Commerce Yearly Notes PDF

Law and government: 4.2 reasons for law Reasons for laws in society - To evade confusion and chaos Main roles of law - Establish boundaries - Determine which actions are not...

Law and government: 4.2 reasons for law Reasons for laws in society - To evade confusion and chaos Main roles of law - Establish boundaries - Determine which actions are not acceptable - Protection - From the actions of others as well as your behaviour - Tells you what you can't do - Freedom - Tells people what they can do - Resolving disputes - Stop people from taking action into their own hands - Police force and court systems 4.3 Values, morals and ethics Rules of morality and ethics - Development of right and wrong through moral and ethical values in society Different country, different values, - There are certain laws that differ from different laws those in other countries 4.4 Australia’s court system Court hierarchy - In criminal cases, the higher courts deal with the most serious crimes - In civil cases, the higher court hear cases that will affect many people or involve lots of money - If the individual does not agree with the ruling, they can apply for appeal in a lower court which is reviewed by a higher court Local court (bottom) - All criminal cases and 90% of civil cases begin here - There is no jury - There is a magistrate who hears the case and delivers the consequences - Deals with minor civil disputes; suing - Hears summary offences (minor criminal) - Magistrates chairs over committal  hearings dealing with indictable offences (major criminal) - Magistrates also - Hears bail applications - Issues arrest and search warrants - Hears applications of AVOs - Specialist courts→ children and Coroner’s - 2 years per offence or a max of 5 years - Up to $100 000 District court (third tier) - Cases heard by judges - Deals with more serious civil cases - All motor vehicle accident cases - Its criminal jurisdiction will deal with serious criminal matter e.g manslaughter - In some cases a jury will decide the verdict - Judge decides sentence if guilty - Hears appeals from local court - $100 000- $750 000 Supreme court (second tier) - Deals with the most serious criminal cases e.g sexual assault - Most serious civil cases - Headed by the Chief Justice - Judges of supreme court hold sessions in major regional centres→ ‘going on circuit’ - Deals with appeals from lower courts - Judgement of supreme court are compulsory on all lower courts - Impose a range of sentences - Over $750 000 High court of Australia (top tier) - Deals with appeals from state or territory supreme courts - Cases concerning the interpretation of the constitution - Shifts the balance of power away from states and to the commonwealth - Decisions are final - Consists of Chief justice and six justices - Important cases have a full bench - Other cases have at least 2 justices - No jury Specialised courts Children court  - protection of children and young people - Criminal cases concerning those under 18 - Closed to the public and media - Same personnel as local court→ trained Coroner’s court - Investigates deaths by unnatural causes - Determines identity, date, place, circumstance, medical cause of death - Investigate cause and origins of fires or explosions Family court - Assists with complex family law matters - Parenting, divorce, division of property Drug court - long -term solutions for offenders - Encourage to become sober, gain employment and reduce crimes - Offender has to eligible to drug court program 4.5 Role of court personnel Magistrate as umpire - Adversarial system→ two opposing sides present their arguments to a judge or magistrate - Magistrate is incharge of the lowest cart→ your honour - Magistrate decides if guilty or innocent and then the punishment - Will refer very serious criminal offences to a higher court Courtroom personnel 1. Judges associate→ lawyer manages paperwork 2. Members of public→ observe 3. Members of media→ report 4. Sheriff’s officers serve summonses and provide security 5. The accused 6. Jury consisted or juror - Criminal case 12 people - Civil matter 6 people - Decide on balance of probabilities whether the defendant is liable - Criminal trial→ accused is innocent of guilty beyond  reasonable doubt 7. Prison officer the prison where accused is held 8. Counsel of defence - Criminal cases→represents the defendant - Plead guilty→ lessens punishment - Plead not guilty→ prove innocence - Civil cases→ tries to convince that wrong has not been committed 9. Prosecution - Criminal cases→ prosecutor will convince the jury that the defendant is guilty - Civil cases→ act on behalf of plaintiff and convince magistrate as why compensation should be given 10. Witness box→ people give evidence 11. Tipstaff→ help judge keep order in court 12. Judge→ addressed as your honour and listens to arguments presented by both sides. - Not allowed to ask witness questions (except clarifying) - Guides the jury and decides the punishment if decided guilty 4.6 The role and selection of juries Role of a jury - Less than 5% of all cases - ordinary people and decide on the facts of the case - civil trial→ balance of probabilities - Criminal trial→innocent or guilty or beyond reasonable doubt To do this: - Listen to facts and