nature of business slides - businessstudiesandcommerce

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PRELIMINARY BUSINESS
STUDIES
Miss Vidler 2011
Preliminary Business Studies

Syllabus 2011...outline....
NOTE FOR DIARIES
Friday period 2 computer lab #1
Meet at the lab
Please put in diaries!

Preliminary Business Studies 2011
TERM 1: Nature of Business
 20% of time
 Contemporary business situations
 Business case studies
 Roles and types of businesses
 Influences in the business environment
 Business growth and decline
ASSESSMENT: Type TBC (20%) week 8
TERM 1: Business Management





40% of time
Contemporary business situations
Business case studies
Nature of management
Management approaches
Preliminary Business Studies 2011
TERM 2: Business Management (cont)
 40% of time continued from term 1
 Contemporary business situations
 Business case studies
 Roles and types of businesses
 Influences in the business environment
 Business growth and decline
ASSESSMENT: Half-yearly Exam(25%) Week 9
TERM 2: Business Planning
 40% of time
 Contemporary business situations
 Business case studies
TERM 3: Business Planning
 40% of time
 Contemporary business situations
 Business case studies
 Small to medium enterprises (SME)
 Influences in establishing a business
 Business planning process
 Critical issues in business success and failure
BUSINESS RESEARCH TASK (25%)Week 5
PRELIMINARY COURSE YEARLY EXAMINATION (30%): fourth and final assessment Week 9
Preliminary Business Studies 2011
TERM 4:
 HSC Course begins!
Prelim Business Studies
Syllabus Outline
2. Assessment Outline
3. Media File instructions
4. Business Research Task
5. Homework Programme
"Continuous effort- not strength or intelligence is the key to
unlocking our Potential.”
Churchill
1.
Key websites for Nature of Business
ASIC http://www.asic.gov.au
 ICAC http://www.icac.nsw.gov.au
 CHOICE magazine
http://www.choice.org.au
 ASX http:www.asx.com.au
 The Body shop
http://www.thebodyshop.com.au
 Coca-cola Amatil
 Wesfarmerswww.wesfarmers.com.au

FOR SUCCESS
GLOSSARY of key terms
Read, read, read

◦
◦
◦
◦
Business Review Weekly
Choice Magazine
The New Internationalist
All in library
Read the paper: including the SMH,
The Australian, Online newspapers,
The NY times, The Economist (Advanced)
◦ Cut out and start collecting articles of interest
Watch the news: Including shows
Such as Q & A (Monday nights) with politicians and Insiders and Inside Business on
Sunday Mornings, Insight
◦ We will watch any good shows relevant to what we are doing in class: If you
see something you believe would benefit our work in class let me know!
FOR SUCCESS
Business annual reports
 Your connections with local
entrepreneurs
 Legal resources
 Collect any business magazines
 Get familiar with different websites: esp
SMH business, The Australian Business

Opportunities

business woman, Director of
a company, stockbroker,
investment banker, political
adviser, manager, sales
representative, accountant,
analyst, marketing manager,
advertising executive, PR
executive, communications
manager, small business
owner, investor relations
manager....
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





Figures in text.p.6
Woolworths largest employer 94 000
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 fewer than 100 employees
employ over 42% of the workforce
Activity: Australia’s top 10
employers
List Australia’s top 10 employers and investigate their core
activities
1.
Woolworths
2.
Coles Myer
3.
Queensland Health
4.
Telstra
5.
National Australia Bank
6.
Commonwealth Bank Group
7.
Australia Post
8.
Qantas
9.
BHP Billiton
10. ANZ Banking Group
Which of these companies is in the ‘private sector’ and which in the
‘public sector’?

