Business Structures and Competitive Advantage

Definition: Businesses owned by two or more people (up to 20).
Common Structure: Generally between two to six partners.
Liability: Unlimited liability - each partner is separately liable for business debts.
Capital Contribution: Partners share in funding the business, and workload, as well as profits/losses. Profit share can reflect the percentage of contribution.
Sleeping Partners: Partners who contribute capital but do not manage the business.
Partnership Agreement: Advisable to set out details such as:
- Name and address of business and partners
- Type of business
- Duties and responsibilities of each partner
- Amount of capital contribution from each partner

Definition: A legal entity formed by a group of individuals (shareholders).
Types: Public and Private companies.
- Public Companies: Listed on the Australian Stock Exchange, have strict reporting requirements, can obtain capital from the general public.
- Private Companies: Not publicly listed, shares are sold privately.
Legal Status: Can incur debt, sue or be sued; limited liability protects personal assets of shareholders.
Taxation: Companies incur a flat tax rate on taxable income, with no tax-free threshold.
Dividends: Shareholders receive a share of profits as dividends.
No Medicare Levy: Companies do not pay Medicare levy.

Definition: Ability of a business to outperform similar businesses in a market.
Factors Influencing Competitive Advantage:
- Skilled personnel
- Cost reduction
- Improved quality
Consumer: An individual purchasing goods/services for personal use.
Profit: Revenue left after expenses.

Lower Prices: Reducing production costs and offering lower consumer prices.
- Economies of Scale: Larger production volumes reduce unit costs, e.g., fixed costs remain the same irrespective of volume (e.g., cake manufacturing example).
- Outsourcing: Delegating operations to reduce costs (e.g. Qantas outsourcing maintenance).
Advertising: Making consumers aware of products through various media (websites, social networks, print).
Quality Improvement: Offering better product features and perceptions of quality.
- David Garvin's Eight Dimensions of Quality:
1. Performance: How well the product works.
2. Features: Additional attributes.
3. Reliability: Consistency in performance.
4. Conformance: Meeting standards.
5. Durability: Product lifespan.
6. Serviceability: Efficiency of repairs.
7. Aesthetics: Attributes appealing to senses.
8. Perceived Quality: Customer perception of quality.
Responding to Consumer Needs: Timeliness and quality in delivery are critical. Good customer service is paramount, necessitating staff training and technology for efficient service (e.g., self-check-in at airports).

Businesses must innovate to adapt to changing consumer preferences and market conditions. For example, the Covid-19 pandemic prompted remote working adaptations, changing operational dynamics significantly.
Technological Innovation: Improving productivity using technology, seen in farming and tech companies like Apple. Requires ongoing adaptation to stay competitive, avoiding the risk of obsolescence.

Definition: Individuals who own and manage their own business.
Taxation: Income taxed as personal income.
Liability: Unlimited liability, risking personal assets to cover business debts.

Industry Model Innovation: Expanding into new industries or reinventing existing ones.
Enterprise Model Innovation: Non-traditional methods, including partnerships and outsourcing tasks (e.g., cafes sourcing from local bakers).

Adjusting product or marketing to enhance profit potential (e.g., premium versions of products in digital markets).