Business Management UNIT 1 Exam Revision Checklist

Entrepreneurs tend to have

A shared vision:

Clear understanding or hope of what a business will be like in the future. This gives the business a clear direction. Having a shared vision means everyone in the business works together as a team, to develop then accomplish a goal. When this happens, it is much more likely staff will enthusiastically contribute to making sure the vision is realized.

Initiative:

They will take the first step in a series of actions or in a process. They frequently do this without someone prompting or telling them to take this step.

Innovation and Enterprise:

Innovation is either adding a new product (which can be a good or service) to an existing product line, or significantly improving an existing product or process.

Enterprise: Effort made by someone to creatively or boldly achieve something new.

What are the three significant ideas (features) of Entrepreneurship?

Pursing Business Opportunities:
Such as gaps in the market that no one else has noticed or paid attention to. An entrepreneur may seize on other opportunities, such as changes in customer needs, technological developments or changes in global markets. They then convert these opportunities into manageable business ideas and makes the idea a reality.

Innovation:
This is change, improvement and/or transformation. Entrepreneurs blend their flair, imagination, and creativity to develop existing products or processes. Frequently used as a business opportunity- meet the needs and wants of customers or to take advantage of change.

Seeking Growth:
Entrepreneurs will seek new trends, explore new approaches and products so that a business can increase it’s size. Growth is necessary for the survival of a new business, and becoming bigger would be expected to lead to increasing sales and market share, and greater profit.

What are the reasons/motivations for wanting to start a business?

Desire for (financial and personal) independence
Person desires freedom to choose when and where they work, who they work with.
Great attraction- belief owners have more control over destiny.
Dream to become wealthy- potential for long-term financial independence is a motive.

To make a profit
Monetary reward.
Someone willing to work hard may believe that they can earn much more by working for themselves.
These rewards may not come immediately-even most successful businesses may lose money in the early startup phase- hoping tp earn more from self employment.

To fulfil a market need
Recognize a gap in the market.
Potential business owner may have particular skills that can be the basis of a new business, or may recognize that particular goods or services for which there is a demand and is unavailable for a suburb or town.
Some cases it will inspire the developer of product to set up a business to market it.

To fulfil a social need
Less common.
A social enterprise may be established. This is a business that makes a profit or surplus but concentrates on some sort of community or environmental need.

What personal characteristics are helpful in managing a business and the questions a potential business owner should ask themselves?

What are the sources of opportunities for business ideas?

Innovation and Entrepreneurship:

Innovation: Either creating a new good, service or process, or significantly improving an existing one.

Recognizing and taking advantage of market opportunities:

Markets are the places where buyers and sellers interact to trade goods or services. Business owner may be able to identify opportunities from changes in these markets and take advantage of them for a potential business idea.

Changing customer needs, research and development:

Due to markets always changing, and personal needs of customers too, potential business owners may find opportunities by focusing on changing needs . The needs of customers in the market for any product can change due to;
-Changing income: Increasing= demand of more products or diminishing=less products.
-Changing tastes and fashions. Increase or reduce demand for products.
-Changing prices of complementary and substitute goods and services. E.g. cars and fuel, fuel higher in price, less fuel bought, demand for cars to fall.
-Changing population: Changes in age and gender distribution will have an impact on demand. e.g.. ageing population demand more health products.
-Changing expectations about the market, including future prices and incomes. Customers will act in a certain way if they expect something is going to happen.
-Changes in the number of potential customers. Increased number of customers=greater demand, decline in customers=reduce demand.

R&D:
A set of activities undertaken to improve existing products, create new products and improve production processes.

Technological development and global markets:
Technological development= applications of knowledge that have changed people’s lives and changes the way in which businesses operate.
Global markets:
Goods and services are exchanged between businesses and customers across the world. Potential business owners can have more access to more customers and more sales, e.g. advantages: grow and expand a business and reduce dependence on global markets.

What system do business use for setting goals?

