Study+notes+posted+by+students.

What I have in mind is, as a group, everyone can choose one element of the Topic 1 syllabus to prepare study notes on. You do this by editing the page, writing your study notes underneath the heading and then saving it. If we all do a little bit then we all benefit. I have done the first two bullet points as a guide and I'm hoping you will join in. Ms Wright

__The importance of business__ ** By combining inputs and raw materials with human skill and equipment businesses add value. Bs's take resources and combine them into a product that is of more importance to the consumer than the value of the individual resources. This process is referred to as value adding.
 * Topic 1: The Nature of Business
 * • the function of business in creating value/benefits and adding value to all the business processes (value chain)**

The social role of bs is focused primarily on the impact of bs on the community. The economic role is concerned with the financial impact that the activities of bs have on various groups in the bs environment.
 * • social and economic roles – wealth creation, employment, innovation, quality of life, choice, entrepreneurship**


 * Wealth creation** - many bs's seeek to achieve a profit from their activities.
 * Employment** - The goods and services that bs provide to the community are produced using the knowledge, skills and effort of human reosurces. Downsizing occurs when fewer staff are required to work in the bs. The staff whose services are no longer needed are retrenched. The retrenched employees are said to be redundant.
 * Innovation** - the process of improving the features of a product.
 * Quality of life** - Bs research and development has contributed to a significant improvement in our quality of life eg: to develop products such as different types of bread that will help consumers maintain a healthy lifestyle.
 * Choice** - choice encourages bs's to provide goods and sercices at the lowest possible price with the highest quality and to be innovative and different from their competitors.
 * Entrepreneurship** - an individual who has developed certain ideas and is willing to take a risk to implement these ideas through a bs.

**__Identification of relevant stakeholders__**
 * • business goals**
 * 1) Financial goal - this includes profitability, market share and growth.
 * 2) Social goal - businesses like to have a positive image in the community and like to achieve this by giing back to the community. Eg. sponsoring the local soccer team.
 * 3) Personal goal - aims of the individuals running the business. Eg, self-esteam, power, wealth creation.

Small businesses are an important part of the commercial environment. They are important because they; employ a large amount of people, offer a diverse range of goods and services, and provide a starting point for entrepreneurs to enter the industry. A small business is defined by the bureau of statistics as: -  A business that in involved in manufacturing of goods and has a workplace of fewer that 100 employees or -  A business that is considered to be non-manufacturing and employs 20 or fewer people. • the role of management** Business success of often the result of a responisble and capable group of individuals leading the organisation effectively. These members take responsibilty for developing the goals of the business establish the most suitable course of action to achieve these goals. Within the business environment, these individuals are commonly referred to as managers or management. · The goals of the business · The layout of the business · Market strategies · The types of products to manufacture · The type and number of staff to employ <span style="font-family: Symbol; mso-fareast-font-family: Symbol; mso-ansi-language: EN-US; msoansilanguage: EN-US; mso-bidi-font-family: Symbol; msofareastfontfamily: Symbol; msobidifontfamily: Symbol; msolist: Ignore;">· Where to access supplies from <span style="font-family: Symbol; mso-fareast-font-family: Symbol; mso-ansi-language: EN-US; msoansilanguage: EN-US; mso-bidi-font-family: Symbol; msofareastfontfamily: Symbol; msobidifontfamily: Symbol; msolist: Ignore;">·  <span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: Arial, Helvetica, sans-serif; msoansilanguage: EN-USmsoansilanguage;">The level of borrowing and debt.
 * •** **The importance of small business**
 * __Coordinating the business__ **
 * • controlling the value chain

The role of manager can be grouped into four main categories: planning, organising, leading, controlling. Planning- Concerned with determining the goals of the business. Organising- The process of arranging the operations of the business. Leading- Concerned with the way in which managers interact with their staff. Controlling- The process of checking whether the business has achieved its goals. • the interdependence of business and its environment

__** Business life cycle **__ – establishment – growth – maturity – post-maturity • voluntary and involuntary cessation** The cessation process The nature of the cessation process will often depends on the legal structure of the business. That is whether the business is registered as a: <span style="color: #d60093; font-family: Times New Roman; mso-ansi-language: EN-US; msoansilanguage: EN-US;">-sole trader -partnership - Public or private company Receivership - where an indentant manger (reviver) has been appointed by the court to administer a business that has become insolvent. A receiver can either trade the business out financial trouble or liquidate its assets and close the business to recover outstanding debt Liquidation - occurs when all the assets of a business are sold to generate cash to pay liabilities and creditors. Bankrupts - A legal declaration that a person or business has more liabilities that asset.
 * • phases of the cycle**
 * • challenges presented at each stage of business life cycle

