Unit 1 AOS2 - KK1-KK4

Question 1

Business Environment

Answer 1

The surrounding conditions in which a business operates.

Question 2

Internal/Micro environment

Answer 2

Factors over which the business has some
control, such as employees, managers, management style, products, corporate culture, etc.

Question 3

External Environment

Answer 3

Consists of all the elements outside a business that may act as pressures or forces on business operations.

Question 4

Operating/task environment

Answer 4

The specific outside stakeholders with whom the business interacts in conducting its business, such as: suppliers, employees, competitors and special interest groups.

Question 5

Macro Environment

Answer 5

The broader conditions and trends in the economy and society within which a business operates like: CSR considerations, global issues, government regulations, societal attitudes, etc.

Question 6

External Environment Influence on Internal Environment

Answer 6

The external environment has a much greater degree of influence on the internal environment of the business than vice versa.

Question 7

Internal Environment Influence on External Environment

Answer 7

Businesses can sometimes influence various aspects of their operating environment and, in rare instances, even the macro environment to a small degree.

Question 8

Unincorporated Business

Answer 8

Business has no separate legal existence from its owner/s and will either be a sole trader or partnership.

Question 9

Incorporated Business

Answer 9

What businesses go through to become a registered company and a separate legal entity (limited.)

Question 10

Unlimited Liability
(sole traders and partnerships)

Answer 10

The owner/s of a business are held personally responsible for any dents incurred by the business.

Question 11

Limited Liability
(companies)

Answer 11

Shareholders of the business are not personally held responsible for any of the debts incurred by the business.

Question 12

Freelance

Answer 12

An individual that is self-employed and hired to work for different businesses.

Question 13

Board of Directors

Answer 13

A group (3-20) that takes leadership role in an organization to protect interest of stakeholders. Boards are responsible for making high-level decisions about the company.

Question 14

Sole traders

Answer 14

-An unincorporated business that is owned by one owner.

Question 15

Partnerships

Answer 15

Unincorporated business that is owned by between 2-20 people.

Question 16

Limited Partnerships

Answer 16

One or more partners contribute financially but have no involvement in business operations.

Question 17

Private Limited Companies

Answer 17

An incorporated business that’s owned by between 1-50 non-employee shareholders.

Question 18

Public Listed Companies

Answer 18

An incorporated business that’s owned by minimum of 1 shareholder and a minimum of three directors. There is no maximum amount of shareholders.

Question 19

Social Enterprises

Answer 19

A business that exists to fulfill a social need that benefits the public and community, rather than shareholders.

Question 20

Government Business Enterprises

Answer 20

Government owned and operated businesses.

Question 21

Business Model

Answer 21

The general framework in which the way a business will run its operations to generate a profit and run on a day-to-day basis.

Question 22

Online Businesses

Answer 22

Exist solely on the internet with a small number of offices to facilitate business operations.

Question 23

Bricks and Mortar

Answer 23

Businesses that have a physical location.

Some have had to adapt and establish an online presence with their physical stores - known as bricks and clicks.

Question 24

Direct-to-Consumer

Answer 24

Businesses that sell their goods directly to consumers without any intermediaries like retailers or wholesalers.

Question 25

Franchise

Answer 25

A business structure where the owner (the franchisee) pays a franchise fee to trade using goods, service, name, system and trademark of an existing business (the franchise.)

Question 26

Importer

Answer 26

Businesses that source goods from overseas for sale in Australia due to their superior quality, cheaper cost of production, or lack of viable alternatives.

Question 27

Exporter

Answer 27

Businesses that sell Australian produced goods and services to overseas customers.

Question 28

Sole traders - advantages and disadvantages

Answer 28

Advantages: -Inexpensive to set up -Owner has complete control and can enjoy 100% of profits. -no partner conflicts -business can be sold without consent from anyone. Disadvantages: -Unlimited liability -Healthy work-life balance is hard -Owner supplies most capital -Hard to raise capital for expansion

Question 29

Partnerships - advantages and disadvantages

Answer 29

Advantages: -Inexpensive to set up -Workload is shared -Easier to raise capital -Debts and obligations are shared -Healthy work-life balance -Unique set of skills and expertise Disadvantages: -Unlimited liability -Profits are shared -Partner conflict -Difficult to remove a partner -Everyone is responsible for actions of each partner

Question 30

Social enterprises - advantages and disadvantages

Answer 30

Advantages: -Can open up new markets -Meet social need -Make a positive impact on reputation, profit, market share. Disadvantages: -Difficulty obtaining capital to start. -Difficult to focus on social/financial objectives.

