Business contribution to the wellbeing of a nation
Identify the three basic questions that all economic systems must answer.
The three basic questions that all economic systems must answer are:
Define Financial independence
is the ability to fund a desired lifestyle without relying on income from another individual.
Explain the difference between a business manager and an entrepreneur.
Briefly explain what is meant by the term ‘goal’.
A goal is a statement made by a business that describes what it expects to achieve over a set period. An example of this would be a business that has a stated goal of increasing sales over the next three months through a concentrated advertising campaign in the Herald Sun.
Identify three possible sources of new business concepts and explain how each could provide ideas for a new business.
Responses will vary. Examples include:
Source of business concept
How it could provide ideas for a new business
Listening to people, particularly for ideas on the goods or services people want, but that may not be readily available
Can help to identify a gap in the market, and the existence of potential customers
Reading magazines and books and researching on the internet
Can identify new products or ideas for services available elsewhere, but possibly not available locally
Visiting displays and exhibitions in areas such as new technology or new products from overseas
Can identify new products or ideas for services available elsewhere, but possibly not available locally
Accessing government statistics and research information
Can identify demographic changes and possible new markets for products or services
Identifying a ‘gap in the market’ — that is, a demand not currently being satisfied
Can identify a group of potential customers whose needs are not currently being satisfied
Determining improvements that could be made to an existing product
Can create a new market for the new or innovative product or service
Briefly outline how businesses make contributions to the economic wellbeing of a nation through each of the following:
a. employment
Businesses employ large numbers of people, providing jobs for more than 11 million Australians. Employed Australians will use the wage they have earned to buy goods and services to meet their needs and wants, supporting business and opening up further opportunities for job creation
Define fulfilling a market need
is when a business fills a gap in the market by addressing customer needs that are currently unmet or underrepresented by competitors in the same industry
Identify five characteristics that a successful business manager is likely to have and explain how these can help them perform their duties.
Identify the five characteristics of a S.M.A.R.T. goal.
Specific — Goals should be clear and focused; for example: ‘Obtain 500 new customers in the market.’
Measurable — Goals should be quantifiable with numbers so that the owner can know whether they are on track to achieve the goal.
Attainable — Goals should be challenging enough to motivate people to work towards them, but not so difficult as to be unrealistic.
Relevant — Goals should be important to the overall direction of the business.
Time bound — A deadline or time limit to achieve the goals should be set.
Outline the link between business opportunities and business concept development.
The development of the business concept is when the prospective business owner takes an idea that has arisen from an assessment of possible opportunities, and begins to turn it into an actual business. The business concept is also affected by the motivations and personal qualities of the owner wanting to start a business, as well as the goals that they want to achieve.
Define the term ‘corporate social responsibility’.
Corporate social responsibility refers to managing a business in such a way that the broader social welfare of the community, including its employees, customers, suppliers and the environment, is taken into consideration when making business decisions.
Describe personal independence as a motivation behind starting a business.
Personal independence involves a person being in control of their own decisions and actions. For example, an individual may be motivated to start their own business so they can havea flexible work schedule that suits their lifestyle needs
Explain why it is best for business owners to select a business opportunity that suits their personality and strengths
It is best for business owners to select a business opportunity that suits their personality and strengths because it will increase their chances of success. There is little point in pursuing a business that holds little interest for the owner.
Outline two examples of financial goals and two examples of social goals.
Examples of financial goals include:
Making a profit — Profit is what is left after business expenses have been deducted from money
earned from sales (revenue).
Increase sales — This may be achieved by deciding to sell products at a lower price so consumers purchase more, or by the business seeking to increase sales through more clever marketing, creating innovative products, or delivering a better service than other businesses.
Increase market share — Market share is a business’s share of total industry sales.
Expand the business — Growth might be achieved by opening more outlets, employing more staff, starting new projects or introducing innovative products, by merging with another business or by acquiring another business.
Maximising the return on investment — Return on investment is a ratio that relates the money gained or lost on an investment relative to the cost of the investment.
Improving the way that the business operates — A business might improve the way it goes about its day-to-day operations by focussing on improving productivity, efficiency and/or effectiveness.
Examples of social goals include:
Community service — Many businesses sponsor community events, promotions and programs, or financially support educational, cultural, sporting and welfare activities.
Provision of employment — Many businesses will consider the continuity of their business to ensure employment, perhaps planning to employ family members who otherwise might be unemployed.
Social justice — 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 are increasingly taking greater responsibility for the protection of the environment, adopting policies of conservation, recycling and restoration.
Explain the importance of business concept development.
A business concept is the description of the idea for a new business initiative. This is the starting point for any new business. Business concept development is important to the success of the business because the owner must have a clear idea of what goods or services they wish to sell, and why they believe they have a chance of being successful. Development of the business concept could be generated by listening to people for ideas, accessing government statistics, identifying a ‘gap’ in the market or determining improvements that could be made to an existing product.
Describe two economic contributions that businesses make to the nation.
One economic contribution that businesses make to the nation is to employment. Creating sufficient jobs is one of the most important elements of a healthy economy, as jobs provide people with an income with which they can satisfy their needs and wants as consumers. Businesses employ more than 11 million Australians. Employment also generates tax revenue for the government in the form of income taxes. This allows the government to provide society with social goods and services that would otherwise not exist, such as public schools, hospitals, roads, etc.
