Unit 1 AOS 2

• What are the disadvantages of a private limited company?

  • Complex and expensive to establish/ Expensive to set up and operate

  • Increased reporting requirements and government regulation

  • Complex reporting requirements such as annual reports, need to be published for shareholders.

  • It is difficult to change structure once a company has been established
• What are the factors to consider when choosing a business model?

  • What is the main goal of the business?

  • What type of goods or services will the business offer?

  • How will the business sell these goods/services?

  • Who are the target customers and where are they located? • What types of costs will the business expect to incur?

  • Will this be a new business or an existing business model?
• What are online businesses?

  • An online business has no physical (bricks and mortar) location and conducts its business via the internet such as Facebook, Uber and Google.

  • Online businesses have grown due to the growth of the internet, and the advancement of smart phones.
• What are the different types of models for online businesses?

  • Advertising model: This is where users can use the website for free, however, advertisers pay the website to promote their products.

  • Brokerage model: Where a website exists to bring buyers and sellers together in an online marketplace. Fees are charged for each transaction.

  • Merchant model: Where a business uses its website to sell directly to consumers rather than a bricks and mortar store.

  • Subscription model: This involves a business charging customers a fee to subscribe to the website and access information.
• What are some contemporary examples of an advertising model for online businesses?

  • Facebook allows users to access its platform for free, but advertisers pay to display their ads to the vast user base. Advertisers can target specific demographics, interests, and behaviours. Reaching target market.
  • Another example is Google, particularly through its search engine and various online services. Google offers free access to its search engine, Gmail, and other services, while businesses pay for advertising through Google Ads to appear prominently in search results and other placements.
• What are some contemporary examples of a brokerage model for online businesses?

  • Airbnb is an online marketplace that connects people looking to rent out their homes with travelers seeking accommodation. The platform charges hosts a percentage of each booking as a transaction fee.
  • Uber operates as a transportation network company, connecting riders with drivers through a mobile app. The platform charges a commission on each ride completed through its app.
• What are some contemporary examples of a merchant model for online businesses?

  • Amazon: As one of the largest e-commerce platforms globally, Amazon operates primarily on the merchant model. It sells a vast array of products directly to consumers, leveraging its online platform for transactions.
  • Alibaba: A major player in e-commerce, Alibaba operates on the merchant model. It connects buyers and sellers, facilitating direct transactions through its platforms such as Alibaba.com and Taobao.
• What are some contemporary examples of a subscription model for online businesses?

  • LinkedIn Premium: LinkedIn offers a subscription model called Premium, providing additional features and insights for professionals looking to enhance their networking and job-seeking capabilities.
  • Netflix: A leading streaming service that charges a monthly subscription fee for access to a vast library of movies, TV shows, documentaries, and original content.
• What are advantages of an online business?

  • Customers can order products at any time as the business is open 24/7
  • Wider customer base as there is a global market reach via the internet/Reach customers all over the world
  • Greater customer convenience as they are able to purchase products online from whenever they are located
  • Do not have to pay for retail space and employees to work in stores.
  • Online websites can be set up quickly in comparison to other business models.
  • Business can operate from remote locations
• What are disadvantages of an online business?

  • Greater risk of unsatisfied customers as they cannot inspect products prior to purchase
  • It is difficult to offer customer service so strong customer relationships may be hard to develop
  • Risk of on-line fraud, must maintain privacy of customer data.
  • Online security issues may have the potential to negatively impact the business’s reputation.
  • Delivery charges are an added expense for consumers
  • Time is needed to train employees to fulfil online orders.
  • Development and maintenance of the website software can be costly.
• What is an Online business model?

  This business model exist purely on the internet with a small number of offices to support its operation.

  Smartphone applications have also presented more opportunities for on-line models.

  This type of business has a distinct advantage over bricks and mortar as they can reduce their running costs but what is common amongst them is they need highly skilled workers to run their technical operations.
• What is affiliate marketing?

  is a performance-based strategy where individuals or companies earn a commission by promoting another company's products or services and driving sales through their unique affiliate link. It's like earning a reward for helping to sell someone else's goods
• what is a freemium business?

  offers basic services or products for free, with the option to purchase premium features or additional content at a cost. It combines free access with paid upgrades, enticing users to upgrade to a paid version for an enhanced experience. The goal is to attract a wide audience with the free offering and convert a portion of them into paying customers.
• What is a clicks & bricks model?

  A business that has both a physical store and an online presence
• Describe a bricks & mortar business

  This is when a business has a physical location. These are the chosen model for some of the biggest retailers, manufacturing and wholesalers in the world.

  This models offers face to face interaction with customers allowing them to physically inspect or test a good/service before they buy it.

  They can be far more expensive to establish than other models which can impact on their competitiveness. BUT – it is vital that any bricks and mortar models supplements its business with an on-line platform (sometimes called ‘bricks and clicks’).
• What is a social enterprise business model?

  A social enterprise aims to improve the wellbeing of others by tackling social problems through its business activities. A social enterprises sells products and rather than the owners/shareholders of the business keeping any profit, the profit is used to support their social mission or cause.
• Thankyou Group exemplifies the freemium business model in the context of social enterprises. It generates income through selling consumer goods, like water and body care products, combining commercial activities with a social mission, where profits fund charitable projects rather than relying solely on donations.
• What are the advantages of a social enterprise?


