The nature of a business; an organisation that attempts to satisfy the needs and wants of the community by providing goods and/or services.
A product is a good or service that can be bought or sold. * Goods are items that can be seen or touched. (Tangible) i.e. a computer * Services are things done for you by others. (Intangible)i.e. Dental work
Definitions * Profit- how much the good was sold for and how much to make and sell the product * Gross Profit- COGS (sales-costs) * Net Profit- comes with expenses * Employment- ABS; people above 15yrs who are engaged in paid work or self-employment for 1hr/per week * Productivity- The output per person per unit of time * Incomes- monetary reward to employees * Choice- the choice of what to purchase and where to purchase it. Businesses have a choice of what they produce. * Regulation- process by which governments increase restrictions * Duoplay- type of market where only two produces exist * Stakeholder- people influenced by business * Shareholder- stakeholder but deals with financial side * Market – the physical place where gods are bought and sold * Market Share- percentage of the market a particular business product have * Innovation- businesses to constantly seek ideas for new products, product modifications or different markets for existing products = consumer demands, profit, new customers * Entrepreneurship and risk- someone who starts, operates and assumes the risk of a business venture in the hope of making a profit. They take risks because usually they explore untapped markets with no track record of proven consumer demand or guaranteed returns. * Wealth- when a business increases the investment initially outplayed by investor. Wealth is created for shareholders through:
- Capital Gains: Increase in the value of the business
- Dividends: payment to investor per share owned or portion of the profit of the business profit. * Quality of life - refers to the overall wellbeing of an individual, and is a combination of both material and non-material benefits. * Total Revenue- sum total of all sales for a given time period * Total Cost- sum of all expenses made by business for a period of time * Break-even Point- calculates price where a business sells products in order to start profit * Fixed costs- remain same & not dependent on sales * Variable Costs- vary with business activity * Unit Price- price charged to customer * Liquidity- ability of business to meet its short term debt obligations (current liabilities) * Factoring- selling of short term debts to a financial institution for collection; incurs fee but enables business to maintain liquidity * Overdraft- bank pays bill, then you pay bank plus interest
Classification of business - Process of grouping based on common characteristics
1. Size – small (20-50) to medium (50-100) enterprises (SMEs), large (100+)
2. Scope - Local, national, global
Local: (newsagent) restricted geographical spread and operate in immediate environment National: one that operates within just one country (Coles).
Global or transnational corporation (TNC): International (Maccas)
3. Industry – businesses conducting similar economic activity (PSTQuatQuin)
i) Primary: production is directly associated with natural resources. ii) Secondary: businesses that take the output of firms in the primary sector (raw materials) and process it into a finished or semi-finished product (manufacturing businesses). iii) Tertiary: provide a service (selling and distributing goods) Tertiary industry involves people performing a vast range of services for other people (e.g. retailers, dentists) iv) Quaternary: includes services that involve the transfer and processing of information and knowledge (e.g. finance and education)
v) Quinary: all services traditionally been performed in the