S.M.A.R.T
Specific- clear and focused
Measurable-Quantifiable (numbers)
Attainable- Challenging but realistic
Relevant- worthwhile
Time Bound- deadline of time limit

What are the three broad types of goals?

Financial goals:
Making a profit. Many business owners not only want to make a profit, but they want to maximize their profit. A business may set several other goals to support its main goal of maximizing profit.
Increase Sales
Through clever marketing campaigns, decreasing the selling price of products, creating new products and delivering better service

Increasing Market Share
The business’s share of total industry sales expressed as a percentage.
 Expand the Business
Opening more outlets, employing more staff, starting new projects or introducing innovating products, merging or acquiring a new company 

 Improving the way the Business operates 
To improve productivity, efficiency and effectiveness

 - Maximising the Return on Investment
The Return on Investment is a ‘positive or negative percentage that relates to the money that has been gained (profit) or lost (loss) on an investment to the actual cost of making that investment’
This can be used as a comparison indicator to see if the owner’s funds could have been invested somewhere else instead, to gain the maximum amount of profit
Social Goals:
 All businesses operate within a community and have certain social responsibilities. Many businesses develop social goals and adopt strategies that will benefit the community as well as achieving financial goals.
 Community Service
- Business sponsorship of a wide range of community events, promotions and programs have been increasing during the past decade
- Many business owners plan to financially support educational, cultural, sporting and welfare activities

 Provision of Employment
- Many businesses look at the continuity of their business, planning to employ family members who otherwise might be unemployed
 Social Justice
Everyone has the right to be treated fairly.
A business may plan to adopt a set of policies to ensure employees and/or other community members are treated equally and fairly

 Ecological Sustainability
Businesses have to take increasing responsibility for the protection of the environment
The social conscience of responsible business owners leads them to adopt policies of conservation, recycling an restoration
Personal goals:
 - Higher Income

 - Improved Financial Security

 

 Personal goals for business owners are not normally made public

 However, this does not diminish their importance because they motivate the business owner and may underpin the viability of the business

What is market research?

Market research is a process of systematically collecting, recording and analyzing information concerning a specific market.
It involves steps of:

Step 1	Identifying what information is needed to make a decision about the potential of the business. For example, someone wanting to set up a pet care business would want information about pet numbers and types in a particular area.
Step 2	Gathering the relevant information from appropriate sources. This could involve surveys or interviews, or examining government statistics. Market research businesses can be hired to carry out this research.
Step 3	Analysing and interpreting the relevant results to extract some clear information that will assist in decision-making. This analysis can give the potential business owner an idea of the market conditions that exist for the proposed good or service.

Market conditions for a particular good or service can often be determined by finding answers to the following questions:

• Is the business concept entirely new or does it already exist?

• Who will buy the product?

• Why will they buy the product?

• What needs and wants have to be satisfied?

• How big is the market?

• Where is the market?

• Who are the competitors?

• What makes this product different from what already exists?

What is feasibility studies?

An assessment of the practicality and potential for success of a proposed business idea.
This involves determining how practical the idea is and if it would successfully translate to the market. A feasibility study might include:

• an assessment of the market. This involves analysing the level and type of demand for the new or improved product, who and where potential customers are and why they will buy the product, who the present and potential competitors are and their strengths and weaknesses, and what the business’s competitive advantage is.

• a consideration of the operations. This involves describing the product that will be sold, the resources needed (plant, equipment, materials, staff and support personnel), the location of the business and legal requirements.

• an analysis of commercial feasibility. This involves considering the financial aspects of the business idea, such as how long it will take before the business has its first sale, how the price of the product will be determined, how much finance will be needed to start the business and sustain operations, as well as forecasting sales, costs, cash flow and profit.

• an appraisal of the potential owner’s management ability. See section 1.4.1 on the qualities required to be a successful business owner.

• an understanding of whether others have tried this idea. This involves finding out whether anyone else has tried the business idea and, if they failed, finding out why they failed.

What are ways the external environment can affect the internal environment of a business?

The external environment has a much greater degree of influence on the internal environment of a business than the internal environment has on the external environment of a business.

