Identify Three Common Characteristics Of A Small Business In Australia

MORIAH COLLEGE

SUBJECT: Preliminary Business Studies, Assessment No 1

DATE: Tuesday 27h March 2007

LENGTH: 45 minutes

SECTION I: 20 marks

SECTION II: 38 marks

SPECIAL INSTRUCTIONS:

 Only Board of Studies approved calculators may be used  No borrowing of any kind is permitted  Complete Multiple Choice (Section I) on the Answer Sheet  Use the spaces provided on the paper to answer Section II

Student Number: Section I: Multiple choice questions 20 marks

Answer questions 1 to 20 on the attached answer sheet selecting the most appropriate response for each question.

Multiple choice questions

1. Which of the following is not a factor influencing choice of legal structure?

(a) Size of business (b) Ownership structure (c) Privatisation (d) Economic cycles

2. Antonio recently opened a café within the heart of the city targeting office workers. He is spending most of his time directing and motivating his team so that the café develops a strong customer base.

Which basic function of management is Antonio displaying?

(a) Planning (b) Organising (c) Leading (d) Controlling

3. In which of the following industrial sectors would a bed and breakfast guesthouse belong?

(a) Secondary (b) Tertiary (c) Quaternary (d) Quinary

4. An external reason for business failure could be?

(a) Insolvency (b) Poor financing and under capitalization (c) Incorrect location (d) A change in government policy affecting the operations of he business 5. Which of the following is an example of a Public Business Enterprise?

(a) A public company with shares listed on the stock exchange (b) A McDonalds franchise (c) Nun Wong’s Computer Software Pty Ltd (d) Rail Infrastructure Corporation

6. Which local government regulation affects the establishment of a business?

(a) Registration of a business name (b) Trade Practices Act, C’Wealth, 1974 (c) The zoning of business premises (d) Workplace relations legislation

7. The government regulatory body that is concerned with the competitive situation in Australia is?

(a) Department of Fair Trading (b) ACCC (c) ASIC (d) ASX

8. Which of the following statements is true of the economic cycle’s impact on domestic business?

(a) in times of a boom unemployment will fall and business activity will decrease (b) in times of a recession consumer spending will fall and business activity will rise (c) in times of a boom unemployment will fall and so business activity will rise (d) in times of a recession consumer spending will rise and so will business activity

9. An organisation that is responsible for managing the assets on behalf of an individual or a group of individuals is known as?

(a) A private sector business (b) A quinary Business (c) A Trust (d) A private limited company 10. Chloe designer handbags are manufactured all over the world and then sold to clothing boutiques in domestic and international markets.

(a) Chloe is an example of an international business (b) Chloe is an example of a transnational business (c) Chloe is an example of a public sector business (d) Chloe is an example of a co-operative business

11. Limited liability is a feature of ownership of a business. Which type of business entity does this not apply to?

(a) A public company (b) A partnership (c) A co-operative (d) A proprietary company

12. Vaby’s Mediterranean Grill is a casual and relaxed family dining restaurant featuring popular and delicious meals of the Mediterranean. The owners’ of the business, Armindo Martins and Vicki Allen opened their first restaurant in Beverly Hills in 2001. This restaurant concept proved to be extremely popular with customers and this success allowed them to open other restaurants in Picton and Penrith. Armindo Martins and Vicki Allen are looking to allow someone to set up and run a new store under their guidance and company name in Double Bay.

State what the company Vaby’s Mediterranean Grill is an example of?

(a) A Franchise (b) A Franchisor (c) A Partnership (d) A Public Business Enterprises

13. Which of the following is an example of horizontal integration?

(a) Virgin Blue purchasing shares in Jet Star (b) Virgin Blue purchasing shares in Harvey Norman (c) Virgin Blue purchasing shares in Flight Centre (d) Virgin Blue purchasing shares in Oz Experience 14. Mad Mountain Bikes Ltd has failed to appropriately manage expenses to such an extent that the company currently has a net loss of $5,000,000. An independent third party has been appointed to take control of the business with the intention of selling all of company’s assets in order to try and pay some of the creditors,

The appointment of the independent third party is an example of which of the following?

(a) Bankruptcy (b) Voluntary administration (c) Liquidation (d) Undercapitalisation

15. It can be argued that large companies assist the Australian economy through providing jobs, and paying taxes which are used to provide public works. It is also claimed that they also offer a broad range of products to consumers, partially through improving upon existing products and that overall, they provide us with a higher quality of life.

