Business classification and legal

Business Definition

Organisation that produces goods and/or services with the goal of making a profit

Wealth Definition

The total value of assets owned by a person, business or country

Income Definition

Businesses create an income for people to pay for goods and services

Employment Definition

Refers to a business providing jobs and paying wages to individuals in return for their labour and skills

Producing Goods and Services Definition

A business will provide products which allow people to satisfy their wants and needs- consumers drive demand for products

Goods vs Services

Intangible, some perishable, contains ownership, limited customisation

Intangible, exist when performed, generally customised towards customer preference.

Innovation Definition

The development of new ideas or the improvement of already exisiting ones- Competitive advantage

Choice Definition

Consumers having options availability when spending their money = variety to satisfy preference.

Entrepreneurship & Risk

When a business identifies a gap in the market and takes the risk of innovating to create or EXPAND their business. -Pursuit of profit

Quality of life Definition

The overal wellbeing improving due to an outcome of the business

Incorporated Definition

When the company is a seperate entity from the owners.

Unincorporated Definition

When the business entity and the owner are regarded as one and the same

What is an advantage of perpetual succession

The company’s continuity – it keeps existing despite death, exit, or insolvency of owners or directors.

What is a disadvantage of perpetual succession

The risk of long‑term liabilities – debts and obligations can persist indefinitely and burden future owners.

What are two extra disadvantages of choosing a incorporated legal structure

Must lodge a financial report and directors report annually, increasing administrative costs.

Higher startup costs

What is a advantage of limited liability

Owners’ personal assets are generally protected from business debts.

What is a disadvantage of paying company tax

The same money can be taxed at the company level and then again on dividends-no tax‑free threshold for the company

What is a advantage of paying company tax

Company tax is often lower than higher personal rates, so keeping profits in the company can save tax due to the flat rate 26-30%

List one extra disadvantage and advantage for unincorporated

ad: less management stress and costs are shared therefore affective for businesses starting, shared responsibility

dis: possibility of disputes damaging business culture

What is a disadvantage of unlimited liability

If the business fails, your personal assets (house, savings, car, etc.) can be taken to cover its debts.

What is a advantage of paying income tax

If your income is low enough, you may not have to pay income tax at all (you just fall under the tax‑free threshold).

What is a disadvantage of paying income tax

If you have a very high‑income year, you pay at the top personal tax rate, which is usually much higher than the flat company tax rate you’d pay if the money stayed in a company.

What is a advantage of limited succession

Small and short-term businesses usually have easier tax and reporting rules than bigger, long-lasting companies.

What is a disadvantage of limited succession

If the business has limited succession, it can end or collapse quickly when the owner or key person leaves, retires, or dies, disrupting operations and jobs.

What is another classification

Government Enterprises (public sector business)- Function as a regular business however are owned and managed by the government. such as aus post

What are the three markets(MCPIGSLEFT)

Consumer, labour and finance

What are the competitive situations(MCPIGSLEFT)

Monopoly: Usually only one main company in the industry
Monopolisitic comp: most common in australia, there are lots of similar businesses with slight differenciation
Oligopoly: A small number of large businesses dominating the markets
Perfect comp: Many businesses selling a product that cant be differenciated

What are the political influences (MCPIGSLEFT)

Changes to policy
There are two types of political influences taxation and environmental

What is an example of a political: taxation(MCPIGSLEFT)

Goods and services tax or company tax

What are institutional influences(MCPIGSLEFT)

Organisations that are not businesses but have an impact on them, most often regulatory bodies and trade unions.

What are geographical influences(MCPIGSLEFT)

the impact of the features of a population
demographics: needs and demands (gender, ethnicity, age, socioeconomic)
Locational: Effect of climate change, natural resource, physical infrastructure.

What is special about australias geographical location?(MCPIGSLEFT)

We are next to Asia Pacific region impacting the activity of imports and business in aus

What are Social Influences (MCPIGSLEFT)

The factors in society which alter consumer trends and spending habits, businesses must respond to consumer wants
Social media is an amplification= FOR EXAMPLE OWALA ECO FRIENDLY SOCIAL MEDIA TREND

What are legal influences? (MCPIGSLEFT)

When a change to law occurs it impacts a business
laws can be made my parliament or state/federal courts
EXAMPLE: Legally gov banned social media affecting target marketing to teens and possibly pay fines to gov.

What are economic influences (MCPIGSLEFT)

Refers to the change in overall economic conditions. Economic cycles influence a businesses capacity to compete and customers willingness/ability to spend. (Businesses must respond to this)

What are the factors influencing a boom or bust economic (MCPIGSLEFT)

• Employment

• Incomes (pay rises)

• customer attitude (optimistic or pessimistic- increase customer spending)

What are the three policies the government implements to influence economic activity to keep it stable(MCPIGSLEFT)

• Monetary policy (RBA changing interest rates influencing money supply and inflation)

• Fiscal Policy (Government altering taxation to influence money supply and inflation)

• Microeconomic Reform (Government focusing in on a specific industry)

What are financial Influences (MCPIGSLEFT)

How easily a business can access capitol to finance project. There are 2 types: Debt finance and Equity

What is DEBT FINANCE- financial influence (MCPIGSLEFT)

Owner doesn’t have to sell any ownership of the business

Most popular source finance- however not everyone has access due to a low credit score.

What is EQUITY- financial influence (MCPIGSLEFT)

Raised from sale of shares and doesn’t have to be repaid unless owner leaves the business
Disadvantageous as owners/shareholders may expect a return on the investment.

What are technological influences (MCPIGSLEFT)

The growing use of tools, techniques or systems by businesses to solve a problem or serve a purpose in operations. (competitive advantage)

EXAMPLE: Self serve checkout may alienate a demographic but improves efficency.