Nature of business

Innovation:
◦ Competitive edge always, constant ideas
◦ R&D
◦ Cochlear

Choice:

'It's choice – not chance – that determines your destiny.‘ – Jean Nidetch
◦ Free enterprise system in Australia – production
and distribution are mostly privately owned.
Supply and demand determine the allocation
of resources in the economy
◦ Choice of production and purchasing encourages
competition between businesses to product
products and services at the lowest possible
price and of the highest possible quality
In what countries is/was there no competition. No free
market?
◦ Consumers have freedom of choice = ^ quality
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
Class discussion: Local Businesses
What goods and services do they provide?
Identify the similarities and difference between each

Let’s Go Surfing

Bondi Icebergs

Aquabumps

Love Lunch

Camilla

Sarah Glover Cookies

Gertrude and Alice 2nd hand books

ANY OTHERS
Is a school a business?
An example of the Strategic Plan of a
School
Short paragraph on: Is school a business?
short answer response
The role and importance of
business: recap
Entrepreneurship
Innovation
Employment
Provider of goods and services
Source of government revenue
Wealth creation
Quality of life
Choice
Copy table on p. 9 and give examples of each
one. EG. 1. Entrepreneurship, Camilla
Franks, 2. Innovation, Bionic Ear.
1.
2.
3.
4.
5.
6.
7.
8.
Business Goals
Financial Goals
 Social Goals
 Personal Goals
 Corporate Social Responsibility

◦ ‘Triple bottom line’: corporate, social and environmental responsibility.
Business must make a profit, protect the planet and serve the people.
CASE STUDY: read and answer all
questions 1-4.
CASE STUDY
Veuve Clicquot Award (p 11-12 txt)
Read together and answer questions 1-3
individually
1.
2.
3.
Describe the qualities of a person who would be
nominated for the Veuve Clicquot Award.
Research one of the finalist for the award and explain to
the class why this woman deserves to win the award
Explain the qualities Sarina Bratton has that make her a
good businesswoman
Business Goals
Financial Goals
 Social Goals
 Personal Goals
 Corporate Social Responsibility

◦ ‘Triple bottom line’: corporate, social and environmental responsibility.
Business must make a profit, protect the planet and serve the people.
CASE STUDY: read and answer all
questions 1-4.
Business goals
Common business goals
What is the right balance?
Financial Goals
Social Goals
Personal Goals
•Profit maximisation
•Return on investment
•Increased market share
•Increased sales revenue
•Community service
•Environmental protection
•Employee satisfaction
•Continued employment
•Prestige
•Power and influence
•Job satisfaction
•Financial reward
Stakeholders

Every business, through its range of functions or
operations, serves the interest of customers, owners,
employees, suppliers, creditors, governments, society
and even competitors: STAKEHOLDERS as they have a
stake in the continuing successful operation of the
business

See figure 1.1.10 the importance of business to
stakeholders
Wednesday 9 February
Business reports!
 1.1 review for homework tonight
 Today introduce new topic: Types of
business

Business Reports on companies:
feedback

Spelling! Capitals! Punctuation! Which
Grammatical person?! Be consistent

Ensure you have only listed highlights. Is
the information you are including in your
report really vital? Make sure it is! Be
fussy. Think don’t just copy.
1.1 review
Key terms for glossary pg. 16
 Complete Business Literacy
◦ 1 and 3
 Business Teamwork: 5
 Business Thinking skills: 7
 Create a mind map outlining people affected by a
particular business activity. Divide these into internal
and external stakeholders

"Kites rise highest against the wind - not with it"
Types of business

Classification of business
◦ Which industry it belongs to
◦ The size of the business
◦ The industry/economic sector
◦ Its legal structure
Industry/
economic sector
Size
Industry
Legal structure
•Primary
•Secondary
•Tertiary
•Quaternary
•Quinary
•Large
•Medium
•Small
•Micro
•Agriculture
•Construction
•Financial
•Management
•Mining
•Sole trader
•Partnership
•Private company
•Public company
•Cooperative
•Trust
•Statutory body
•Government business
enterprise (GBE)
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]
Annual Report 30 June 2010 [ 1.65MB]

Albury-Wodonga Corporation []

