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31 Cards in this Set

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Define: Small Business
General:
-Manufacturing = <100 employees.
-Non-agricultural = <20 employees.
-One or two persons make critical management decisions.
-No internal specialist personnel
-Relies on external support services.
-Estimated no.= 1.3 mill
-Approximate share of AUstralian Business = 95%
Define: Medium Enterprise
Generally:
-Manufacturing = 100-200 employees.
-Non Manufacturing = 20-200 employees.
-Estimated no.= 23100
-Approximate share of Australian business = 2%
What are some quantative measurements for small businesses?
-Number of employees
-Type of ownership
-Sources of finance
-Legal structure
-Management structure
What are some qualitative measurements for small businesses?
-Owner makes most management decisions.
-Owner provides most of capital.
-The business has little control within the market.
-Business independantly owned + operated
-Business relies on external support services.
-Service is personalised
-Business sells mainly to local markets.
-Business is locally based.
Define: Micro Business
Small business that employs less than 5 people (incl. owner)
-Usually SOHO
-Represents 90% of small business.
Why is it difficult to provide accurate accounts of the number of SMEs?
2 reasons:
1. No univerally accepted definition of small business.
2. Small business sector is dynamic with high failure rates fluctuating with national economy.
GDP in relation to small business.
Gross Domestic Product is the total money value of all G&S produced in Australia over a year.
-Small business contributes approximately 40% of Australia's GDP.
BOP in relation to small business.
A Balance of Payments is a record of a country's trade and financial transactions with the rest of the world over a period of time (usually 1 year).
-To maintain favourable BOP, exports>imports
-Flexibility and adaptability os small business make them more responsive to needs of overseas markets.
Invention and Innovation in relation to small business.
Invention is the development of something new.
Innovation is improving on something already established.

-Small business is main source of invention and innovation.
What are the 5 keys to small business success?
-Entrepreneurial abilities
-Access to information
-Flexibility
-Focusing on market niche
-Reputation
Failure of small business.
A small business has failed when it is:
-Unincorporated and declared bankrupt
-Incorporated and forced into liquidation or voluntarily closes down.

-Approx 1/3 of small businesses fail within first year of trading and 3/4 fail within first 5 years.
-Two main reasons for failure are lack of capital and lack of management expertise.
What are the future prospects of small business?
-Aged Services
-SOHO
-Franchising
-Outsourcing
Who are stakeholders?
Stakeholders are anyone with a vested interest in a business.
-Customers
-Clients
-Managers
-Employees
-Owners
-Shareholders
-Creditors
-Financiers
-Government
-Suppliers
-Environment
-Society
-Unioins
-Future
What are the 6 social and economic roles of business?
-Wealth creation
-Employment
-Innovation
-Quality of life
-Choice
-Entrepreneurship
What are the 4 factors of production?
-Land
-Labour
-Capital
-Enterprise
What are the three types of Business goals?
-Financial Goals
-Social Goals
-Personal Goals
What are the two major requirements to effectively co-ordinate a business?
-Controlling the value chain
-Role of management
Business environement and interdependance of the two.
-We live in a highly specialised society with high levels of interdependance

The Business environment is the surrounding conditions in which a business operates.
Two categories:
-Internal Environment (microenvironment) includes all things over which the business has some degree of control.
-External Environement (macroenvironment) includes things business has very little control over.
What are the 4 stages of the business life cycle?
-Establishment
-Growth
-Maturity
-Post maturity
-Cessation
-Decline
-Steady state
-Renewal
What is a liquidator?
3rd party appointed to take control of business with intention of seling all the company's assets in order to pay the creditors.
What is bankruptcy?
Decleration of a bankrupt status (a person cannot pay his or her debts).
What is a receiver?
A person appointed by the bankruptcy court or secured creditor to run a company for a short period of time that will ensure as much debt is paid back to creditors ASAP.

Receiver ship is the type of bankruptcy a company enters when a receiver is appointed.
What is an administrator?
An independant appointed to operate the business in the hope of trading out the present financial problems.

Administration is apponting an administrator.
What is solvency?
When a business experiences cessation, if it can pay all of it's debts, it is SOLVENT.
How can Businesses be classified?
-By industry sector
-By legal structure
-By size
-By work type
-By private or public sector
-International or transnational
What is an incorporated business?
Incorporation refers to the process companies go through in order to become a separate legal entity from the owner/s.
What are the four industry sectors? Briefly describe.
-Primary: Sourcing of raw materials
-Secondary: Using raw materials to produce finished or semi finished good.
-Tertiary: Performing a service for other people.
-Quaternary: Transfer and processing of knowledge
-Quinary: Services that have traditionally been performed in the home.
What are public/private enterprises? WHat is privatisation?
-Public business enterprises are govt. owned and operated businesses.
-Private business enterprises are individual owned and operated businesses.
-Privatisation is when a public business enterprise is sold to individuals trasferring the business to the private sector.
What is the difference between international and transnational businesses.
-International businesses produce goods in only one country and exports.
-Transnational corporations is company based in one country with partially or wholly owned businesses in other countries.

When national businesses expand and increase sales, the domestic market becomes saturated. An option is for them to enter the export market.
What are the 4 most important factors affecting legal structure choice?
-Size of business
-Ownership of Business
-Finances needed
-Privatisation
What are the four main influences on business obtained from the business environment?
-Economic and social factors
-Competitive situation
-Government situation
-Other institutional influences: employer, trade + industry associations, trade unions, ASX etc.