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Bus Man Year 10 > Understanding Business Book 1 > Flashcards

Understanding Business Book 1 Flashcards

1
Q

Business Motivation

A

the reason why someone chose to seat a business (the why)

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2
Q

Source of business opportunities

A

Where or how the opportunity arose for them to start their own business

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3
Q

List Business Motivations

A

financial independence, Personal independence, make a profit, fulfil a market and/or social need

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4
Q

Financial Independence

A

Being able to support yourself without relying on other people/a job

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5
Q

Personal independence

A

Being able to make your own decisions, decide your role, working hours, holidays ect.

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6
Q

Make a profit

A

To benefit financially from capitalising on a business opportunity

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7
Q

Fulfil a market and/or social need

A

create a product to meet customer demand or improve on an existing product to better meet the needs of customers

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8
Q

Sources of business opportunities

A

Innovation, entrepreneurship, Market opportunities, changes customers needs

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9
Q

Innovation

A

innovation is transforming into reality a new idea about a product or a service, or it could be a new way of doing things (proactive/creative)

Characteristics: New efficient process can save time, money and Create less waste, allows business to grow, helps business to adapt to the changing marketplace, gives a competitive advangte

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10
Q

Entrepreneurship

A

Entrepreneurship refers to the concept of developing and managing a business venture in order to gain profit by taking several risks (risk taking)

Characteristics: seeks out new opportunities, manages business activities, takes calculated financial risks, experiences business success

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11
Q

Market opportunities

A

Market opportunities refers to chances to increase trade caused by the changing trends in the market. the key is to be able to recognise a market trend. This could also be an opportunities where there is a gap in the market

Example: Chinese market demands more Aussie wine=Aussie wineries sell more wine=more profit!

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12
Q

What is a gap in the market

A

identified something that customers need which is not currently available

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13
Q

Changing Customer needs

A

Busy: wants convenience, wants 24/7 trade, wants supportive home services such as cooking, cleaning childcare

Technologically savvy: has access to information, compares competitors, shops online, is able to give reviews and use social media

Demanding: high expectations of corporate social responsibility to people and environment, high expectations of excellence in product quality, is health and safety conscious, is aware of consumer laws and rights when shopping

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14
Q

Unincorporated

A

When the company and the individual asset are together

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15
Q

Incorporated

A

When the individuals assets are separated to the company (if the company is sue all individuals assets are safe e.g. house, car

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16
Q

List business types

A

sole trader, partnership, private limited companies, public listed companies

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17
Q

Sole trader

A

A sole trader is an unincorporated business structure with only ONE owner who also operates the business

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18
Q

Sole trader characteristics

A

-owned and operated by a single person- but can still employees who are not owners
-owner has unlimited liability for all business debts
-owner has to source all funding for the business
-owner retains all profits after personal income tax (not subject to company tax)
-may have employees but owner is the only one responsible for making decisions for the business (therefore has to manage a wide variety of tasks)

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19
Q

Sole trader strengths and weaknesses

A

strengths: - low cost of set up, -low level of government regulation ( easy to set up and run), - centralised decision making = no conflict for owner, - owner retains all profits (and decide to reinvest into business but has control)

Limitations: -unlimited liability = risk for personal assets (e.g. house), - difficult to raise funds - 2 sources = owner investment or loans from banks, - high level or responsibility for owner- needs to manage all acts of organisation

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20
Q

Partnerships

A

A partnership is an unincorporated business structure owned by 2-20 owners

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21
Q

Partnerships characteristics

A

-Partners share responsibility for the responsibility for organisation’s
-Partners have unlimited liability for all business debts
-Partners have to source all funding for the business
-Partners have to source all the funding for the business
-Partners can divide and retain all profits after personal income tax (not subject to company text)

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22
Q

Partnerships Strengths and weaknesses

A

Strengths: -low cost to set up, low level of government regulation (=easy too set up and run), multiple ownership (knowledge increases and expertises)

Limitations: -unlimited liability = risk for personal assets (e.g. house), difficult to raise funds = partner investment + loans form banks, potential for conflict between partners

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23
Q

Private Limited Companies

A

A private limited company is an incorporated business with at least 1 and up to 50 selected share house

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24
Q

Private Limited Companies characteristics

A

-Business name MUST always follow by Pty ltd. (proprietary limited)
-The company is a seperate legal entity
-high level of control retained by shareholders as new shareholders are selected by the board
-overseen by directors (can be 1 or a board of directors) = decision making
-profits are subject to company tax before shareholders receive a return on their investment shareholders are then subject to personal income tax on profit the individual recieves

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25
Q

Private Limited Companies strengths and weaknesses

A

strengths: incorporation means that liability is limited to the business = protection of shareholders, Directors can be shareholders or can be appointed by shareholders = increased expertise, revenue can be raised by selling shares in the organisation (but not on the ASX), company tax rate is lower then personal income tax rate - so tax for business itself is less

Limitations: Profits are taxed twice (company and personal income), cost of set up and level of government regulation are higher (follow a set of ‘company rules’ + pay registration to ASIC + annual renewal fee

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26
Q

Public listed companies

A

A public listed company is an incorporated business that can sell shares in an open market to an unlimited number of shareholders

