Unit 3 AOS 1: Business Foundations Flashcards
Sole trader
- Individual operating as the sole person legally responsible for the business
- Simple structure
- Gives owner all decision making power
Partnerships
- Business structure that involves a number of people (2-20)
- Governed under Partnership Act 1958
Private limited company
- Incorporated which means they have their own legal identity
- Have the power to sue or own assets
- Divided into equal parts called shares
Public listed company
- Has shareholders who own the company and directors who run it
- Listed on the ASX for members of public who to trade shares
Social enterprises
- Exists for social objectives
- Surpluses are reinvested into the business or community rather than making profit for shareholders
Government business enterprises
- Commonwealth entity
- Unlike government departments aims to act under general business principles
- Aim to make profit
Business objectives
- To make a profit
- To increase market share
- To fulfil a market/social need
- To meet shareholder expectations
Stakeholder
Any person who has an interest in the operations of the business
Stakeholder conflict: Customer > Shareholder
Customers want low prices and ethically sourced goods whereas shareholders want highest profit which may mean raising prices or cutting costs
Stakeholder conflict: Employees > Shareholders
Employee’s want the highest pay whereas shareholders may believe it will disrupt the money made on their investment as they want highest amount of profit
Business objectives
A goal a business sets that they expect to achieve over a certain period of time
How to increase market share?
- Come out with a new advertising campaign
Corporate Social Responsibility
- Demonstrating commitment to the community and environment
Areas of management responsibility: Finance
Refers to,
- Budgeting
- Financial planning
Areas of management responsibility: Human resources
Responsible for,
- Employee’s
- Managers
- Benefits the business may offer employee’s
- Hiring
- Training
- Termination
Areas of management responsibility: Sales and marketing
Responsible for,
- Advertisement/campaign
- Getting customers to buy the product
- Working out and trying to bring in target market
Areas of management responsibility: Operations
Responsible for,
- How the business makes the product or gives the service
e. g. ethical sourcing (no child labour), how the materials are made and where it comes from - In charge of making inputs turn into outputs
Inputs = making of product Outputs = how the product is distributed
Market share
Percentage of the total industry sales that the business in question receives
Social need
Benefiting the community through the actions of business
To make a profit
Surplus remaining after total costs are deducted from total income, and the basis on which tax is calculated and dividends are paid
