business management unit 1 aos 2

factors inside the environment that impact day-to-day life and that businesses have full control over.

Internal Business Environment - KK1

The environment businesses have less control over.

Operating Business Environment - KK1

The environment businesses have no control over.

Macro Business Environment - KK1

Made up of the operating and macro environments. Changes in the external environment cannot be ignored.

External Business Environment - KK1

1) Employees
2) Legal business structure
3) Type of business model
4) Business location
5) Sources of finance
6) Business support services

Internal business environment examples - KK1

1) Customers
2) Suppliers
3) Competitors

Operating business environment examples - KK1

1) Corporate social responsibility considerations
2) Global issues
3) Economic conditions
4) Legal and government regulations
5) Societal attitudes and behaviours
6) Technological considerations

Macro business environment examples - KK1

a business structure owned and operated by one person

Sole Trader - KK2

• Full decision making
  • cheapest and simplest business to set up and maintain

Sole trader advantages - KK2

• Full legal responsibility
  • High risk
  • recourses are limited (skill and materials)

Sole trader disadvantages - KK2

dentist, hairdresser

Sole trader examples - KK2

A business structure that is owned by 2-20 owners

Partnership - KK2

• unincorporated
  • inexpensive and easy to establish
  • financial risk is distributed
  • recourses and expertise is combined
  • income tax is split between share of profits

Partnership advantages - KK2

• unlimited liability over business debt
  • disagreements
  • partners wanting to leave threaten business existance
  • pay personal income tax rate

Partnership disadvantages - KK2

cafe, bakery, fruit shop

Partnership examples - KK2

an incorporated business structure that has at least one director and a maximum of 50 shareholders

Private Company Limited (Pty Ltd) - KK2

• limited liability over business debt (only responsible for their share)
  • extra capital can be attained by issuing more shares
  • existence is not threatened when shareholder sells shares

Private Company Limited advantages- KK2

• shareholders are selected and approved by a board of directors
  • shareholders expect to receive dividends and the value of their shares to increase
  • shareholders can only sell shares to people approved by business
  • high degree of complexity to set up
  • high establishment cost
  • high degree of government control and regulation
  • potential for disputes

Private Company Limited disadvantages - KK2

LEGO, IKEA, Rolex

Private Company Limited examples - KK2

A public limited company is an incorporated business that had an unlimited number of shareholders and lists and sells its shares on ASX

Public Limited Company (LTD) - KK2

• managed by a board of directors
  • limited liability
  • anyone in public can buy/sell shares
  • grater access to expertise and ideas
  • sell more shares = more money

Public Listed Company advantages - KK2

• expensive to establish
  • government stipulates they have to share financial reports to public and pay company tax
  • minimum of 1 shareholder and 3 directors to start

Public Listed Company disadvantages - KK2

Apple, Coles, Nike

Public Listed Company examples - KK2

A social enterprise is a type of business that aims to fulfil a community or environmental need by selling goods or services. They are not considered as a legal business structure, and instead are considered as sole traders partnerships or private companies who's main object is to support social or environmental causes.

Social enterprise - KK2

• donate most profit to addressing social issues rather than to shareholders/owners
  • differs from charities as they earn revenue through sales - not donations

Social enterprise advantages - KK2

• must contribute 50% of profit (in Victoria) to be considered as a social enterprise
  • high level of risk
  • liability depends on legal structure (sole trader, proprietorship, ect)
  • more expensive to set up and run
  • more challenging to get a bank loan

Social enterprise disadvantages - KK2

Yarra View Nursery, Malala Fund

Social enterprise examples - KK2

A government business enterprise is a business owned and operated by the government. They operate in the public sector

Government Business Enterprise - KK2

• deliver goods and services that help the community

Government Business Enterprise advantages - KK2

• initial investment comes from government (business isn't as well resourced as it might need to be)
  • accountability can be a problem
  • productivity may be lower than private sector.

