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Commerce > Business Management > Flashcards

Business Management Flashcards

1
Q

What are business ethics?

A

The study of appropriate business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, and CSR.

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2
Q

A successful Australian Leader and obstacles?

A

Daniel Flynn is co-founder and managing director of Thankyou (a social enterprise in the food whole-sale industry). He is humble, honest, and very engaging. The business goal of the enterprise is to end global poverty through simple everyday purchases such as hand sanitizers.
He is responsible, great communicator, and open-minded.
He lacked funding and experience in managing a business, but found angel donors who provided finance to start the business.

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3
Q

List all the types of businesses

A

Sole Trader
Partnership
Private Limited Company
Publicly Listed Company
Social enterprise
Government business enterprise

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4
Q

Characteristics and example of sole trader?
- number of people
- perpetuity?
- liability?
- establishment
- privacy?
- responsibility

A

Plumber:
- Single owner (contributes all capital, receives all profits)
- No perpetuity (business life ceases if owner leaves/deceases)
- Unlimited liability (fully responsible for debts, and personal assets)
- Cheap/easy to establish, simple tax requirements
- Privacy with business records
- Owner takes all responsibility and makes all decisions

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5
Q

Characteristics and example of partnership?
- number of people (capital)?
- perpetuity?
- liability?
- establishment
- privacy?
- responsibility

A

Law firm:
- 2-20 owners/partners (partners have greater access to capital, and share all profits)
- Unlimited liability (owner fully responsible for debts, and personal assets at risk)
- Cheap/easy to establish, simple tax requirements
- Legal advice required to establish partnership agreement
- Privacy with business records
- Shared decision-making

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6
Q

Characteristics and example of private limited company?
- number of people
- perpetuity?
- liability?
- establishment
- privacy?
- responsibility

A

Visy:
- 1-50 shareholders must be INVITED
- Extra capital can be gained by issuing more shares
- Incorporation declares the business is a separate legal entity to owners
- Has perpetuity (existence not threatened by death of shareholder)
- Limited liability (shareholders not liable for any debts)
- Pty Ltd (Proprietary Limited): Private company that offers limited liability to its private shareholders
- High cost and high complexity in establishment with greater government control over accounting/financial records
- Less privacy with Government access to records (for tax purposes)
- Directors/management make decisions on behalf of shareholders

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7
Q

Characteristics and example of publicly listed company?
- number of people
- perpetuity?
- liability?
- establishment
- privacy?
- responsibility

A

Commonwealth Bank (ASX)
- Unlimited number of shareholders
- Public can buy shares
- Incorporation declares business is separate entity to owners
- Has perpetuity
- Limited liability (Shareholders not liable for debts)
- Ltd (company that offers limited liability to its public shareholders)
- Highest cost and high complexity in establishment with greater government control over records
- Prospectus used to invite public shareholders
- Directors/management act on behalf of shareholders

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8
Q

Characteristics and example of social enterprise?
- number of people
- perpetuity?
- liability?
- establishment
- privacy?
- responsibility

A

Thankyou:
- Fulfils vision that benefits the community rather than stakeholders (using profits to benefit a social/environmental cause)
- Not a charity - set up as company limited by guarantee

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9
Q

Characteristics and example of government business enterprise?
- number of people
- perpetuity?
- liability?
- establishment
- privacy?
- responsibility

A

VicRoads:
- Business undertakes commercial activity on behalf of government (owned by government and aims to make profit)
- Finance Minister acts on behalf of government

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10
Q

Difference between business mission vs objective?

A

A mission statement explains the company’s purpose and focus, while objectives outline a path for achieving the mission.

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11
Q

Features of full-time employment?

A
  • 35-40 hours or more
    Advantages: Stable income, benefits (healthcare, retirement), job security, career advancement.
    Disadvantages: Limited flexibility, potential for long work hours, may be harder to change roles.
  • paid on a regular schedule
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12
Q

Features of part-time employment?

A
  • less than 38 hours regularly
    Advantages: More flexibility, work-life balance, opportunity to have multiple part-time jobs.
    Disadvantages: Limited income, no or reduced benefits, less job security.
  • paid on regular schedule but with proportionately lower income.
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13
Q

Features of casual employment?

A
  • irregular work hours, hired on an as-needed basis.
    Advantages: Flexibility, may earn higher hourly rates, freedom to take other jobs.
    Disadvantages: Unpredictable income, no or minimal benefits, no job security.
  • paid after each shift or on irregular basis.
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14
Q

Features of contract employment?

A
  • work for a specific duration or project, with predetermined set of responsibilities and often higher pay.
    Advantages: Higher income potential, specialized work, flexibility in choosing projects.
    Disadvantages: Lack of job security, no benefits, limited career advancement.
  • paid per the terms of the contract
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15
Q

Explain some employment trends over the past decades?

A
  • Technology
  • Economy
  • Sectors like retail and hospitality often rely on part-time and casual workers to meet fluctuating demand
  • Pandemic
  • More women in workforce
  • Many more jobs part time
  • Greater number of jobs are high-skilled
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16
Q

Describe personal income tax

A

A tax levied on the income earned by individuals. It is one of the most significant sources of revenue for governments (to fund public services/programs) → they set tax rates and brackets

17
Q

Describe company/business tax

A

Levies on the profits, earnings, and activities of businesses (corporations, partnerships, sole proprietorships).

Governments use it to generate revenue, stimulate economic growth, and regulate business activities.

