Section 3: Business And Industry

Page 37: Grouping Businesses 1

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) Elaboration: Explaining the diff erence between not-forprofi t and for-profi t businesses

Information:

A business gets off the ground when a person or group decides that they can make a profi t by making or supplying goods and services that other people are willing to pay for. A business is principally motivated to make a profi t (a fi nancial gain or benefi t). If a profi t is not made, the business cannot pay for its operating costs such as workers’ wages, rent, electricity and raw materials. It will be forced to close down. Businesses are also motivated by other objectives such as: being the leader in the market, being sustainable and environmentally-friendly or building a reputation for supplying top quality products and services. In some cases the aim is not to make a profi t at all, but to provide goods and services to help people. This can be achieved through funding from the government, fund-raising by organisations or donations from the public.

Types Of Businesses

Businesses can be grouped into four main categories:

While businesses in the public sector, notfor-profi t and charities are not set up to be profi t-making, they still aim to earn enough This is a Ready-Ed Publications' income to cover their operating costs. If income exceeds operating costs, then this results in a surplus (not a profi t). A surplus can be used by businesses to improve their book preview. facilities, provide more employment, expand their services and open new businesses.

Page 38: Grouping Businesses 2

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) Elaboration: Explaining the diff erence between not-for-profi t and for-profi t businesses

Answers:

1. Without making a profi t, businesses would not have the capital for their running costs and would have to shut down. 2. Diff erence 1: The principal aim of a private sector business is to make a profi t. A public sector business aims to provide services to a community. Diff erence 2: The capital for a private sector business is provided by its owner/s. Public sector businesses are funded by the government or donations. 3. Teacher to check. 4. A surplus would provide capital to invest in improving the goods and services off ered, and expand the business.

Page 39: Comparing Businesses

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To Provide A Public Service

(Public sector owned by the government)

TO MAKE PROFITS

(Private sector)

SHOPS

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) Elaboration: Explaining the diff erence between not-for-profi t and for-profi t businesses

Information:

Let’s compare a for-profi t business (Swimming Pool Constructor) to a not-for-

ENTREPRENEURSHIP profi t business (Animal Shelter). (next page)

(Developing a good business idea) Answers:

Model answer should include references to: motive for setting up business, aims of the business and how profi t or surplus is distributed and applied.

NOT-FOR-PROFIT/CHARITY

A great idea for a new app!

Section 3 Business And Industry

SPLASH SWIMMING POOLS LTD

• This business has shareholders (an owner or owners that share in the profi ts if the business performs well). • The objective of this for-profi t business is to make money. • For-profi t businesses can support a good cause, but this is also linked to getting positive publicity that can help improve profi ts. • The owners of this for-profi t business can decide to change to a new business if building swimming pools is not profi table. After all, the mission is to make a profi t. • This for-profi t business has legal obligations to pay

Page 40: Not-For-Profi t Businesses Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) This is a Ready-Ed Publications' Elaboration: Explaining the diff erence between not-for-profi t and for-profi t businesses Information:book preview. There are over 600,000 registered notfor-profi t charities providing community support in Australia and overseas in diverse areas such as wildlife conservation, aged care services and humanitarian aid. Read the fact fi le below on a charity called the Northern Region Westpac Life Saver Rescue Helicopter Service that provides free helicopter transport in medical emergencies in the Lismore / Byron Bay area of New South Wales.

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tax.

• This business competes for sales with other similar businesses. It needs to be innovative and up-to-date in new technological know-how.

FACT FILE:

Northern Region Westpac Life Saver Rescue Helicopter Service

FERNTREE VALLEY DOG, CAT AND BIRD SHELTER

This business has members. Any surplus must be held for the next year or reinvested in the business. Members do not receive money for their work. The objective of this not-for-profi t business is to help others, in this case, homeless animals. Even if this shelter’s members invest their own money in projects, they do not “own” the business and cannot receive money from it. This business could receive tax breaks from the Government to help it continue its good work. The shelter competes with other not-for-profi t businesses for members, volunteers and funds. It has to justify its decisions to a large group of members about how funds are spent.

BUSINESS OBJECTIVE: To deliver emergency medical and rescue helicopter services 24 hours a day, every day of the year, free of charge, whenever life is threatened. GOVERNANCE: A board of eight directors, which meets six times a year. The Board brings aviation and business experience to the service. MAJOR SPONSORS: Westpac, Surf Life Saving Australia, NSW Government, Lions International, Cassino, CHT, Yellow Pages. CHARITABLE ACTIVITIES: Surf rescues, attending road accidents, rescue missions at sea, transporting patients to other hospitals, searching for lost plane beacons. FUND-RAISING: Community or individual fundraising on the charity’s behalf, volunteers to help in fund-raising events (raffl es, Op Shop), sales from branded merchandise (key rings, caps, pens, stubby holders), business sponsorship. HOW DONATIONS ARE MADE: Online, payroll deductions, phone or mail, bequests, in memoriam, donation gift card, apps for phones and tablets.