Government Business Enterprise disadvantages - KK2

police force, hospitals, public schools, firefighters

Government Business Enterprise examples - KK2

Outlines a business' plan of how it will function and make a profit

Business model - KK3

Goods/services traded via the internet

Online Business - KK3

other businesses pay for promotional space on the website

Advertising Model (Online Business) - KK3

Facebook, Youtube, Instagram, Google

Advertising Model examples - KK3

transactions are made through a platform/marketplace provided by a third party, where buyers and sellers are brought together. Money is earned by charging sellers a fee when a sale is made.

Brokerage Model (Online Business) - KK3

Ebay, Etsy, QuickBuy

Brokerage Model examples - KK3

Makes direct sales to consumers via the internet

Direct-To-Consumer/Merchant Model (Online Business) - KK3

Cotton On, Tesla, L'Oreal, Disney

Direct-To-Consumer/Merchant Model examples - KK3

A business who charges consumers a regular fee to use the service

Subscription Model (Online Business) - KK3

Netflix, Binge, Disney+, Spotify

Subscription Model example - KK3

Where the business' products are sold directly to consumers with no intermediaries involved

Direct-To-Consumer Business - KK3

A business has a physical store presence where customers experiance face-to-face customer service.

Bricks-And-Mortar Business - KK3

When a bricks-and-mortar business has an accompanying website. A combination of a bricks-and-mortar business model and an online business model.

Clicks-And-Mortar Business - KK3

coffee shops, local grocery stores, pet shops

Bricks-And-Mortar Business examples - KK3

When a business allows another person to operate under its name, use its business systems and sell its goods/services.

Franchise Business Model - KK3

McDonald's, 7-Eleven, Starbucks, Subway

Franchise Business Model examples - KK3

A model that purchases goods/services from overseas and sells them to its home country.

Importer Business Model - KK3

A model that produces goods/services in its home country and sells them overseas.

Exporter Business Model - KK3

clothing, vehicles, technology

Importer Business Model examples - KK3

gold, coal, iron ore, education

Exporter Business Model examples- KK3

Involves buying a business that is already set up and operating. It is crucial for potential buyers to evaluate a business' likelihood of future success before purchasing.

Purchasing an Existing Business - KK4

The calculated monetary value of a business' established reputation.

Goodwill - KK4

• established reputation with customers
• advice/assistance from existing employees/original business owner
• experienced employees
• time saved in setting up business
• immediate revenue generation

Advantages of Purchasing an Existing Business - KK4

• difficult to jusge business' reputation accurately
• previous success may have been due to previous owner's personality or personal contacts
• uncooperative employees due to ownership change
• goodwill can be difficult to value so the business can be overpriced

Disadvantages of Purchasing an Existing Business - KK4

Involves creating a new business from scratch. Often the best choice for individuals with innovative ideas not yet in the market.

Establishing a New Business - KK4

• having full control of deciding business systems
• decision-making control over store layout and staff
• fulfil a gap in the market
• quick decision-making (no referring to anyone else)
• no goodwill costs

Advantages of Establishing a New Business - KK4

• new customer base needs to be established
• greater risk/uncertainty
  -time consuming (training staff/setting up business)
• harder to secure finance without previous reputation
• greater expense
• slower to earn revenue without prior customer base

Disadvantages of Establishing a New Business - KK4

Corporate social responsibility is the ethical conduct of a business beyond legal obligations, and the consideration of social, economic and environmental impacts when making business decisions.

CSR - KK5

Natural resources are raw materials from the environment that are used in the production of goods/services

Natural resources - KK5

• vegetables
• wood
• water
• oil
• land
• gold

Natural resource examples - KK5

• cost
• quantity
• seasonal availability
• location
• reliability
• environmental impact
• perishability
• storage

Affecting Factors of a Business' Use of Natural Resources are… - KK5

Labour resources are the people who provide the business with their skills to conduct business activities

Labour resources - KK5

• wages/salaries
• quantity
• providing job security
• timing
• qualifications
• improving employees wellbeing
• skills/knowledge
• training

Affecting Factors of labor resources are… - KK5

Capital resources are the man-made goods used in the production of gods/services

Capital resources - KK5

• factories
• tools
• equipment
• technology
• machines

Capital resource examples - KK5

• cost
• quality
• social responsibility
• capability
• operation requirements
• maintenance
• sustainability

Affecting Factors of the use of Capital Resources - KK5

Shopping centres are major shopping destinations as there are many stores that make up the centre. They act as a central point for an individual's needs.