evidence and understand the, - Decide what they believe actually happened according to evidence - Put own bias and prejudices away - Be fair and impartial - Understand points of law  - Deliver a verdict Empanelling a jury - Potential jurors walk past the accused and his or her counsel as well as prosecution - Council can determine whether they are the type of people they want Arguments for and against the jury - Some say they are the best and most system accepted method in a trial - Some say that they outdated and prejudiced→ replaced with either trial by judge or professional; specialist jurors 4.7 How laws are made: common law The beginnings of common law - Two ways of making laws: - Law written down before are statute law or acts of parliament - Can be developed piece by piece by judges when there are problems as they hear cases→ common law - In Australia the law is a combination of both History of common law - When Henry II became King, people were tried at number of courts - He decided ll people should have the opportunity for royal justice - King’s court began travelling around→ hearing cases - Judges started keeping records of decisions and made precedents Common law - Decisions given by judges - May occur because judges decide on a case where there is no existing law - Record of decisions are places in Law reports to be referred→ legal precedents precedent - Judges give similar decisions in cases that are alike→ precedent Statutory interpretation - Courts also make laws when they interpret words of a law made by parliament  - When a court interprets a word→ new meaning applies as law from then on - Principle of precedent applies on interpretation too - This meaning becomes law and is followed by other judges and lower courts 4.8 How laws are made: statute law Statute law - Laws created by parliament has highest status - Parliament makes most laws - Federal government that makes laws affecting the country→ Canberra - NSW parliament makes laws for NSW - Parliaments can make laws, change laws and pass Acts to overcome the effects of a precedent - Statute law > common law - No court can change this - Only high court is unconstitutional Federal and state constitutions - Constitution→ document that outlines powers of parliament and restrictions in law-making authority - Rulebook of how parliament is to operate and govern a country - Australian constitution limits the powers of Federal parliament - If there are disagreements between Federal and state governments about the power to make a law→ high court decides 4.9 How a bill becomes a law How a bill becomes law - Before proposed laws can become an act of parliament it must be debated and passed then approved by the executive council, the head of state and selected ministers. Government must debate why it is needed and good. The opposition will argue  against this 1. Proposed new or changed law is discussed in Cabinet 2. Government lawyers draft a bill→ first draft 3. Given to the House of Reps→ first reading 4. Bill goes through a second reading→ responsible ministers describes purpose and benefits - Speakers from government and opposition debate and there is vote 5. Bill is debated, bit by bit→ committee stage as it occurs in parliamentary committees to make amendments 6. Bill including changes go through→ third reading, then passed through the senate 7. Similar processes in 3-6 occur in the senate. - If the senate wants a change it goes back to House of Reps for debate and vote - Senate may refuse to approved a bill - If a money supply bill, the Gov-Gen calls a double dissolution of parliament 8. Governor-general meets with selected govt ministers in Executive council and approves and signs the bill→ act of parliament 4.10 Types of law Two branches of law - Private law→ how individuals interact with each other and rights and duties we have towards each other - Public law→ regulating people’s behaviour in society and protects the freedom of individuals Public law - Industrial - Concerned with rights and obligations of employers and employees - Resolving industrial disputes, workers compensation, occupational health and safety - Discrimination in workplace - Administrative - Decisions and powers of government departments - Allows courts to review and change decisions of government - Criminal - Keep the community safe from harm - Orderly society and dealing with crime - Constitutional - Concerned with powers and authority of parliament, rights of each citizen, powers between federal and state governments Private law - Tort - Situations when one infringes the rights of someone - Resulting in distress of injury - Property - Real property→ land and buildings - Personal property→ goods and services - Provides regulations about the sale, leasing and hiring of property - Contract  - Coerced with legal agreements between two or more people - If one party fails to carry out her sides of the agreement→ sued for breach of contract - Family - Regulates family relationships - Sets rules about process of marriage, who can bet marriage, de facto relationships, divorce, custody etc 4.11 Civil law Protecting our individual rights - Non-criminal matters - Tort law - Negligence→ fails to take reasonable care, injuries another person - Defamation→ injures another