Snowy Hydro Limited []
SMEs

http://thehub.ethics.org.au/sme/n
Features of small, medium and large
businesses

Construct a table listing the features of
each – list five examples of each
Small –Medium
enterprises (SMEs)
Large
•Surfculture – retail, wholesale,
Australian business, 20 staff,
low turnover of staff, products
made in china, external
accountant
• OneAgency – service
business, Australian business
with international clients, 10
staff, 10 contractors
• Woodside – mining services
business, Majority Australian
Business,ggg 50, 000 staff,
export business, international
staff
SMEs
Suggest and justify the most likely growth areas
for SMEs in the next ten years in Australia or
Globally....
Ageing population to change business
Lema Samandar
September 22, 2008 from SMH
Local, national, global

Examine local, national and global business
reports and classify these businesses in
relation to their output or service
provided
Industry

Primary

Secondary

Tertiary

Quaternary

Quinary
THURSDAY 10 February
Homework from Chapter 1: 1.1 and/or
questions/mindmaps!
 Who did not complete their industry
sector breakdown?
 Why do we break down sectors?

NEW TOPIC: Business Legal Structures
 News articles homework!!

Industry sectors
INDUSTRY
PRIMARY
SECONDARY
QUATERNARY
QUINARY
TERTIARY
DEFINE
Examples
INDUSTRY
PRIMARY
DEFINE
Examples
Exploit natural resources
and produce raw
materials
Mining, farming
SECONDARY
Process raw materials
and manufacture finished
goods;
production of cars, food
and clothes
QUATERNARY
Information-based
services
Teaching, journalism,
banking
QUINARY
Household services
Carpet cleaning, child
care, restaurants
TERTIARY
Distribute goods and
provide services
Supermarkets,
hairdressing, travel
agents
Industries contd
ACTIVITY: Examine how government policy contributed
to the development of the quaternary and quinary
sectors
QUATERNARY
 Information-based services
 Teaching, journalism, banking
QUINARY
 Household services
 Carpet cleaning, child care, restaurants
What business legal structures do these
successful business people use?
Tuesday 15th
Business Legal Structures
 Homework: Share news articles
 Sass n Bide finish up
 Continue and finish Business Legal
Structures: complete handouts from last
Thursday

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
NEWS ARTICLES
Homework for weekend:
1.
You are to go to The Australian or SMH business websites
or any other legitimate news website of newspaper! (try
not make it the Daily Telegraph.. The Economist, BRW, New
York Times etc all good)
2.
You are to find an article about any business small or large
and find out two things

1.
2.
Whether the business is a SME or a Large business and;
What type of legal structure this business has.
Finally you are to create a small summary of the article to
share with the class.
EG: Boral
3.
This is to be handed in on Tuesday 15 February
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
Partnership

A “general partnership” is an agreement by two
or more persons or entities to establish and
operate a business

A written agreement should be prepared
between the partners

Each partner discloses business profits in his or
her personal tax return and deducts
proportionate losses

A “joint venture” is a general partnership set up
to make a profit on a one-time basis
A good example: Sass and Bide

Positive Partnership:
Sass and Bide – 12 mins
Why do you believe this partnership is
successful?
 What were the partners former careers?
 What obstacles did they have to
overcome?
 What press “could you not buy” that Sass
and Bide landed? What is this called?
 Why do they believe they were
successful?

Hancock and Wright
Court told agreement gave Wright family half of ore deposit
Posted Tue Mar 6, 2007 9:41pm AEDT
A multi-million dollar court dispute over the ownership of Australia's biggest
iron ore tenement has heard the late mining magnates Lang Hancock and
Peter Wright had a unique relationship and were intensely loyal.
The Supreme Court in Perth has been told both men agreed to split their
assets in 1983, with the Wright family taking ownership of the iron ore
business, including a 50 per cent stake in the $3 billion Rhodes Ridge
deposit.
The counsel for Wright Prospecting, Rod Smith, told the court Mr Hancock
wanted a binding agreement drawn up to split company assets because he
foreshadowed their families would be locked in legal battles.
Mr Smith told the court this agreement gives the Wright family half the
Rhodes Ridge deposit, with Rio Tinto owning the undisputed half.
However Hancock Prospecting claim it also owns a 25 per cent stake in the
deposit.
The hearing has been set down for six weeks.
Activity:
Business structures (legal)

Construct a profile of the ‘ideal business partner’ then devise
a possible partnership agreement.