Which social or economic role of business is not outlined in the above paragraph?

(a) Quality of life (b) Employment (c) Wealth creation (d) Entrepreneurship

16. Big Phil Travel Pty Ltd was recently established in Bondi Junction. Which of the following would form part of the internal business environment?

(a) Social forces (b) Economic conditions (c) Management style (d) Political forces

17. Which of the following relate to job security, self-esteem and status, professional recognition, and power and influence?

(a) Social goals (b) Personal goals (c) Ethical goals (d) Financial goals 18. Which of he following is not an example of an economic or social factor impacting upon business?

(a) Product diversity (b) Consumer tastes (c) Multiculturalism (d) Innovation

19. Which type of market concentration involves a large number of businesses relying on product differentiation to gain market share over the competition?

(a) Oligopoly (b) Perfect competition (c) Monopoly (d) Monopolistic competition

20. Which of the following are the social and ethical responsibilities of a business?

(a) The business’s responsibilities to community groups (b) The business’s responsibilities to its external stakeholders (c) The business’s responsibilities to its customers (d) The business’s responsibilities to its internal and external stakeholders Student Number:

MULTIPLE CHOICE ANSWER SHEET

INSTRUCTIONS: Select the most correct answer and circle the most correct letter. If you make a mistake, clearly indicate which answer you have selected.

1. A B C D

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20. A B C D Section II:Short answer questions 38 marks

Question 21

Answer question 21 using the stimulus material below and your own knowledge.

Loop-Hole Larry is the founder and major shareholder of Kamikaze Cut-price Airlines (KCA), a recent entrant into Australia’s low cost domestic market. The company has quickly become highly profitable having become the market leader in only 3 years.

However, Loop-Hole Larry, being concerned about threats to the business like rising fuel prices and the war on terrorism, is considering making some changes…….

(a) Outline a social goal for KCA. (1 mark)

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(b) Distinguish between the internal and external business environment. (2 marks)

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Question 21 continues over the page (d) Analyse how the external business environment may cause changes to the internal business environment of KCA. (4 marks)

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______Question 22

Answer question 22 using the stimulus material below and your own knowledge.

It is estimated that there were approximately 1,400,000 private sector small businesses in Australia during 2004 which represented 95% of all the private sector businesses. Small businesses play a vital role in the Australian economy, however only about 20% survive past the 10th year.

(a) Define the term small business. (1 mark)

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(b) Outline TWO contributions of small-medium business enterprises to the Australian economy. (2 marks)

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Question 22 continues over the page (d) Explain how the economic cycle and government business regulations impact on business in Australia. (4 marks)

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______Question 23

Answer question 23 using the stimulus material below and your own knowledge.

The Constitution gives the Commonwealth Parliament power to make laws for telecommunications. Telecom Australia was incorporated on 6 November 1991 and began operating as a company under the requirements of the Corporations Law (now Corporations Act 2001). Telecom was retained as the company's trading name in Australia. Telecom changed to its current trading name 'Telstra Corporation Limited' in April 1993. Whilst Telecom became the Telstra Corporation it retained its legal and operating structure. Telstra was partially sold to private shareholders in November 1997, by Telstra being listed on the Australian Stock Exchange. A further 16 per cent of the Commonwealth's equity in Telstra was listed in late 1999.

Telstra is currently around 51.8 per cent owned by the Commonwealth and around 48.2 per cent by private shareholders following the conclusion of share buybacks by Telstra in November 2003 and November 2004. Adapted:http://www.dcita.gov.au/communications_and_technology/policy_and_legislation/telstra_shareholder_role/telstra_sh areholder_-_history

(a) Distinguish between incorporated and unincorporated. (2 marks)

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(b) Describe the type of business entity Telecom Australia (Telstra) would have been prior to 1991. (2 marks)

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Question 23 continues over the page (d) Discuss TWO advantages and TWO disadvantages of privatising Telecom Australia (Telstra). (4 marks)

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______Question 24

1. Define vertical integration. (1 mark)

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2. Draw and label the business life cycle. (3 marks)

Question 24 continues over the page 3. Outline TWO main challenges facing businesses in the Growth phase. (2 marks)

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4. Explain TWO government laws OR TWO regulatory bodies OR TWO institutional influences that impact upon businesses. (4 marks)

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End of Exam