Definitions

Question 1

competitor

Answer 1

other businesses or individuals who offer rival, or competing, goods or services to the ones offered by the business

Question 2

resources

Answer 2

the people and objects that are needed for the business to function properly

Question 3

customer

Answer 3

the people who purchase goods and services from a business, expecting high quality at competitive prices

Question 4

customer service

Answer 4

responding to the needs and problems of the customer; central to this response is making sure the desired product is delivered at the appropriate place at the right time

Question 5

Labour, land and capital resources

Answer 5

Land: derives from the natural world, such as water
Labour: refers to the people who provide their efforts/ knowledge and services to produce a finished product such as a tradie and or plumber.
Capital: refers to the tools and machinery used to create a final product such as a bob cat.

Question 6

Bank bills

Answer 6

short-term securities issued by a business and bought by a bank. They are a type of bill of exchange and are given for larger amounts, usually over $100 000, for a period of 90–180 days.

Question 7

Bank overdraft

Answer 7

short-term borrowing, A bank allows a business to overdraw its account to an agreed limit. Bank overdrafts assist businesses with short-term liquidity problems

Question 8

Trade credit

Answer 8

Short term borrowing, trade credit exists when a supplier provides products to a business with an agreement to charge for the goods or services later

Question 9

Mortgage

Answer 9

is a loan secured by the property of the borrower (the business). The property that is mortgaged cannot be sold or used as security for further borrowing until the mortgage is repaid

Question 10

leasing

Answer 10

is a long-term source of borrowing for businesses. It involves paying money to use equipment that is owned by another party.

Question 11

factors affecting choice of finance

Answer 11

1. the terms of the finance you are choosing
2. the overall cost of the finance
3. the flexibility of the finance
4. the business structure
5. the level of control you have (the business)

Question 12

partnership

Answer 12

unincorporated business structure with a minimum of 2 and a maximum 20 owners

advs: low start up cost, less costly to operate than a company
disadvs: personal unlimited liability, possibility of arguments

Question 13

proprietary (private) companies

Answer 13

is an incorporated business with a minimum of 2 and a maximum of 50 shareholders

advs: shared workload
disadvs: possibility of arguments

Question 14

shareholders

Answer 14

are the owners of a company who are entitled to share of its profits

Question 15

limited liability

Answer 15

is when the shareholders of a company cannot be help personally responsible for the debts of the business

Question 16

prospectus

Answer 16

is a legal document that provides details about investment in the company

Question 17

publicly listed company

Answer 17

is a corporation who’s ownership is dispersed among the general public in many shares of stock which are freely traded on a stock exchange or in over the counter markets.

advs: limited liability, easier to attract public finance
disadvs: too much growth, double taxation - company and personal

Question 18

business model

Answer 18

is a plan that outlines how the business will run its operations to generate a profit

Question 19

online business

Answer 19

exists solely on the internet with no face to face contact

Question 20

bricks and mortar

Answer 20

is a business model that is solely based on a store with a physical presence

Question 21

advertising based websites

Answer 21

Other businesses will pay top dollar to a website to feature their advertisements because it reaches their target markets. This is how many blogs have grown into successful businesses. After attracting enough followers a blog becomes an attractive space for advertisers.

Question 22

freemium

Answer 22

attracts customers with their free service offers, which means like how Spotify attracts you with their 30 day free trial

Question 23

brokerage

Answer 23

Websites such as eBay bring buyers and sellers together in exchange for a brokerage fee when sales are made.

Question 24

merchant

Answer 24

Merchants are online sellers who operate through their own independent website or through the use of platforms such as eBay. These online retailers generally buy in bulk directly from manufacturers or wholesalers and sell the products to customers for a pro t.

Question 25

import and export

Answer 25

Import and export businesses are those which earn their income by trading goods internationally

Question 26

franchise agreement

Answer 26

is an agreement whereby the franchisor grants the franchisee the rights to use its business name and distribute its products or services.

Question 27

franchisor

Answer 27

is the owner of the original business concept that licenses another business to use its name and distribute its products or services in exchange for royalty payments and fees.

Question 28

franchisee

Answer 28

is a business that | is licensed to operate under the name of an existing business and distribute its products or services.

Question 29

social enterprise

Answer 29

is a business model that aims to improve the wellbeing of others through its business activities. While pro t is not the main objective of a social enterprise, it must ensure that it can earn enough money to fund its continued operations.

Question 30

solicitor

Answer 30

Solicitors provide information concerning business formation and structures, registra- tion, contracts, leases, partnership agreements, patents and legislation. Solicitors are up to date with any changes to company law and can advise the business owner on how best to deal with such changes.

Question 31

accountants

Answer 31

Accountants provide valuable advice on all nancial management issues and taxation obligations.They have access to the latest changes to taxation and nancial reporting requirements, and know procedures for recording nancial events (transactions) accu- rately, speedily and with maximum security.

Question 32

bank managers

Answer 32

Bank managers are another valuable source of information and advice on nancial services, sources of nance, and basic business management. They usually have a wide range of experience to draw on and can access the resources of the bank.

Question 33

trade associations

Answer 33

trade associations offer specific industry information and assistance. Each association is made up of organisations in the same line of business, so it can provide specific details about development and industry trends

Question 34

market research

Answer 34

Market research involves collecting and analysing data and information to assist the business in its understanding of potential customers and competitors By better understanding the desires and habits of potential customers as well as the level of competition in a given market, a business can develop or adjust its products and marketing strategies in such a way that it targets unmet consumer demand.

Question 35

SWOT analysis

Answer 35

``` is a plan- ning tool which identi es the business’s internal strengths and weaknesses, as well as any opportunities and threats from the external environment, in order to plan for the success of the business for the future. Strengths - internal Weaknesses - internal Opportunity - external Threats - external ```

Question 36

business plan

Answer 36

written statement of the goals and objectives for the business, and the steps that need to be taken to achieve them

Question 37

benefits of developing a business plan

Answer 37

1. helps test the viability of the business 2. assets the business to be proactive rather than reactive 3. identifies the strengths and weaknesses 4. forces the business owner to justify his or her plans or actions 5. indicates the business owners ability and level of commitment 6. assits in maintaining the business operation, especially focusing attention on the goals and objectives

Question 38

What are the 4 steps of a business plan?

Answer 38

1. executive summary 2. financial plan 3. operations plan 4. marketing plan

Question 39

executive summary

Answer 39

A one page document describing the business and its objectives, this is usually prepared at the end of the plan-writing process

Question 40

financial plan

Answer 40

This details how the business will be financed, and projected cash flow, revenue, expenses and profit

Question 41

operations plan

Answer 41

this outlines how the business will be set up and the human resources needs

Question 42

marketing plan

Answer 42

this outlines key information from the industry the business will be entering and how it ts in, and the marketing strategy of the business.

Question 43

corporate social responsibility

Answer 43

managing a business in such a way that the broader social welfare of the community, including its employees, customers, suppliers and the environment, is taken into consideration when making business decisions

Question 44

stakeholder

Answer 44

is any group or individual who has an interest in, or is affected by, the activities of a business.

Question 45

how to be socially responsible in the internal environment

Answer 45

1. fair pay 2. safe and healthy working conditions 3. employing disadvantaged groups 4. socially responsible policies

Question 46

socially responsible policies

Answer 46

A business needs to ensure that the policies it develops re ect a commitment to social responsibility. It is through policies that the business can set expectations for its employees and de ne what it deems to be appropriate behaviour. Businesses can develop policies in the areas of environmental sustainability, workplace bullying, equal opportunity for all employees, employee leave and flexible work arrangements.