person’s reputation - nuisance → cause unreasonable interference with another’s right to quiet enjoyment of their pretty - Trespass→ person interferes with another or their property rights - Civil law gives the plaintiff the ability to initiate action to sue the defendant→ compensation - Judge may decide the plaintiff is wrong and has to pay the defendant’s cost - Juries are optional - Not all case end up in court→ reach out-of-court settlement 4.12 Criminal law Crime - From 10, anyone can be prosecuted for committing an offence - 10 is the age of criminal responsibility - Serious crimes such as armed robbery, homicide, murder→ indictable offences - Heard in district and supreme courts - Determined by judge and jury - Less serious crimes such as minor assaults, vandalism, petty theft→ summary offences - Dealt quicker and cheaper by magistrate in local court - Purpose is so protect individuals and the community - Under our system→ police and judiciary is the way the state deals with criminal behaviour 4.13 Customary law Customary laws - Current laws made by British laws from settlers - First nations had laws prior - It was passed on orally - Based on customs and rituals and varied between tribes - Elders knew the customs administered these law and punished those - The accused would meet with the victim in front of the community - Penalty ranged from banishment to death - Based on kinship→ marriage, education, trade, sharing of food National title act - Australia was claimed to be terra nullius, however it previously was inhabited by Indigenous people. - Mabo began legal action against the state of queensland to claim Murray  Island for his people - High court decided in favour of this Circle sentencing - First nations australian to have a legal system that reflects their culture→ circle sentencing in NSW (2002) - Rather than a magistrate, relevant parties would gather and the elders will collectively decide the punishment 4.14 Domestic versus international law Laws regulating australia and its citizens - Domestic laws→ country laws International law and UN - Standards of acceptable behaviour for nations - Issues that cross borders, concern society in general, foster good relationships and avoid conflict - Developed treaties and conventions 4.15 Accessing the law Barriers to accessing the law - There should be equal access to the legal system - Cost - The expense is great - If case is prolonged or is subject to appeal→ costly - Time - ‘Justice delayed is justice denied’ - Trial drags on then people are not treated fairly - Distance - May have to travel far - Procedures - Limited knowledge - Intimidated and confusing - Language - May be difficult to understand 4.17 The three level of government Structure of Australia's government - 01/01 1901→ Commonwealth - 6 colonies that became one nation called Federation - Monarch is head of state but independent country government→ constitutional monarchy - Each level of government has an  extent of control but there is overlap Federal government - Senate (Upper house) - House of Representatives (lower house) - PM is head of government and other ministers look after portfolios - Cabinet includes PM and senior ministers→ key decisions - Governor-general represents British monarch - Money comes from taxation Responsibilities: - Air travel, currency, defence, immigration, medicare, taxation, trade - Supports states through funding State government - Legislative council (upper house) - Legislative assembly (lower house) - Premier is head of government and governor is head of state - Income from federal government grants, property and payroll tax Responsibilities: - Agriculture and fishing, community services, education, health, public transport, railways and roads Local government - local government areas - hEad of LGA is mayor - Operate under state government legislation - Makes rules called by-laws - Income from land rates Responsibilities: - Libraries, parks, sewerage, pools, 4.18 Why laws change Laws reflect changes in society - Social values technology and political circumstances - Changing political circumstances bring about radical changes to law - Public pressure to the government Eureka stockade and democratic rights - 1840s, only males 21+ who owned or  rented property could vote - Far from democratic - Pressure resulted in a battle between a group of Lalor and governments - Eureka Battle and political reforms lead to voting for all men 21+ Vote for women - 1880s, individuals participate in rallies, demonstrations and campaigns to allow women to vote - Women’s ruffrage→ 1894 women 21+ were allowed to vote in SA - 1902 women in NSW could vote Cybercrime laws - Federal government developed new set of laws to fight hacking, child pornography and copyright 4.19 Political action Issues that concern the community - politically active→ informed about social, political and economic issues International law How to take action on - Keeping informed political issues- active citizenship - Writing letters to politicians - Online petitions - Youth advisory councils 4.20 Referendums The process of chaining the constitution - Made sure that power distribution was even - Not easy to change constitution - Chapter VIII section 128 describes how this can be done - Change must be