Because of this imbalance of influence, a business often finds itself at the mercy of factors from the external environment. To increase its chances of success, a business must take a proactive approach to planning for, and responding to, such external factors.

Macro and stakeholders affect.

Example:Scientists predict that over the next several decades, climate change will reduce cocoa production and cause chocolate shortages. This is an external factor that the Mars business may not be able to control. 

What are the ways the internal environment can affect the external environment of a business?

What are the three main types of legal structures? (further separated). These are privately owned known as a ……

Business entity is an organization that exists separately to its owner in order to produce and sell goods and services.

Sole trader
partnership
SOLE TRADER AND PARTNERSHIP AND UNICORPORATED
company
COMPANY IS INCORPORATED- FURHTER SPILT INTO PRIVATE, PUBLIC OR GOVERNMNET BUSINESS ENTERPRISE.

What is incorporation?

The process that companies go through to become a separate legal entity from the owner/s.

An incorporated business has its own separate legal existence. Regardless of what happens to individual owners (shareholders) of the company, the business can continue to operate.

What is unicorporation?

An unincorporated business has no separate legal existence from its owner(s), and will be either a sole trader or partnership. The most common legal structure for businesses in Australia is the unincorporated enterprise, because this structure is the easiest and cheapest to establish.

What is a sole trader?

A sole trader or proprietor is a business owned and operated by one person.
The owner may employ other people to work in the business, but the owner or sole trader is the person who provides all the finance, makes all the decisions and takes all the responsibility for the operation of the business.
It is easy to establish.

Advantages and disadvantages of a sole trader

What is a partnership?

A unincorporated business structure with a minimum of 2 and maximum of 20 owners.
There are exceptions to this rule, including medical practitioners and stockbrokers (allowed up to 50 partners); veterinarians, architects and chemists (allowed up to 100 partners); and solicitors and accountants (allowed up to 400 partners). A partnership is similar to a sole trader in that the owners and the business are regarded as the same — that is, there is no separate legal entity. Like sole traders, the partners in a business are also subject to unlimited liability, and so may be personally responsible for the debts of the business.

What are the advantages and disadvantages to a partnership?

How can a company be organized?

as either a proprietary (private) or public company

What is a private limited company or proprietary company?

An incorporated business with a min of one shareholder and a max of 50 non-employee shareholders.
It is the most common type of structure in Australia and must also have at least one director.

Therefore, it is quite possible for a private limited company to be owned by a single shareholder, who is also the director of the company. Proprietary companies tend to be small to medium-sized, family-owned businesses, although Mars Inc. is one example of a private company that is larger than most publicly listed companies. In many cases, one family owns most of the shares in a proprietary company.

has to have pty ldt after its name

What is a public listed company?

Incorporated business with a min of one shareholder and no max, whose shares are openly traded on the Australian Securities Exchange.
The general public may buy and sell shares in this type of company. Whereas private companies tend to be small or medium-sized businesses, most public companies are large in size and market a large range of products

The advantages and disadvantages of the company form of business ownership

What are resources?
And
What are the three main categories of resources?

The people and objects that are needed for the business to function properly.

Natural, Labour and Capital. These are the types of productive resources.

What are natural resources?
Provide Examples

Items the business uses that comes from the natural environment.
Examples include;
land, water and raw materials.

What are labour resources?

The people that provide their skills, effort and knowledge to the business.
Main source= employees and owner.
A business can also hire subcontractors to provide labour if it is not practical or possible for the people who own or are employed by the business to do the work themselves.

Subcontractor is a person that is not directly employed by the business but has been contacted to perform certain tasks.

What are capital resources?
Why are they important?

The tools and machinery that are used to produce goods or perform services.

They are important as they maximise the efficiency of labour.

What is an important aspect of planning for a business and why?

Deciding on its location.
The physical location of a business can determine whether or not it will ultimately succeed.
Crucial for the business owner to invest time and effort into finding the ideal location for the business. To do so, they must consider all the factors that will be affected by the location of the business.