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27
Q

Public listed companies characteristics

A

-name MUST always be followed LTD
-company is seperate legal entity
-shares are sold on ASX (prices based on market value not business)
-limited decision making , receive a share of profit
-decisions made by board directors
-minimum of 3 directors, requirement for public annual report on business financial accounts

28
Q

Public listed companies Strength and weaknesses

A

strengths: incorporations means that liability is limited to the business = protection of shareholders, increased capacity to raise funds through selling shares (allowing business to grow), can provide a prestigious profile

Limitations: profits are taxed twice, cost of set up and level of government regulation highest, greater public scrutiny of the company’s financial performance and actions, shareholders can lack patience of return on investment is not evident and so the business has to become more focused on profit or risk fall in share prices

29
Q

List 5 Business objectives

A

make a profit, increase market share, meet shareholder expectation, fulfil a market need, fulfil a social need

30
Q

What is KPI

A

Criteria that measure how efficient and effective a business is at achieving business objectives

31
Q

Make a Profit

A

Generate more revenue than expenses from running a business

32
Q

Increase market share

A

grow the proportion of sales of a business within a particular industry (control more of the market)

33
Q

Meet shareholders expectations

A

Provide a return on the money that have invested into the business

34
Q

Fulfil a Market need

A

provide customers with a good or service that is dissed and meets their expectations

35
Q

Fulfil a Social need

A

Conduct business actives that improve the community and environment

36
Q

Why make a Profit

A

Essential for survival

37
Q

Why increase market share

A

increases customer loyalty = increased stability —> can increase profit

38
Q

Why meet shareholders expectations

A

attract new shareholders b/c seen as strong investment + prevent conflict b/w management and shareholders

39
Q

Why fulfil a market need

A

increase sales –> increase revenue –> increased profit + if the only organisation fulfilling a ‘gap in the market’ then creates customer loyalty

40
Q

why fulfil a social need

A

improves reputation—> increase sales + market share OR b/c organisation purpose–> NB can make profit at same time

41
Q

How to achieve making a profit

A

increase revenue (e.g. marketing campaign, new product, improve quality of product) OR reduce expenses (e.g. eliminate waste, lower staff requirement, cheaper materials)

42
Q

How to achieve increase market share

A

Make process lower than competitors, provide a unique benefit of your product (e.g. higher quality, sustainable)

43
Q

How to achieve meeting shareholders expectations

A

Increase profit

44
Q

How to achieve fulfilling a market need

A

identify what the market is not currently meeting, develop a product

45
Q

How to achieve fulfilling a social need

A

consider social and environmental impact when making decisions OR supporting other organisations work

46
Q

Types of KPIs

A

percentage of market share, Net profit figures, number of sales, level of wastage, rate pf productivity growth

47
Q

Number of sales

A

Total quantity of a particular product or service purchased during a defined time period

48
Q

Number of sales indicate

A

Measure success or marketing campaigns, sales training and product innovation, the most popular and unpopular products

49
Q

Percentage or Market share

A

A representation of the portion of sales that a business has compared to the total sales for the industry or product, expressed as a percentage

50
Q

Percentage or Market share Indicate

A

level of control in a market place, improved your quality of price compared to your competitors, improved quality, issue within organisation Or weather the market is shrinking

51
Q

Net Profit

A

Net profit figures are calculated by deduction total expenses incurred from total revenue earned over a period of time

52
Q

Net profit indicate

A

capacity of organisations to use its resources to maximise profits, if selling price is right, increase revenue

53
Q

Rate of Productivity growth

A

Compares the amount of year of output produced to the amount of input (resources) going into production from one defined time period (e.g. year) to the next

54
Q

Rate of Productivity growth indicate

A

if organisation is using resources more effectively, fewer inputs to obtain same level of output OR more output is produced from the same input

55
Q

Level of wastage

A

The amount of resources discard by the business during the production process

56
Q

Level of wastage indicate

A

Reduction of waste–>cut costs—>greater profit
Higher levels of waste—>negative impact on environment

57
Q

List Business Environments

A

Macro, operating, internal

58
Q

Macro Factors

A

Influences which business has no control over, always changing and so business must adapt to these factors to remain viable

59
Q

List macro factors

A

Legal & government regulations, societal attitudes and behaviours, economic condition, technological issues

60
Q

Legal & government regulations

A

refers to the business legislation (law) passed by local (council), state (victorian) or federal (Australian), as well as decisions made by the courts, that protect consumers, the community and the environment while encouraging fair trade and competition

61
Q

Societal attitudes & behaviours

A

Societal attitudes and behaviour includes external and internal customers’ (working, supplies) values, beliefs and customer trends trends. it includes what people currently think about the ways of working, how business should be operating and purchasing patterns

62
Q

Economic Conditions

A

Economic conditions includes all things financial, meaning when planning, businesses must take into consideration interest rates, tax rates, business confidence and consumer confidence levels

63
Q

Economic condition factors

A

interest rates, inflation, unemployment

64
Q

Interest rates

A

amount a lender charges a borrower and is a percentage of the principal- the amount lined. it can also refer to the amount earned on savings and investments

65
Q

Inflation

A

A rise in prices

66
Q

Unemployment

A

Refers to a situation where a person actively searches for employment but is unable to find work, considered a key measure of the health of the economy

Bus Man Year 10 (5 decks)

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