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Flashcards in AOS1 Q Deck (66)
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Advantages of sole trader (6)

simple and inexpensive to set up
Owner has complete control
No disputes with partners
Less costly to operate
Owner right to keep profit
Less government regulation


Disadvantage of sole trader

unlimited liability
End of business when owner dies
Can't operate if sick
Need carry losses
Difficult for expansion


What are the two types of partnerships. Elaborate

general partnership (unlimited liability)
Limited partnerships (silent partners, financial support)


Advantages of partnership

simple and inexpensive to setup
Workload can be shared between partners
Risk/debt shared amongst partners
May be easier to take time off
Easier to raise capital


Disadvantages of partnership

unlimited liability
Potential disagreement
Liability for debt incurred by other partners
Difficult to find suitable partner


What is a sole trader business (3)

one person who owns and runs the business
The individual and the business have the same entity
Therefore unlimited liability (responsible to pay off debt


What is a partnership

A business owned by a minimum of 2 or a maximum of 20 people
Not separate legal entity from the partners.


What is a public listed company (3)

company where shares of the business are for sale in an open market (ASX)
Limited liability
Have limited or "Ltd" behind name


Advantage of public limited company (2)

limited liability
Easy to raise capital (money) by selling more shares


Disadvantage of public limited company (4)

highly complex and time consuming to establish
High cost to establish
More accountability and compliance
Possible loss of control


What is a private listed company eg.

An incorporated business with a minimum of two and a maximum of 50 private shareholders, and whose shares are offered only to those people whom the business wishes to have as part owners


What is social enterprise (3)

a business that produces goods and services for the market, but operates with the primary objective of fulfilling a social need eg salvos
The business may make a profit however, the business will continue to work towards goals
Can take form of a charity, a cooperative of privately owned business.


Advantages of social enterprise (2)

Can open up new markets
Meeting a social need can have a positive effect on profit and market share


Disadvantage of social enterprise (2)

Difficult to obtain capital to start the business
Significant operating costs
Can be difficult to focus on both social and financial objectives


What is a government business enterprise (2)

A type of business that is government owned and operated
Like companies, they participate in commercial activities with the goal of making a profit


Advantages of government enterprise (3)

able to carry out government policies delivering community services in areas where private sector businesses might hesitate to invest
Can operate with some independence from government
Provision of healthy competition to businesses in the private sector - can lead to low prices in the market


Types of objectives

To make a profit
To increase market share
To fulfil a social need
To fulfil a market need
To meet shareholders expectations


What is an objective (2)

desired goal, outcome or specific result that an organisation intends to achieve
Gives an organisation direction, providing a path to follow


What is a vision statement

States what the business aspires to become


What is a mission statement

expresses why the business exists, its purpose and how it will operate


What does it mean to fulfil the market need (3)

opening a gap in the market
Feeding the target market
Identifying what the target market requires to allow you to meet their needs and build a market for your goods and services


Types of performance indicators (10)

net profit
Number of sales
Rate of productivity growth
Customer satisfaction
Staff satisfaction
Staff turnover
Level of wastage
Number of complaints
Number of workplace accidents
Market share


What is a stakeholder

groups and individuals who interact with the business and have a vested interest in its activities


Difference between internal and external stakeholders

Internal stakeholders are those are part of the business while external are those who interact with the business but are not part of it


Example of internal stakeholders (5)



Example of external stakeholders 4()

Interest groups (unions, consumer goups, specific issue groups)
Customers suppliers
Members of the community


What is corporate social responsibility

The obligations a business has over and above its legal responsibilities to the wellbeing of employees and customers, shareholders and the community as well as the environment


The areas of responsibility

Sales and marketing
Human recourses
technology support


What is operations responsible for

This area is responsible for the production of a business’s products. It oversees the transformation of inputs into the finished product


What is the area of finance responsible for

This area is responsible for managing the financial aspect of the business. This can include developing financial policies, raising finance, budgeting, accounting, reporting and cash control