Answers:

Teacher to check.

Section 3 Business And Industry

QUINARY = Tourism• • Hospitality Health• • Arts and Recreation

How Industries Are Connected

In order to transform raw materials from primary industries into products that consumers can buy, the raw materials undergo various processes. This is known as the production chain. Look at the various stages in the production chain of canned fruit before the fi nal product reaches the consumer:

PRIMARY = • Agriculture Mining• Quinary • Fisheries 11% • Forestry SECONDARY = • Manufacturing • Utilities(water, gas, electricity) • Construction TERTIARY = • Wholesaling • Retailing • Transport

Page 41: Types Of Industries 1

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011)

Elaboration: Identifying diff erent industry sectors (such as agriculture, information, tourism, telecommunications) and discussing what they produce or provide

Information:

Australia’s industries drive the economy and provide goods and services locally, nationally and internationally. According to the ABS (2013), the country’s various industries employed more than 11.4 million people.  Study the chart below which shows the types of industries within fi ve categories that exist in Australia. (Source: ABS 2013.) Primary 12% Secondary 17% QUATERNARY = • Media and Communications • Information Technology • • Finance and Insurance Real Estate Quaternary Tertiary 14% • Education 46% • Government Administration • Professional and Technical

Services • Administration and

Support Services

Page 42: Types Of Industries 2 Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) This is a Ready-Ed Publications' Elaboration: Identifying diff erent industry sectors (such as agriculture, information, tourism, telecommunications) and discussing what they produce or provide book preview.

Answers:

1. mining = door hinges, paints; agriculture = biofuels, spaghetti; forestry = coff ee fi lters, tambourines; fi sheries = fertilisers, jewellery; oil extraction = nylon cord, deodorants 2. State emergency services = quaternary; website design = quaternary; tourist resort = quinary; bus company = tertiary; electricity provider = secondary; scuba-diving school = quinary; health food shop = tertiary; sugarcane farm = primary; wholesale clothing supplier = tertiary; cultured pearl farm = primary; Thai restaurant = quinary; day-care centre = quaternary. 3. Raw materials produced or extracted in primary industries are sent to secondary industries for processing. Tertiary industries begin the distribution process to consumers indirectly through retailers or through the quinary sector. The quaternary sector provide goods and services to support the diff erent sectors in the production chain. 4. Ethanol production chain: sugarcane (raw material) fermentation and distillation mills transport wholesalers retailers consumers

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FRUIT GROWER

PROCESSING PLANT Page 43: Case Study: Forestry Industry

WHOLESALER FOOD SERVICES

TRANSPORT RETAILERS

CONSUMER

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) Elaboration: Identifying diff erent industry sectors (such as agriculture, information, tourism, telecommunications) and discussing what they produce or provide

Information:

Australia has a massive 125 million hectares of forests (native and planted), which is 3% of the world’s total forest heritage and the

Section 3 Business And Industry

seventh largest area in the world. What value do our forests hold? Foremost, they are an important link in the world’s carbon cycle and supplier of fresh water. The forest habitat is home to Australia’s rich biodiversity and an integral part of the cultural values of indigenous peoples. Economic activities that take place in our forests employ 120,000 people Australia-wide mostly in regional areas and contribute towards the conservation of this irreplaceable natural resource. Look around your classroom environment and you will see an array of wood products that have their origins in the forest: laminated tops on desks, fl oorboards, cardboard boxes, and wood chips used in the garden. Perhaps part of the frame for your school building is made of timber logged in an Australian forest. To guarantee that forests are conserved and managed in a sustainable way, the forestry industry provides various services to maintain and protect forested areas for economic, cultural and recreational purposes. These services include: • controlling pests and diseases in forests; • removal of biomass in forests to prevent bushfi res; • developing and monitoring certifi cation schemes for sustainably sourced timber; • providing scientifi c research on the preservation of animal and plant species; • advising farmers on soil erosion and tree species to plant.

Answers:

1. protection of forested areas; controlling pests and plant diseases; advising farmers on ecology matters 2. CONSUMERS: wood products such as furniture; school supplies; paper, etc.

