Nature of Business
The name of a document that aims to summarise the current situation of a business and provide future recommendations
What is a business report
What is the difference between limited liabilities and unlimited liabilities?
limited liability means owners are only liable for the amount they invested, while unlimited liability means owners are personally responsible for all business debts, potentially risking personal assets
List three internal influences on a business.
➤ Products, Location, Management, Resources, Business Culture
Identify the four ways a business can be classified
➤ Size, Geographical spread, Industry sector, Legal structure.
What are the areas that are outside the control and operations of a business, but can directly influence the business.
What are external influences?
Identify 4 external influences. Explain the impact of one of these influences on a particular business
Economic
Financial
Geographical
Social
Technological
Political
Competitive Situations
Markets
Institutional
Explain the classification of business by size (exact numbers of employees) for the following:
➤ Micro
➤ Small
➤ Medium
➤ Large
➤ Micro: <5 employees (e.g. food truck)
➤ Small: 5–19 (e.g. local cafe)
➤ Medium: 20–199 (e.g. regional gym)
➤ Large: 200+ (e.g. Woolworths)
What are three key challenges a business faces during the establish stage of the Business Life Cycle?
➤ Low sales, limited awareness/ low customers, difficulty securing finance.
What are stakeholders and what are THREE examples of stakeholders in a business?
stakeholder is anyone who has an interest (a stake) in a business
Examples - managers, employees, customers, environment, society/ general public, owners/shareholders
Jake and Emma have been dating for 6 years and are considering opening a café together. They will share profits, bring equal capital, and manage daily operations together.
Question: What legal structure should they choose? Justify with one advantage and one disadvantage.
➤ Partnership is suitable. Advantage: Shared responsibility and capital. Disadvantage: Risk of conflict and joint liability for debts.
Lisa wants to start a small marketing business. She wants full control but has limited funds. She’s concerned about financial risk but wants to keep things simple at the start.
Question: What legal structure is most appropriate for Lisa? Justify your choice.
A sole trader is most suitable. It gives Lisa full control and is inexpensive to set up. However, she needs to be aware of the unlimited liability risk.
Explain two reasons why a business may enter voluntary cessation
➤ Personal reasons (retirement, career change)
- Facing financial difficulties/ unable to pay its debts
➤ No longer profitable or too stressful to operate
1. In regards to business growth and expansion - what is it called when a business acquires another company or joins?
2. What are the 4 ways it can do this?
Mergers - two companies combine to form one new business
Acquisitions - One company buys another
4 ways - Horizontal integration, forward vertical, backward vertical, diversification
Scenario:
A fast-fashion brand is being criticised for poor labour practices and environmental waste. In response, they’ve launched a campaign to recycle clothes, introduced ethical sourcing policies, and published a sustainability report.
Question:
Explain how these initiatives relate to Corporate Social Responsibility and evaluate how they could impact the business’s public image and long-term profitability.
These initiatives reflect Corporate Social Responsibility (CSR), as the business is responding to social and environmental concerns beyond profit-making. By recycling clothes and sourcing ethically, the business is attempting to address its environmental and ethical footprint.
In the short term, these strategies may increase costs, but long-term benefits include improved public image, increased consumer trust, brand loyalty, and potential market differentiation. This can translate to higher profitability, particularly as consumers become more socially conscious.
What is the opposite of a traditional (hierarchical) management structure for a business? Provide and example of a business that has this AND what are the advantages of this structure?
- Flat management structure
- E.g Google/ Apple
- advantages = Quicker decisions, better communication, adaptability to market changes, stronger business culture
BytePlay" is a gaming company that has a strong client base. Recently, sales have plateaued, and competitors are starting to release innovative new games. Staff morale is low, and the company’s original product has become outdated.
Question:
Identify the stage of the business life cycle and recommend two strategies BytePlay could adopt to remain competitive.
BytePlay is in the maturity stage, as shown by plateauing sales and saturated markets.
Two strategies include:
Product renewal – Develop new games or update existing ones to attract fresh interest.
Motivate staff – Introduce professional development and new leadership strategies to re-energise the team.
These actions can delay or prevent decline and help the business regain momentum.
Amira owns a successful cold-pressed juice company called "GreenBloom", operating across Sydney. Her business is rapidly growing due to increasing health-conscious trends. She currently sources her fruit and vegetables from local organic farms and distributes through a third-party logistics company.
Amira is exploring strategic options to support future growth and maintain product quality. In relation to mergers and acquisitions, what should Amira do?
Option A – Forward Vertical Integration: Acquire a refrigerated logistics company that delivers her juices to stockists and customers.
Option B – Horizontal Integration: Merge with another boutique juice company that operates in Sydney or another capital city like Melbourne with a loyal customer to extend her product range to a new market