Business Management Outcome 2

Revision for SAC 2 Business Planning and Decision Making

Internal Environments

Aspects inside the business that the business can control. e.g. employees

External Environments

Aspects outside the business that a business can not control. e.g. new laws coming into place

How does external environments impact the internal environments of a business?

External environments can impact internal environments in business planning by influencing company policies, employee behavior, and operational procedures. For instance, changes in regulations may require businesses to adapt their practices to remain compliant.

Sole Trader (name 1 advantage and 1 disadvantage)

Single Owner

Advantage: complete control over decision making

Disadvantage: more risk and pressure

Company (name 1 advantage and 1 disadvantage)

A legal entity owned by shareholders

Advantage: more money to start business

limited liability

Disadvantage: expensive cost of employees

Partnership (name 1 advantage and 1 disadvantage)

A business with 2-20 owners

Advantage: shared responsibility

Disadvantage: share profits

fallouts with partners

Bricks and Mortar (Business Model)

Business that has physical locations e.g. stores

Advantage: people can see in real life what they are buying

Disadvantage: expensive to maintain and establish

Clicks and Mortar (Business Model)

Business that has an online and physical store

Advantage: face to face interactions as well as reach global market

Disadvantage: online competitors and expensive to have a physical store

Online (Business Model)

Business that sells goods over the internet

Advantage: reach global market

Disadvantage: unsatisfied customers due to not seeing physical items

Importer (Business Model)

Business that brings goods into a country from overseas for sale

Advantage: provides goods that aren’t available in Australia

Disadvantage: cost (shipping, delivery, taxes)

Exporter (Business Model)

Business that sells goods to other countries from its home country.

Advantage: global market

Disadvantage: shipping costs and taxes

Social Enterprise (Business Model)

Business that aims to improve and benefit the community

Advantage: fulfil social need

Disadvantage: operating costs

Franchise (Business Model)

Business buys rights to sell goods under its name e.g. Macdonalds

Advantage: Higher success rate than starting new business

Disadvantage: less control to make own decisions

Starting a business from scratch (Adv and Dis)

Advantage: full control over how business is set up and the owner can determine the pace of growth and change

Disadvantage: high level of risk and need to develop a customer base from scratch

Buying and existing business (Adv and Dis)

Advantage: business already operating and set up and has employees

Disadvantage: hard to recover from poor reputation and employees may resent change

Natural Resources

Raw, natural materials that come from the earth e.g. wood, water etc

Labour Resources

Human Resources of people involved in the business e.g. employees skills, knowledge, experience and work

Capital Resources

Human made materials (tools, machinery, vehicles, buildings etc)

Factors to consider when resourcing

Business must consider the QUALITY of resources, RELIABILITY of suppliers and resources and SOCIAL RESPONSIBILITY to maintain a reputation of being ethically and socially responsible

Business Locations

Each business has different location needs depending on the type of business they operate

What location best suits RETAIL ?

A place with high visibility and foot traffic

What location best suits MANUFACTURE?

A place with easy access to transport routes and a large space

What location best suits WHOLESALERS?

A place with a lot of space and easy access to transport routes, e.g. warehouse

What location best suits SERVICE BUSINESS?

An office or commercial space with easy access and client parking

What location best suits ONLINE BUSINESS?

A place with quality internet, can be operated from anywhere.

Bootstrapping (Business Finance)

Internal source of finance where business owner uses their personal finance to fund the business

Family or Friends (Business Finance)

Internal source of finance that is provided by family or friends

Private Investors (Business Finance)

Internal source of finance where investors contribute money in return for shares in the business’ profit

Shares (Business Finance)

Internal source of finance where a business may raise funds by offering shares in the business

Crowdfunding (Business Finance)

Internal source of raising finance by using online networks

Bank Overdraft (Business Finance)

External source of finance for short term borrowing where a bank allows business to overdraw its account to an agreed limit

Bank Bills (Business Finance)

External source of finance for short term borrowing are short term securities issued by a business and paid by the bank

Trade Credit (Business Finance)

External source of short term finance where a supplier provides products to a business with an agreement to pay later

Loan (Business Finance)

External source of long term finance where a business may use a business loan to start their business

Lease (Business Finance)

External source of long term finance that involves paying money to use equipment that is owned by another party

Government Grants (Business Finance)

External source of long term finance where government provides grants for business development

Business Support Services

Provide assistance to a business owner with their business planning, some support services are free of charge others come with a fee

Legal and Financial Advice (Support Services)

Evaulate different legal structures within business and provide advice on financial management e.g. Solicitor, Accountant, Bank Manager

Technological Advice (Support Services)

Purchasing equipment from a dealer who offers advice and back up support for all things technology e.g. eftpos

Community Based (Support Services)

Government has multiple support services within the community to assist with starting a business e.g. Small Business Centres Victoria

Informal Networks (Support Services)

Business people can network with friends and colleagues to gain business understanding

Business Mentors (Support Services)

Small business owners will often seek advice from people with more experience and knowledge in the field

Business Plan

Is a written statement of the goals and objectives for a business, and the steps to be taken to achieve them. Business Plan should be constantly changing

S.W.O.T Analysis

Planning tool that identifies the business’s internal strengths and weaknesses, as well as any opportunities and threats from the external environment.

S.W.O.T. Analysis and Business Planning

Important to use S.W.O.T Analysis during business planning to understand internal and external factors impacting the business. Knowing a businesses S.W.O.T they can make plans to improve the business