unit 1 topic 1 Flashcards
name the 4 legal ownership structures
sole trader
partnership
private company
public company
what is a sole trader
a business owned and operated by one person.
characteristics of a sole trader
simple and cheap to establish
unlimited liability
can change structure with growth and expansion
advantages of being a sole trader
simplest form of ownership
tax is on owners income not businesses
minimal legal and government regulations
disadvantages of a sole trader
owner is responsible for debts
business finances are limited to the owners finances
owner needs to be multi-skilled
Unlimited liability
what is a partnership
a business structure that involves a number of people who operate a business together.
how must decisions be made in a partnership?
mutual agency
under the act all partners are responsible for the decisions of other partners.
all or a particular number of partners have to sign off on it
characteristics of a partnership structure
simple to establish
unlimited liability – does not require own TFN
shared responsibility
must be registered for GST
advantages of a partnership
low start-up costs
shared responsibility and management
minimal legal and government regulations
tax is on owners’ income
disadvantages of a partnership
change in ownership can be difficult
owners are responsible for the debts of the business – unlimited liability
partnership may be dissolved if a partner dies
what is a company
is a separate legal entity from its owners
characteristics of a company
sperate legal entity requires a TFN must be registered for GST must comply with corporations act board of directors limited liability
advantages of a company
greater source of management expertise limited liability ownership is easily transferable greater capacity for capitol greater spread of risk
disadvantage of a company
complex and expensive to establish
profits are divided
must report financial situation publicly
name all 5 business categories
home-based digital local national international
what is strategic planning
a management tool that is used to set the priorities for the future of the business.
what should a strategic plan do
be a framework for decisions
explain the business to others
assist in performance monitoring
give insight into future planning
what does SWOT stand for
Strengths
weaknesses
opportunities
threats
what are the 2 forms of sustainability a business must consider
environmental sustainability
being able to sustain the business
what are the 7 stakeholders
owners/managers employees governments suppliers customers investors society
what are in an internal business environment
owners/management
employees
organisational structure
organisational culture
what is in an external operating environment
customers
interest groups
competitors
suppliers
what is in a macro external environment [STEEPLE]
socio-cultural technological economic environmental political legal ethical