Question 31

Government businesses enterprises- advantages and disadvantages

Answer 31

Advantages: -Can operate with independence from government. -Provision for healthy competition to businesses operating in private sector -Can lead to lower prices in the market. Disadvantages: -Political interference -Excessive regulations or rigid conformity to rules. -Changing governments can provide instability.

Question 32

Sole traders - characteristics

Answer 32

-Can hire employees -Have an ABN -Name of businesses is registered with ABIC -They provide finances/make decisions.

Question 33

Partnerships - characteristics

Answer 33

-Unlimited -Possible to have 20+ people, like accountants and solicitors -Limited partnerships exists -can be formed by writing a partnership agreement or by implication

Question 34

Private limited companies- characteristics

Answer 34

-Must have at least one director and shareholder -Shares sold privately -tend to be small to medium sized and family owned -Must have Pty Lt after its name -Annual reports outlining the businesses financial performance must be published yearly to allow shareholders to make decisions.

Question 35

Public listed companies- characteristics

Answer 35

-At least 3 shareholders -Financial report must be published yearly -Limited -Shares are available to the public on ASX. -Must have Ltd after its name

Question 36

Social enterprises- characteristics

Answer 36

-Provides essential goods and services to disadvantaged -Provides employment -Access to better quality of life -May have an objective to make a profit, but it'll be reinvested back into the business.

Question 37

Government business enterprises- characteristics

Answer 37

-Run like companies, have a board of directors and a shareholder (government) -Employ many people with the aim to make profit.

Question 38

Online businesses- advantages and disadvantages

Answer 38

Advantages: -24/7 trading -Easy to access -Lower costs (only if business is exclusively online) -All over the world -Saves time Disadvantages: -Not able to physically feel or see the item. -Temptation to overspend -Shipping costs -Risk of fraud -Return process

Question 39

bricks and mortar- advantages and disadvantages

Answer 39

Advantages: -Costumers can interact with products -Face-to-face interactions with workers -Immediate gratification Disadvantages: -Time consuming -not 24/7 trade -expensive to establish -difficult to remain competitive on price

Question 40

Direct-to-consumer- advantages and disadvantages

Answer 40

Advantages: -Build customer loyalty -Lower costs -Competitive in terms of price -Connection with costumers -Brand control -Higher margin Disadvantages: -Time consuming as business must master all steps in making product -Cybersecurity and data protection (online) -Higher initial costs -Costumer acquisition

Question 41

Franchise- advantages and disadvantages

Answer 41

Advantages: -Business owner receives benefits of a successful business formula, recognized name and registered trademark -Higher success rate -Lower risk Disadvantages: -Little scope for making independent decisions -Forgoes the possibility of expanding an original brand -Initial costs -Ongoing fees

Question 42

Importer- advantages and disadvantages

Answer 42

Advantages: -Grow and expand businesses -Sell products that aren't available locally -Access to global markets -Wide range of variety/quality Disadvantages: -Goods need to meet Australian consumer standards -Factor in costs, distribution, and taxes -Increased competition -Job losses -Trade imbalance

Question 43

Exporter- advantages and disadvantages

Answer 43

Advantages: -Grow and expand businesses -Increased competition -Increased life cycle of business products -Reduce dependence on local markets and open new markets Disadvantages: -Legal requirements -Foreign exchange -shipping and quarantine issues -Job losses -Trade imbalance

Question 44

When purchasing an existing business, what is included in the purchase?

Answer 44

-Stock and equipment -Business premises -Employees -Existing customer base -Reputation -Goodwill (the monetary value attached to the reputation of a business)

Question 45

Goodwill

Answer 45

the cost of intangible assets, such as business reputation, customer loyalty, etc.

Question 46

When purchasing an existing business, the buyer must investigate and examine...

Answer 46

-investigate why the business is for sale because if the company has been struggling, it may not be good for purchase. -Examine the business detailed accounts for at least previous three years to determine its financial health because the true value of goodwill is hard to estimate. As a result, an accountant is a must.

Question 47

Buying an existing business- advantages and disadvantages

Answer 47

Advantages: -Good business history leads to success -Stock has already been acquired and is ready for sale -Seller may offer advice or training -Employment is set -Instant income Disadvantages: -Employees may resent change of business operations -Poor reputation may be difficult to change -Sucess may be linked to previous owners' success and contracts, so when sold it can be lost.

Question 48

Buying a new business- advantages and disadvantages

Answer 48

Advantages: -Freedom to run operations exactly how they wish -No goodwill -If owner has smaller funds they can start from a smaller scale -Determine pace and growth of change -Fresh start Disadvantages: -Higher risk and uncertainty -Time consuming to build loyal customer fanbase, staff and lines of credit from suppliers -Slow starts may lead to profits not being generated -Difficult to secure all finances