Nature of Business

Question 1

Goods and Services

Answer 1

Goods- tangible items
Services- actions performed which are valued by someone

Question 2

Needs and Wants

Answer 2

Needs- things people require to live
Wants- goods or services that are not necessary, but desired

Question 3

What are the Key Roles of Business

Answer 3

Profit, Employment, Income, Choice, innovation, entrepreneurship and risk, wealth, quality of life

Question 4

What is the economic role of business

Answer 4

The financial impact that the activities of business have in the business environment

Question 5

What is the Social Role of Business

Answer 5

The impact of the business on the community

Question 6

How can a business be classified?

Answer 6

Size, Industry,
Legal Structure,
Geographic Location

Question 7

Small Business Definition

Answer 7

• 100 employees if in manufacturing of goods
• 20 or less if service based

Question 8

Importance of SMEs

Answer 8

70% of private sector employment, produce 50% of all products

Question 9

Micro Business

Answer 9

4 or less employees

Question 10

Medium Business

Answer 10

21-200 employees

Question 11

Large Business

Answer 11

200+ Employees

Question 12

How is Geographic Spread Characterised?

Answer 12

Local
National
Global

Question 13

Types of Industry

Answer 13

Primary- Natural resources/raw materials
Secondary- uses primary to manufacture goods
Tertiary- Provides Services rather than goods, also retailers
Quaternary- Information, technology, finance, education
Quinary- Domestic Services, home cleaning, food prep

Question 14

What are the legal structures?

Answer 14

Sole Trader
Partnership
Private Company
Public Company
Government Enterprise

Question 15

What is a sole Trader?

Answer 15

Owned and Operated by a single person, unlimited liability

Question 16

What is a partnership?

Answer 16

2 to 20 people operating a business together, each is liable, but not necessarily equally

Question 17

What is a private company?

Answer 17

(Pty Ltd) privately owned, shareholders have limited liability, shares not sold publicly, max 50 shareholders

Question 18

What is a public company?

Answer 18

Listed on the Aus Securities Exchange, general public can buy shares

Question 19

What is a Government Enterprise?

Answer 19

Owned and Operated by the government, typically large and operate at local, state, federal level

Question 20

How should you choose Legal Structure?

Answer 20

Size, as business grows ownership might need to change
Ownership, level of control for the owners
Finance, How the business is funded, and makes/ raises money

Question 21

What is an unincorporated business?

Answer 21

Sole Trader, Partnership
Business does not pocess a different identity to owner, owners have full liability

Question 22

Types of Business Goals?

Answer 22

Financial-
financial success/ profit of the business
Social-
benefit certain sectors of the community and still financial goals
Personal-
Goals of the individual owners, may or may not relate to business plan
Corporate Social Responsibility-
Doing ‘right’ in the business world or environment

Question 23

What are the types of Influences

Answer 23

External
Internal

Question 24

What are the Internal influences?

Answer 24

Product
Location
Management
Resource Management
Business Culture

Question 25

What are the External Influences?

Answer 25

Market Competitive Situation Financial Economic Legal Technological Political Institutional Geographic Social

Question 26

Types of Resource Management

Answer 26

Tangible- financial, physical Intangible- Reputation, Intellectual Property HR- Employees

Question 27

Types of Geographic impacts?

Answer 27

Demographic factors Process of Globalisation Natural Disasters

Question 28

Stages of the Business Life Cycle?

Answer 28

Establishment Growth Maturity Post Maturity

Question 29

Describe the Establishment Stage

Answer 29

The initial stage of the lifecycle, low sales, problems with cash flow

Question 30

Describe the Growth Stage

Answer 30

Increased sales and change in day-to-day operation, new development, expansion Growth Opportunities- mergers and acquisitions

Question 31

Describe the Maturity Stage

Answer 31

Plateau in the lifecycle, growth slows, need to come up with new ideas

Question 32

Describe the Post Maturity Stage

Answer 32

Dependent on how managers responded to change in maturity stage Steady State- similar path Renewal- Business enters new growth stage Decline- fall in profit, business continues Cessation - Closure of Business

Question 33

What are Mergers and Acquisition?

Answer 33

Mergers- 2 businesses combine to become one larger Acquisition- One business purchasing controlling interest and takes over

Question 34

Voluntary vs Involuntary Cessation?

Answer 34

Voluntary- Loss of enthusiasm, retire, other party purchase, declining profits, rest Involuntary- death of owner, lack of demand, negative economic conditions, increased competition, ordering assets of business to be sold

Question 35

Describe Cessation process

Answer 35

Depends on Legal Structure Receivership- an independent party appointed by the court to examine how business can trade itself out of trouble Liquidation- assets are sold to recover outstanding debts Bankrupt- owners are unable to repay debts themselves

Question 36

What is Receivership?

Answer 36

an independent party appointed by the court to examine how business can trade itself out of trouble

Question 37

What is Liquidation?

Answer 37

Assets are sold to recover outstanding debts

Question 38

What is Bankruptcy?

Answer 38

owners are unable to repay debts themselves

Question 39

Consumers and Investors

Answer 39

Consumer: Absorbs the product Investor: Puts money towards the company