Debate the topic:’ Never go into business with a relative.’
Billion-dollar war
An enduring partnership based on trust between two of the west's richest
mining magnates has not passed on to their heirs.Victoria Laurie and Paige
Taylor report on two dynasties fighting over a vast mineral deposit
THE biblical wisdom that the sins of the father are visited on his
offspring could well apply to iron ore magnate Lang Hancock and
his business partner Peter Wright, if one views their collective sin
as being too rich for their own children's good.
 This week in the West Australian Supreme Court, Wright's son and
daughter, Michael Wright and Angela Bennett, began legal action against
Hancock's only daughter, Gina Rinehart, over a vast unmined pile of iron
ore - possibly worth $4 billion - that each side claims it owns.
 Like other legal fights that have emanated from WA's two dynastic iron ore
families, it carries an unedifying air. For these are two sets of offspring who
have already inherited vast fortunes from their respective fathers. Rinehart
is Australia's first female billionaire, reputedly worth $1.8 billion from the
accumulated, and ongoing, royalty payments her father negotiated with
mining companies. Australia's second richest woman, Angela Bennett,
shares a $900 million fortune with her brother Michael Wright, inherited
from their father.

Companies: private
Private company is limited to 50 shareholders. A board of directors is
elected to run the company. If there are only a small number of
shareholders they usually take on the role of directors
 A private company has Pty Ltd short for Proprietary Limited: this means
that liability is limited to the company, and does not extend to its owners.
 Shares NOT sold to public.

◦ A “limited liability company” (LLC) combines liability protection with the tax status of
a general partnership
◦ Owners of an interest in the LLC are called members
◦ Members have no personal liability for the debts and obligations of the LLC
◦ Members disclose profits and deduct losses on their individual tax returns
Public company



There is no limit to the number of people who can own
shares in a public company. Such companies must be
listed on the ASX (Australian Stock Exchange) and are
run by a board of directors elected by the shareholders.
The board then appoints executives to manage the daily
affairs of the company. A public company usually has
‘Ltd’ after its name, meaning that the shareholders have
limited liability.
Follow the process of floating a public company
WEDNESDAY 16 February

FRIDAY: in Turnbull Centre: homework
for tomorrow to come up with two good
questions relating to the Business Studies
syllabus that you can ask a small business
owner. These are to be emailed to me.
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
THURSDAY 17 February
Business structures short answers..
Each question a short paragraph..
1.Write a short paragraph outlining the advantages and
disadvantages of being a sole trader.
2. List three disadvantages of a partnership.
3. What are the benefits of being a private company?
4. Define: public company?
1. HOMEWORK DUE
2. LOOK AT SYLLABUS
3. HOW TO CHOOSE LEGAL STRUCTURE
4. INTERNAL AND EXTERNAL FACTORS
5. QUIZ OVER WEND OR TOMORROW ON SYLLABUS
THUS FAR
YOUR TASK:IN PAIRS:You are to prepare arguments for or against a
different business structure and then we are to have a class debate about the
different types of business structures.
Group 1: arguments for sole traders and an example of a successful sole
trader
Group 2: arguments against sole traders and give an example of when a
sole trader failed if possible
Group 3: arguments for partnerships and an example of a successful
partnership
Group 4: arguments against partnerships and an example of a partnership
that went wrong
Group 5: arguments for a private company and give an example of a
successful private company
Group 6: arguments in favour of Public companies and give an example of
one of Australia’s most successful public companies
IMAGES SHOULD BE INCLUDED WHERE POSSIBLE
Factors influencing choice of legal
structure
Size
 Ownership
 Finance

INFLUENCES IN THE BUSINESS
ENVIRONMENT

External influences









Internal influences






Geographic
Social
Legal
Political
Institutional
Technological
Competitive situation
markets
Products
Location
Resources
Management and business culture
Stakeholders
Stakeholders
INSTITUTIONAL FACTORS
Institutions







