1. Role of business
The nature of a business
The role of a business is to satisfy the never- ending needs and wants of
consumers. A business can be defined as the organised effort of individuals to
produce and sell, for a profit (goods and services) that satisfy individuals needs
and wants.
2. Types of Businesses
Classification of business Small Businesses http://au.finance.yahoo.co
o Size: Small to medium Business Type- Corner store, Local mechanic, Hairdressing salon m/news/harsh-winter-
enterprise SMEs Number of employees- Less than 20 employees chills-small-businesses-
Type of ownership- Independently owned and operated by usually one 010102330.html- Article on
or two people how small businesses have
Most Common legal structure- Sole trader, Partnership been effected bby the
Market Share- Small climate during different
Decision making- Owner responsible for majority of decisions; simple parts of the year.
and quick implementation of decisions
Sources of Finance- Owner (usually from own savings or a loan);
difficulty in accessing loans
Medium Businesses
Business Type- Services club, Motel/hotel, Engineering factory
Number of employees- 20- 199 employees
Type of ownership- Owned and operated by a few people and/ or
private shareholders http://www.franchise.net.a
Most Common Legal Structure- Partnership, Private company u/news/the-top-10-small-
Market Share- Medium, due to dominance within a geographic region; to-medium-sized-business-
Decision making- Owner basically responsible for majority of decisions; trends-f article on the
more complicated decision making with slower implementation, due to trends of small and medium
influence of directors businesses.
Sources of finance- Owners/partners own savings or a loan and/or
private shareholders; easier accessibility to larger loans
o Size: Large Large Businesses http://www.miamiherald.co
Business Type- Woolworths, Qantas, National Australia Bank m/2014/02/12/3929311/he
Number of employees- 200 or more employees alth-care-tweak-big-
Type of ownership- Owned usually by thousands of public shareholders companies.html Talks about
Most Common Legal Structure- Public company (numerous) how in America, Obama
Market Share- Large, especially for multinational corporations that changes to the health care
dominate the markets of many countries rules benefits large
Decision making- Complex decision making, due to division of companies greatly.
responsibilities among directors, senior and middle management;
possibly slow implementation of decisions, due to the layers of
management
Sources of finance- Many sources, including cash reserves, retained
profit, sale of shares, and loans from domestic and overseas institutions
o Local, national, global
A local business, such as a newsagent, corner store, hairdresser, mechanic or
pharmacy, has a very restricted geographical spread. It serves the surrounding Example of local
area and is in no position to offer a range of products to another suburb or business- Sams
town. Local businesses such as these will frequently be used by consumers who Cheap Cut (barber)
live nearby. The majority of local businesses tend to be small to medium in size.
As a business grows, it increases its range of products and the area it serves. As
it does this, it develops into a national business one that operates within just Example of national
one country. Coles, for example, commenced trading in 1914 as G.J. Coles business-Woolworths
variety store in Collingwood, Victoria. Started by George Coles and his brother
Jim, it employed six people. Today, Coles is a leader in Australian food retailing,
with more than 100 000 employees and over 11 million customer transactions a
week.
A global business, commonly referred to as a transnational corporation (TNC), Example of global
is a large business with a home base in one country that operates partially business- McDonalds
owned or wholly owned businesses in other countries.
o Industry: Secondary Secondary industry involves taking a raw material and making it into a
finished or semi-finished product.
For example, iron ore, coal and limestone are turned into steel a
semifinished product that is then used to manufacture cars.
Steel and car manufacturers are both examples of secondary industry
businesses.
o Industry: Tertiary Tertiary industry involves performing a service for other people.
Examples include retailers, dentists, solicitors, banks, museums and
health workers.
Today, about three out of every four employees and two out of every
three businesses are classified as tertiary.
Due to this increase in numbers, the tertiary sector has been subdivided
into two other sectors: quaternary and quinary.
o Industry: Quaternary Quaternary industry includes services that involve the transfer and
processing of information and knowledge.
Examples include telecommunication, property, computing, finance and
education.
The quaternary sector is expected to undergo dramatic change over the
next 20 years due to the rapid advances in telecommunications.
Expansion in e-commerce and internet-based business activity will see
an increase in the number of people employed in information
processing and analysis.
o Industry: Quinary Quinary industry includes all services that have traditionally been
performed in the home.
Examples include hospitality, tourism, craft-based activities and
childcare.
It includes both paid and unpaid work.