Another contribution that businesses make to the nation is export earnings. Exports are goods and services that are produced locally and sold to overseas customers. A business may sell goods or services to individuals, businesses or governments in overseas countries to extend sales or develop new markets. Exporting products creates local jobs, boosting incomes and thus improving material living standards by increasing the purchasing power of Australians, as well as non-material living standards by providing them with the intrinsic benefits of being employed (such as the opportunity to learn new skills).
Distinguish between a social need and a market need.
A social need refers to the production and/or selling of goods and services for the purpose of making the world (or the community) a better place. Some examples of typical social needs include providing opportunities for local unemployed people or focussing on an environmental need. On the other hand, a market need refers to the goods or services that customers require that are not readily available. For example, a prospective business owner may recognise that particular goods or services for which there is a demand are not readily available in a particular area, or they may have particular skills that can become the basis for a new business.
A social need is fulfilled by a business wanting to help the community or the environment whereas fulfilling a market need is more about a business owner identifying a gap in the market and being rewarded with profit.
Explain how two entrepreneurial characteristics have contributed to the success of an entrepreneur with whom you are familiar.
One entrepreneurial characteristic is enterprise. Carolyn Creswell, founder of Carman’s Fine Foods, demonstrated enterprise when she made the effort to create something new, taking risks to determine if the market was interested in her ideas. Carolyn Creswell says that her success is due to her hard work.
Carolyn Creswell also places great importance on having a clear vision of where the business is heading and considering this when making decisions. A shared vision gives a business clear direction, ensuring that each decision is made in a way that will help the business achieve its long-term goals.
Providing an example of each, distinguish between social goals and financial goals.
Financial goals are targets related to making money for the business, and tend to be more focused on the long-term financial success of the business, while social goals are about giving back to the community within which the business operates (locally and/or globally). A financial goal might be to increase market share by 5 per cent over the next financial year, while a social goal could be to raise $100 000 in donations for a local charity over the next financial year
Explain three ways of protecting intellectual property.
Identify and outline two positive contributions that businesses make to the economy through the people that they employ.
Through the people they employ, businesses make positive contributions to the economy. One way in which this occurs is through businesses providing employees with a stable income. This income is used to fulfil the needs and wants of these employees as consumers.
A second positive contribution that businesses make to the economy through the people that they employ is by providing employees with the opportunity to learn new skills. Acquiring new skills is an aspect of personal growth and is a positive contributor to the wellbeing of a person, giving them a greater sense of purpose and fulfilment, while making them more employable in the future.
Award 1 mark for identifying a positive cont
‘Being self-employed is better than working for someone else.’ With reference to this quote, discuss the benefits and limitations of owning a business
While there are many benefits of owning your own business, there are also many drawbacks. Business owners take on a great deal of risk when operating a business. Often, they use their own money and take out loans to start up the business. The result of their business failing can have catastrophic consequences on their personal lives. Failed businesses have led to bankruptcy, with people losing their homes, as well as breakdowns in their personal relationships.
It is also necessary for a person to have a commercially viable business idea, which can be tricky.
Running a business is also time-consuming and requires a great deal of effort. Many people consider starting a business the hardest thing that they have done. As the boss, you are ultimately responsible for every aspect of the business.
Despite this, many people are motivated to start up their own business for various reasons. Running your own business gives you the freedom to choose how the business will operate, and your role within it. It allows people to fulfill social needs that they are passionate about, and it can be incredibly rewarding financially if the business is successful at fulfilling market needs.
Whether it is better to be employed by a business or self-employed largely depends on the person’s character traits, skillsets and circumstances. For most people, owning a business comes with a greater level of risk and responsibility, but it also often comes with more freedom and possibilities in terms of growth and profit. That is why a person should carefully consider who they are and their circumstances before jumping into a business idea.
Identify three characteristics that a successful business manager is likely to have. Justify why each characteristic might be needed for a business to be successful.
Successful business managers are likely to be self-motivated, with a strong desire to succeed. This motivation is likely to provide them with enough passion and inspiration to fully commit to the task at hand and ensure that the business they are managing meets its objectives.
Another characteristic that a successful business manager is likely to have is good health to withstand the extra workload and stress involved. Physical or emotional illness can prevent a business manager from being able to perform their demanding duties. This would prevent a business from achieving its objectives.
Successful business managers must be able to make decisions based on logic rather than emotions. Emotions can cloud a person’s judgment and prevent them from making sound decisions. When a business manager is able to make logical and sound decisions, the business should be able to achieve its objectives.
‘We plan to expand our market into Asia, increasing worldwide market share by 2 per cent.’ Is this goal more likely to belong to a large or small business? Outline reasons for your answer.
The goal is more likely to belong to a large business. The focus of the expansion into Asia is to ‘increase worldwide market share by 2 per cent’ — not to establish market share. If a business were to establish market share, they would be starting to venture into foreign markets, which might be an objective of a medium-sized business rather than a small business. Therefore, this objective is unlikely to belong to a small business. Most large businesses have already attained a market share that includes the dominance of some foreign markets; therefore, the idea of expanding market share into the Asian markets indicates that international trade as a component of the business structure already exists.
Outline how a business concept is developed.
It is developed by a prospective business owner after an idea has arisen from an assessment of possible business opportunities.
Award one mark each for identifying relevant points about the business concept.