Institutions are according to North(1991) the game rules, in other words, the man-designed limits that
determine the forms of social relationships.
The importance of these institutional elements in the regional level could be found in the contribution they have
had in the reorganization of the production forms, through the reduction of transaction and production costs,
the definition of the incentives structure and the changes of social participation.
a)the soft institutional factors that refers to individual habits, routines, customs, traditions, social norms and
values, which show some of the characteristics of the networks of interpersonal relations;
b)the hard institutional factors are the long-lasting collective forces that shape the economy, such as rules, laws,
constitutions, property rights, etc.
However institutional factor can not explain by itself high growth rate, but added to economic and social
variables, it might contribute to create a dynamic processes with higher levels of growth.
An institution is any structure or mechanism of social order and cooperation governing the behavior of a set of
individuals within a given human community. Institutions are identified with a social purpose and permanence,
transcending individual human lives and intentions, and with the making and enforcing of rules governing cooperative
human behavior.[1]
The term "institution" is commonly applied to customs and behavior patterns important to a society, as well as to
particular formal organizations of government and public service. As structures and mechanisms of social order among
humans, institutions are one of the principal objects of study in the social sciences, such as political science, anthropology,
economics, and sociology (the latter being described by Durkheim as the "science of institutions, their genesis and their
functioning").[2] Institutions are also a central concern for law, the formal mechanism for political rule-making and
enforcement.
Foreign takeovers?

Argue the case for or against foreign
takeovers
National interest
The WA Premier Colin Barnett says it is in the nation's best interest for
Woodside to remain in Australian hands.
Mr Barnett was the WA Resources Minister in 2000 when Shell unsuccessfully
tried to take over Woodside.
He says he is still opposed to any foreign takeover of the company.
"I would still have the view that it's important and in our national interest,
certainly in our state's interest, for Woodside to remain an independent,
national company," he said.
"Now, if some other company, whether it's a BHP or someone else, buys a share
of Woodside, I don't have an objection to that so long as Woodside remains
as an independent company."
Influences in the business
environment
Writing task: 10mins
Are internal or external factors more
influential? Provide reasons for your answer
and use business examples where you can.
Influences in the business
environment
Select a small business and outline factors that
impact upon its operation, distinguish
between internal and external factors
Business life cycle

A business evolves through four major
phases of development. The four phases
are establishment, growth, maturity and
post-maturity

Each phase characterised by a number of
features that are common to most
businesses and need to be carefully
managed
Business growth and decline

Stages of the business life cycle
◦
◦
◦
◦
Establishment
Growth
Maturity
Post-maturity
1. Establishment phase
Business is launched
In pairs find out how much you already
know about the difficulties associated with
launching a business:
 Financial costs, employing people
 Unknown competition (direct competition)
 Management team need realistic and
sustainable ideas..needs to be original
 Many key decisions about business need to
be made e.g. Location, staffing, management
structure etc


Establishment phase

Retailers are reluctant to put a product
without a track record on their shelves

Typically expenses are higher than sales
revenue during the establishment phase

Establishment phase is often characterised
by negative profits
The establishment of a company
http://www.theaustralian.com.au/business/small-business
Create a flowchart of the steps that must
be taken to establish a company
2. Growth Phase

Rapid increase in sales during growth
phase put pressure on resources

Cash problems may develop because of
rapid expansion

Competitors will react to the rapid
increase in sales and try to counter it
3. Maturity stage





The growth in sales levels off as the business
is selling the same value of products year
after year
The market for the product is saturated
E.g. Everyone who wants a plasma TV has
one after a certain time
In this phase it is usual to employ
professional managers as they have the skills
to grow the value of the business by making
it more competitive
Cost cutting is the way to success in the
maturity phase..how else?
4. Post-maturity