What are four business locations?

Shopping centers, retail shopping strips, online presence, home-based businesses.

What is the first type of business location?
Advantages and Disadvantages

Shopping centers.
There are suburban shopping centers that have one or more supermarkets and a number of small specialist stores, parking for several hundred cars and access to public transport, most of the shops undercover, facing internal walkways.
There are regional shopping centers that are large and include major departments stores and cinemas, as well as the full range of specialist outlets all in one place.

Leasing a store in a shopping centre can be expensive, particularly in larger centres.
A business may need to remain open during the shopping centre’s hours, which may be seven days a week.
A business may also need to rely on the centre renewing its lease. If this does not occur, the business will be forced to move elsewhere.

What is the second type of business location?
Advantages and disadvantages?

Retail shopping strips.
Disadvantages: Hard for them to compete with shopping centers offering off-street parking and air-conditioned environment.
Shopping strips suffer from a lack of parking, particularly those located on major arterial roads as they are clearways during peak hours. Moreover, shopping strips offer customers limited protection from the weather, which can reduce foot traffic.
Advantages:
The busiest shopping strips were located near public transport, such as tram routes, and near suburban railway stations.
High visibility for passing traffic.
The costs of locating in a retail shopping strip are less than those of a shopping centre. The people who work or live in the local area should provide a strong source of customers for a business located in a shopping strip.
Because many shopping centres close in the evenings, shopping strips have become popular locations for restaurants and ‘after hours’ entertainment.

What is the third type of business location?
Advantages and disadvantages

Online Presence.


Benefits:
Increased access to new customers.
Online-only stores forge the need for a physical store, avoiding it’s associated expenses e.g. rent.
Limitations:
costs of planning, designing and maintaining an online presence are significant
Some businesses have added an online presence to ensure they keep up with them competition and benefit from online sales, while retaining their physical stores
REMEMBER: Careful to protect personal information for businesses and customers.

What is the fourth type of business location?
Who are they most commonly run and catered to?

Advantages and Disadvantages

Home-based business.
These are usually run by tradespeople and other service providers because they provide services in the customer’s own home or business premises, so they don’t need a dedicated location.
The only reason why they can run is because of affordable and creative technology, which is their main source of applications to run.
Online ordering and payment has allowed there businesses to expand.



Does not face any substantial expenditure on renting or purchasing premises.

Locating a business at home also provides flexibility around when the owner works and reduces commuting time.
However, it can be difficult for the owner to keep work and home life separate. The owner may also feel isolated from other people and miss social interaction.

What are the factors that affect the choice of a business location?

A business owner determines a business location decisions according to the nature of the business.

Visibility, Cost, Proximity to customers and suppliers, proximity to competitors, complementary business.

What is the first fund group that a business can be classified under?

equity the funds contributed by the owner(s) of a business to start and build the business. (INTERNAL SOURCE OF FUNDS). If the business is a company, then this contribution is referred to as shareholder’s equity.

Advantages and Disadvantages to equity finance or internal sources of functions.

Advantages:
it does not have to be repaid unless the owners leave the business.
It is cheaper than other sources of finance because there are no interest payments for the business.
An owner who contributes the equity to a business retains control over how that finance is used.
Disadvantage:

owner may expect a good return on their investment, but the small amount of finance may only generate low profits and low returns.

What are the sources of funds of an equity finance or internal sources of finds.

Self- funding, family or friends, private investors, shares, crowdfunding.

What is the second fund group a business can be classified under?

External sources of finance. Most are in the form of debt.

What is debt finance and what is it a source of?

Source of external source of finance, most are debt, which is where the funds provided by banks, other financial institutions, government and suppliers, which must be paid back over time with interest

Sourcing funds from outside the business should result in increased earnings and profits. Regular repayments on the borrowings must be made, so the business must generate sufficient earnings to make these payments. There is higher risk for businesses using debt for finance, as the interest and government charges have to be paid on top of the principal amount borrowed

Types of external finance

short term borrowing (bank overdrafts, bank bills and bank loans), long-term borrowing (loans and leasing), government grants.