approved by both houses of the federal parliament - Within six months of approval, people must vote in referendum - Referendum→ yes or no - 50% of all voters must say yes - 4/6 states must say yes - Goes to Governor-General and change is made The double majority - Having majority votes and 4/6 states - Founding fathers introduced this to make sure larger populations could not out-vote smaller ones Where the proposals for change come - State governments can come together from - Federal government will hold an inquiry–. Recommendations - Community pressure 4.21 Participating in the democratic process Origins of democracy - People have equal rights and privileges→ power rests in people - Originated in Greece in 5 BC Australia’s representative democracy - Citizens have power because they elect representatives to act on their behalf Australia's political system - Head of state and government must be different people→ PM and Queen - Bicameral (two houses) - Three sections of government - legislature makes laws - Execute administers laws - Judiciary enforces the law - Must be kept separate Different type of governments - Communism  - Karl Marx and Friedrich Engels - no private ownership - State supplies all needs and wants - Monarchy - Monarch has power - Autocracy - One person has often authoritarian military dictatorship and holds all power - Oppressive and secretive regimes - Anarchy - Government is broken - No laws and no enforcement - Usually during civil wars - Socialism - Ownership of al main economic resources are in the community's hands - High priority for social welfare, income and equality of wealth - Fascism - Strong centralised power with no opposition or criticisms - Controls all affairs - Emphasises aggressive nationalism and anti communism 4.22 Voting in the democratic process The right to vote - All australian citizens 18+ - Keep enrolment up to date with residential address - Those not allowed to vote→ - mentally unsound, - convicted of treason - Prisoners serving 3+ years Methods of voting - First past the power - Placing a 1 on the person’s name - Most vote wins - Winner can be supported by a minority of the population - Prefentrial  - Voters decide put candidates in order of preference - House of representatives - House of representative election→ green ballot - Preferential voting - Absolute majority→ 50% of formula votes and if there is no majority, preferences are counted proportional representation/optional - Vote for senate→ white ballot paper preferential - Vote above the line in order from 1-6 (by parties) OR - Vote below the line in order from 1-12 (by candidate) - Senators have to win a set quota→ optional proportional representation 4.23 Rights and responsibility in the democratic process Role and strategies of pressure groups - Pressure group is formed when individuals are concerned for a common issue - E.g Trade unions, Industry Group, Social services - Influence abilities depends on size and strategies - May try to protest, rally, letters, media events, lobbying, social media Rights and responsibilities of individuals - Expect government to protect us and and groups in the democratic process improve our lives - Obligation to contribute to the  community→ participating in political and legal processes 4.24 Role and functions of political parties Providing options for australian voters - Political parties must be registered with the Australian electoral commission - Must have at least 500 eligible votes Australian labour party - ALP is the oldest party (1890s) - Trade unions have strong links - promote social justice - Ensure wealth and power are fairly shared - Jobs for everyone - Abolish poverty and improve living standards - Ensure everyone has access to education, housing and community services Liberal party of Australia - Founded in 1944 - Usually formed coalition with National party - Based on absolute rights and freedom - incentive , individual freedom and free enterprise - Lean government with minimal interference in daily life - Minimises taxes - Encourages private business and does not compete - Just and humane society which family and role of law and justice are maintained National party - Founded in 1914 - Presents rural and regional areas - Fights for equality of services, lifestyle and opportunity between cities and regions - Provide strong local community representation - Ensure health, safety, social and economic welfare - Promote individual achievement, free choice, reward for private enterprise Australian Greens - Founded in 1992 - Ecological sustainability, social and economic justice, peace and nonviolence, democracy - Often holds balance of power in senate - Protect and preserve environment - Equality and respect for citizens - Harmonious worlds - Governed by people and not wealthy and powerful Independents - Do not belong to a political party - [positions is powerful if government does not have majority - Independent support on bills to pass - Governments often has to make compromises for independents 4.25 The inner workings of Australia’s government Forming the federal government - Winning a vote in lower house→ House of reps - Formed on principle of majority in this house - Majority party forms government - Election happens every 4 years - Opposition