The Nature Of Business

Front 1

Define: Small Business

Back 1

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%

Front 2

Define: Medium Enterprise

Back 2

Generally:
-Manufacturing = 100-200 employees.
-Non Manufacturing = 20-200 employees.
-Estimated no.= 23100
-Approximate share of Australian business = 2%

Front 3

What are some quantative measurements for small businesses?

Back 3

-Number of employees
-Type of ownership
-Sources of finance
-Legal structure
-Management structure

Front 4

What are some qualitative measurements for small businesses?

Back 4

-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.

Front 5

Define: Micro Business

Back 5

Small business that employs less than 5 people (incl. owner)
-Usually SOHO
-Represents 90% of small business.

Front 6

Why is it difficult to provide accurate accounts of the number of SMEs?

Back 6

2 reasons:
1. No univerally accepted definition of small business.
2. Small business sector is dynamic with high failure rates fluctuating with national economy.

Front 7

GDP in relation to small business.

Back 7

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.

Front 8

BOP in relation to small business.

Back 8

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.

Front 9

Invention and Innovation in relation to small business.

Back 9

Invention is the development of something new.
Innovation is improving on something already established.

-Small business is main source of invention and innovation.

Front 10

What are the 5 keys to small business success?

Back 10

-Entrepreneurial abilities
-Access to information
-Flexibility
-Focusing on market niche
-Reputation

Front 11

Failure of small business.

Back 11

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.

Front 12

What are the future prospects of small business?

Back 12

-Aged Services
-SOHO
-Franchising
-Outsourcing

Front 13

Who are stakeholders?

Back 13

Stakeholders are anyone with a vested interest in a business.
-Customers
-Clients
-Managers
-Employees
-Owners
-Shareholders
-Creditors
-Financiers
-Government
-Suppliers
-Environment
-Society
-Unioins
-Future

Front 14

What are the 6 social and economic roles of business?

Back 14

-Wealth creation
-Employment
-Innovation
-Quality of life
-Choice
-Entrepreneurship

Front 15

What are the 4 factors of production?

Back 15

-Land
-Labour
-Capital
-Enterprise

Front 16

What are the three types of Business goals?

Back 16

-Financial Goals
-Social Goals
-Personal Goals

Front 17

What are the two major requirements to effectively co-ordinate a business?

Back 17

-Controlling the value chain
-Role of management

Front 18

Business environement and interdependance of the two.

Back 18

-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.

Front 19

What are the 4 stages of the business life cycle?

Back 19

-Establishment
-Growth
-Maturity
-Post maturity
-Cessation
-Decline
-Steady state
-Renewal

Front 20

What is a liquidator?

Back 20

3rd party appointed to take control of business with intention of seling all the company's assets in order to pay the creditors.

Front 21

What is bankruptcy?

Back 21

Decleration of a bankrupt status (a person cannot pay his or her debts).

Front 22

What is a receiver?

Back 22

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.

Front 23

What is an administrator?

Back 23

An independant appointed to operate the business in the hope of trading out the present financial problems.

Administration is apponting an administrator.

Front 24

What is solvency?

Back 24

When a business experiences cessation, if it can pay all of it's debts, it is SOLVENT.

Front 25

How can Businesses be classified?

Back 25

-By industry sector
-By legal structure
-By size
-By work type
-By private or public sector
-International or transnational

Front 26

What is an incorporated business?

Back 26

Incorporation refers to the process companies go through in order to become a separate legal entity from the owner/s.

Front 27

What are the four industry sectors? Briefly describe.

Back 27

-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.

Front 28

What are public/private enterprises? WHat is privatisation?

Back 28

-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.

Front 29

What is the difference between international and transnational businesses.

Back 29

-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.

Front 30

What are the 4 most important factors affecting legal structure choice?

Back 30

-Size of business
-Ownership of Business
-Finances needed
-Privatisation

Front 31

What are the four main influences on business obtained from the business environment?

Back 31

-Economic and social factors
-Competitive situation
-Government situation
-Other institutional influences: employer, trade + industry associations, trade unions, ASX etc.