Business Studies Preliminary 1. Nature of Business --> Role of Business

1. BUSINESS
STUDIES
PRELIMINARY
TO P I C 1 : N AT U R E O F B U S I N E S S - R O L E O F B U S I N E S S
A . N e w m a n

2. SYLLAB
US
LINKS
Business Studies Stage 6
Syllabus

3. WHAT IS BUSINESS?
According to well-known professors William Pride, Robert Hughes,
and Jack Kapoor, business is
'the organized effort of individuals to
produce and sell, for a profit, the goods
and services that satisfy society's needs.'
A business, then, is an organisation which seeks to make a
profit through individuals working toward common goals.

4. WHAT IS BUSINESS?
Characteristics of businesses:
Organised - Some businesses may be organized in a way that
requires constant cooperation and communication with other
employees. Other businesses may not require as much contact
with other employees but may instead rely on automated
workflows.
Societal need - for example, a grocery store satisfies the need
to be able to purchase food for ourselves and our families.
Profit seeking – a business will be centered on profit, as
opposed to a non-profit organization seeking donations and
funding to help vulnerable people.

5. WHY IS BUSINESS
IMPORTANT?
• Brainstorm: what were the last 10 businesses you
interacted with?
• Write these businesses down in a list, then next to
their name, identify the way/s that the business
benefited you.
• Mind Map: Create a mind map of impacts of business
on you. You can use ideas from your brainstorming,
and add positive impacts that are less obvious.

6. WHY IS BUSINESS
IMPORTANT?

7. SMEs = SMALL-MEDIUM
ENTERPRISES
SMALL BUSINESS
The ABS defines a small business as a business employing fewer than 20
people. Categories of small businesses include:
• Non-employing businesses (sole proprietorships and partnerships
without employees)
• Micro-businesses (employing between 1 and 4 people including non-
employing businesses)
• Other small businesses (businesses that employ between 5 and 19
employees)
MEDIUM BUSINESS
Medium sized businesses employ between 20 and 199 employees while
large businesses employ 200 employees or more.
SOURCE

8. WHY IS BUSINESS
IMPORTANT?
• Businesses play a crucial role in our society, largely
determining our standard of living.
• Small to medium enterprises (SMEs) make up over 98 per
cent of all businesses in Australia.
• The one common feature shared by both the largest and the
smallest business is that they produce a product — goods or
service — which is sold in a market where buyers and sellers
meet.
• Businesses have an enormous impact on our lives every day.
• Businesses play a crucial role within the Australian economy.

9. WHAT DOES BUSINESS DO?
A good is a type of product that is tangible or
physical and is usually created by a process of
manufacturing or production.
GOODS
SERVICES
Many business portfolios
consist of a mix of goods and
services that they offer to
potential consumers
Tangible/physical means that the
good can be touched, felt and held
and has a physical dimension.
Intangible means that the
good has no physical
dimension and only exists
while it is being utilised or
performed.
A Service is a non-physical product that is created
through the skills, expertise and effort of a person
and is intangible in nature.

10. 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, 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.

11. 1. PROFIT
2. EMPLOYMENT
3. INCOMES
4. CHOICE
5. INNOVATION
6. ENTREPRENEURSHIP AND RISK
7. WEALTH AND QUALITY OF LIFE

12. PROFIT
Profit is a financial
benefit that is realized
when the amount of
revenue gained from
a business activity
exceeds the expenses
needed to sustain the
activity.
=
-
Profit ExpensesRevenue
Revenue is the
amount of money
that a business
actually receives
during a specific
period – cash flowing
into a business.
Two of the main
revenue items are
sales & service fees.
Expenses are costs
that occur as part of
running a business –
cash flowing out of a
business.
Typical examples of
expenses include
purchases, insurance,
wages, rent, bank fees
and charges.

13. EMPLOYMENT
The number of employees hired by a business at
any time will largely depend on the nature of the
products and the number of customers who wish
to purchase the products. Generally, the more that
is sold the more employees a business will hire.
Large businesses employ thousands of people
within their organisations. However, the Small-
Medium Enterprise (SME) sector is a major source
of employment in Australia, accounting for about
50 per cent of all private (non-government) sector
employment — approximately 5.3 million people.

14. INCOMES
Income is money
received by a person for
providing his or her
labour, or a business from
a return on its
investments.
A wage is money
by workers, usually on a
weekly basis, for services
they provide to an
employer.
A salary is a fixed amount
of money paid on a
regular basis, usually
fortnightly or monthly, to
a permanent employee of
a business.
Shareholders are people
who are part owners of a
company because they
own a number of shares.
A dividend is part of a
Many businesses require staff to conduct their
operations. These employees provide their labour
and in return receive an income through:
• wage, or
• salary
A business receives money from the sale of its
products. As previously outlined, this is called sales
revenue. From this revenue, all the expenses
incurred in operating the business must be
deducted. The amount that remains is the
business’s profit. This becomes the business
owner’s property and consequently their income.
If the business is a private or public company, it will
have many owners referred to as shareholders. (A
share is a part ownership of a company.) Usually,
some or all of a company’s profit is divided among
shareholders. This type of income is called a
dividend.