is the major party that fails to win majority - Shadow ministers - Hung parliament - Two major parties have same number of seats in House of representatives→ hung parliaments - Neither side can form government on its own - Minor party reps or independent will support one side - Minority government - Government has fewer seats than opposition - Able to governor because the support of enough crossbenchers Policy making in Australian politics - Backbenchers - House of representative divided into backbenchers and frontbenchers - Involved in parliamentary debate and save in committed and suggest amendments - can suggest their own bill - Front benchers and cabinet - Allocated portfolio - Significant influence on policy decision - Members of cabinet - Ceach ogvnemrent determines their own cabinet - Cabinet should direct government policy - A cabinet vote will be cast and the final verdict must be support by all members of cabinet→ cabinet solidarity - Prime Minister - Can develop their own policies - PM policies follow same pathway as regular bills Shaping australian policy and law - Setting the policy agenda - Government the right and responsibility to set a policy agenda→ mandate - Parliamentary debate - Members of the ruling party, opposition and minor parties participate in these discussions - Question Time is where MPs ask questions to members and ministers - Dorothy Dixers→ members to ask questions to promote opinions 4.26 Separation of powers Separation of powers - The power to make laws is separate from the power to put them in action - Fair court systems persided by indiepent judges Legislative arm - Parliament - Power to make, chance and repeal laws - House of Representatives and Senate The executive arm - Government with responsibility of putting laws into action - Officially lies with the Governor-general - Public servants and other government employees are part of the executive arm of government The judicial arm - Judiciary and the courts - Enforces law and settle disputes - Ensure fair application of law Why does it exist - System of checks and balances the Division of powers power of government - Members of parliament can make laws but have to face elections on a regular basis. - An independent judiciary has the power to ensure that parliament and the executive are acting within the limits of the Constitution. - The High Court can declare any law invalid if it is contrary to the Constitution  The economic and business environment 2.2- The five sector flow model What is it? The way the economy works What does it do? Flow of money finance Circular flow of income shows the connections between 5 different sectors of an economy ○ Consumers, business, financial institution, government and overseas sector Where money is injected and elakades→ calculate changes economic activity Household sector Provide labour to firms in exchange for income (money) Are consumers who buy goods and services from firms May borrow or save money with the financial sector Pay taxes to the government Firms sector Produce output (goods and services) which they sell to receive revenue May borrow or save money from with the financial sector Pay taxes to the government Financial sector Receive savings from households and firms Then lend them to those who need to borrow Help them invest by lending them money Savings→ leakages Injections→ investments Government sector Taxation (leakage) → collects tax from individuals and business when income or profit Government expenditure (injection)--> Spend taxation revenue on public goods and services; roads, schools, hospitals, parks Overseas sector Deals with Australia’s trade with other nations Export goods and services produced by Australian businesses to other countries Import goods and services produced by businesses in other countries to Australia Exports (injection) Important (leakage) Simple two-sector model People sell resources to firms for an income Firms use resources to produce goods and services (production) Households use income to buy goods and services (consumption) Consumers and businesses are interdependent Equilibrium when (y)=(c) When injections> leakages→ expand When leakages< injections → decline Circular flow of the economy govnerment ‘s role to maintain equilibrium→ altering flows of money and influencing decision in the sectors 2.3- The interdependence between different sectors of the economy Government's role in protecting consumers Main roles: (ASIC) ○ Monitoring financial services industry ○ Monitoring the provision of financial services e.g investment advice ○ Providing consumer protection in financial services like shares, managed funds, super, insurance, deposit-taking and credit The role of financial sector in facility business Money is usually deposited in a bank or investment similar Financial institutions act as intermediaries between savers and borrowers Banks receive deposits and use this to lend to those who need to borrow for usually investment  2.4- The business cycle What is the business cycle? Model that conveys the periods of high and low economic activity Contractions Falling levels of production (output) Decreasing consumer spending Rate of inflation may fall Wage rates generally fall Interest rates eventually fall Level of unemployment rises