Business Ideas & Motivation (AOS 1)
Q: What is the primary motivation behind starting a social enterprise?
A. Making a profit only
B. Supporting social causes while operating commercially
C. Avoiding competition
D. Expanding globally
Answer: B
Explanation: Social enterprises aim to address social needs while also running as a business.
Q: Which legal structure has unlimited liability?
A. Private company
B. Public company
C. Sole trader
D. Trust
Answer: C
Explanation: Sole traders are personally liable for all business debts and obligations.
Q: Which of the following is an example of a macro environment factor?
A. Competitor pricing
B. Changes in tax rates
C. Supplier negotiations
D. Customer expectations
Answer: B
Explanation: Macro factors include broader elements like tax policy, outside business control.
Q: What is a business plan?
A. A government policy document
B. A personal resume
C. A formal written statement of business goals and strategies
D. A tax return
Answer: C
Explanation: A business plan outlines the vision, objectives, and strategy of a business.
Q: What is the definition of a sole trader?
A. A business owned by shareholders
B. A government-funded agency
C. A business owned and operated by one person
D. A nonprofit
Answer: C
Explanation: Sole traders have single ownership and full control over the business.
Q: Which of the following is not a common source of business opportunity?
A. Technological development
B. Changes in consumer needs
C. Personal hobbies
D. Low customer complaints
Answer: D
Explanation: Low customer complaints are not a driver for new business ideas; they suggest satisfaction.
Q: What is the benefit of operating as a partnership?
A. Unlimited liability
B. Shared workload and decision-making
C. Higher taxation
D. Limited access to capital
Answer: B
Explanation: Partnerships allow for shared responsibility and pooling of skills and knowledge
Q: What is the role of a business support service?
A. To advertise on behalf of the business
B. To provide advice and resources to assist in planning
C. To supply raw materials
D. To employ staff
Answer: B
Explanation: Support services assist with tasks like legal advice, marketing, and planning.
Q: Which section of a business plan outlines expected sales and profit targets?
A. Legal section
B. Operational plan
C. Financial plan
D. HR strategy
Answer: C
Explanation: The financial plan forecasts future income, expenses, and profitability.
Q: What is a market gap?
A. A pricing error
B. An opportunity in the market where customer needs are not being met
C. A gap between profit and expenses
D. A type of business error
Answer: B
Explanation: Market gaps represent unserved customer needs — ideal for business opportunity.
Q: Which motivation is most likely for someone who starts their own business to escape a boss and create their own work schedule?
A. Desire for independence
B. Financial ambition
C. Fulfilment of a market need
D. Innovation
Answer: A
Explanation: The desire for autonomy and flexible control is a key driver of independence.
Q: What is the best definition of a business objective?
A. A strategy to avoid risk
B. A long-term vision
C. A specific goal the business wants to achieve
D. A list of employee responsibilities
Answer: C
Explanation: Objectives are measurable outcomes a business works towards.
Q: A low interest rate would likely encourage businesses to:
A. Delay business expansion
B. Increase product prices
C. Borrow more to invest in growth
D. Increase staff redundancies
Answer: C
Explanation: Low interest reduces the cost of borrowing, making investment more attractive.
Q: Why is location an important factor in business planning?
A. It determines product pricing
B. It influences rent only
C. It affects accessibility, costs and customer visibility
D. It allows tax avoidance
Answer: C
Explanation: A strategic location affects customer access, brand visibility and running
Q: Maria is planning to open a café in Melbourne that serves hot food and alcoholic drinks. Which of the following combinations of permits would she definitely need to obtain before opening
A. A building permit and a copyright licence
B. A liquor licence and a food handling permit
C. An ABN and a patent
D. An environmental impact statement and a WHS policy
Answer: B
Explanation: A liquor licence is legally required to sell alcohol, and a food handling permit is necessary for serving hot food — both are essential to meet Victorian legal and health regulations.