Short term external finance

Borrowed funds used for temporary cash flow shortages or working capital, usually repaid within 1–2 years.

• Bank Overdraft: Withdraw more than account balance up to a limit; interest charged on amount used.

• Bank Bills: Large short-term loan (usually $100,000+) repaid with interest after 90–180 days.

• Trade Credit: Buy now, pay supplier later (30–90 days); no interest charged.

Long term borrowing external finance

Borrowed funds for more than 2 years, used to finance property, plant and equipment. Can be secured or unsecured.

• Loan/Mortgage: Money borrowed and repaid with interest over a long period. A mortgage is secured against property.

• Leasing: Paying to use equipment owned by another party. No large upfront cost, fixed repayments, but can be more expensive overall due to interest/fees.

government grants external source of finance

Money provided by the government to support business development, start-ups, exports, or job creation.

• Usually does not need to be repaid.

• Must meet specific conditions.

• Must be used for a particular purpose set by the government.

• Available through federal and state government programs.

What are the factors a business owner should assess when planning for the source of finance available for a business? (External and internal-e.g. debt, bank bills etc.)

• Terms of Finance: Repayment amount and timing should match the asset's lifespan (short-term finance for short-term needs, long-term finance for long-term assets).

• Business Structure: Larger businesses have more access to equity finance; small businesses often rely on private funds or partners.

• Overall Cost: Compare total costs, including interest, fees, or profit sharing with investors.

• Flexibility: Ability to change or exit financial agreements if business needs change.

• Level of Control: External investors or partners may reduce the owner's control over business decisions.

What are the formal (private) networks business owners can access for information and support for start up businesses?

Chambers of Commerce

• Local business organisations that provide networking opportunities, support, advice, and advocacy for businesses.

Victorian Chamber of Commerce and Industry

• Supports Victorian businesses through training, advice, networking, workplace relations support, and business resources.

Small Business Association of Australia

• Provides support, information, resources, and advocacy for small business owners across Australia.

Trade Associations

• Industry-specific organisations that provide information, training, networking opportunities, and represent the interests of businesses within that industry.

Flashcard Version

Formal (Private) Networks:

• Chambers of Commerce – networking and business support.

• Victorian Chamber of Commerce and Industry – training, advice, and advocacy.

• Small Business Association of Australia – support and resources for small businesses.

• Trade Associations – industry-specific advice, training, and representation.

What are the public networks business owners can access for information and support for start up businesses?

Solicitors

• Provide legal advice.

• Help with business registration, contracts, leases, and legal obligations.

Accountants

• Give financial advice.

• Assist with budgeting, tax, record-keeping, and financial planning.

Bank Managers

• Advise on finance options.

• Help businesses access loans, overdrafts, and banking services.

Technological Advice

• Guidance on technology, software, websites, cybersecurity, and equipment.

• Helps improve efficiency and competitiveness.

Community-Based Services

• Local organisations that offer mentoring, training, networking, and support for new businesses.

Business Enterprise Centres

• Provide advice, workshops, mentoring, and resources to help people start and grow businesses.

Small Business Victoria

• Victorian Government service offering information, training, grants, mentoring, and support for small businesses.

Legal and government regulations

• Business Name Registration: Must be registered with the Australian Securities and Investments Commission (ASIC) unless trading under the owner's own name. Requires an ABN. Companies also need an ACN and Certificate of Registration.

• Location: Must comply with zoning laws, building regulations, signage restrictions, and fire regulations.

• Health Regulations: Must follow food safety laws (e.g. food storage temperatures and kitchen layout requirements).

• Employment Laws: Cover wages, working conditions, unfair dismissal, discrimination, workplace disputes, human rights, and WHS.

• Taxation: Businesses must meet tax obligations, including BAS and GST requirements.

• Trade Practices: Must follow fair trading and competition laws; products must be fit for purpose and of acceptable quality.