18
Q

Describe land tax

A

A tax on the value of land and real property owned by individuals or entities. Used by local governments to fund services and infrastructure that benefit the community.

19
Q

Describe goods and services tax (GST)

A

A broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia.

20
Q

Explain superannuation + benefits/cons

A

Money put aside by an employer over an employee’s working life to save for retirement. 11% of wages go towards Super.
- Qantas Super (Growth super fund)
- CareSuper (Balanced super fund)
- Australian Ethical Super (Ethical super fund)
Advantages:
- encourages long-term saving and helps individuals accumulate sufficient funds to support them during their retirement years
- allows individuals to choose investment strategies that align with their financial goals and values.
Disadvantages:
- restricting access to funds when individuals have other financial needs and emergencies
- funds charge fees for managing and administering funds. These fees may impact the overall return on investment

21
Q

What is cryptocurrency, benefits/cons?

A

Cryptocurrency is a digital or virtual form of currency.
Advantages:
- potential for significant price appreciation
- accessible to a global audience, and you can invest with relatively small amounts of capital, making it inclusive for retail investors.
Disadvantages:
- riskiest form of investment (highly volatile and subject to rapid price fluctuations)
- exchanges and wallets can be vulnerable to hacking, leading to theft of assets
- regulations vary by country and can change rapidly. Regulatory actions can impact the value and legality of certain cryptocurrencies

22
Q

Types of loans?

A

Mortgage Loan (long-term loans to finance purchase of house)
- Interest rates vary based on economic change, inflation rates
Auto Loan (for vehicle)
- Interest rates vary based on vehicle age/value, borrower’s creditworthiness
Personal Loan (debt, home improvement)
- Interest rates vary based on borrower’s credit history, loan amount

23
Q

What is an income statement?

A

An income statement is a financial report that provides a summary of a company’s revenues, expenses, and net profit and loss for a specific period.

24
Q

What is a balance sheet?

A

A balance sheet is a financial statement that provides a snapshot of a company’s assets, liabilities, and equity at a specific point in time

25
Q

What is a cash flow statement?

A

shows the source of cash and helps you monitor incoming and outgoing money

26
Q

What is the break even point? And how to calculate it?

A

The point at which revenue = expenses. Neither a profit or loss is made.
Fixed cost/(selling price-variable cost)
selling price-variable cost = contribution margin
Basically: Fixed cost/contribution margin

27
Q

What is the variable cost?

A

Expenses that vary depending on the number of goods sold. These costs are directly involved in the production process (direct costs) → raw materials, delivery costs, sales commissions.

28
Q

What is the fixed cost?

A

Expenses that stay the same regardless of number of goods sold. These costs are indirectly involved in the production process (indirect costs) → salaries, rent, electricity.

29
Q

What is Corporate Social Responsibility+ benefits?

A

Corporations have a degree of responsibility not only for the economic consequences of their activities, but also for the social and environmental implications
- enhanced reputation
- customer loyalty (increased profits)
- competitive advantage

30
Q

How do businesses increase revenue, and issues related to this?

A
  • Sell more inventory: Difficult to do and cannot be controlled or guaranteed
  • Increase price of inventory: Increasing the selling price too much will make customers shop elsewhere. Decreasing the selling price so it is very close/at the cost price will mean the firm will not make enough gross profit to pay for other expenses.
31
Q

What is the Fair Work Commission?

A

Australian industrial relations tribunal that regulates labor relations, sets minimum wages, and resolves employment disputes to ensure fair and equitable working conditions for employees and employers.

32
Q

Future of work?

A
  • Remote/flexible work (more work-life balance)
  • Automation and AI
    AI/machine operating specialists:
  • AI programming (digital tech skills)
  • Data modelling
    Health/age care: compassion
    Infrastructure: trade/engineering skills
    The COVID-19 pandemic accelerated the adoption of remote work, and this trend is expected to continue. Many organizations are likely to offer flexible work arrangements, allowing employees to work from different locations.
33
Q

What is net profit margin, and how to calculate it?

A

Net profit/revenue x 100
Measures how much net profit a business is able to generate for each dollar of revenue earned.
- takes ALL expenses into consideration
Revenue - cost of goods sold - operating expenses - interest and tax expenses = net profit.

34
Q

What does a higher net profit margin indicate?

A

A company is more efficient at converting sales into actual profit (efficient operation management, low expenses, efficient pricing strategies → high revenue)

35
Q

What is a gross profit margin, and how to calculate?

A

Gross profit/revenue x 100
- measures a business’s ability to generate gross profit from each unit of revenue earned
Gross profit = Revenue - Direct Cost of Sales (Cost of Goods/Services Sold)
- only factors in a business’s direct Cost of Sales (ignores all of the indirect operating expenses, interest and tax expenses

36
Q

How can businesses increase their gross profit margin?

A

An increase in revenue (higher pricing), and a decrease in direct cost of sales (negotiated a discount with a supplier, or switched to a cheaper one, automated part of their production process).

37
Q

Distinguish between Cost of Goods Sold and Other Expenses

A

COGS: Expense generated from direct preparation of inventory for sale
Other Expenses: Outflows of economic benefit due to day-to-day business operations

38
Q

Benefits of work?

A
  • Financial benefits
  • Better work conditions -> better mental health
  • Better connected
  • Better health outcomes (unemployed more likely to have heart disease)

Commerce (5 decks)

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