Business Studies Prelim Half Yearly Notes- Term 1 and 2 PDF

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Summary of Business Studies Syllabus 1 and 2 notes based on Year 11: Term 1 and 2. Summaries of semester 1 for Half yearly examinations...

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BUSINESS STUDIES

SYLLABUS 1: Nature of business 

Nature of a business - Producing goods and services - Creating a finished product requires production through inputs outputs  Profit, Employment, Income, Choice, Innovation, Entrepreneurship and Risk, Wealth, Quality of life

Profit: -

(profit = revenue – costs). Return on investment – level of profit based on amount invested. (profit divided by investment amount x 100)

Income: -

wage= weekly basis salary= fortnightly/monthly A business which is a private or public company will have shareholders who earn a dividend

Choice: -

-

Freedom of choice: consumers shop around and select from a range of competitors products. more competition= greater choice Choice encourages businesses to lower prices and be innovative/different

Innovation: -

Innovation helps maintain is competitive advantage

Types of businesses: Classification of businesses:

    

Size: SME’s, large Number of employees Number of owners Market share Legal structure (sole trader, partnership etc.)

Small: - > 20 employees - Independently owned, operated by 1-2 people Medium:

BUSINESS STUDIES - 20-199 employees - Debt or equity finance – easy to get loans Large: - 200+ employees

Industries:

Primary: -

producing raw materials such as wheat Eg. Farming, mining, fishing 60% of exports come from these

Tertiary: -

Secondary: -

Quaternary:

provide services Eg. Dentists, doctors and hairdressers

Quinary: -

use raw materials + labour to = outputs E f t

-

transfering & processing info/ knowledge Eg. Telecommunications,

Services originally performed at home E.g. Tourism, childcare

Incorporated: process companies go through to become a separate legal entity Unincorporated: businesses that aren't companies

Influences on the business environment External: economic, financial, geographic, social, legal, institutional,

BUSINESS STUDIES political, technological + Competitive situation: → Monopoly: concentration by 1 firm in the industry. Eg; AusPost → Oligopoly: small number of large firms dominating a market. Eg; banks and airlines

Internal: products, location, resources, management and business culture.

Business growth & decline: Establishment: -

business first enters the market slow growth in sales, not receiving sufficient revenue features are; goals, sales, marketing, profit, cash flow

Growth: -

business is experiencing increased sales challenges: more production costs, less failure rate increased profit

Maturity: -

market share slows down higher competition challenges: developing strategies, ensuring financial position professionalism/formal structure

Post-maturity: 

steady state, then a decline, renewal, cessation (closing down) business responds to challenges by cessation or innovation Voluntary and involuntary cessation – liquidation

BUSINESS STUDIES

SYLLABUS 2: Business management o Features of effective management: →

Planning:

→

Organising: establishes the rules & reporting relationship to reach

decide on orgaisational goals and use resources to achieve them. goals.

→ →

Leading: encourage individuals so they work together. Controlling: evaluate how well the organisation is achieving goals.

SKILLS OF MANAGEMENT:        

interpersonal (people skills) communication strategic thinking (planning) vision (goal skills) problem-solving decision-making flexibility & adaptability to change reconciling conflicting interest of stakeholders

Achieving business goals: S – specific     

M – measurable

A – achievable

R – realistic

T – timebound

Profits- income statement determines profit made Market share- number of customers a biz has, higher market share=more sales Growth- can be internal (new employees) & external (merging) Share price- determines business value, sustained by being well-managed etc Social goals- more social responsibility=long-term support from communities

BUSINESS STUDIES 

Environmental- being sustainable=good publicity, may conflict w profit

LINKS BTWN THEM: Startegies for increased market share will support profitability. Human resource strategies will improve skills and employee productivity. Social/ecological goals support reputation and lead to increased market share and sales. Mix of goals reflects interdependance between business functions 

Staff involvement- achieving goals thru staff, involving staff in decisions to motivate & increase labour productivity, source of innovation, less experienced staff get mentored providing individual training & advice.

MANAGEMENT APPROACHES: 1) classical approach 2) behavioural approach 3) contingency approach

1. CLASSICAL approach: 3 roles are planning, organising and controlling. - Manager has full control and employess must follow their instructions - The harder employees work=better output - Henri Fayol created the 3 roles: PLANNING: involves direction of business—achieve goals. MUST establish startegies to help achieve goals. Plans must be made for different time frames: → STRATEGIC: long term planning=for the business's future, 2+ years → TACTICAL: medium-long term planning, middle management, path to long term, 1-2 years → OPERATIONAL: short term planning, detailed-involves marketing and objectives, >12 months ORGANISING: creating a framework for APPLYING plans from ^ above/brings it to reality, includes what WILL be done, WHO will DO it and HOW it will be done.