__**Types of business entity**__ There are various types of businesses in the commercial environment providing a variety of goods and services, aimed at different consumer groups. A business may be classified by several ways.
 * • C lassification of business**

A business can be classified based on:


 * 1) It's legal structure
 * 2) The industry sector it is in
 * 3) It's size
 * 4) Whether it is in the public or private sector
 * 5) Whether or not it is international or international

The legal structure is a vital aspect of the building of a business as having the most appropriate legal structure may affect the efficiency of the business, influencing it's ability to **maximise profits** and more readily satisfy consumer needs and wants. Some issues that businesses may encounter when deciding on it's legal structure may be if it will be able to meet its financial obligations, will the business be run by an individual or a group of individuals, and if the owners or investors are responsible for covering its debts. There are several main types of legal structures : //Sole Trader, Partnership, Private Company, Public Company, Company Limited by Guarantee, Cooperative and Trust.//
 * • Legal Structure**

When a business is owned and operated by a single individual, the business has a legal structure of a Sole Trader and are registered as unincorporated **businesses.** This implies that the single owner holds all the risks and responsibilities of the business, risking their personal assets ( such as: car, house, furniture ) if they are unable to meet their financial obligations. This is known as **unlimited liability.** However with the risks associated with a sole trader business structure comes the many **advantages** of being a single owner, such as:
 * • Sole Trader**

– The owner is entitled to all the profits of the business – Flexible working hours – There is no clash of opinions therefore allowing for more efficient operation – The prestige associated with owning a successsful business <span style="font-size: 11pt; font-family: 'Calibri','sans-serif'; mso-bidi-font-family: Arial; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">

A partnership is an unincorporated business that has more than one owner. According to the //<span style="font-family: 'Calibri','sans-serif'; mso-bidi-font-family: Arial; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Partnerships Act 1982 (NSW), //the number of partners within a business is dependent on the type of industry. Most partnerships usually have 2 to 20 owners, with the following exceptions: <span style="font-size: 11pt; font-family: Symbol; mso-fareast-font-family: Symbol; mso-bidi-font-family: Symbol; msofareastfontfamily: Symbol; msobidifontfamily: Symbol; msolist: Ignore;">· <span style="font-size: 11pt; font-family: 'Calibri','sans-serif'; mso-bidi-font-family: Arial; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Up to 100 owners are permitted for veterinary practices and pharmacies <span style="font-size: 11pt; font-family: Symbol; mso-fareast-font-family: Symbol; mso-bidi-font-family: Symbol; msofareastfontfamily: Symbol; msobidifontfamily: Symbol; msolist: Ignore;">· <span style="font-size: 11pt; font-family: 'Calibri','sans-serif'; mso-bidi-font-family: Arial; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Up to 200 partners are permitted for accountancy and legal practices <span style="font-size: 11pt; font-family: Symbol; mso-fareast-font-family: Symbol; mso-bidi-font-family: Symbol; msofareastfontfamily: Symbol; msobidifontfamily: Symbol; msolist: Ignore;">· <span style="font-size: 11pt; font-family: 'Calibri','sans-serif'; mso-bidi-font-family: Arial; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Up to 50 owners are permitted for businesses consisting of other professional occupations, including medical practitioners and engineers

The act also requires partners in a firm to develop a partnership agreement. The agreement is commonly referred to as a constitution. The areas it covers: <span style="font-size: 11pt; font-family: Symbol; mso-fareast-font-family: Symbol; mso-bidi-font-family: Symbol; msofareastfontfamily: Symbol; msobidifontfamily: Symbol; msolist: Ignore;">· <span style="font-size: 11pt; font-family: 'Calibri','sans-serif'; mso-bidi-font-family: Arial; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The name and place of residence of each partner <span style="font-size: 11pt; font-family: Symbol; mso-fareast-font-family: Symbol; mso-bidi-font-family: Symbol; msofareastfontfamily: Symbol; msobidifontfamily: Symbol; msolist: Ignore;">· <span style="font-size: 11pt; font-family: 'Calibri','sans-serif'; mso-bidi-font-family: Arial; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The percentage of the total business that is owned by each partner <span style="font-size: 11pt; font-family: Symbol; mso-fareast-font-family: Symbol; mso-bidi-font-family: Symbol; msofareastfontfamily: Symbol; msobidifontfamily: Symbol; msolist: Ignore;">· <span style="font-size: 11pt; font-family: 'Calibri','sans-serif'; mso-bidi-font-family: Arial; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">How profits will be distributed <span style="font-size: 11pt; font-family: Symbol; mso-fareast-font-family: Symbol; mso-bidi-font-family: Symbol; msofareastfontfamily: Symbol; msobidifontfamily: Symbol; msolist: Ignore;">· <span style="font-size: 11pt; font-family: 'Calibri','sans-serif'; mso-bidi-font-family: Arial; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The process of selling a partner’s share within the business <span style="font-size: 11pt; font-family: Symbol; mso-fareast-font-family: Symbol; mso-bidi-font-family: Symbol; msofareastfontfamily: Symbol; msobidifontfamily: Symbol; msolist: Ignore;">· <span style="font-size: 11pt; font-family: 'Calibri','sans-serif'; mso-bidi-font-family: Arial; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Conflict-resolution procedures Responsibility is spread, as is the decision-making process. Additional funds can be brought into the business, which could be used for growth and expansion. <span style="font-size: 11pt; font-family: 'Calibri','sans-serif'; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Partnerships have unlimited liability. If the business is unable to meet financial obligations, each partner will be required to contribute to the business a portion of his/her money. Problems may occur within the business between partners and may affect the long term survival of the business.