Demand for quinary-type services is estimated to expand rapidly during
the next two decades, due to social and lifestyle changes, as well as an
increase in the number of two income households,
o Legal structure: Sole trader Is a business that is owned and operated by one person.
Owner may employ other workers, but the owner or sole trader is the
person who provides all finance, makes all the decisions, takes all the
responsibility for the operation for the business.
Only legal requirement, the name of the business be registered if the
names is different from that of the owner. If so, it must be registered
with the Department of Fair Trading.
The owner and the business are regarded as the same, meaning if the
business is sued, the owner is sued.
If the business runs on financial difficulties, the sole trader is solely
responsible.
The responsibility may include selling personal assets to pay for the
liabilities if the business, this being referred to as unlimited liability.
o Legal structure: Partnership Is a legal business structure that is owned and operated by between two
and 20 people, with aim of making profit.
Exceptions to this number- medical practitioners, stockbrokers,
veterinarians, architects, chemists.
Similar to sole trader in that the owner and the business are regarder as
the same; that is, there is no leagal entity. http://businesscasest
Have unlimited liability. udies.co.uk/business-
Can be made verbally or in writing by implication.
Limited partnerships introduced to allow one or more partnerships to
theory/strategy/legal
contribute financially to the business but take no part in the running of -forms-of-
the partnership. business.html#axzz2t
The main reason for their investment, to add more capital or finance to FKGYtB8 legal
an existing partnership.
structure of
businesses
o Legal structure: Government Government enterprises are government-owned and operated. (They
enterprise are also known as government business enterprises GBEs.)
Dues to privatisation, some government enterprises have become
public companies.
Examples of government enterprises- Australia Post, Railcorp.
o Financial Global financial markets have changed dramatically over the last thirty years due Workplace deregulation
to two main factors:
won't boost productivity
Deregulation http://theconversation.com/work
Globalisation place-deregulation-wont-boost-
Deregulation productivity-22942
Deregulation: The removal of government regulation from industry, with This article argues that
businesses are not able
the aim of increasing efficiency and improving competition. to function as
Deregulation has allowed a more flexible, market-oriented approach in productively without the
the financial sector. government systems
Deregulation opens the financial industry to greater competition. that are in place in
regulated businesses.
Globalisation All businesses need
Globalisation allows large businesses to acquire finance from worldwide some level of regulation
sources. to ensure maximum
productivity, with
regulation comes order.
o Geographic Major Impacts on Business Activity
Australias geographic location within the Asia Pacific region
Economic grown in a number of Asian nations, especially China - provide
challenging opportunities for business expansion and sales and profit
Demography
Globalisation
Demography- the study of particular features of the population, age, sex, http://www.sys-
income, cultural background and family size. con.com/node/2977254
Changes in the demography of a countrys population can lead to changes in
demand levels and the nature of products and services. Unprecedented
Transformation in Care
Delivery across
Australia and Asia-Pacific to
drive Innovation and
Major demographic issue Efficiency
Effects
Skill shortages in the workforce
Increased demand for age-related services
Globalisation- a process that involves the breaking down of barriers between
countries, allowing them to become more connected, resulting in increased
flows of goods, money, people and ideas.
Important geographical influence
Earth is now a global community whose individual members are linked
through the mechanism of international trade; the buying and selling of
goods and services between nations
Nations are closely linked now more than ever before
Assisted by technological revolution: communication & computers
Trade, exploration and the movement of people and ideas globally have
been occurring for centuries
New communications, information and transportation technology has
redefined our concept of time and distance
Dominos People Powered
o Social Social influences, such as changes to fashion and culture, have the Pizza
capacity to affect business sales and profits. Talks about how Dominos
Rapid identification and response to these changes is using the opinions of
Leads to sales & profit opportunities people to make their
Leads to business growth products how their
Failure to respond consumers like it.
Threaten business stability & viability
(McCain Times 100
Case Study)- Talks
Businesses have legal responsibilities to customers and competitors in about what McCain needs
o Legal the way in which they provide goods and services. to fulfill for it to be legal to
Most businesses are willing to comply with regulations sell to the public.
Often time consuming and costly
Regulations can be confusing and contradictory
Essential for business owners to have a working knowledge of laws
affecting operation so they: Happy Birthday GST, and
Can avoid penalties many happy tax returns
Understand and accept the legal responsibilities they owe to Goods and Service Tax- Broad
stake holders bases tax of 10% on the supply of
most goods and services
consumed in Australia.
