Roles of Businesses
The Functions of a Business (Table)
Profit | the return or reward (income) that business receive for producing products that customers need and want. Profit = total revenue - total expenses | A business will have a negative profit when expenses (for production) are greater than sales revenue, loss. |
Employment | Businesses provide employment for people in their local community (or potentially overseas, other parts of the country, etc.) | During April 2020 (Covid-19), the Grattan Institute reeasd a paper predicting that between 1/6 and ¼ of Australians were likely to be out of work. The hospitality industry had over 1/ 2 of workers unemployed wiht arts adn recreation following closely behind. The non-essential industries were first ot lose workers. |
Incomes | Businesses provide income to owners, shareholders (part owners of a company), and employees. | Recieved as an award for investing to the company, shareholders are paid a dividend (a portion of the company’s profit) at the end of the financial year. Most companies withhold a large part of the profit to reinvest in the business with the rest being redistributed to the shareholders. |
Choice | Businesses provide consumers with the freedom of choice and opportunity to purchase products at competitive prices. | Despite the variety and amount of choice consumers appear to have, 11 companies own majority of brands including; Kellog’s, Kraft Heinz, Coca-Cola, Unilever, Nestle, Procter. All together these comapnies own over 400 brands/businesses. |
Innovation | Through research and development, existing products are improved and new products created. | Gekko used a research grant to develop their Inline Pressure Jig to meet the growing demands for their product. These demands led Gekko to continuously advance/develop thier technology and created new ideas. |
Entrepreneurship and Risk | Businesses provide individuals with the opportunity to turn thier ideas and passions into a livelihood. | Research from Xero’s ‘Ageless Entrepreneur’ report showed that more Australian kides are dreaming of become the next ‘Mark Zuckerberg’ or ‘Elon Musk”, the next big entrepreneur. |
Wealth | Business activity results in higher levels of economic growth and wealth | The redistribution of income/wealth:
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Quality of life | Businesses offer a vast array of products that improve our standard of living. | In 2020 the measure of qaulity of life in Australia was launched. it measures the progres to each state/territroy in meeting basic needs to support welllbeing and oppportunity for all indivduals. |