Nature of Business Role of Business

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The nature of business

The focus of this topic is the role and nature of business in a changing business environment.
Use your existing knowledge: you may know more than you think!

Outcomes
The student:
P1 discusses the nature of business, its role in society and types of business structure
P2 explains the internal and external influences on businesses
P6 analyses the responsibilities of business to internal and external stakeholders
P7 plans and conducts investigations into contemporary business issues
P8 evaluates information for actual and hypothetical business situations
Content
Students learn to:
examine contemporary business issues to:
 discuss the global expansion of one Australian business
 discuss the expansion into Australia of one global business
 explain how changes in external influences have contributed to the growth of the tertiary,
quaternary and quinary industries in Australia
 identify problems that arise for stakeholders when companies go into liquidation
investigate aspects of business using hypothetical situations and actual business case studies to:
 distinguish between the different types of businesses
 identify actual businesses at different stages in the business life cycle
 outline possible business strategies appropriate for different stages in the business life cycle
The nature of business:

The Role of Business


What is business?
Person’s occupation, behaviour when buying and selling, trade and commerce,
firms activity. English word: ‘To do things’
BUYING AND SELLING
 Sellers:
◦ How to sell and receive income
 Buyers
◦ How to get what you want

All businesses offer something to the community; no matter how big or


small, businesses are crucial to the successful functioning of society.
Business: Producing goods and services

Q: Where would Government without business?


Australia’s largest employers

 Wesfarmers largest employer 100,000


employees
 Australia’s biggest company is BHP Billiton with
over 33 000 employees.
 Small business employ more Australians than big
business overall (retail)
 Businesses with 20-199 employees account for
about 25%, and businesses with 200+
employees, around 20%.

Nature of business
 Entrepreneurship
◦ What defines an entrepreneur? Risk taker? Creativity?
Determination? Energy? Passion? Contacts?
◦ What entrepreneurs can you think of and what
qualifications did they have?
◦ Steve Jobs
◦ Entrepreneurs must combine resources of land,
labour and capital to produce a product
 Quality of life
◦ Products and services increase the quality of life for
all Australians. Business provides us to a range of
goods that we could not create ourselves
Activity: Australia’s top 10
employers
 List Australia’s top 10 employers and
investigate their core activities
Class discussion: Local Businesses
What goods and services do they provide?
Identify the similarities and difference between each
Nature of business
 There is one thing people have in common — they all
have needs and wants. They need food to eat, clothes to
wear and houses to live in. Most of us also want DVD
players, iPods, mobile phones and cars — if only for the
pleasure they give to us. To satisfy these never-ending
wants is the role of business. A business can be defined
as the organised effort of individuals to produce and sell,
for a profit, the products (goods andservices) that
satisfy individuals' needs and wants. To satisfy the needs
and wants of its customers, the business has to produce
the products the customers demand. By producing these
products for sale on the market, the business hopes to
achieve a number of goals. Making a profit is perhaps the
most basic of these
Production – producing goods &
services
 When we go shopping we are choosing from a
range of finished products — products that are
ready for customers to buy and use. Rarely do we
stop to think about all the operations that have
occurred to transform raw materials into finished
products ready for consumption. Business
enterprises undertake many activities to provide
the products demanded by customers, as shown
in figure . However, by far the most important of
all these activities is
production. Production refers to those activities
undertaken by the business that combine the
resources to create products that satisfy
customers' needs and wants
The role and importance of
business: recap
1. Entrepreneurship
2. Innovation
3. Employment
4. Provider of goods and services
5. Source of government revenue
6. Wealth creation
7. Quality of life
8. Choice
Summary

 The main role of a business is to produce


and sell, for a profit, the products that satisfy
individuals' needs and wants.
 Business enterprises undertake many
activities to provide the products demanded
by customers, with production being one of
the most important.
 Production occurs when the business
combines the resources to create products.
Revision/Homework

 1. What are the main roles of business in


Australia?(hint there is 9 of them, try to
remember without looking at notes.
 2. Choose 1 role and write a TEEEL
paragraph
Types of Business
 There are four main ways to classify
a business:
 1. Size
 2. Geographical spread
 3. Industry sector
 4. Legal structure
Types of business
 Classification of business
◦ Which industry it belongs to
◦ The size of the business
◦ The industry/economic sector
◦ Its legal structure
Industry/ Size Industry Legal structure
economic sector
•Primary •Large •Agriculture •Sole trader
•Secondary •Medium •Construction •Partnership
•Tertiary •Small •Financial •Private company
•Quaternary •Micro •Management •Public company
•Quinary •Mining •Cooperative
•Trust
•Statutory body
•Government business
enterprise (GBE)
INDUSTRY DEFINE Examples
Exploit natural resources Mining, farming
PRIMARY and produce raw
materials
Process raw materials production of cars, food
SECONDARY and manufacture finished and clothes
goods;
Information-based Teaching, journalism,
QUATERNARY services banking

