Business studies notes- Chapter 1- The nature of business The role of business It is small to medium enterprises that make

up about 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. The Australian business world has approximately 1. 98 million separate business enterprises that respond to the needs and wants of around 22 million Australian customers and millions of overseas customers. Importance of business to you Business is important to you as a: Successful business owner- 'The technical skills and knowledge required to own and operate a successful business can be gained through learning about business. Productive employee- Employers today requires people to have a number of skills. These include technical skills, and the ability to cooperate with people and to have a working knowledge of business operations Informed consumer- You will be able to make better informed decisions and use your money wisely. During vour life you will make thousands of commercial transactions with hundreds of businesses. Informed investor- You may want to invest some money and become a shareholder in a company. To do this wisely requires an' understanding of business operations and terminology

Importance of the business to the economy Exports products, which generates income for Australians and helps reduce our trade deficit Assists in the development and use of new technology. Provides employment and income for , employees, Pays taxes to the government Undertakes investment which leads to economic growth Produces a wide range of products giving consumers greater choice Helps provide consumers with challenges and rewards Encourages research and development Into new products (invention) and improved products (innovation)

The nature of business A business can be defined as the organized effort of individuals to produce and sell for a profit, the products that satisfies individuals needs and wants. A product is a good or service that can be sold or bought. Goods can be touched. Services are done for you by others. The main activities undertaken by a business includes: Production creating products (e.g. new reproduction furniture line is created featuring chairs with a 'well worn' look) Organizing natural, capital and human resources (e.g. organizing rosters for employees. Marketing products- online, tv Controlling production- quantity and quality Forecasting sales, expenses and profit Planning finances, production and business needs Distributing goods and services to customers

Other functions of businesses Businesses provide employment for millions of people and it also adds to the economic wealth but it also has other roles. They are: Profit- that is the return or reward that business owners receive for producing products that consumers need and want. The greater the revenue the greater the profit. Profits encourage risk taking as if the business succeeds, then lots of money may be made. Quality of life- businesses offer a vast array of products that improve our standard of living. As new products are being made , our lives are made easier by these new innovations. Wealth creation- business activity results in higher levels of economic growth and wealth. As businesses gain profit, it is distributed through governments (taxes), employees (salaries, wages) , lenders,(rent) and shareholders (dividends). Entrepreneurship- businesses provide individuals with the opportunity to turn their ideas into a livelihood. For those who venture into business and succeed, their profits are huge. Innovation- through research, existing products are improved and new ones are made. New technological developments lead to new products. Choice- consumers have the opportunity to purchase products locally made and also have more competitive prices. The more

competition there is, the more choice that are available. Incomes- businesses provide income to owners/shareholders. For an individual income is the amount of money received for providing his or her labour. Employees receive wages (money received by workers on a weekly basis for services), and salaries (a fixed amount of money per year). If a business is a private or public company, it will have shareholders which receive a dividend depending on how the shares go. Employment- businesses provide 80% of all private sector jobs. The number of employees hired by a business at any time will largely depend on the nature of the products and the number. The more that is sold, the more people a business hires. The small to medium enterprises accounts for 50% of all private (non government) sector employment. of customers who wish to purchase the products.