Professional Documents
Culture Documents
WHAT IS A BUSINESSBusiness is a way that buyers buy and sellers sell goods and services.
For sellers, business is about how they do their selling and receive
their money and income. For buyers, business is about how they get
what they want. All business offers something to the community. A
business provides goods and services to meet the needs and wants of
the community.
Business is defined as all activities that involve the creation of
goods and services which are then bought and sold.
Normally driven by profit motive
Suppliers and customers are imperative to survival
Inputs are raw materials, outputs are the final product that is
sold to consumers
Function of business is to create/add value or benefits
Prime function is the major/core activity and the reason for
being
Mission statement includes long-term objectives. Used for
planning and evaluation
Social and economic roles are wealth creation, employment,
quality of life and choice
Stakeholders have an interest in a business. Can be internal
(owners, employees, shareholders) or external (customers,
government, competition)
Business goals can be financial, social, environmental and
personal. There may be conflicts.
BUSINESSES CAN BE CLASSIFIED AS Primary producers
Manufacturers
Retailers
Service/tertiary sector
The
Entrepreneurship
FINANCIAL GOALS Profit
Return on investment
Sales revenue
Market share
Growth
Diversification
SOCIAL GOAL Community services
Environmental protection
Employee satisfaction
Continued employment
PERSONAL GOALS Good reputation
Personal satisfaction
Environmental aware
Stakeholders are all the various individuals and groups with whom a
business interacts. They are all people who have some type of interest
in the business. Internal Stakeholders include owners, shareholders,
managers and employees. External stakeholders include customers,
suppliers, creditors, government, environment, society and
competitors.
business can improve but also which areas contain the business
sustainable competitive advantage.
LEGAL STRUCTURE Sole Trader- Someone who conducts a business on his/her own
and is solely responsible for managing and financing of the
business enterprise.
Advantageo Owns the business
o Can easily sell it
o Keeps all the profits
o Inexpensive business structure
o Responsible for all decision
o Not subject to government control
Disadvantageo Limited capital
o Unlimited Liability
o Owner needs to be good in all fields
o Owner bears all the loss
Partnership- Consist of two or more people who join together
to operate a business.
Advantageo Relatively inexpensive to set up
o More capital available
o More specialized people
o Not subject to government control
o Profits are shared between partners
Disadvantageo Unlimited liability
o Possible conflict between partner
A SMALL BUSINESS
The importance of small businessSmall-medium sized businesses account for the majority of business
operations in Australia. They contribute to the economy through:
Providing employment
Exporting income
Advancing technology
Large businesses outsource certain jobs to smaller businesses
A MEDIUM BUSINESS
A LARGE BUSINESS
The business environment and its impact on business Economic and social influences
- Economic cycle- economy experiences booms and busts,
growth and recession at different times.
- Consumer tastes- Change as you get older.
- Cultural and product diversity- Different people want
different products.
Competitive situation:
- Number of competitors- Compete for market share.
- Easy of entry- Some industries require larger investments.
- Local and foreign competitors- Affect the business sales.
- Market strategies- The ways businesses promote to the
customers.
- Substitution- Other products can be consumed instead of
theirs.
and services
The key business functions Operations- involves organising the production of goods and
services in a business
Employment relations- Is responsible for organising the
businesses human resources (the people who work in the
business). Involves hiring and firing of staff and everything in
between
Marketing- is the link between the business and its customers.
Marketing drives the business because it identifies what
customers wasnt and need and then plans the product so it
satisfys the customers demands at and acceptable price. Must
be profitable.
Accounting and finance- is responsible for providing the
financial resources necessary to run the business.
Relationship to value chain Operations- the more skilled and accomplished operations are,
the better the product will be accepted by the market.
Employment relations- This department adds value by
improving work culture and work performance. Creates increased
profits.
Marketing- This department adds value by delivering a product,
pricing, promoting, and distributing it in a way that increases
sales and profitability.
Accounting and finance- This department adds value by
allowing the organisation to use its resources more efficiently,
take advantage of greater liquidity and record higher profit
levels.
Planning is the process of deciding what is to be done, when and how
it will be done and who will do it. Plans provide direction for action.
Controlling is the process of measuring whether the objectives set
out by planning have been achieved. Controlling involves measuring
the actual performance, comparing the performance to targets and
correcting variations from targets.