Household services Carpet cleaning, child


QUINARY care, restaurants

Distribute goods and Supermarkets,


TERTIARY provide services hairdressing, travel
agents
Features of small, medium and large
businesses
 Construct a table listing the features of
each – list five examples of each
Small –Medium Large
enterprises (SMEs)
•Surfculture – retail, wholesale, • Woodside – mining services
Australian business, 20 staff, business, Majority Australian
low turnover of staff, products Business,ggg 50, 000 staff,
made in china, external export business, international
accountant staff
• OneAgency – service
business, Australian business
with international clients, 10
staff, 10 contractors
Business Legal Structures
Important to think about the advantages and disadvantages of each different type of
structure..

 Sole trader
 Partnership
 Private company
 Public company
 Government enterprise

CREATE: MIND MAP


Sole trader
 A “sole proprietorship” is the establishment
of a business by an individual; there is no
legal entity that owns ands operates the
business

 The owner is personally responsible for all


debts ands contracts

 Profits are disclosed on the owner’s


personal income tax return and he or she
can deduct business losses
Government Enterprise
 A government sponsored/supported
business activity
Government Business Enterprises (GBEs)
The Government Businesses Advice Branch (GBAB) provides advice to the
Australian Government relating to its Government Business Enterprises
(GBEs) and other commercial entities.
Eg
ASC Pty Limited []
Australian Government Solicitor []
Australian Postal Corporation []
Australian Rail Track Corporation Limited []
Defence Housing Australia []
Medibank Private Limited []
NBN Co Limited []
Government Business Enterprises (GBEs)
The Government Businesses Advice Branch (GBAB) provides advice to the Australian
Government relating to its Government Business Enterprises (GBEs) and other
commercial entities.
The branch´s primary tasks in relation to GBEs is to:
provide sound strategic and analytical advice to the Minister for Finance and Deregulation, in particular by engaging with the GBEs, analysing their operations and their
environment, and consulting with stakeholders;
action the Minister's decisions including communicating objectives; and
ensure that there is a robust and sound governance framework in place by initiating change and contributing to policy development.
Government Business Enterprises (GBEs) are prescribed in regulations [] under the Commonwealth Authorities and Companies Act 1997.
The Australian Government´s relationship to its GBEs is similar to the relationship between a holding company and its subsidiaries, features of which include:
a strong interest in the performance and financial returns of the GBE;
reporting and accountability arrangements that facilitate active oversight by the shareholder;
action by the shareholder in relation to the strategic direction of its GBEs where it prefers a different direction from the one proposed;
management autonomy balanced with regular reporting of performance to shareholders; and
boards that are accountable to shareholders for GBE performance, and shareholders that are accountable to Parliament and the public.
To enable greater public accountability, wholly owned GBEs are required to prepare a Statement of Corporate Intent (SCI) in consultation with Shareholder Ministers.
A SCI focuses on the purpose and corporate outlook of a GBE, and expresses the expectations of its management in relation to future financial and non-financial performance.
The following is a list of the Australian Government´s GBEs, with links to their websites, where available:
ASC Pty Limited []
Australian Government Solicitor []
Australian Postal Corporation []
Australian Rail Track Corporation Limited []
Defence Housing Australia []
Medibank Private Limited []
NBN Co Limited []
Other entities which are not prescribed as GBEs but which GBAB also provides advice to the Government are:
Airservices Australia []
Australian River Co. Limited - Statement of Intent [ 53KB] - Statement of Expectation [ 6KB] - Annual Report 2009 [ 7MB] - Annual Report 2009 [ 357 KB]

 Australian Industry Development Corporation


◦ Statement of Intent [ 24KB]
Statement of Expectation [ 7KB]
◦ Annual Report 30 June 2010 [ 381KB]
Privatisation of government
companies

Debate the issue of privatisation of


government companies in Australia. (Telstra,
Cth Bank etc)

 Watch video on Privatisation under Thatcher


 http://www.youtube.com/watch?v=nEIR0aOL
qXk&feature=related
Activity/ Homework
 Complete summary dot point sheet for ‘Role of Business’

 Name how many a micro, small, medium and Large Company can
employ

 Provide an example of a business that is from the economic sector


of the business and also the legal structure of a business.
 Explain what is meant by geographical spread. Give examples of
different types of businesses for different locations. Use examples
to illustrate your response. For example ; Local: A business that
serves the local population and surrounding area only such as a
hairdresser or pharmacy.

 Businesses may often begin as a local business, but often expand.
Outline the four main reasons for expansion.

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