– industry – size – public/private sector – international, transnational • factors influencing choice of legal structure** – size, ownership, finance, privatisation
 * • relationship of legal structure to particular circumstances

• the number of SMEs • the contribution of the small business sector to the economy • success and failure of small business • future prospects of small business**
 * __Small-medium enterprises (SMEs) in Australia__ **
 * • definition of SME

– economic cycles – consumer tastes – cultural and productive diversity // Economic and Social Factors // Economic Cycle: The fluctuation of consumer and business spending over a period of time. This influences the level of employment and investment in an economy and the profitability of business. Monetary Policy: Actions taken by the Reserve Bank to influence the level of interest rates in the Australian economy. This means increasing the interest rates in order to slow down consumer spending and the upswing. This helps keep the economy in a steady state. Fiscal Policy: Is the use of government spending and taxation to regulate fluctuations in national income, employment and prices. The key provider is of essential community services will often seek assistance from business in providing these services. This is used when the economy is heading downswing.
 * __The business environment and its impact on business__ **
 * • economic and social factors**

// The Four Factors That Influence Customer Buying Patterns // 1. The availability of credit 2. Levels of Disposable income 3. Interest Rates 4. Inflation rates // Four Phases The Economic Cycle Experiences // 1. Upswing 2. Boom 3. Downswing 4. Trough // Consumer Tastes and Preferences // Consumer tastes and preferences are a major influence on the operations of a business. The goods and services developed by businesses are all affected by customer base. As preferences and consumer tastes change, businesses must adapt to these changes. If a business isn’t successful in achieving this then it might face risks of closing. Successful businesses are the ones that adapt to latest trends and changes.

**• competitive situation** – number of competitors – ease of entry – local and foreign competitors – marketing strategies – substitutes

<span style="font-size: 12pt; font-family: Arial; mso-fareast-font-family: 'Times New Roman'; mso-fareast-language: EN-AU; mso-ansi-language: EN-US; mso-bidi-font-family: 'Times New Roman'; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA;"> **• government** – business law relating to levels of government, eg local (health, zoning), state (fair trading), federal (taxation), international (trade agreements) – regulatory bodies such as Environment Protection Authority, Department of Fair Trading, Australian Securities and Investment Commission, Australian Competition and Consumer Commission
 * • other institutional influences including: employer, trade and industry associations, trade unions, Australian Stock Exchange**

• reconciling conflicting interests of stakeholders** – between shareholders, society and future environments – between shareholders and employees.
 * __Ethical and social responsibilities of business__ **
 * • responsibilities to shareholders, managers, employees, consumers and society

<span style="font-size: 12pt; font-family: Arial; mso-fareast-font-family: 'Times New Roman'; mso-fareast-language: EN-AU; mso-ansi-language: EN-US; mso-bidi-font-family: 'Times New Roman'; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA;"> • government – business law relating to levels of government, eg local (health, zoning), state (fair trading), federal (taxation), international (trade agreements) – regulatory bodies such as Environment Protection Authority, Department of Fair Trading, Australian Securities and Investment Commission, Australian Competition and Consumer Commission • other institutional influences including: employer, trade and industry associations, trade unions, Australian Stock Exchange

//ethical and social responsibilities of business// • responsibilities to shareholders, managers, employees, consumers and society • reconciling conflicting interests of stakeholders – between shareholders, society and future environments – between shareholders and employees.

<span style="font-size: 12pt; font-family: 'New York'; mso-fareast-font-family: 'Times New Roman'; mso-fareast-language: EN-AU; mso-ansi-language: EN-US; mso-bidi-font-family: 'Times New Roman'; mso-bidi-font-size: 10.0pt; mso-bidi-language: AR-SA;">