OTHER INDUSTRIES: wood construction materials like timber; fl ooring; advice to agriculture sector, etc.

THE COMMUNITY: managing forestry areas to preserve heritage; biomass removal to prevent bushfi res; providing parks for recreation

Page 44: Australian Industry Curriculum Link: The reasons businesses exist and the This is a Ready-Ed Publications' diff erent ways they provide goods and services (ACHEK011) Elaboration: Identifying diff erent industry sectors (such as agriculture, information, tourism, telecommunications) and discussing what they produce or provide book preview.

Answer:

Teacher to check.

Page 45: Ways Of Providing Goods And Services 1

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) Elaboration: Identifying why businesses exist and investigating the diff erent ways that goods and services are provided to people, for example through shopping centres, local markets, online, small independent stores, remote community stores.

Information:

The following information explores some of the ways that consumers today can buy the goods and services that they want.

Shopping Centres

Shopping centres have changed the way that Australians shop. Under one big roof, people can now visit a variety of speciality shops, department stores and supermarkets. They can also use services like the post offi ce, bank or public library, eat out or catch a movie. The growth of shopping centres has meant that busy shoppers don’t have to spend time travelling into crowded city centres and fi nding a convenient place to park. Shopping centres are characterised by their chain stores – shops operated by large national or international companies that sell the same goods in each shopping centre, e.g. Just Jeans, Staples, etc. Go to www.readyed.net.

Small Independent Shops

Small independent shop owners today, generally do not operate in shopping centres due to high rent, but establish their businesses in local communities along and close to the main streets. This was where

Section 3 Business And Industry

most shops were located before shopping centres began to appear in the 1970s. Small retailers specialise in their goods and services such as handicrafts, delicatessens and fl orists and are usually operated by their owners and a few employees – often family members. To compete with shopping centres, small retailers emphasise their friendly staff , specialist knowledge of products and local convenience.

Local Markets

Local markets have been a feature of Australian life for over a century. Often set up in historic buildings or in open spaces, local markets off er a vast variety of goods and services from small independent retailers ranging from organic farm produce to indigenous products and home-made wares like soaps, candles and leather goods. Retailers apply for permanent or temporary stalls so the types of stalls are always changing. In addition to providing a diff erent shopping experience, local markets often include entertainment like live music, street buskers and face-painting.

Remote Community Stores

Living in remote areas in Australia poses special problems for indigenous and non-indigenous people: food produce is not always fresh and the high cost of transportation from distribution centres makes basic items expensive. Remote community stores with government and business support have been set up in communities to provide a regular supply of fresh fruit and vegetables, groceries and household products. In some places, local community stores play a central role in the community’s life as they also provides a social hub where people can access EFTPOS and ATM facilities and use the internet or phone to do their banking or to contact others.

Page 46: Ways Of Providing Goods And Services 2This is a Ready-Ed Publications'

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) Elaboration: Identifying why businesses exist and investigating the diff erent ways that goods and services are provided to people, for example through shopping centres, book preview. local markets, online, small independent stores, remote community stores.

Answers:

1. i) Convenience of being closer to home. ii) Diff erent shops under one roof. iii) Easy parking. 2. Large stores which can be found in other shopping centres nationally and internationally. 3. Chain stores tend to be larger retail outlets that carry a wide range of goods, and can aff ord higher rents. 4. Students will probably conclude that small retail businesses are more specialised and focus on catering to consumers looking for personal preferences, e.g. a favourite hairdresser, vegetarian restaurant, etc. 5. More personalised attentive, friendly “family” atmosphere.

Page 47: Ways Of Providing Goods And Services 2

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) Elaboration: Identifying why businesses exist and investigating the diff erent ways that goods and services are provided to people, for example through shopping centres, local markets, online, small independent stores, remote community stores. Answers: Teacher to check.1. Benefi t 1: regular supply of fresh 2. Go to www.readyed.net. nutritious food; Benefi t 2: providing banking and postal services; Benefi t 3: provides a social hub; Benefi t 4: providing local employment opportunities.

Section 3 Business And Industry

3. In very remote regions principally in the

Northern Territory. 4. Suggestion: community shops were small, but modern and well-stocked.

Page 48: Online Shopping 1

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) Elaboration: Identifying why businesses exist and investigating the diff erent ways that goods and services are provided to people, for example through shopping centres, local markets, online, small independent stores, remote community stores.

