unit 1 aos2 Flashcards
internal environment
factors within a business that a business has control over
external environment
the surrounding factors that can impact a business which it has minimal control over. includes operating and macro factors
macro factors
social, legal, technological, global and economic conditions that a business operates in and has no control over
operating factors
are the primary external factors impacting a business that it has some control over
sole trader
a business structure that is owned and operated by one individual
unincorporated
the business owner and the business being viewed as the same legal entity
unlimited liability
the business owner being held personally responsible for the business’s debts
personal income tax
a portion of an individual’s earnings that is paid to the government
3 advantages of sole trader
owner has full control, easy and simple to setup, owner can retain all profits
3 disadvantages of sole trader
the life of the business dies when the owner dies, difficult to take time off work, unlimited liability puts the owner’s assests at risk
partnership
a business structure that is owned by two to 20 business owners
3 advantages of a partnership
financial risks are shared between partners, owners can share workload, greater access to finance
3 disadvantages of partnership
conflicts could arise due to shared decision making amongst partners, profits needs to be shared, liabilities incurred by one partner is held by all
private limited company
an incorporated business structure that has at least one director and a maximum of 50 shareholders
incorporated
a business being established as a seperate legal entity from the owner
shareholders
the individuals who have purchased shares of a company and therefore part owners.may recieve dividends
dividends
the regular sums of money paid out to shareholders from a company’s profit
limited liability
is when shareholders are only liable to the extent of their original investment
3 advantages of a private limited company
limited liability for shareholders, greater variety of expertise, greater access to capital
3 disadvantages of private limited company
complex reporting requirements, setup process takes longer, expensive to set up
public listed company
an incorporated business that has an unlimited number of shareholders and sells its shares on the ASX
3 advantages of public listed company
shareholders have limited liability, greater access to capital, no permission needed to sell and trade shares
3 disadvantages of public listed companies
conflicts could arise through shared decision making, there are complex reporting requirements, expensive to operate
social enterprise
a type of business that aims to fulfil a community or environmental need by selling goods or services
3 advantages of a social enterprise
the community benefits from its activities, employees have purposeful work, likely to recieve financial support
2 disadvantages of social enterprise
difficult to balance the achievement of financial objectives with social and may be difficult to obtain a bank loan as the busienss doesn’t solely focus on financial objectives
government business enterprise (GBE)
is a business owned and operated by the government
2 advantages of GBE
GBE’s can rely on the government for the initial investment, they deliver goods and services that meet the community’s needs (others may apply)
2 disadvantages of GBE’s
governments and politicians can interfere, they must follow significant rules and formalities (others may apply)
business model
a plan that identifies how the business will operate to make a profit
online business
a business model where the goods and services are traded via the internet
direct-to-consumer business
a business model where the business’s products are sold directly to consumers with no distributers involved
bricks-and-mortar business
is a business that has a physical store presence
franchise
a business model that grants another person the right to operate under its name, use its business systems and sells its goods and services
importer
purchases goods from overseas and sells them in their home country
exporter
produces goods in its home country and sells them to overseas buyers
3 advantages of purchasing an existing business
the business may already have a strong reputation, time can be saved as the business processes don’t need to be developed, the business can generate revenue immediately as it is already opened.
3 disadvantages of purchasing a business
employees may be resistant and uncooperative with change in ownership, previous business success could have been due to the previous owner’s personal contacts, when purchasing a business its reputation may be negative
3 advantages of establishing a new business
Owners have full decision-making control, can provide something that is not currently offered, business owners can create their own positive reputation
3 disadvantages of establishing a new business
There may be difficulty in building a customer base, there is greater risk, uncertainty, and room for error, it may be time consuming to find and train new staf
resources
the items required by a business to produce its goods and services. includes natural, labour and capital
natural resources
are raw materials from the environment that are used in the production of goods and services. CSR is a factor affecting
labour resources
are the people who provide the business with their skills and qualifications to conduct business activities. Cost is a factor affecting
capital resources
are man-made goods used in the production of goods and services. Supplier considerations is a factor affecting
business locations (4)
the physical or non-physical place that a business operates from. Shopping centres, shopping strips, home businesses, online businesses
factors affecting shopping centre
high visibility, high cost, high proximity to competitors
factors affecting shopping strips
high visibility, variable cost (dependent on popularity), high proximity to competitors
factors affecting home businesses
low visibility, low cost, low proximity to competitors
factors affecting online businesses
only have visibility through advertisements, minimal costs, high access to competitors
what are the 4 sources of finance
equity capital, debt capital, grants, overdraft facilities
equity capital
money contributed to a business by an investor in exchange for partial ownership. includes personal, private and public equity.
personal equity
could inclue the personal savings of a business owner or money borrowed from family and friends
private equity
money from selling shares to individuals or money from an angel investor (business mentor)
public equity
can include money from selling shares on the ASX
debt capital
the money that has been lent to a business by an external source that must be paid back overtime with interest. bank loans or long-term loans
grant
is money provided by a government or another organisation for a particular reason
overdraft facilities
agreements between banks and businesses or individuals, that allow a bank account to be withdrawn below zero
business support services
are the specialised people facilities, or amentities that aim to help businesses successfully operate. such as legal (solicitor), financial (accountant), technological and community based.
business planning
is the process of establishing a business’s goals and developing strategies to achieve them
SWOT analysis
a planning analysis tool that helps a business identify its internal strengths and weaknesses, as well as any external opportunities and threats