Expansion Rising levels of production (output) Increasing consumer spending Rate of inflation may rise Wage rates generally rise Interest rates eventually rise Level of unemployment falls Phases of business cycle Fluctuation do not fall into regular patterns A contraction does not always mean a recession if recovery begins quickly ○ RBA lowers interest rates, to encourage spending Recessions Lack of spending not the inability to procure goods and services Income and production are at their lowest level in the business cycle Unemployment is high Inflation rate tends to stay low Wages and salaries either fall or grow slowly Consumer demand and business sales and profits reach lowest Bankruptcies everyday and future looks bleak Business have lots of unused resources Interest rates remain low, investment opportunities r low as well as creditworthy borrowers Booms Economy cannot keep producing more goods and services indefinitely→ limit additional spending pushes up prices→ inflation Income and production are at their highest  Full employment of labour and all other resources Wages and salaries are high, employees can bargain with business→ scarce labour resources Business are operating at full capacity ○ Increase In demand is met by increasing prices rather than production Interest rates are high→ loanable funds are short Rate of inflation rises sharply 2.5- The price mechanism and the interaction of demand and supply within a market What is it? - Markets attempt to solve the economic problem of scarcity and efficient allocation of resources Demand - Quantity of a product that consumers are willingly to purchase at a particular price at a point in time - LAW OF DEMAND - As price increases, demand decrees - As price decrease, demand increase Example: - Demand curve - When price falls, demand increases (B)--> expansion in demand - When price increase, demand decreases (C) → contraction in demand Supply - Quantity of a good or service that business are willing and are able to offer at a given price at a point in time - LAW OF SUPPLY: - As prices increase, quantity with increase - As prices decrease, quantity will decrease Example: - Supply curve - When price increase, supply increase (B)--> expansion in supply - When price decrease, supply decrease (C) →  contraction in supply Price mechanism - Point of intersection of both curves→ market equilibrium - Price mechanism refers to forces of demand and supply in determining price and quantity of a good and service Increase in demand→ shift demand curve to right - Increase in price - Increase in quantity Decrease in demand→ shift demand curve to left - Decrease in price - Decrease in quantity Reasons for increase in demand - A rise in consumer income: - Changes in consumer tastes and preferences - An increase in the size of the population - A substitute good becomes more expensive - A complementary good becomes cheaper - Prices are expected to rise in the future Reasons for decrease in demand - A fall in consumer income - Changes in consumer tastes and preferences - A decrease in the size of the population - A substitute good becomes cheaper - A complementary good becomes more expensive - Prices are expected to fall in the future Increase in supply→ shift supply curve to right - Decrease in price  - Increase in quantity Decrease in supply→ shift supply to the left - Increase in price - Decrease in quantity Reasons for increase in supply - Increased efficiency - A fall in the cost of production - Improved climatic conditions - An increase in the number of suppliers Reasons for decrease in supply - Decreased efficiency - An increase in the cost of production - Unfavourable climatic conditions - A decrease in the number of suppliers  2.7- What is a market What is a market? - Situation where buyers and sellers come together to exchange goods and services - In australian economy - Retail markets - Labour markets - Financial markets - Stock markets Retail markets - Most of our goods and services - Shopping centres - Local shopping centres - Online shopping websites Labour markets - Employees are hoping to sell or supply their labour - Employees wish to buy or demand skills - Not physical location communication of employees and employers Financial market - Intermediaries between savers and the borrowers - Households decide to deposit money into banks - Others need to borrow - The price of having access to money belonging to someone else→ interest - When you deposit, bank will pay interest on savings - Banks lend out money from deposits - Banks usually charge a higher rate of interest to borrowers then they pay depositors→ profit Stock markets - Simply relationship between buyers and sellers - Shares in public companies bought and sold - Share→ unit of ownership - Business raise money for investment→ selling shares who can invest by buying shares→ value increase - Values of shares fluctuate→ depends on demand - Good financial year→ more investment - More buying than selling→ price rises - Bad financial year→ less investment - More selling than buying→ price falls  2.9- Customary trading practices of Aboriginal Peoples and Torres Strait Islander Peoples Indigenous peoples and torres strait islander - trading involved swapping, or bartering, one people item for another. - Trading