Unit 1 ASO2 - KK5-KK8

Question 1

Resources

Answer 1

The items needed for the business to make goods and services, as well as to function properly.

Question 2

Natural resources

Answer 2

Resources coming from the natural environment.

Question 3

Labour resources

Answer 3

people who provide intellectual skill, knowledge and manual effort to make goods and services.

Question 4

Capital resources

Answer 4

Tools, machines, equipment, buildings or vehicles that are used to assist in the production of goods and services.

Question 5

Shopping Centre

Answer 5

a center with one or more supermarkets and a number of specialists stores, sometimes includes major department stores and cinemas.

Question 6

Shopping Centre - pros and cons

Answer 6

Pros:
-Excellent location to purchase a business
-Higher success rate, if no existing competitors

Cons:
-Lease can be expensive
-Set hours based on shopping center hours
-Rely on center renewing its lease or forced to move to a new location

Question 7

Retail shopping strips- pros and cons

Answer 7

Pros:
-Higher visibility for passing traffic
-Reduced costs
-Strong source of customers
-Popular location for restaurants or ‘after hours’ entertainment

Cons:
-Struggle to compete with growth of shopping centers
-Lack of parking
-Limited protection from weather conditions

Question 8

Retail shopping strips

Answer 8

stores arranged in a row, with a footpath in front.

Question 9

Online presence

Answer 9

internet presence through websites, social media, etc.

Question 10

Online presence - pros and cons

Answer 10

Pros:
-Keep up with competition and benefits from online sale, if physical presence exists.
-increased access to customers.

Cons:
-Avoid expenses like rent
-significant cost of planning, designing and maintaining an online presence.
-protect personal data and cybersecurity issues

Question 11

Home business

Answer 11

provide services in customers own homes or in business premises.

Question 12

Home business - pros and cons

Answer 12

Pros:
-Low cost, no rent or purchases
-Lower risk
-Flexibility and reduces commuting time

Cons:
-Difficult to keep work and home seperate
-Many feel isolated from other people and may miss social interactions

Question 13

Factors affecting business’s choice of location

Answer 13

-Visibility
-Cost
-Proximity to customers and suppliers
-Proximity to competitors
-Complementary businesses

Question 14

Visibility

Answer 14

Reaching target audience.

A higher visibility is deal so an owner may choose a prime shopping area.

Question 15

Cost

Answer 15

Busy/central location –> less expensive to lease or purchase
Less busy area–>less expensive to lease or purchase

Question 16

Proximity to customers and suppliers

Answer 16

Businesses will locate close to suppliers, supply, transportation and storage costs will decrease.

Customer convenience is a business is close or nearby.

Question 17

Proximity to competitors

Answer 17

Business ideally want to locate far away from competitors. However, this is not always possible, because businesses will locate in the most profitable area, which can result being near competitors.

Question 18

Complementary businesses

Answer 18

Sell goods and services aimed at the same costumers and are often located next to each other.

Question 19

Equity finance (internal source of funds)

Answer 19

The funds contributed by the owner(s) of a business to start and build a business.

Question 20

Equity finance - pros and cons

Answer 20

Pros:
-Does not need to be repaid (unless owner leaves)
-Cheaper since no interest payments.
-Retain control over now finances are used.

Cons:

-can damage relationships if getting money from family/friends
-high risk of loosing investment
-does not gaurantee success
-may need to share profits if borrowing from friends/family
-if owner gets a private investor they will lose some control.

Question 21

Debt finance (external source of funds)

Answer 21

funds provided through banks, government, suppliers, other financial institutions. Debt (borrowing) must be paid back over time, with interest.

Short term: bank overdraft, bank bills and trade credit

long term: mortgage, leasing, bank loans

Question 22

Government grants (external source of funds)

Answer 22

Funds that can be obtained by the government to open and start a company.