Q: What is the role of entrepreneurship in the economy?
A. Increasing taxes
B. Decreasing unemployment benefits
C. Creating jobs and driving innovation
D. Eliminating competition
Answer: C
Explanation: Entrepreneurs stimulate the economy through job creation and innovative solutions.
Q: What is one advantage of equity as a source of finance?
A. Increases debt
B. Must be repaid with interest
C. No interest and greater control
D. Limited use for large businesses
Answer: C
Explanation: Equity doesn’t incur interest and allows owners to retain more control.
Q: A fashion company has noticed growing public concern about the environmental impact of fast fashion. It responds by switching to organic textiles, introducing a take-back scheme, and marketing itself as carbon-neutral. Which macro factor is most influencing this change in business planning?
A. Technological developments
B. Economic downturn
C. Societal attitudes and behaviour
D. Environmental regulation
Answer: C
Explanation: These changes reflect shifts in customer values and beliefs, specifically a societal trend toward ethical and sustainable consumption — not regulatory or technological pressure.
Q: During the planning stage, a business identifies that it has limited brand recognition but is launching in a market where customers are increasingly seeking eco-friendly products. Which parts of a SWOT analysis do these two findings most likely represent?
A. Strength and threat
B. Weakness and opportunity
C. Opportunity and threat
D. Weakness and strength
Answer: B
Explanation: Limited brand recognition is a weakness (internal), and growing demand for eco-products is an opportunity (external), aligning with SWOT analysis definitions.
Q: Liam starts a business designing eco-friendly surfboards after growing frustrated with the amount of plastic waste in the ocean. He later finds success in an untapped local market. Which two motivations best explain Liam’s decision to start his business?
A. Desire for independence and need for employment
B. To make a profit and to fulfil a social need
C. To fulfil a market gap and personal interest
D. Personal interest and desire for wealth
Answer: C
Explanation: Liam was driven by a personal interest in environmental protection and addressed a market gap for sustainable surfboards, showing both personal and strategic motivations.
Q: Which of the following best explains the concept of the Business Concept Development process?
A. Developing an app from scratch
B. Researching competitors before writing a resume
C. Identifying a business opportunity and refining an idea through market research
D. Hiring staff before securing premises
Answer: C
Explanation: Business concept development involves shaping ideas through research and planning.
Q: Which resource is categorised as a capital resource?
A. Chef in a restaurant
B. Farmland
C. Oven in a bakery
D. Business loan
Answer: C
Explanation: Capital resources are physical assets like machinery and equipment.
Q: An Australian electronics retailer is planning to launch a new product line but is facing stiff price competition from online overseas sellers who operate with lower labour costs and minimal import taxes. Which of the following planning strategies best helps the business remain competitive in this global market?
A. Increase product prices to signal premium quality
B. Outsource manufacturing offshore to reduce costs
C. Eliminate marketing expenses to cut overheads
D. Rely solely on government protections against imports
Answer: B
Explanation: Outsourcing allows businesses to match competitors’ cost advantages, a key consideration when facing global pricing pressures during the planning stage.
Q: A prospective business owner completes a feasibility study and discovers that while their product fills a market gap, the start-up costs will require securing significant finance, and competitors could easily imitate the concept. What should the entrepreneur conclude from this analysis?
A. Proceed without delay, as the market gap ensures success
B. Delay launching until a business name is registered
C. Refine or reconsider the idea, as feasibility is questionable due to financial and competitive risks
D. Proceed immediately but reduce pricing to beat competitors
Answer: C
Explanation: Feasibility studies aim to assess both potential and risk; identifying major financial and competitive obstacles suggests the idea may not be viable in its current form.
Q: What does ‘bootstrapping’ mean in business finance?
A. Securing a bank loan
B. Funding your business using only existing personal resources
C. Gaining sponsorship
D. Launching on the stock market
Answer: B
Explanation: Bootstrapping means using minimal external finance and relying on personal means.