Business Studies

What is the nature of a business?

An organised effort to produce and sell goods and services to satisfy needs and wants for profit.

What are needs and wants?

Needs are essentials such as food and housing, while wants are non-essential items such as technology and entertainment.

What is production?

The process of combining resources to create goods and services.

What is profit and why is it important?

Profit is revenue minus expenses; it allows businesses to grow, survive, and avoid failure.

How do businesses contribute to employment and income?

They create jobs, provide wages and salaries, and generate income for owners and shareholders.

How do businesses increase consumer choice?

They provide more products and competition, allowing consumers to compare price and quality.

What are innovation and entrepreneurship?

Innovation improves products or processes, while entrepreneurs create businesses and take risks.

How do businesses create wealth?

They add value through production, creating profits shared by workers, owners, and government.

How do businesses improve quality of life?

They provide employment, income, goods/services, and may support sustainability.

How are businesses classified by size?

Micro (<5 employees), small (5–19), medium (20–199), and large (200+ employees).

What are characteristics of small, medium, and large businesses?

Small businesses are owner-controlled; medium businesses have more structure; large businesses have complex management and many shareholders.

What are local, national, and global businesses?

Local businesses operate in a small area, national businesses operate across a country, and global businesses operate internationally.

What are the five industry classifications?

Primary extracts resources, secondary manufactures goods, tertiary provides services, quaternary provides knowledge services, and quinary involves high-level decision making.

What are the main legal structures of businesses?

Sole trader, partnership, private company, public company, and government enterprise.

What are the key features of legal structures?

Sole traders/partnerships have unlimited liability; companies have limited liability and separate legal identity.

What factors influence the choice of legal structure?

Business size, ownership needs, and finance requirements.

What are external influences?

Factors outside a business that affect decisions and operations, creating opportunities or threats.

How do economic influences affect businesses?

Interest rates, inflation, wages, unemployment, and exchange rates affect costs, demand, and profits.

How do financial influences affect businesses?

The availability and cost of finance affect borrowing, expansion, and investment decisions.

How do geographic influences affect businesses?

Location, resources, climate, infrastructure, and demographics affect operations and markets.

How do social influences affect businesses?

Changing values, lifestyles, and consumer trends influence products, ethics, and business practices.

How do legal influences affect businesses?

Laws such as taxation, WHS, and environmental regulations control business operations.

How do political influences affect businesses?

Government policies on taxation, trade, and regulation affect confidence and investment.

What are institutional influences?

Regulatory bodies and organisations that ensure businesses operate fairly and legally.

How does technology influence businesses?

It improves efficiency, productivity, communication, and creates new products and industries.

How does competition influence businesses?

Competition affects prices, quality, product variety, and the need for competitive advantage.

What are markets that influence businesses?

Financial, labour, consumer, and international markets provide capital, workers, customers, and opportunities.

What are internal influences?

Factors within a business that affect operations and decision-making.

How do products influence businesses?

Product type, range, and size affect operations and business structure.

How does location influence businesses?

Location affects costs, customer access, sales, and operational efficiency.

What are business resources?

Human, information, physical, and financial resources needed to operate.

How does management influence businesses?

Management style, structure, and decisions affect motivation, flexibility, and performance.

What is business culture?

The shared values, beliefs, and practices that influence employee behaviour and performance.

Who are stakeholders?

Groups with an interest in a business, including customers, employees, owners, government, and the community.

What are the stages of the business life cycle?

Establishment, growth, maturity, and post maturity.

What happens during establishment and growth?

Establishment focuses on survival and attracting customers; growth involves increasing sales, staff, and production.

What happens during maturity and post maturity?

Maturity focuses on maintaining market position; post maturity involves renewal or decline.

How can businesses respond to challenges?

They can raise finance, improve efficiency, innovate, expand markets, or restructure.

What factors contribute to business decline?

Poor management, competition, lack of innovation, economic downturns, technology changes, and cash flow problems.

What is voluntary and involuntary cessation?

Voluntary closure is chosen by owners; involuntary closure occurs when a business cannot pay debts.

What is liquidation?

The legal process of selling business assets to repay creditors before closing.

What is management?

The process of planning, organising, leading and controlling resources to achieve business goals efficiently and effectively.

What are the features of effective management?

Clear goals, informed decisions, efficient resource use, employee motivation, communication, problem-solving, and adapting to change.

What are interpersonal skills?

