BUSINESS STUDIES TERM 1

• Business


  A coordinated effort by individuals to combine resources in order to produce goods and services that satisfy consumer needs and wants for the ultimate goal of making a profit
• Goods and services produced by businesses

  • Goods - items that can be seen and touched (e.g. clothes, food, cars)
  • Services - things that are done for you by others (e.g. Coles delivering food, airlines, banks, law firms, plumbing repair)
• Finished product


  • A good or service that is ready for customers to buy and use
• SME (Small to Medium Enterprise)


  • 98% of businesses in Australia
• Production


  Activities undertaken by the business that combines the resources to create products that satisfy customers' needs and wants
• Inputs


  • Land
  • Capital
  • Labour
  • Enterprise
• Outputs


  • Goods
  • Services
• Roles of business


  • Profit
  • Employment
  • Incomes
  • Choice
  • Innovation
  • Entrepreneurship and risk
  • Wealth
  • Quality of life
• Profit


  What remains after all business expenses (operating costs) have been deducted from sales revenue
• Income


  Money received from a person for providing their labour/work, or a return on investment
• Employment


  Businesses provide employment opportunities, which keeps the economy healthy through the purchasing of products by consumers
• Choice


  The act of selecting alternatives
• Entrepreneurship and risk


  The ability and willingness to start, operate and assume the risk of a business venture in the hopes of making a profit
• Wealth


  The net amount a person or business owns
• Innovation


  A new or improved product or process
• Quality of life


  The overall standard of living and well-being of an individual
• Classification of business by size

  • Micro businesses (fewer than 5 employees)
  • Small businesses (5-19 employees)
  • Medium businesses (20-199 employees)
  • Large businesses (200+ employees)
• Classification of business by geographical spread

  • Local
  • National
  • Global
• Classification of business by industry

  • Primary
  • Secondary
  • Tertiary
  • Quaternary
  • Quinary
• Classification of business by legal structure

  • Sole trader
  • Partnership
  • Private company
  • Public company
  • Government enterprises
• Unincorporated business


  The business has no legal existence from its owner/s and will either be a sole trader or partnership. Owners have unlimited liability.
• Incorporated business


  The business exists as a separate legal entity from the owners. Owners have limited liability.
• Sole trader


  • Owned and operated by 1 person, unincorporated entity, most common legal structure, owner makes all decisions and takes all responsibility, unlimited liability
• Advantages of sole trader

  • Low cost to set up
  • Owner has full control of operations
  • Owner receives all profit of the business
  • Only a few government and legal requirements
• Disadvantages of sole trader

  • Unlimited liability
  • Business will no longer continue when the owner dies (perpetual succession)
  • Not paid when they go on holidays or are sick/unwell
  • Difficulty in raising finance for expansion
  • Owner's sole responsibilities for a range of tasks
• Federal Government influences


  • Payment of taxes for employees earning above the minimum taxable income level
• Other institutional influences


  • Employer Associations
  • Trade unions
• Employer Associations


  Represent the interest of employers and assist them in formulating policies, providing assistance, and acting on behalf of employers in negotiating enterprise/collective agreement with employees/trade unions
• Trade unions


  Their main aim is to improve working conditions and pay rates
• Technological influences


  • Allowed businesses to increase efficiency and productivity, create new products and improve the quality and range of products and services
  • Increased competitive advantage over local, national, or global markets
  • Adopting advances in IT has enabled businesses to operate 24/7, reduced geographical boundaries, and changed workplace practices
• Robotics has increased productivity and operating costs


  Reduced employment opportunities
• Competitive situation


  The concentration of business within an industry or sector describes the level of competition
• Types of market structures

  • Monopoly
  • Oligopoly
  • Monopolistic Competition
  • Perfect Competition
• Monopoly


  Complete concentration by 1 business in the industry, business has the ability to decide the price of goods/services as there are no competitors, customer has no influence over the price charged
• Oligopoly


  Consists of a small number of larger businesses that dominate the market, are able to stay in control of the market because they spend large amounts of money on advertising which allows them to restrict the entry of new competitors in the market
• Monopolistic Competition


  Most common type of market in Australia, a large number of buyers and sellers, the goods and services sold are different compared to competitors using methods such as packaging, advertising, brand names, and quality
• Perfect Competition


  Large number of small businesses that sell products that are the same or similar, very little advertising is used to increase market share, the only way to achieve market share is through price competition
• Markets/changing markets


  • Financial products are bought and sold across borders more readily due to technology
  • The labour market has been globalised by migration and the tendency for business to favour outsourcing of manufacturing to low-wage economy
  • Consumers now have access to goods and services across the globe and have greater levels of disposable income than ever before
• Disposable income


  Money that is available from an individual's salary after they pay local, state, and federal taxes
• Internal influences


  • Products
  • Location
  • Resources
  • Management
  • Business culture