Business Studies: Nature of Business and Management

A comprehensive set of vocabulary flashcards covering basic business concepts, industry types, management theories, financial statements, and growth factors.

Business

The organised effort of individuals to produce and sell, for a profit, the products (goods and services) that satisfy individuals’ needs and wants.

Goods

Tangible products that can be physically held, such as a phone, car, or shoes.

Services

Intangible acts performed for a consumer, such as legal advice, tutoring, or a haircut.

Micro business

A business that employs fewer than $5$ people, representing approximately $90\text{\%}$ of the small business sector.

Geographical spread

The range of which a business reaches its product, categorised as local, national, or global.

Primary Industry

Businesses associated with the production of natural resources, raw materials, and basic foods, such as mining and agriculture.

Secondary Industry

The sector involved in processing raw materials to create finished goods, including metalworking and construction.

Tertiary Industry

Known as the service industry, it involves selling goods with commercial services, such as health care and wholesaling.

Quaternary Industry

Services involving the transfer and processing of information and knowledge, such as banking and technology repair.

Quinary Industry

Services that traditionally could be performed from home, including hospitality, childcare, and dog grooming.

Sole trader

A business run and owned by one person who makes all decisions and has unlimited liability.

Partnership

A business structure owned by $2$ to $20$ people who share responsibility and have unlimited liability.

Private company (PTY LTD)

An incorporated separate legal entity commonly consisting of $2$ to $50$ shareholders, with limited liability.

Public company (LTD)

A large business that allows individuals to buy and sell shares on the Australian Securities Exchange.

Unlimited liability

A situation where the owner is personally responsible for all business debts and is not legally separate from the entity.

Economic boom

A period of strong economic expansion characterised by high production and spending.

Recession

An economic period defined by two negative quarters of growth, with falling output and rising unemployment.

Interest rates

The cost of borrowing money which fluctuates and impacts business finances.

Financial influence: Appreciation

When a currency increases in value, benefitting a business by making imports cheaper.

Legal influence: ACCC

The enforcement body that administers the Australian Consumer Law and ensures business compliance.

Stakeholder

Any group or individual who has a vested interest in or is affected by the activities of a business.

Undercapitalization

A factor contributing to business decline involving negative cash flow that leads to loss of sales and falling profits.

Strategic-thinking

A management skill involving making plans in an uncertain environment by outlining resources, methods, and controls.

Classical management approach

A system developed during the Industrial Revolution involving a rigid chain of command, division of labour, and autocratic leadership.

Behavioural management approach

An approach focused on employees' social needs, democratic leadership, and flat organisational structures.

Maslow’s Hierarchy of Needs

A psychological tool identifying a progression from physiological needs to self-actualization that drives employee motivation.

Contingency approach

A management style that stresses flexibility and adaptability to meet changing business circumstances.

Operations

The business function responsible for the production process, involving inputs, transformation, and outputs.

Quality Control

The minimum level of quality management involving inspections at various points in the production process to reduce defects.

Total Quality Management (TQM)

A proactive quality strategy where quality is at the centre of the organisation and every employee is responsible for it.

Market Segmentation

Subdividing the total market into groups sharing common characteristics like demographics, geography, or lifestyle.

Niche Marketing

A narrowly selected target market segment, such as designer luxury brands.

The Seven P’s of Marketing

The mix of Product, Price, Place, Promotion, People, Process, and Physical Evidence used to reach a target market.

Summary dismissal

When an employee is fired on the spot for serious misconduct such as fraud, theft, or intoxication.

Cash Flow Statement

A financial document showing the movement of cash inflows and outflows to assess the liquidity of the business.

Balance Sheet

A financial report providing a snapshot of stability by measuring assets, liabilities, and owner’s equity at a point in time.

Current Assets

Assets that the business expects to convert into cash within $12\text{\,months}$, such as stock or accounts receivable.

Owner’s Equity

The amount owed by the business to its owners, calculated as $\text{Assets} - \text{Liabilities}$.

Cost of Goods Sold (COGS)

The cost of stock sold, calculated as: $\text{Opening Stock} + \text{Purchased Stock} - \text{Closing Stock}$.

Net Profit

The final financial outcome after expenses are deducted from total operating income: $\text{Gross Profit} - \text{Expenses}$.

Debt Finance

Short-term or long-term borrowing from external sources, where interest payments are tax-deductible but add financial pressure.

Equity Finance

Funds contributed by business owners or shareholders that do not require repayment.

SWOT Analysis

A strategy used to evaluate a business’s internal Strengths and Weaknesses and external Opportunities and Threats.

Economies of Scale

The economic principle that the cost per unit decreases as the volume of production increases.