routes are linked to trade movement - Traded with each other as well as PNG and IND - Usually followed water lines and intersected - Goods and items were traded but rituals and traditions were too 2.10- The reason for government intervention in the market Summary - Sometimes the profit seeking nature of businesses can result n a negative outcome for society and the environment→ government intervention Prevention of environmental degradation - Environmental but also economical issue → humans rey on environment - Governments attempt by imposing regulations and restriction that cause damage - Ban littering laws - Ban use of some chemicals in manufacturing - Restrictions on how and where business developments take place Conservation of natural resources - Natural resources such as fish, fresh water, agricultural land and forests need to be conserved - Change faced by governments→ trade off between exploitation (short term) for economical gain and needs of both society and economy (long term) - Long term economic growth– environment needs to be managed sustainably  2.11- Different types of businesses Online business - Runs some or all of its business using the internet - Provide entrepreneurs to create a virtual business that sells globally without associated costs of a physical store On-demand business - Uses mobile technology such as apps to maximise consumer convenience Small and large businesses - Micro: less than 5 - Small: 5 to 19 - Medium: 20 to 199 - Large: more than 200 (usually global) - Business are usually SMEs Global business - Large company with global branches - National borders are not barriers for trade - TNC (transnational corporation)--> highest level of involvement in global business Offshore business - Business can get labour down in different counties - Cheaper production costs→ lower wages or less restrictions - Long hours little pay, bad working conditions - Businesses are under increasing pressure to ensure employees are not exploited Government business - Owned and operated by the government - Essential community services - Health, education, welfare, roads - Generally very large in Australia Not-for-profit business - Services for the community without a profit for owners - Earned from donations - Running business must go back to providing the community - Usually receive tax concessions  2.12- Factors influencing business decisions Technology - Changed aspects of business - Administration , communication and service, manufacturing - Increase efficiency and productivity, create new products and improve range and products and services - Hi-tech robots, bar codes, EFTPOS (IT), Teleconference, email, cloud The business cycle - Reduced spending→ profits fall and cost cutting must occur - Cost cutting means retrenching workers→ fuels further recession - Increase spending→ profits increase - Not all businesses experience fall in revenue and sales during a recession - Nor an upswing during a boom - Most susceptible to swings→ luxury goods - Business with essentials do better in a recession→ groceries Globalisation - Process by which the world is becoming increasingly interconnected as a result of increased trade and cultural change - Reducing barriers to trade, investment and labour internationally Positives of globalisation - Expanded markets - A small business can easily go global. The use of the internet and other technologies makes it possible for most businesses to access globally and selling overseas - Cheaper materials Allows business to seek out the cheapest materials from around the world→ global sourcing - Access to labour Now have access to a much greater pool of talent. They can lower production costs by accessing cheaper labour in developing countries, or the most skilled employees globally negatives of globalisation - Increased business competitions Customers now have a greater choice in the market. Global business and online businesses give consumers access to goods and services globally. However, businesses now face  competition from global companies - Increased unemployment in some industries Industries that are unable to compete with cheaper imported products may be forced to close. - Environmental and social issues: Some TNCs that outsource production to developing countries may explicit workers and damage the endowment in order to reduce production costs 2.13- The contribution of entrepreneurship and innovation Entrepreneur - Person willingly to take a risk and has such qualities - Innovative and inventive - Someone who - Has great ideas and do smelting about them - Bunts for opportunities to promotes - Thrives on challenges - Makes money out of solving problems and selling ideas - Starts up their own business innovation - Process of improving or significantly contributing to an existing product of service invention - Development of something completely new 2.14- Ethical decision-making and corporate social responsibility What is CSR - Corporate social responsibility refers to businesses considering the interests of stakeholders, society and the environment when making economic and business decisions. Investing 6.2 reasons for investing Reasons for individuals and business - Investment is money spent to gain invest profitable return - Businesses may invest in