The ability to build relationships, motivate employees, and resolve conflicts.

Why are communication skills important in management?

They allow clear sharing of information, teamwork, and effective decision-making.

What is strategic thinking?

Analysing the business environment and planning long-term goals and strategies.

What is vision in management?

Creating a clear future direction that inspires employees to achieve goals.

What is problem solving?

Identifying issues, evaluating solutions, and choosing the best action.

What is decision making?

Assessing information and selecting the most effective option.

Why is flexibility important in management?

It allows managers to adapt styles and operations to changing circumstances.

Why must managers manage stakeholder conflicts?

To balance the needs of owners, employees, customers, suppliers, government, and the community.

What are common business goals?

Profit, market share, growth, share price, social goals, and environmental goals.

What is profit as a business goal?

Earning more revenue than expenses to ensure survival and growth.

What is market share?

The percentage of total industry sales controlled by a business.

What is growth as a business goal?

Expanding through increased sales, operations, or new markets.

What are social and environmental goals?

Social goals involve ethical contributions to society; environmental goals involve reducing environmental impact.

How can staff involvement improve business performance?

Through innovation, motivation, mentoring, and training that increase productivity and commitment.

What is the classical approach to management?

An approach focused on efficiency, productivity, planning, organising, and controlling.

What are key features of the classical approach?

Specialisation, clear hierarchy, chain of command, and centralised decision-making.

What is the behavioural approach to management?

An approach focused on employees, motivation, communication, teamwork, and participation.

What are key features of the behavioural approach?

Leading, motivating, employee involvement, collaboration, and higher job satisfaction.

What is the contingency approach?

The belief that managers should adapt their style depending on the situation.

What is the management process?

Coordinating resources and business functions to achieve goals.

What are the four key business functions?

Operations, marketing, finance, and human resources.

What is operations management?

Producing goods and services by transforming inputs into outputs.

What is quality management?

Ensuring products and services consistently meet customer expectations.

What is marketing management?

Identifying customer needs and using strategies to satisfy them.

What are the 4Ps of marketing?

Product, price, place, and promotion.

What is finance management?

Managing money to operate, pay debts, and support growth.

What is debt finance?

Borrowed money that must be repaid with interest.

What is equity finance?

Owner investment or retained profits that do not need repayment.

What is a cash flow statement?

A report showing cash inflows and outflows over a period.

Why is cash flow important?

It shows liquidity and helps identify cash shortages.

What are the three types of cash flow?

Operating, investing, and financing cash flows.

What is operating cash flow?

Cash from daily activities such as sales, wages, and rent.

What is investing cash flow?

Cash from buying or selling long-term assets.

What is financing cash flow?

Cash from loans, investments, repayments, and dividends.

What is a balance sheet?

A statement showing a business’s financial position through assets, liabilities, and equity.

What is the accounting equation?

Assets = Liabilities + Owner’s Equity.

What are assets?

Resources owned by a business, including current and non-current assets.

What are liabilities?

Debts owed by a business, including current and non-current liabilities.

What is owner's equity?

The owner’s investment plus retained profits.

What is an income statement?

A report showing profit or loss over a period.

What is gross profit?

Sales revenue minus cost of goods sold (COGS).

What is net profit?

Gross profit minus expenses.

What is COGS?

The cost of goods sold during a period.

What is the role of human resources?

Managing employees through recruitment, training, contracts, and separation.

What is recruitment?

The process of hiring suitable employees.

Why is training important?

It develops employee skills, knowledge, and productivity.

What are employment contracts?

Agreements outlining employee rights, responsibilities, and conditions.

What is voluntary separation?

When an employee resigns or retires.

What is involuntary separation?

When an employee is dismissed or retrenched by the employer.

What is ethical business behaviour?

Acting honestly, fairly, and responsibly while considering social and environmental impacts.

Why is ethical behaviour important?

It builds trust, reputation, and long-term business success.

What internal influences affect change?

Employees, resources, business culture, and management.

What external influences affect change?

Economic, legal, technological, political, and social factors.

How can managers manage change effectively?

By communicating, involving employees, providing training, and reviewing outcomes.

What factors create a need for change?

New technology, customer needs, competition, laws, and poor performance.

What is a Business Information System (BIS)?

A system that collects, stores, and analyses data to support decisions.

What are SMART goals?

Goals that are Specific, Measurable, Achievable, Realistic, and Time-bound.