PLANNINGStrategic planning- is developing a long term general plan of action
that requires the commitment of each business function.
Tactical planning- is focusing on how to achieve the objective
specified in the strategic plan.
10
ROSTERING/SCHEDULING
Rostering- process of organizing workers in the businesses so that
work can be completed; forming a timetable showing availability of
employees are main tools used to schedule:
Program Evaluation Review Technique (PERT)
Critical Path Analysis (CPA)
PERT and CPA show what needs to be done and how long it takes and
order.
11
TASK DESIGN
Task design- classifying job activities in ways that make it easy for an
employee to perform and complete the task successfully
Process:
Define what needs to be done in a general statement
Analyze job into duties
Allocate difficulty and time
Match tasks to awards
Articulate task via job descriptors and pay a scale to allow a
range of experience in a range of work settings
TECHNOLOGY
Technology is the development of methods of production or products
that help us do things faster.
Robotics- highly specialized form of technology capable of complex
tasks
CAD/CAM
CAD- computer aided design; computerized design tool that allows bus
to create product possibilities from a series of input parameters; a
computerized graphical design that generates 3D diagrams from a set
of input data. CAD designs a sequence of steps needed to be taken to
create desired products in shortest lead time possible
CAM- computer aided manufacture; software that controls
manufacturing processes; can be linked to CAM to allow instantaneous
manufacture of designs that are accepted by clients
INVENTORY CONTROL
Stocktake- the physical counting of goods to determine how much of
each stock item the bus has at a certain point
12
13
Separation of human resourcesEmployees leave an organisation for many reasons. Separation can be
voluntary (retirement, resignation, etc) or involuntary (redundancy,
retrenchment, dismissal etc)
14
15
(city/town, urban/rural)
style, personality)
16
over one year (loans, leasing) and long term finance is for much
longer (long-term loans)
The key financial statements are a balance sheet which shows
the financial position at the time, revenue statement which
measures financial performance over a period of time and a
cash flow statement which shows the sources and uses of cash
over a period of time.
A balance sheet is comprised of two columns; the left is assets
and the right liabilities and owners equity.
A = L + OE
Current assets will be turned into cash within 12 months, noncurrent assets will not. Current liabilities are to be paid off in
the next 12 months, non-current liabilities will not be.
Important equations for a revenue statement:
COGS = Opening Stock + Purchases Closing Stock
Gross Profit = Sales Revenue Cost of Goods Sold
Net Profit = Gross Profit General Expenses
A revenue statement is in the form
Sales revenue
Less COGS
Gross Profit
Less Expenses
Net Profit
A cash flow statement simply shows where money is coming
into the business, and where it is being spent.
Financial statements are used to forecast, and for interested
stakeholders.
Budgets can be used as a planning tool
Establishing a Business
Entrepreneurship being a visionary, having high motivation and
financial sense. An entrepreneur identifies a need, develops the idea,
takes risks and is passionate
Personal features-
17
Gender Business need more and more of soft skills and cultural
flexibility (the skills they say are associated with women)
Identifying business opportunities Opportunities originate from the changing needs of customers
and changes in the business environment
Sources of information help determine whether an opportunity is
viable or not
Considerations-
18
The business ideaThe business idea involves a well thought-out plan with strategies for
marketing, organizing and finance. A successful business opportunity
will involve a number of important factors Must be an opportunity that is doable and will be profitable
and competitive.
Will involve a well-thought-out plan with strategies for
marketing, organising and finance
Identifying the target marketPotential customers and their needsPotential customers are those who in the future may purchase a
product or service for a particular business. Research must be done to
find out the geographical, demographical and psychographic
information of a potential market. Market research is comprised of
market surveys (provides info about how many customers, whether
market is growing, details about suppliers, etc) and customer surveys
(info about where customers live, age, earnings etc)
Key considerations in setting up a businessEstablishing optionsThere are 3 main ways of setting up a business
Setting up a new business:
- Considerations
Business must be planned and organized
Research must be done (capital availability)
Target markets must be considered
- Advantages
Opportunity and freedom
You choose the direction of business
Select own employees and training methods
Dont pay for goodwill develop own reputation
- Disadvantages
Higher risk of failure (uncertainty)
No established customers/reputation
Costly (staff)
Have to develop relations (suppliers/distributors)
Long start up time (run at a loss)
Difficult to establish financial relationships
19
20
21
22