VCE Buieness Management warmup questions 2 Flashcards
(15 cards)
Justify the decision by Blue Berry Juice to change to a public listed company. (4 marks)
A public listed company is an incorporated business with many shareholders that is listed on the Australian Securities Exchange (ASX). The owners of Blue Berry Juice may wish to change from a partnership to a public listed company to pay company tax on revenue, which is usually taxed at a lower rate than personal income tax, which is what revenues for partnerships are taxed on, thus, to maximise Blue Berry Juice’s profits. Another advantage is Blue Berry Juice may receive increased funding from the Australian public purchasing company shares, which was impossible as a partnership. Hence, Blue Berry Juice could raise more money to facilitate the business’s expansion into overseas markets. Another advantage is public listed companies are incorporated with limited liability, meaning the owners of Blue Berry Juice are not personally responsible for all business debts, which is not the case for partnerships, hence benefits the owner
Recommend to Ray a source of finance he could utilise to source the funds needed to start his business,
and two factors affecting this choice. (3 marks)
One source of finance is a bank. Ray could get a small business loan with a low interest
rate that he can pay back over a number of years. This would allow him to get enough money to purchase
any equipment, such as pliers or ladders, that he might have been using that were owned by his past
employer. This is a good source of finance as it is readily available for the right borrower (i.e. a bank will
always have enough money to lend) and will have predictable repayments so he can budget for them.
There are also no emotional troubles or awkwardness when borrowing from a bank, compared to
borrowing from a relative or friend
Define Lean Management? (2 marks)
Lean Management involves the process of pull,one piece flow,takt and zero defects. Lean management aims for continous improvement seeking to eliminate any waste of time by revisiting each step of the buieness plan and cutting steps that don’t add value.
Kahinde has developed a new pizza recipe that he believes will sell strongly. He is trying to choose the most appropriate business model for his idea.
a. Describe a business model that would be suitable for Kahinde’s business.
A business model that would be suitable for Kahinde’s business is a franchise. Under a franchise agreement other people will buy the rights to use Kahinde’s business name and distribute his new pizza. Kahinde’s business will grant the right to these people to use its name and products, and will be known as the franchisor, while the individuals or businesses that buy those rights are known as the franchisees.
Highlight disatavantages of a franchise
Other accepted disadvantages of franchises: profits must be shared with the franchisor through the payment of ongoing franchise fees, the franchisor often charges additional service fees for advice, the franchisee is often required to purchase stock from the franchisor and may not be able to shop around for cheaper supplies, contracts may be biased in favour of the franchisor, the franchisee must share the burden of the franchisor’s business mistakes.
Highlight advantages of a franchise
Other accepted advantages of franchises: immediate benefit is derived from the franchisor’s goodwill because the name is established, a franchisee can succeed despite having limited experience, equipment and premises design are usually established and operational, well-planned advertising often exists, volume buying is possible, which often results in cheaper stock, a business plan and proven business methods already exist.
Explain the disadvantages of the business model you identified in part a.
However, a disadvantage of a franchise is that there is little independence because the franchisor has control over much of the operations. The franchisor makes most key strategic decisions. Another disadvantage is that the costs and fees may be excessive. This may reduce the franchisee’s profits.
Explain the advantages of the buieness model identified in part A?
An advantage of a franchise as a business model is that the business using it usually has a proven business model, meaning that success is more likely and there is a reduced risk of the prospective business owner’s business failing. Another advantage is that it is likely that support and advice will be provided to the franchisee by the franchisor. For example, the franchisor will often provide training and management backup.
Propose and justify a suitable location for a bakery?
An suitable location for a bakery would be within a shopping strip or near an existing
supermarket; somewhere with lots of foot traffic. Since lots of people go to a supermarket to purchase
food, they are likely to purchase bread from a bakery in the same trip, therefore being next to a
supermarket would be advantageous.
Propose and justify a suitable location for a cinema?
A suitable location for a cinema would be one that has lots of space for parking and preferably close to
food establishments, as people often like to go out for dinner and to the cinema in the same outing. Also,
as most movies go for two or more hours, and are at night, it is likely that people will want to drive to the
cinema and leave their car. Also, it would also be best if it were located in a central location, such as
within a large town, in order to attract lots of customers as most people only visit a cinema occasionally
(so a small town might not attract enough custom to be viable)
Advise Ray of the benefit of writing a business plan and identify the key sections he should include in
the business plan.
The benefit of writing a business plan is that it sets out all the specific plans for the business. This gives direction to the business and allows the managers to determine where to spend the
money. It also allows them to set goals for the business to determine if it is running successfully and also
to figure out the strategies to achieve those goals. This can then be used to create predictions of revenue,
expenses and profit. Once created, the business plan can also help the manager to apply for loans or other funding for the business. The plan should contain sections, such as the business model, vision and mission statements, description of the product, legal considerations, financial planning and proposed marketing
