Unit 3 AOS 1: Business Foundations

Question 1

Sole trader

Answer 1

• Individual operating as the sole person legally responsible for the business
• Simple structure
• Gives owner all decision making power

Question 2

Partnerships

Answer 2

• Business structure that involves a number of people (2-20)

- Governed under Partnership Act 1958

Question 3

Private limited company

Answer 3

• Incorporated which means they have their own legal identity
• Have the power to sue or own assets
• Divided into equal parts called shares

Question 4

Public listed company

Answer 4

• Has shareholders who own the company and directors who run it
• Listed on the ASX for members of public who to trade shares

Question 5

Social enterprises

Answer 5

• Exists for social objectives

- Surpluses are reinvested into the business or community rather than making profit for shareholders

Question 6

Government business enterprises

Answer 6

• Commonwealth entity
• Unlike government departments aims to act under general business principles
• Aim to make profit

Question 7

Business objectives

Answer 7

• To make a profit
• To increase market share
• To fulfil a market/social need
• To meet shareholder expectations

Question 8

Stakeholder

Answer 8

Any person who has an interest in the operations of the business

Question 9

Stakeholder conflict: Customer > Shareholder

Answer 9

Customers want low prices and ethically sourced goods whereas shareholders want highest profit which may mean raising prices or cutting costs

Question 10

Stakeholder conflict: Employees > Shareholders

Answer 10

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

Question 11

Business objectives

Answer 11

A goal a business sets that they expect to achieve over a certain period of time

Question 12

How to increase market share?

Answer 12

• Come out with a new advertising campaign

Question 13

Corporate Social Responsibility

Answer 13

• Demonstrating commitment to the community and environment

Question 14

Areas of management responsibility: Finance

Answer 14

Refers to,

• Budgeting
• Financial planning

Question 15

Areas of management responsibility: Human resources

Answer 15

Responsible for,

• Employee’s
• Managers
• Benefits the business may offer employee’s
• Hiring
• Training
• Termination

Question 16

Areas of management responsibility: Sales and marketing

Answer 16

Responsible for,

• Advertisement/campaign
• Getting customers to buy the product
• Working out and trying to bring in target market

Question 17

Areas of management responsibility: Operations

Answer 17

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

Question 18

Market share

Answer 18

Percentage of the total industry sales that the business in question receives

Question 19

Social need

Answer 19

Benefiting the community through the actions of business

Question 20

To make a profit

Answer 20

Surplus remaining after total costs are deducted from total income, and the basis on which tax is calculated and dividends are paid