  • The community benefits from the activities of the business.
  • The business can develop a positive reputation as they are helping and contributing to society
  • Likely to receive financial support from other businesses a the government as they have a positive social mission.
  • Employees have meaningful work as they are working to support a cause
• What are the features of a social enterprise?

  • Profits redistributed into the business

  • Exists to fulfil a vision that benefits the community rather than shareholders

  • A main goal is to achieve social, community or environmental outcomes while earning revenue

  • They provide goods or services to make a profit
• Distinguish between a charity, social enterprise, for profit and non profit company

  A charity is an organization focused on providing aid and services to address social issues through donations. A social enterprise combines business activities with a social mission, aiming to achieve both profit and social impact. For-profit companies operate primarily to make a profit, while non-profit companies pursue social or charitable goals without distributing profits to owners.
• What type of business model is a social enterprise?

  This type of business model aims to improve the wellbeing of others through its business activities – usually they concentrate on a community or environmental need.

  Profit is not the main objective, however they need to ensure they are making enough money for the business to fund it’s operations.

  Any surplus profit is usually re-invested back into the business. Can raise money through donations (crowdfunding). Sometimes the owner can find it difficult to raise finance in the conventional sense.
• What is franchising?

  When you purchase the right to use the business name, marketing and distribute the products of another business.
• How does franchising work?

  Is when the owner of the original business concept grants the rights for another business (Franchisee) to use its name and sell its products. The franchisor retains a degree of control and supports the franchisee in the management of the business.
• The franchisor provides the business name, marketing, training and support in running the managing the business in exchange for a % of the profits and on-going fees.

  The Franchisee pays a lump sum to the Franchisor, hires staff, manages the franchise and must agree to the terms of the Franchise agreement.
• What is the import and export business model?

  The import and export business model involves businesses generating sales revenue by trading goods internationally. Consumers are more aware than ever of international products. It is this demand combined with reductions in trade barriers between nations, advances in technology and continued industralisation of nations with cheaper labour resources that enables import and export businesses to prosper.
• What are exports?

  Exports are goods and services that are produced in Australia to be sold overseas.
• What are the disadvantages of an exporter business model?

  • Non- renewable natural resources are often sold which may not beneficial for the environment.
  • Difficult to understand and accommodate for different overseas cultures and laws.
  • There are higher transportation costs to sell overseas rather than domestically.
  • Australia's resources are being consumed overseas
• What is one of the most important decisions a business owner will make?

  Will they purchase a business that already exists, or do they establish a new business?
• What is a franchise?


  is when a business sells the rights to others to use their name, marketing and sell their products.
• Consultation with accountant is important to confirm the accuracy of the value placed on goodwill by the seller.
• What are the three types of resources available to a business?

  •There are three main types of resource available to a business— natural resources, labour resources (including entrepreneurship) and resources that involve capital equipment.

  •All businesses use resources to create goods or provide services
• What are business resources?

  Resources are things, including people and objects, needed for the business to function properly.
• What are natural resources?

  Natural resources are items used by the business that come from the natural environment. These include land, water and raw materials. A business must ensure that it uses natural resources wisely and does not harm the natural environment in its operations. Failing to do so will make it more difficult to attract and retain customers and employees.
• What factors should a business consider when planning for natural resource needs?

  • Where will they source their natural resources from?
  • Are the raw materials that they plan to use in production sustainable, accessible and reasonable?
  • How can they reduce wastage and environmental damage during the production process?
  • Are their products environmentally friendly, and how can they minimise the negative effect of their products on the environment?
  • Are the shops, offices and/or factories of the business designed in a sustainable way that minimises energy usage?
• What are labour resources?

  Labour resources refer to the people that provide their skills, effort and knowledge to the business. The main source of labour for a business is its employees as well as the owner. Unlike natural and capital resources, labour is a human resource. This means that any decision that a business makes can have a direct effect on the lives of the people working for that business.
• A business must ensure that it treats its workers both legally and fairly, and not as just another resource that contributes to the profitability of the business.
• What factors should a business consider when planning for a labour resource need?

  • How many workers will be needed and what kind of skills will they need?
  • What kind of training should the business offer to its workers to help them grow and benefit the business?
  • How will the business provide fair pay and healthy working conditions for its employees
  • What are the legal responsibilities of the business towards its employees?
  • How will the business resolve any disputes that arise with employees?
  • Does the location of the business allow access to the types of workers that it needs?
• Although there have been some moves towards automation and less reliant on labour, it can be argued that labour is perhaps the most important resource a business has (As other resources cannot be utilised without these).
• Why is labour the most important business resource?

  Without labor, natural resources like raw materials and capital resources like machinery cannot be effectively managed or utilized. For example, workers are needed to operate machinery and processes to transform raw materials into finished products. Even with advances in automation, human labor remains crucial for overseeing operations, maintaining equipment, and making critical decisions.
• What is are capital resources?

  Capital resources refer to the tools and machinery that are used to produce goods or perform services. Capital resources are important as they maximise the efficiency of labour.