Information:

The retail industry in Australia has undergone important changes in the way it traditionally provides goods and services to consumers. The development of online shopping (or e-commerce) has taken retailers by storm. So much so that it is predicated that by 2021, 11% of retail sales will be online and 65% of those will be from overseas retailers. Consumers still see the need to buy via traditional retail outlets, but are also driven by the numerous advantages of buying online. The following graphs (Source: Australian Institute 2011) compare what motivates consumers to participate in traditional in-store retail and online retail.

want to view it before buying concerns about online security supporting local business accustomed to buying in stores want to talk to salespeople unreliable access to the internet save money compare products and prices variety of goods save time avoid travel avoid shopping centres avoid salespeople privacy other TRADITIONAL RETAIL 0% 10% 20% 30% 40% 50% ONLINE RETAIL

How do businesses sell online? Consumers have the choice of thousands of e-commerce retailers. Ebay is the largest This is a Ready-Ed Publications' online marketplace in Australia with over 4.3 million people visiting its website (2014). Other top online shopping sites include: Amazon, Woolworths, Gumtree and GetPrice book preview. Network. These businesses use various ways to sell their goods online, for example, advertising on their websites, auction services and through social media. Small and medium businesses are also expanding their marketing strategies by developing their own online retail sites.

Page 49: Online Shopping 2

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) Elaboration: Identifying why businesses exist and investigating the diff erent ways that goods and services are provided to people, for example through shopping centres, local markets, online, small independent stores, remote community stores.

Answers:

1. E-commerce is shopping conducted electronically on the Internet. 2. The data in the online retail graph suggests that people are quite motivated (62%); e-commerce sales are increasing annually. 3. About 46%. People could be afraid of being misled by the images of products on the web pages. 4. Shopping is literally at people’s fi ngertips, people save time not having to travel and park at shopping centres. 5. Teacher to check. 6. If local small retailers have online sales, consumers can still support local businesses through e-commerce. Suggestions: using high quality 7. Go to www.readyed.net. photography to maximise depiction of products; giving more assurances of consumer protection against fraud; keeping postage/shipping costs as low as possible.

0% 20% 40% 60% 80% 100%

Section 3 Business And Industry

Page 50: Online Shopping 3

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011)

Elaboration: Identifying why businesses exist and investigating the diff erent ways that goods and services are provided to people, for example through shopping centres, local markets, online, small independent stores, remote community stores.

Information:

Australians are now spending $15.60 billion online on retail products (6.6% of total retail spending) with consumers aged between 24 - 54 dominating sales. But what are they buying? Here is a breakdown of the most popular products bought on Ebay (2014) by State and Territory:

State or Territory Major sales online

NSW NRL merchandise and DVDs VICTORIA AFL merchandise and books WESTERN AUSTRALIA Lighting, wedding supplies, party supplies SOUTH AUSTRALIA Gardening supplies, plants and seeds TASMANIA Nail art supplies ACT Toys and video games NORTHERN TERRITORY Fishing equipment and automotive parts QUEENSLAND Fashion and jewellery

Page 51: Online Shopping 4

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011)

Elaboration: Identifying why businesses exist and investigating the diff erent ways that goods and services are provided to people, for example through shopping centres, local markets, online, small independent stores, remote community stores.

Information:

Choosing the mobile phone plan that best suits your monthly usage will save you money, but you need to consider several important things:  what kind of phone you have (or intend to buy);  the mobile phone plans available;  how you use your phone and how often. These considerations are even more important in the age of downloads made

easier by new phone technology, the National Broadband Network and WiFi. Many mobile phone plans off er attractive monthly This is a Ready-Ed Publications' rates or pre-paid options with 1G of data included. But how far will 1G go when you want to download your favourite songs, stream a funny YouTube video or play an book preview. online game?

Answers:

A) Maya: 300 minutes x 10 MB = 300 MB (Could be adequate if Maya does not use the Internet often for other activities.) B) Molly: 60 songs x 6 MB each = 360 MB (This seems adequate if Molly does not spend too much time on other activities.) C) Trey: 600 minutes x 0.4 MB = 240 MB (Trey would be within his limit.) D) Leah and Ted: 900 minutes x 1.5 MB = 1350 MB (This would be within the limit.) For extension, students could add in other online activities to the case studies to simulate data usage.

Page 52: My Own Business Venture

Curriculum Link: The reasons businesses exist and the diff erent ways they provide goods and services (ACHEK011) Elaboration: Identifying why businesses exist and investigating the diff erent ways that goods and services are provided to people, for example through shopping centres, local markets, online, small independent stores, remote community stores.

Answers:

Teacher to check.

Page 53: Vocabulary Round-up Answers:

Check that students are writing defi nitions for the terms in the economics sense.Go to www.readyed.net.