Unit 3 AOS1 - Business foundations

Question 1

6 types of businesses

Answer 1

Sole trader 
Partnership 
Private limited company 
Public listed company 
Social enterprises 
Government business enterprises

Question 2

Define the term business

Answer 2

Businesses are organisations that sell goods and/or services to a market with the aim of making a profit. There can be diff types which all have unique structure and objectives

Question 3

Define - sole trader

Answer 3

Sole trader - a business is owned and operated by one person. The proprietor May employ other people to assist with business activities however owner provides all the finances and is fully responsible for the business

Example - milkbar

Question 4

Define - partnership

Answer 4

A partnership is a business structure where 2-20 people come together to run a business with the purpose of making a profit.
Each owner has equal responsibility over the business, and equally provide business funds

Example - law firm

Question 5

Define private limited company

Answer 5

Private limited company is a business that is incorporated, meaning they have their own legal identity. The ownership of the company is divided into shares. These shares are not listed on the stock exchange

Example - Linfox

Question 6

Define - public listed company

Answer 6

A public listed company is a business that has shareholders who own the business and directors who run it. The company is listed on the stock exchange for members of the public who buy and trade the shares

Example - qantas

Question 7

Define- social enterprise

Answer 7

A social enterprise is revenue- generating business with the aim to fulfil a social cause or mission.

Example - thankyou

Question 8

Define - government business enterprise

Answer 8

A government business enterprise is a company owned by the commonwealth. This business aims to make a profit which is distributed to shareholders (state and federal governors)
And act under general business principles

Example - aus post

Question 9

2 advantages
2 disadvantages
Sole trader

Answer 9

1. Low establishment cost
2. Easy to cease operations
3. Unlimited liability
4. Reliant on owners skills and knowledge

Question 10

2 advantages
2 disadvantages
Partnership

Answer 10

1. workload is shared
2. cheap and easy to set up
3. potential disputes and personality clashes
4. unlimited liability

Question 11

2 advantages
2 disadvantages

Private limited company

Answer 11

1. Limited liability
2. extra capital can be obtained by issuing more shares
3. higher establishment costs
4. higher degree of government control

Question 12

2 advantages
2 disadvantages
Public listed company

Answer 12

1. Limited liability
2. Separate legal entity to owners
3. highly complex structure
4. no control over who owns shares

Question 13

2 advantages
2 disadvantages
Social enterprise

Answer 13

1. Consumers feel they are helping a greater cause which their purchase
2. Enterprise can meet needs that commercial businesses wouldn’t
3. Difficult to obtain capital to start the business
4. difficult to focus on both social and financial objectives

Question 14

2 advantages
2 disadvantages
Government business enterprise

Answer 14

1. gbe is able to carry out government policies
2. Healthy competition to other business which can lower market costs
3. Political interference with day to day running
4. Management can be less effective than that of the private sector

Question 15

Mission statement

Answer 15

A written document that sets out the reason for the existence of the business, it’s fundamental reason for being

Question 15

A vision statement

Answer 15

Written document outlining the broad direction the business hopes to take in the future

Question 15

Values statement

Answer 15

Written document that outlines what is important to the business in terms of values and ethics

Question 15

Define - Business objectives

Answer 15

Objectives are the stated goals a business is aiming to achieve

Question 15

Objective - make a profit

Answer 15

Profit = revenue - expenses

Question 15

Objective - increase market share

Answer 15

Market share is the proportion of total sales a business has compared to others in the same market or industry

Question 16

Fulfil a market need

Answer 16

To provide something in the market that is otherwise hard to obtain.
E.g a business may exist to provide a specialty service that other large businesses cannot

Question 17

To fulfil a social need

Answer 17

This objective involves the production and/or sale of goods and service for the purpose of making the world a better place.
Objective example - helping the disadvantaged

Question 18

Meet shareholder expectations

Answer 18

Making a profit is the primary objective, shareholders expect :

• To make a return on their investment
• the business to be successful
• the business to make profit
• shares purchased to gain value ( capital gain )
• receive dividends

Question 19

Shareholder definition

Answer 19

People who have invested money into a business, hence owning shares of it

Question 20

Define - stakeholders

Answer 20

An individual or a group that has direct or vested interest in the activities of a business

Can affect or be affected by business operations

Question 21

3 stakeholders

2 interests and issues each

Answer 21

1. Employees, are interested in earning fair pay, having good working conditions and ongoing employment.
2. Shareholders, are interested in getting a return on their investment through dividends and capital gain
3. Customers, to receive good quality products at affordable prices

Question 22

Why stakeholders might have conflicting interests ( 2 examples )

Answer 22

Stakeholders

Question 23

Corporate social responsibility

Answer 23

Managing a business in such way that the broader social welfare of employees,….. and the environment are taken into consideration when making business decisions

Question 24

Management responsibility - Technology support

Answer 24

Responsible for installing and maintaining technology. Also provides assistance to those who use technology.

• Many businesses have encorporated tech into their business operations (e.g manufacturing) if it were to fail objectives could not be met

Question 25

Management responsibility -

Sales and marketing

Answer 25

Involves creating awareness of business products, which in turn will create profit. Responsible for creating an developing strategies and relationships with customers

-

Question 26

Management responsibility - Operations

Answer 26

Operations is the area of a business that produces goods and services
IMPUTS
PROCESSES
OUTPUTS
Need operations to be efficient to produce good quality goods in short amount of time. Which will help achieve objectives

Question 27

Management responsibility - Finance

Answer 27

Finance - area of the business which oversees and manages the money and assets of a business.
- bookkeeping
- budgeting
Reports of financial performance can be passed onto senior management to minimise costs and maximise profit needed to sustain the business

Question 28

Management responsibility - Human Resources

Answer 28

HR - area of the business that manages the relationship between the business and employees
- recruiting/training
- development and motivation
Helps to achieve objectives as a business needs to employ and more importantly retain the best employees who most effectively achieve set goals

Question 29

Autocratic

Answer 29

- Manager makes all decisions and tells employees what to do - 
Decision making is centralised 
Power is centralised 
Employee involvement is none 
Communication is one way, top down 

Pros 
- decisions are made quickly 
- clear communication to employees 
Cons 
No employee input 
Employees feel undervalued (poor motivation)