• Consumer Protection: Covers product safety, labelling, unfair marketing practices, and price monitoring.

• Environmental Protection: Businesses must minimise pollution and comply with laws relating to air, water, land, and noise emissions.

Social Attitudes and Behaviors

Values and Beliefs

• Society's ideas about what is important, right, and wrong.

• Influence customer expectations and business decisions.

• Businesses may need to focus on sustainability, ethical practices, and community support.

Trends

• Changes in society's attitudes and behaviours over time.

• Ageing population → increased demand for healthcare services but potential labour shortages.

• Flexible work expectations → demand for family-friendly workplaces, childcare support, and work-from-home options.

Economic Conditions

Definition:
The economic factors that affect businesses and consumers, influencing a business's ability to operate and customers' willingness and ability to spend.

Key Economic Conditions:

• Interest Rates – Cost of borrowing money. Higher rates make loans more expensive and reduce spending.

• Employment Levels – The number of people with jobs. Higher employment usually means more consumer spending.

• Tax Rates – The amount of tax paid by businesses and individuals. Higher taxes can reduce profits and spending.

• Consumer Confidence – How optimistic people feel about the economy. Higher confidence leads to more spending.

• Wages – Income earned by workers. Higher wages generally increase spending power.

• Unemployment – Number of people without jobs. High unemployment reduces consumer spending.

• Exchange Rates – Value of one country's currency compared to another. Affects imports, exports, and costs.

• Inflation – General rise in prices over time. Increases business costs and reduces consumers' purchasing power.

Technological Considerations

Technological Considerations: The impact of new technology on business operations and competitiveness.

Advantages: Higher productivity, lower costs, better quality, faster communication, new markets.

Disadvantages: Job losses, rapid obsolescence, costly upgrades, increased R&D spending.

Future Technologies: AI, robotics, 3D printing, wearable tech, driverless vehicles, big data.

Technology Implementation Considerations

Cost, training, compatibility, efficiency, customer needs, security, reliability, employee impact, future upgrades, and legal requirements.

Global Considerations
Advantages and Disadvantages

Businesses operating in a worldwide market due to improved technology, transport, and trade.

Considerations:

• Overseas competitors & markets – More competition but access to more customers.

• Offshoring labour – Lower costs but possible job losses and ethical concerns.

• Exchange rates – Affect import/export costs and profits.

• Patents, copyrights & trademarks – Protect intellectual property globally.

• Online sales – Global reach and lower costs, but require technology investment.

Advantages: More customers, higher profits, lower costs, global expansion.

Disadvantages: More competition, exchange rate risk, job losses, legal complexity, website/technology costs.

CSR
Why important?

Managing a business in a way that considers the welfare of stakeholders (employees, customers, suppliers, community, and environment), not just profit.

Triple Bottom Line:

• Economic – Make a profit.

• Social – Benefit people and the community.

• Environmental – Minimise harm to the environment.

Social Considerations:

• Ethical suppliers (no exploitation).

• Safe, quality products.

• Support local communities and employment.

• Fair treatment of employees and customers.

Environmental Considerations:

• Use renewable energy.

• Reduce waste and recycle.

• Use sustainable materials.

• Reduce pollution and environmental damage.

Why is CSR Important?

• Improves business reputation.

• Attracts customers.

• Creates positive stakeholder relationships.

• Increases competitiveness and long-term success.

• Benefits both the business and society.

Disadvantages:

• Can be costly.

• Time-consuming and difficult to implement.

Suppliers and Supply Chains

Suppliers: Businesses that provide the raw materials, products, or services needed by another business.

Supply Chain: The network of businesses involved in producing and delivering a product from supplier to customer.

Importance:

• Ensure a reliable supply of materials and products.

• Affect product quality.

• Influence production efficiency and costs.

• Help businesses meet customer demand.

• Strong supplier relationships can improve reliability and reduce disruptions.

Risks of Poor Supply Chains:

• Delays in production.

• Stock shortages.

• Increased costs.

• Reduced customer satisfaction.