Question 23

Debt finance - pros and cons

Answer 23

Pros:
-increased earnings and profits
-Borrow large sums

Cons:
-Higher risk
-Must generate sufficient earnings to make payments
-Late payments –> additional fees
-Need to pay back with interest

Question 24

Government grants - pros and cons

Answer 24

Pros:
- Supports projects
-Create employment opportunities
-Helps new businesses to launch

Cons:
-Grants must meet conditions imposed and be used for a specific purpose
-Application process
-No guarantee for success

Question 25

What factors affect business choice of finance?

Answer 25

-Terms of finance -Business structure -flexibility -level of control -overall costs

Question 26

Terms of finance

Answer 26

-Need to suit purpose for which funds are required -Using short-term finance to fund long-term and vice versa

Question 26

Business structure

Answer 26

-Large business --> more opportunity for equity capital -Small business --> need to raise equity from private sources or by taking on a partner

Question 27

Flexibility

Answer 27

-Adjust to changes out of your control as the way a business previously sources finnce may change.

Question 28

Level of control

Answer 28

-Owners wish to retain as much control over business and its finances. -Partners and investors may have other ideas on how to source finances, which can undermine the level of control for the owner.

Question 29

Overall Cost

Answer 29

-Overall cost of each alternative source of finance. -Calculate cost of each source of finance to make well informed decisions when planning financial needs.

Question 30

Solicitors

Answer 30

Provide information concerning business formation and structures registration, contracts, leases, partnership agreements, patents and legislation. Are also up to date with changed to company law and can advise the business owner on how to best deal with them.

Question 31

Accountant

Answer 31

Provide advice on all financial management issues and taxation obligations. They have access to latest changes to taxation and financial reporting requirements, as well as know the procedures for recording financial events (transactions) accurately, speedily, and with maximum security.

Question 32

Bank managers

Answer 32

Provide information and advice on financial services, sources of finance and basic business management.

Question 33

Technological advice

Answer 33

Businesses should consider purchasing computer equipment from vendors offering technological expertise and consulting services, or partner with an ICT consultant to gain valuable expertise and ensure smooth technology integration. Businesses should utilize business.gov.com for advice on establishing an online presence, e-commence, social media marketing and online marketing techniques.

Question 34

Community based services

Answer 34

Businesses owners should seek assistance from the following non-profit organizations which offer information, mentoring training courses, seminars and referrals, and access to networks of other centers. -Businesses service clubs like Rotary, Apex and Lions -Business enterprise centers Australia -Small business centers Victoria

Question 35

Chambers of commerce- Formal networks (private)

Answer 35

Chambers of commerce provides legal and financial help, taxation advice, explanations of legislation, and industrial relations information, as well as organize training seminars, industry conferences, liaisons with government departments.

Question 36

VCCI- Formal networks (private)

Answer 36

Victorian chamber of commerce and industry provides guidance on human resource matters, like recruitment, and support for business-members who may be in dispute with their employees.

Question 37

Small business association of Australia- Formal networks (private)

Answer 37

Small business association of Australia provides a forum for exchanging news and information relating to small business matters, while promoting the role of small businesses in the economy.

Question 38

Trade associations - Formal networks (private)

Answer 38

Trade associations offer industry-specific news and networking opportunities. e.g. Australian medical association

Question 39

Informal networks

Answer 39

Business owners often rely on their network of friends, collogues, and local business owners to gain information and advice.

Question 40

Mentors

Answer 40

Small business owners seek advice on a regular basis from a person who is experiences or knowledgeable in the field. They can give insight on innovative ideas and strategies to everyday business problems.

Question 41

Federal government - formal networks

Answer 41

Deliver assistance programs and services that support businesses such as: -Austrade: help business develops international markets. -ABS: statistics on a wide range of economic, environmental and social factors. -ATO: information on taxation and starting/running a business.

Question 42

State government - formal networks

Answer 42

-Department of jobs, precincts, and regions business vic website provides information and support when starting and managing a business. -VSBC: statutory office established to enhance a competitive and fair operating environment for small and medium businesses.

Question 43

Local government - formal networks

Answer 43

-Assistance in land zoning -Assistance with development applications -Assistance with subsided land