15. CHOICE
• Brand
• Size
• Price
• Taste/smell/sound
• Quality or quantity
• Sustainable practice/produce
• Style or features
Freedom of choice exists when consumers can ‘shop around’
and select from a range of competitors’ products.
The more competition there is, the greater the choice available to
consumers. It is businesses, all competing with one another, that are
responsible for the wide range of products in the shops.

16. INNOVATION
Innovation is the process of translating an idea or invention into a
good or service that creates value or for which customers will pay.
An innovation must be replicable at an economical cost and must satisfy a specific need.
Innovation involves deliberate application of information, imagination and
initiative in deriving greater or different values from resources, and includes all
processes by which new ideas are generated and converted into useful products.
In business, innovation often results when ideas are applied by the company in
order to further satisfy the needs and expectations of the customers.

17. WHO CARES ABOUT INNOVATION?
Department of Industry, Innovation and Science - Business.gov.au
What is innovation?
Innovation generally refers to changing processes or creating more effective processes, products
and ideas.
For businesses, this could mean implementing new ideas, creating dynamic products or improving
your existing services. Innovation can be a catalyst for the growth and success of your business,
and help you to adapt and grow in the marketplace.
Being innovative does not only mean inventing. Innovation can mean changing your business
model and adapting to changes in your environment to deliver better products or services.
Successful innovation should be an in-built part of your business strategy, where you create a
culture of innovation and lead the way in innovative thinking and creative problem solving.
Innovation can increase the likelihood of your business succeeding. Businesses that innovate
create more efficient work processes and have better productivity and performance.
https://www.business.gov.au/info/run/research-and-innovation

18. INNOVATION
The $12 million Boosting Business Innovation Program aims to
accelerate innovation in New South Wales (NSW) by supporting
greater collaboration between research organisations and their business communities.
The two-year program will help unlock access to technology, equipment, research and expertise to
build an innovation ecosystem and stimulate economic growth right across NSW.
Boosting Business Innovation will:
• further a networked innovation ecosystem across NSW
• leverage additional external funding
• support small to medium enterprises (SMEs) who want to scale up and innovate
• grow the regional start-up sector and create innovation clusters across the state
• provide access to high tech equipment and technical expertise research by SMEs and start-ups
through TechVouchers
http://www.industry.nsw.gov.au/business-and-industry-in-nsw/innovation-and-research/boosting-business-innovation-program

19. INDUSTRY
EXAMPLE
References:
Riordan, P. (2015). Go-getters with
a Germanic vision for eyewear
disruption. Financial Review
[website]. Retrieved
from: http://www.afr.com/news/go
getters-with-a-germanic-vision-
for-eyewear-disruption-20151103-
gkpfcb#ixzz4Xcbq6nli

20. ENTREPRENEURSHIP AND RISK
WATCH:
• Shark Bites: Aussie Entrepreneurs [2min]
• Shark Bites: Untapped Areas [1.39min]
Entrepreneur:
a person who sets up a business or businesses,
taking on financial risks in the hope of profit

21. ENTREPRENEURSHIP AND RISK
Entrepreneurship: Do you have what it takes?
Assess your own entrepreneurial ability by completing the following questionnaire:
Questions Yes No
a) Are you willing to take moderate risks?
b) Are you easily motivated?
c) Do you get on well with other people?
d) Is your health excellent?
e) Do you set realistic goals?
f) Are you prepared to except responsibility?
g) Can you tolerate failure?
h) Do you have a positive self-image?
i) Are you well organised?
j) Are you a hard worker?
Entrepreneur: a person who sets up a business or businesses, taking on
financial risks in the hope of profit

22. ENTREPRENEURSHIP AND RISK
Read the article about Richard Branson and make a list of at
least FIVE keys to success. You could continue this research
with other articles and successful entrepreneurs.
https://www.virgin.com/entrepreneur/richard-bransons-
secrets-success
Other interesting links about entrepreneurship:
• http://www.theage.com.au/nsw/the-hatchery-universities-where-young-people-
learn-how-to-become-enterpreneurs-20161214-gtaz2a.html
• http://www.businessinsider.com.au/ring-doorbot-shark-tank-goldman-sachs-2017-
1
• http://www.afr.com/leadership/innovation/university-of-wollongong-sets-up-a-10-million-
seed-fund-for-startups-20170202-gu4fer
• http://www.theherald.com.au/story/4343087/sweet-success-for-urban-hum/

23. WEALTH AND QUALITY OF LIFE
THE DISTRIBUTION OF THE WEALTH CREATED BY A BUSINESS

24. REVIEW: WHY IS BUSINESS IMPORTANT?