The GST had a major impact on
Government policies have considerable impact on the business many aspects of business
o Political environment. operations because businesses
Major political change can lead to business uncertainty or business became responsible for collecting
the tax on behalf of the
confidence.
government.
Example of dominant political issue affecting Australian businesses- the Had a particularly large effect on
introduction of GST, in July 2000. individuals and businesses when it
was introduced as it was a whole
new expense which hadnt
previously existed.
Continues to effect business
environment and individuals.
ACCC puts businesses on
o Institutional Three Main Influences notice over use of drip
Government pricing to boost prices in
Regulatory Bodies online bookings
Other ACCC has warned it is likely
Government to take legal action against
drip pricing with online
purchases.
Consumer Markets
Huge growth in the amount and value
Countries are achieving cost savings
This generally results in higher sales.
Internal influences Advancements in technology have changed consumer markets
http://articles.economictim
o Products Information es.indiatimes.com/2014-03-
Goods physically large require many raw material inputs. 07/news/48005408_1_coke
there will need to be structures in place to organise and monitor the -zero-consumers-coca-cola-
processes involved in production. life
The range of goods and services number produced by the business.
The larger the range, the more internal impact it will have on the
business as it will need to expand operations and internal structures to
accommodate the changes.
Types of businesses
Product influence is reflected in the type of business (service,
manufacturer or retailer).
Internally, a service provider will be structured differently to a
manufacturer or retailer
The range of goods and services number produced by the business.
Some goods or services require extensive preparation, while others are
merely deliverers.
Size of the business
Based on the range and type of products produced, level of technology,
and the volume of products produced.
E.g. Larger businesses produce more goods and services.
Which will influence the internal structures and operations of the
business.
Resources
The four main resources available to a business are:
o Resources http://www.miningaustralia
Managing Resources .com.au/news/wa-
The quantity and quality of these resources will vary performs-strong-in-2012-
But by combining them the goods and services demanded by consumers with-record-resources-m
are produced
These are only general categories of resource
In reality a manager must choose from many specific resources within
each category
Knowledgeable and efficient managers are needed to gather, select, and
coordinate the appropriate resources
o Management and the
business culture Flight Centre
Management
Adopted modern
Businesses have flattened their structures due to increased competition
organisational
from globalisation
structure
Can adapt quickly to meet demands of changing consumer needs and
Consists of only four
market conditions
layers
Less people to approve decisions thus allowing the flow of work to occur
Business teams on
rapidly
bottom, then
Traditional Organisational Structure leadership teams,
Centralised Power not shared then national
Task/activity centred Workers controlled
leadership teams,
Division of labour Communication: top-
regional leadership
Rigid structure down
Delegation: top-down
and finally the
Autocratic
Employment relations:
management style pluralist
global board.
Everyone who
works at Flight
Centre is allowed to
Emerging Organisational Structure participate in
business, area and
Decentralized Equal power sharing
national leadership.
People Centred Workers independent
Managers or
Multi-task, multi-skilled Communication: leaders do the same
Flexible structure: flat Consensus work as other
Democratic style Delegation by employees
Performance management agreement
style Employment
Relations: Unitary
Case Study- Pizza Hut
Business Culture http://www.wwltv.c
What is it? om/news/Pizza-
The values, ideas, expectations and beliefs shared by the staff and Hut-embarrassed-
managers of the business. after-West-Virginia-
Reflected in the way a particular business goes about doing certain store-manager-
things, the style or character developed by a business is displayed in its pees-in-stores-sink-
culture. 246222401.html
Created a negative
business culture
High ranking
member of the
business not
displaying correct
etiquette and acting
as a poor role
model for his
employees.
Culture and
Officially reputation of the
Official culture shown in the policies, goals or slogans of a business. business were
Unwritten or informal rules that guide how people in the business tarnished.
behave, such as the dress code, the language staff use, customer Actions of a single
services policies, as well as the way staff interact with each other. high ranking
Informal atmosphere and casual dress as opposed to a formal individual created a
environment with more rigid standards. snowball effect for
A Managers Role the company
Through understanding effective managers will use the businesss
culture as a vital tool to encourage positive change.
A manager who lacks understanding or who promotes a negative
business culture is likely to experience negatives outcomes from their
employees
The business life cycle refers to the stages of growth and development a
business can experience.