What is the internal influence: for PRODUCT (PLMBR)

Product refers to the choice of tangible good a business sells, focusing on quality and product differentiation.

Involves when businesses compete to have product differentiation: Making a service or product distinct from competitors features of a unique product.

EXAMPLE: coke, coke zero, vanilla coke.

What is the internal influence: for LOCATION (PLMBR)

Location refers to the factors a business should consider to favour customer convenience and visibility.

What is the internal influence: for MANAGEMENT (PLMBR)

Refers to how a company’s management is structured, there are two types: Centralised (autocratic) and Decentralised.

What is the internal influence: for BUSINESS CULTURE (PLMBR)

Business culture refers to the values, expectations, beliefs and rituals shared by management and staff inside a business.  

What is the internal influence: for RESOURCES (PLMBR)

The inputs used by the business to create their product which the business can choose which resources they use falling under the categories: HR, Information resources, Physical resources and financial resources.

Define Human Resources

These are the employees of the business, its most important asset

Define Information Resources

Knowledge and data required by a business

Define Physical Resources

Tangible resources, raw material, tech, machinery, buildings

Define Financial Resources

The funds a business uses

What is a stakeholder

A person/group that can affect or be affected by the actions of a business

for example: CUSTOMERS, GOVERMNEMT EMPLOYEES

Acquisation

When one business takes control of another by purchasing and controlling interest in it

What is insolvency

When a business is unable to pay its debts as they fall due

What is involuntary and voluntary administration

When an incorporated business is either volunteers to find an administrator to help recover the business or decide to liquidate the business. Or a creditor/ASIC might take them to court and this causes court ordered liquidation

Whats the difference between bankrupcy and liquidation

When a business is bankrupt they just shut down whereas for a company, all company shareholders must agree.

What is voluntary and involuntary bankruptcy

Bankruptcy is a legal process for individuals who cannot pay their debts when they are due (insolvency)

What are the three ASIC nominated causes for business failure

• Inadequate cash flow or higher cash use

• Poor strategic managment

• Trading losses

What is the business life cycle

What are the three options after post maturity in the BLC

Renewal, steady state, decline

What is establishment (BLC)

An entrepreneur idea turns into an actual business and begins to operate and make sales.

What are the challenges of establishment (BLC)

• Low level of sales due to no customer base

• High up front costs

• Failure rate high 33% in first year

What are the stratergies of establishment (BLC)

• Advertising (costly but helpful)

• Detailed business planning and budgeting

• take out a loan

What is growth? (BLC)

As businesses grow, they sell more products and jhave a repetitive customer base, helps with profit but still presents challenges such as economies of scale

What are the challenges of growth (BLC)

• Need to hire new staff (length and costly process)

• Ensuring quality of product is maintained

• Increasing market competition

what are the stratergies of growth (BLC)

• Greater rewards for staff to motivate moral or promotion

• Effecient accounting systems (such as computerised systems to manage cash flow)

What is maturity (BLC)

Businesses may struggle to grow continiously, with loyal repeat customers help sales remain consistent

Most desirable stage of BLC

What are the challenges of maturity (BLC)

• Competition is at it highest as other businesses will see profit and stability and aim to replicate

• Low morale: as business stabilise tasks become repitiie and remove passion from working

What are strategies of maturity (BLC)

• Monitor external environment to adjust and change the internal environment in response (competive advantage)

• offer rewards to greaten business culture

What is post-maturity? (BLC)

This is the final stage, there are three ways a business will respond during this stage= the long term survival of the business.

What are the challenges of post-maturity? (BLC)

• changing business environment(taste and preferance- social)

• Changing workforce (staff might leave)

What are the stratergies that can be used for post maturity?(BLC)

• market research to see what changes could be made towards renewal (find new ideas/products or phase out old ones)

• training current staff to take on the role of staff who may potentially leave

• Establish a HR process to help a business fine the most suitable applicant if other staff leave the business

What is renewal- PM (BLC)

the business may go into a new period of growth this could include

• the launch of a new product

• taking over a competitor

• effective marketing campaigns

Owala introducing new lid

What is steady state- PM (BLC)

Occurs when a business is able to maintain a consistant loong term sales

• requires building brand loyalty and repeat customer base

EG: david jones/woolies

What is decline- PM (BLC)

The sales of the business may fall

• this is due to competitors or a change in competitors

Such as CD sales going out due to spotify

Consider factors that may be challenging in (BLC)

• Sales

• resource costs

• managment

• profit

• quality of profit

• staff

• volume of tasks

• customer loyalty

• business culture

• competition

How do you answer a JUSTIFY question?

Meaning:
Give reasons to support an idea or choice.

Words/Phrases:

• Beneficial

• Effective

• Positive

• Detrimental

Tips:

• Take a clear stance

• Support with reasons

How do you answer a DISTINGUISH question?

Meaning:
Show how two things are different.

Words/Phrases:

• Whereas

• Conversely

• However

• On the other hand

Tips:

• Compare both terms

How do you answer a DISCUSS question?

Meaning:
Provide points for and against.

Words/Phrases:

• Advantageous

• Beneficial

• However

• Conversely

• Disadvantageous

Tips:

• Include at least one advantage and one disadvantage

• Separate ideas into sentences

How do you answer a ASSESS question?

Meaning:
Make a judgement of value based on evidence.

Words/Phrases:

• Effective

• Beneficial

• Ineffective

• Disadvantageous

Tips:

• Start with a definition

• Make a clear judgement early

• Support with evidence

• Don’t sit on the fence

How do you answer a RECOMEND question?

Meaning:
Provide reasons in favour of a strategy.

Words/Phrases:

• Recommended

• Beneficial

• Effective

• Assists

• Advantageous

Tips:

• First sentence = recommendation

• Then justify why it’s good