BUSINESS STUDIES CONTROLLING: comparing RESULTS with PLANS, performance is compared to its goals and short-term objectives. If results are different to plans, the issue must be fixed.

THE CLASSICAL APPROACH HAS A:

Hierarchical organisation structure- this structure is longer - orders must go through a lot of people/levels - employees find it harder to ask questions & cannot interact straight w management - level of authority is based on their place on the chain of command

AND A: Autocratic leadership style- strong centralised control, staff must follow orders, top-down communication, external motivation - often effective w sole traders and partnerships as they need quick response to change

2. BEHAVIOURAL approach: 3 roles are leading, motivating, communicating. -

employees are important management works w them for complete efficiency emphasises teamwork to increase output business recognises social, economic and non-economic needs

LEADING: leader motivates employees, effective leader UNDERSTANDS workplace & listen to employees. MOTIVATING: financial and non-financial needs are recognised, praise is UNIQUE to individuals, REWARDS like employee of the month etc. COMMUNICATING: includes exchange of info btwn people, 2-WAY FLOW for better understanding of tasks.

BUSINESS STUDIES

TEAMS STRUCTURE: Adv: accuracy, efficiency, faster work, flexible, enthusiasm, labour productivity Dis: conflict of interest, low individual recognition, free riders

THE BEHAVIOURAL APPROACH HAS A: Flat hierarchal structure:

- for easier communication - shorter command chain - better control of employees and business - people and communication skills are v important AND A: Democratic leadership style: -

decentralised power/authority employee empowerment (girlboss behaviour) self-directed and motivated staff adapted by professional organisations staff input is considered for decision making collaborative nature

3. CONTINGENCY approach - adapting to changing circumstances - emphasises the need of flexibility & adaptation of management practices= suit changing circumstances - no 2 situations are identical

MANAGEMENT PROCESS: o

OPERATIONS:

Involves production (goods&services) and applies to manufacturing and services sector. Establishes level of quality, business capital and determines if there's sufficient products

PRODUCTION: - the steps used to transform inputs 3 production methods are:

outputs

BUSINESS STUDIES

1. JOB- adapting and customising products to custormer liking 2. BATCH- outputs are made in groups or small amounts e.g. batch of cakes

3. FLOW- continous flow of inputs that are made into outputs QUALITY MANAGEMENT: - ensures that an operation, good or service is consistent. Quality can change in any production stage - 3 components: quality control, quality assurance, quality planning = total quality management Quality control: involves establishing standards & measuring outputs against them. Quality assurance: maintenance of quality in g&s Quality planning: plan to make a product (or deliver a service) correctly. Total quality management focuses on continuous improvement in all areas and not only products.

MARKETING:

o

Advertising products & developing them to suit needs & wants of customers by deciding on product, price, place and promotion.

Identification of TARGET MARKET: -

-

Target market: a particular group of consumers at which a product or service is aimed. Market research: info from target group on whether the customers will like the product or not + investigates competitors, changes in govt. regulations, trends & customer buying patterns. Market segmentation: division of total market small segments based on geographic, demographic, psychographic, behavioural Mass marketing & niche market

Marketing mix: process of developing a product that meets the needs of consumers Implements the four p’s: → Product: g&s that can be exchanged. Includes positioning (how it's viewed compared to competitors), brand, trademark & packaging → Price: a balance of what customers are willing to pay and what the biz is willing to take. The methods of setting price are cost-of-

BUSINESS STUDIES production, demand pricing (what customers want to pay), competition based, prestige pricing (products image) and loss leader pricing (product is sold for less than its production cost). → Promotion: process of creating/maintaining consumer awareness and interest. Strategies are sales promotion, advertising, direct selling, publicity and product placement. → Place: how the product is distributed to its target market. It includes transport methods, storage of goods, and the locations which will sell the product.

o

FINANCE:

Cash flow statement: summaries cash transactions (inflow & outflow) key terms: opening balance are funds from previous period closing balance is opening balance + net cash net cash is cash after (-) outflow

Income statement: also known as statement of financial performance or P&L statement

key terms:

C.O.G.S is opening stock + purchases -- closing stock A loss is written in brackets gross profit is sales – COGS admin expenses are wages, ads, fuel, insurance etc net profit is gross profit – admin expenses (final amount)

Balance sheet: shows the businesses financial stability at a particular time key terms: It is based on assets = liabilities + owners’ equity liabilities are what you OWE (current >1 year e.g accs payable/ non- e.g. mortgage) assets are what you OWN (current...