Nature of Business, Business Management, and Business Planning Review

Flashcards testing knowledge on business nature, management theories, planning strategies, and formulas based on the provided notes.

What is the definition and primary role of a business according to the notes?

A business is an organisation that attempts to satisfy the needs and wants of the community by providing goods and/or services, using inputs, raw materials, equipment, and human skills to add value.

How are businesses classified by size based on employee count?

A micro business has $5$ or fewer employees, a small business has fewer than $20$ employees, a medium business has between $20$ and $199$ employees, and a large business has $200$ or more employees.

What are the five main industry sectors described in the notes?

Primary Industry (natural resource collection), Secondary Industry (processing raw materials), Tertiary Industry (providing services), Quaternary Industry (transfer and processing of information and knowledge), and Quinary Industry (services traditionally performed in the home).

What distinguishes a private company from a public company?

A private company has between $1$ and $50$ owners (shareholders), whereas a public company is listed on the Australian Securities Exchange and has ownership open to members of the public.

What is the key difference between debt finance and equity finance?

Debt finance involves borrowing funds from a bank, investor, or another business, whereas equity finance is provided by owners through capital, shares, or reinvested profits.

Which government institutions are listed as institutional influences on business?

Environment Protection Authority, Australian Taxation Office, Australian Securities and Investments Commission, Australian Competition and Consumer Commission, and NSW Fair Trading.

What are the four main stages of the business life cycle?

Establishment, Growth, Maturity, and Post-Maturity (which can result in decline, renewal, or a steady state).

What are the differences between insolvency, receivership, and liquidation?

Insolvency occurs when a business cannot repay its debt. Receivership occurs when a court appoints an independent receiver to find ways to trade out of difficulty. Liquidation involves selling business assets to help pay its debts.

What are the four fundamental functions of management?

Planning, Organising, Leading, and Controlling.

What characterizes Fredrick W. Taylor's classical scientific approach to management?

It involves studying a job in detail to determine the most efficient way to perform it, scientifically examining task parts, selecting and training workers, and dividing work between management (planning, organising, controlling) and workers (executing).

Who pioneered the classical bureaucratic approach in the notes, and what are its key features?

Pioneered by Max Weber and Henri Foyd, it features a strict hierarchy, clear communication and responsibility, specialised and simple tasks, clearly defined roles, rules and procedures, and impersonal performance evaluations.

How do strategic, tactical, and operational planning differ by time horizon?

Strategic planning is long-term ($3$ to $5$ years), tactical planning is medium-term ($1$ to $2$ years), and operational planning is short-term.

What did Elton Mayo and the Hawthorne Effect demonstrate about employee motivation and output?

The Hawthorne effect demonstrated that meeting employees' social needs significantly affects productivity, showing worker satisfaction is not purely economic and feeling like part of a team increases job satisfaction and output.

Which specific change models are identified in the notes?

Lewin's force-field analysis, Lewin's unfreeze/change/refreeze model, Dumply and Starc's contingency model, Klotter's eight-step model, and Mintzberg and Anderson's model.

How is an SME defined according to the Australian Bureau of Statistics measure used in the notes?

An SME is a business with fewer than $200$ employees (with non-manufacturing businesses having fewer than $20$ employees and manufacturing businesses having fewer than $100$ employees).

What statistics are provided regarding the contribution of SMEs to the Australian economy?

SMEs accounted for approximately $99.8\text{\%}$ of Australian private-sector businesses in February 2019, employed approximately $68.3\text{\%}$ of private-sector workers, and contributed approximately $55.8\text{\%}$ of Australia's GDP in 2017–18.

What percentage of SMEs fail within their first three years according to the notes?

Approximately $60\text{\%}$ of SMEs fail within their first three years.

What proportion of new business owners are over the age of 55?

Approximately $30\text{\%}$ of new business owners are over $55$.

What are the four levels of market competition outlined in Topic 3?

Monopoly (one major supplier controls most of the market), Duopoly (two businesses have majority control), Oligopoly (a few large suppliers actively compete), and Highly Competitive Market (many smaller businesses supplying similar products).

What is the formula for calculating Total Revenue (TR)?

$P \times Q = TR$ (where $P$ is the selling price and $Q$ is the quantity of units sold).

What is the formula for calculating Total Cost (TC)?

$FC + VC = TC$ (where $FC$ represents fixed costs and $VC$ represents variable costs).

What is the formula for Break-Even Analysis quantity (Q)?

$$Q = \frac{\text{Total Fixed Costs}}{\text{Unit Price} - \text{Variable Costs Per Unit}}$$