Shopping Centres - KK6

• visibility/accessibility
• cost (high rent)
• proximity to customers, suppliers, competitors and complimentary businesses
• area demographics
• laws and regulations

Affecting factors of Shopping Centres - KK6

Shopping strips are often near public transport and are suitable for nighttime entertainment (shopping centres are closed).

Shopping Strips - KK6

• visibility/accessibility
• cost
• proximity to competitors, complimentary businesses, suppliers and customers
• area demographics
• laws and regulations

Affecting factors of Shopping Strips - KK6

Home businesses are business who don't need a specific location and operate at home. Due to technological development, this is becoming more common.

Home Businesses - KK6

• visibility (little)/ accessibility
• cost (cheaper)
• proximity to competitors, complimentary businesses
• personal factors
• area demographics
• laws and regulations

Affecting factors of Home Businesses - KK6

Money to contributing to a business by an investor in exchange for partial ownership.

Equity Capital - KK7

• less of a burden with equity finance, hence theres no loan to repay
• learn and gain from partners

Equity capital advantages - KK7

• company gives up a portion of their ownership
• leaders are forced to consult with investors when making a deal
• equity typically costs more than debt financing due to high risk
• often hard to find investors

Equity capital disadvantages - KK7

• common stocks/shares
• retained earnings
• referred stock

Example of equity capital - KK7

Borrowed funds that must be paid at a later date. These loans can be long or short term.

Debt Capital - KK7

• won't give up business ownership
• tax deductions
• establish and build business credit/debt financing can save money

Debt Capital Advantages - KK7

• potential for personal liability
• high interest rates

Debt Capital Disadvantages - KK7

receiving loans from banks

Debt Capital Real World Example - KK7

Money provided by a government or another organisation for a particular reason.

Grants - KK7

• never expected to be repaid
• assists businesses
• provided by the government

Grant advantages - KK7

• not much flexibility
• not much control over how the business uses the grant

Grant Disadvantages - KK7

Agreements between banks and businesses that allow businesses to withdraw money below 0 and pay it back later.

Overdraft facilities - KK7

• high flexibility
• quick access to additional funds
• great for uncertain amounts

Overdraft Facilities Advantages - KK7

• high interest rates
• expensive source of finance
• business owners don't control the ability to access overdraft facilities and banks can terminate the facility at any time
• low borrowing limit

Overdraft Facilities Disadvantages - KK7

The specialised people, facilities or amenities that aim to help a business successfully operate

Business support services - KK8

Ensure that a business meets all legal requirements

Legal support services - KK8

Assist in managing a business' finances

Financial support services - KK8

Assist in managing and implementing technologies available to businesses.

Technological support services - KK8

Services that assist in engaging a business with the community

Community-based support services - KK8

Official and professional interconnected groups of people and businesses.

Formal networks - KK8

unofficial and interconnected groups of people that offer advice to business owners.

Informal networks - KK8

Experienced individuals who can assist in providing expert advice and feedback.

Business Mentors - KK8

The process of establishing a business' goals and developing strategies to achieve them.

Business Planning - KK9/10

A document that outlines a business' goals and objectives as well as strategies to achieve them.

A Business Plan - KK9/10

• executive summary
• business brand
• operations plan
• financial plan
• business owners
• product
• marketing plan
• CSR
• supporting documents

Key features of a Business Plan - KK9/10

• helps owner determine business viability
• helps establish goals
• helps owner gain a better understanding of market, industry, competitors and customers
• can be used to help measure performance
• help employees understand the business and its objectives
• saves time by planning ahead for potential problems
• helps obtain external financing if financiers can see the business is viable.
• helps to plan for costs and avoid unnecessary spending

Business Plan Benefits - KK9/10

A planning tool that helps businesses identify their internal strengths and weaknesses as well as any external opportunities and threats.

SWOT analysis - KK9/10