Final stage of the business life cycle
Often business has failed to respond to increased
competition and is haemorrhaging market share
Characterised by falling sales and loss of market
share
Business unprofitable and cash flow problems
emerge/difficulty in paying bills on time
Cost cutting will ensure it maintains postition in
marketplace
Renewal also possible where managers develop
new products or more competitive ways of
providing customer benefits
DIAGRAM FROM OTHER TEXT

handouts
Business growth and decline
ACTIVITY: Using your laptops construct and
annotate a graph showing the business life
cycle.
**Try and also highlight and identify challenges
at each stage in the business life cycle, plot
where actually businesses may be on the
graph!
Responding to challenges at each
stage of business life cycle
Using hypothetical scenarios of the business
life cycle, evaluate strategies to respond
to challenged
Select a range of local businesses and
allocate a particular life cycle stage to
each one. List the main problems facing
owners/managers of each
Business life cycle

Study a business such as Rip Curl. Identify
the stages it has gone through and discuss
issues relevant to each stage
Factors that can contribute to
business decline
BRAINSTORM:
What are some of the factors which
contribute to business decline, find
examples from the media
ABC Learning
Babcock and Brown
CASE STUDY: business failure

What factors led to the failure of this
business...
Reasons for voluntary and
involuntary cessation
Baskin Robbins
DEBATE
‘Liquidation is an easy way out for
businesses’
FOR AND AGAINST
New topic: Business Management
40% of indicative time : The focus of this topic is the nature and responsibilities of management in the business environment.
Outcomes
The student:
P2
explains the internal and external influences on businesses
P4
assesses the processes and interdependence of key business functions
P5
examines the application of management theories and strategies
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
P9
communicates business information and issues in appropriate formats
P10 applies mathematical concepts appropriately in business situations
Content
Students learn to:
examine contemporary business issues to:
discuss strategies that could reconcile the conflicting interests of stakeholders
compare and contrast approaches to management
explain the benefits of quality management practices
investigate aspects of business using hypothetical situations and actual business case studies to:
identify the qualities of managers who have exhibited high personal and ethical standards
analyse different ways of coordinating key business functions for an SME
examine effective cash flow management
assess the role of the income statement and the balance sheet when describing the financial performance of a business
explain how SMEs manage change effectively
Nature of Management

Features of effective management
Nature of Management
Discussion:
What is effective management?
What are the skills that an effective
manager needs?
Skills of management









Interpersonal
Communication
Strategic thinking
Vision
Problem solving
Decision-making
Flexibility
Adaptability to change
Reconciling the conflicting interests of stakeholders
Which of the above skills is most important? Put the list in
order of importance
Skills of management mind map
Vision
Skills of
management
Case study: An effective manager...
Australian of the Year 2011
Simon McKeon
Social Entrepreneur
Simon McKeon is a prominent investment banker and world record breaking yachtsman, but
it’s his efforts to support multiple Australian and international charities which has earned
him great admiration. While enjoying a successful corporate career, Simon decided that he
didn’t want to put off the idea of serious engagement with the community sector until his
most productive years were behind him. So he joined the board of World Vision Australia
in 1994 and subsequently transitioned into a part time role with Macquarie Group as
Executive Chairman of its Melbourne office. Simon is Chairman of CSIRO as well as
Business for Millennium Development, which encourages business to engage with the
developing world. He recently retired as Founding Chairman of MS Research Australia and
the Founding President of the Federal Government’s Takeover Panel. His association with
World Vision International continues and he is also involved with the Global Poverty
Project and Red Dust Role Models, which works with remote Indigenous communities.
Together with crewman Tim Daddo, Simon has held the World Speed Sailing Record for
most of the last two decades. As a leading social entrepreneur, Simon demonstrates how
business and philanthropy go hand in hand, giving tremendously of his time and energy to
many organisations.
A
Related article here
DEBATE
“Businesses are only interested in
maximising profit”
Achieving business goals
Managers must seek to...






Maximise profits
Market share
Growth
Share price
Social
Environmental
 Achieve a mix of the above goals

Staff involvement e.g. Google
What sort of incentives have management allowed staff to enjoy...?




Innovation
Motivation
Mentoring
Training
Google: a case study
Management team
 What common skills are there between
the directors?
 Staff involvement e.g. Google

◦ What sort of incentives have management allowed staff to
enjoy...?
◦ What are the benefits of fostering staff involvement?
◦ To what extent can staff contribute to the achievement of
business goals at Google?

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