Chapter 1

Differences between for-profit (1) and not-for-profit (2)

Aims - 1 wants to make a profit, 2 wants to achieve it's social objective Owners - 1 has set owners, 2 has none Profits - 1 are distributed to owners, 2 used to pay for organisation's expenses Employees - 1 are paid, 2 are either

Similarities between for-profit and not-for-profit

Both must ensure that finances are available to allow the organization to survive, and be accountable for their actions. All organisations must maintain a high ethical standard of behavior.

For profit organisations

Businesses are organisations that provide goods and services to fulfill our needs and wants and in return most businesses seek to make a profit.

Large business pt 2

Complex/slow decision making due to division of responsibilities Many sources of finance incl. cash reserves, retained profits, loans etc Large market share especially for multinational corporations

Internal environment

Employees (business's most important resource) Managers (need effective management to succeed) Management style

Small business contribution to export earnings

Export refers to the sale of our goods and services to other countries.

Differences between for-profit and not-for-profit

For the not-for-profit, pursuing a profit is not the overriding concern.

GPD fact

In 2013, economic growth contributed to around 40% of GPD.

Australia's economic system

In Australia, the type of economic system we have is called a market capitalist economy. This means most answers to economic questions are provided by private buyers and sellers.

The external environment

Includes those factors over which the business has little control. It may be further divided into two categories: operating and macro. Eg economic conditions, government policy, competitors and technology

Small business contribution

June 2014 - small businesses employed 50% (4.9 mill) of all private sector employees, making the small business sector the largest employer in Australia.

Small business

Less than 20 employees Independently owned and operated by generally 1 or 2 people Most common legal structure = Sole trader or Partnership eg corner store, salon, local mechanic

Operating environment

Little control Suppliers and creditors, competitors, customers, lobby groups.

Macro environment

Little to no control Political influences, economic influences, legal influences, social attitudes, technological developments.

Economic Growth

Occurs when the real value of goods and services increases over a set period of time.

Businesses fact

Over 96% of all Australian businesses are classified as 'small', employing only a few people.

Small business pt 2

Owner responsible for majority of decisions Owner provides source of finance Market share - small and usually local area, not dominant in the industry

Medium-sized business pt 2

Owner responsible for majority of decisions, process is complicated Owners/partners provide finance and/or shareholders, easier accessibility to larger loans Medium-sized market share

Market Share

Refers to the business's share of the total industry sales for a particular product.

The business environment

Refers to the surrounding conditions in which the business operates. It can be divided into two broad categories: internal and external.

Business's basic goal

Regardless of size, all businesses produce a good (physical product eg a cake) and/or service (non-material benefit eg car repairs) which is sold in a market where buyers and sellers meet. Making a profit from the sale of these goods and/or services is one of the business's basic goals.

How to check if economic growth has occurred

See whether the gross domestic product (GPD) has grown. GPD is the total market value of all final goods produced by a country over a set period of time.

Small business contribution pt 2

Small businesses drive employment growth in Australia, hiring more staff than a large business. They contribute to revenue raised through taxation.

SME's

Small to medium sized businesses, less than 200 full-time equivalent employees and/or less than $10 million turnover

The internal environment

Sometimes called the micro environment, includes those factors over which the business has some degree of control. Eg employees, managers, management style, company policies

Objective

States what an organization expects to achieve over a set period.

Objective

States what an organization expects to achieve over a set period. Objectives increase a business's chance of success

Taxation uses

Taxation is used to provide goods and services that may benefit the whole community, such as a better education system.

Personal Objectives

The nature and operation of the business reflect these objectives Eg higher income, improved financial security

Not for profit organisations

They operate to provide educational, religious or other benefits, rather than the sole pursuit or objective of earning a profit. They have a social mission.

An economy is a system set up to answer 3 questions

What goods and services are produced? How do we produce those goods and services? How are those goods and services distributed (who will receive them)?

Multinational Corporation

(Sometimes referred to as transnational corporation) is a company that has branches in many different countries.

Social Objectives

-Community service (financially support educational, cultural, sporting and welfare activities) -Provision of employment -Social justice (set of policies) -Ecological sustainability

3 types of objectives

-Financial objectives -Social objectives -Personal objectives Making a profit is the primary objective for many businesses.

Financial Objectives

-Increase sales (lowering price) -Increase market share (extensive product range, lots of brands) -Expand the business (opening more outlets, hiring more staff)

Factors to determine the size of a business

-Number of employees -The organisation -The number of owners -Market share -The legal structure

Medium-sized business

20-199 employees Owned and operated by a few people and/or private shareholders Most common legal structure = Partnership or Private company eg motel, services club, factory

Large business

200+ employees Owned usually by 1000's of public shareholders Most common legal structure = Public company (numerous) eg Woolworths, Qantas, NAB bank

Business

A business is an organization that provides goods and/or services to consumers in order to make a profit.

Organisation

A group of people who come together to achieve a common goal or set of objectives.

Return on investment

A positive or negative percentage that relates the money gained or lost on an investment.

Economy

A system set up to determine what to produce, how to produce and to whom production will be distributed.