Business Functions
Who gets paid in dividends?
Shareholders.
How many employees may a business employ to be classified as medium?
20-199.
Name 2 factors to consider when selecting a business location.
Cost, visibility, proximity to customers, proximity to support services and proximity to suppliers.
How many stages are there in the business life cycle?
4 or 5.
Where can shares for public companies be purchased in Australia?
The Australian Stock Exchange.
Explain the difference between a good and a service.
Goods are tangible and services are intangible.
What type of businesses would be grouped in the secondary industy? Give an example.
Manufacturer of goods, such as: car manufacturing, bakery or jewlery maker.
Name 2 internal influences on businesses.
Product, technology, location, resources, management and business culture.
What are the 4/5 stages of the business life cycle?
Establishment, growth, maturity and post maturity (renewal and decline).
Explain the difference between a traditional organisational structure and an emerging organisational structure.
Traditional:
Centralised
Chain of command
Power not shared
Autocratic management style
Division of labour
Task specialisation
Top down communication
Management make decisions
Emergng:
Decentralised
People centred
Multi-skilled employees
Democratic management style
Flexible structure
Two way communication
Shared decision making
What is the difference between a stakeholder and a shareholder?
A shareholder is a part owner of a company.
A stakeholder is someone with a vested interest in a company/business.
Provide an advantage and disadvantage of being private company.
Advantages:
Can pick shareholders
Easier to attract finance
Limited liability
Easy to transfer ownership
Experienced management
Greater spread of risk
Lower tax
Growth potential
Disadvantages:
High cost
Double taxation
Must publish annual reports
The larger the harder to manage
Name 3 external influences on businesses.
Economic, finance, geographic, social, legal, political, institutional, technological, competitive situation and markets.
Describe 3 elements of the Maturity Stage.
•Goals: Maintain profits at existing levels.
•Product image/brand is established to differentiate from competition.
•Price remains competitive.
•Profit plateaus.
•Lower risk.
What is an entrepreneur?
A person who starts, operates and assumes the risk of a business venture in the hope of making a profit.
Explain the difference between an innovation and an invention.
An innovation is an improvement on something already established.
An invention is the development of something new.
What are the 4 different legal structures available to a business?
Sole trader, partnership, private company and public company.
Name 2 institutions that can influence businesses.
Government, Office of fair trading, Department Environment Climate Change and Water, trade associations, trade unions, and Australian stock exchange.
Describe 4 elements of the Introduction Stage.
•Goal: setting a firm foundation for future growth.
•Establish brand positioning through promotion and physical evidence (reliability and quality).
•Lower/penetrative price.
•Distribution selective, targeting trend setting buyers.
•Erratic sales, resulting in small or no profit.
•High risk of failure.
Explain the difference between the quaternary and quinary industries?
Quaternary – transfer of knowledge and information. Such as banks or education.
Quinary – services traditionally performed at home. Such as travel agent or drycleaning.
Name 3 functions businesses play in our communities.
Wealth creation, profit, employment, incomes, choice, innovation, entrepreneurship and quality of life.
What are the 4 common methods for classifying businesses?
Size, geographical spread, industry sector and legal structure.
Describe the economic cycle.
Booms and bust.
Boom = inflation, high employment rate and high spending.
Bust = no inflation, low employment and low spending.
Describe 4 elements of the Growth Stage.
•Goals: increase sales and diversify business activities.
•Product quality improved and service expanded, as customers give testimonies and reviews.
•Prices remain low to attract more customers.
•Distribution locations increase, targeting wider audience with promotion.
•Risk lower, but still high due to business loans to fund expansion.
What is the difference between revenue and profit?
Revenue is the money a business receives as payment for its products.
Profit is what remains after all business expenses have been deducted from sales revenue.