responsible for planning/retaining financial information (eg. budgets) which guides financial decision-making of business.
2)
- Shows business if it has achieved financial goals
- Controls use of profits