technology, new machinery - Individuals may want to reach a monetary goal 6.3 financing your investment - Personal savings or borrowing - Most people save for smaller investments and borrow money by taking out a bank loan for a larger investment Saving for an investment - Advantage of saving, you don't have to pay interest - May take time for a sufficient fund - Any surplus of funds should be transferred to an investment account→ higher interest Borrowing to invest - Affordable repayments - Persona loans may be secured→ retains in the item purchased - Unsecured→ home loans involve a choice or interest rates - Fixed interest rate - Remains the same for the period of loan - Greater control of finances - Cannot usually be paid off before the set date without having to pay a penalty - Variable interest rate - Moves up and down depending on the financial market - RBA does have some control Income and expenditure account - Record of income earned and money  spent Superannuation as an investment form - Compulsory investment funded by employer - Percentage of your wage into a type of savings account - Investing for retirement - Minimum of 9.5% 6.4 range of investment options Investment accounts - Banks building societies and credit unions offer a variety of investment-type accounts, internet accounts and term deposits Cash managements: - Similar to a savings account→ funds can be deposited and withdrawn whenever - The difference→ pay much higher rate of interest and minimum amount to be kept in the account Internet account - Internet account→ online with higher interest rates, few statements and lower fees Term deposits - Sum of money deposited with a financial institution which must be left for a set term - Given the choice when the interest is paid, monthly or expiry - Safe and reasonable return Shares - Bing certain units of ownership in a company→ shareholder - Benefits from the company’s profits - Given to you as dividends or extra shares - Benefit from capital growth if shares increase - Happens in sharemarket ASX - Stockbroker has direct access to market for trading shares and for a fee (brokerage) acts as an agent Property - Investment properties - Advantages include income from rent - Often appreciates - Taxation benefits Managed funds - Pool of money from people who have similar investment goals - Manager invest this into assets Superannuation - Compulsory savings account - Has some tax advantages Debentures - Long-term loan issued by a company to raise money - Paid back over time at a fixed rate of interest - More secure than shares - Include a security and a guarantee unsecured notes - Not secured against the business assets - Higher risk - Greater risk to the investor Cryptocurrency - Digital-based finances traded virtually - Very high risk 6.5 sharemarket chart  What is a sharemarket chart 6.6 ethical investment Investing ethically - People decide to invest only in certain companies due to shared beliefs - Reasons: - Type of products - Working conditions - Forbidding trade unions - Child labour - Environmental stance - Waste - Animal testing - Negative screening→ avoids investment in types of firms - Positive screening→ investing in firms involved in ethical activities 6.7 the relationship between risk and return relationship - Higher risk= higher return - Lower risk= lower return Rate of return - Growth assets - Shares, property - Higher return over longer periods - Volatile and fluctuate - Higher risk - Income or defensive assets - Government bonds, term deposits - Lower return - Steady change - Lower risk 6.8 Factors influencing an investment portfolio Diversification - Spreading your money across different investment types to spread risk - Growth of a share changes all the time - Generally provides a greater return - Investment portfolio does not have to be fixed 6.9 Investment planning — maintaining records and monitoring investments Short-term investments - Less than 3 years - Want ready access to their funds Long-term investments - More than 7 years - Longer the period, the higher the rate of return Modifying investments to maximise - Must be actively managed long-term gains - Watch economy and performance Maintaining records and monitoring - Shareholder records to prove investments ownership and for taxation purposes - Contract note - CHESS holding statement - Divided statement - Selling shares→ capital gain tax - dividend → company tax as part of firm’s profit 6.10 Managing investments and risk mitigation Personal and economic circumstances - Personal circumstances - Look at savings - Economic circumstance - Market changes Risk mitigation strategies for managing 1. Avoid risk investments a. Remove chance of loss or withdraw 2. Reduce risk a. Diversify 3. Manage risk a. Monitor and record profits and  losses 4. Transfer risk a. Give ownership of financial managers, adviser and brokers 6.11 The role and responsibilities of the financial services industry Role of the financial services industry - Provide tools, advice and guidance for effectively manage finances - Develop and maintain chosen financial systems - Provide training for support - Advice on development of investment→ long-term financial gain - Assist in mitigation or sik - Provide financial reports Financial advice - Financial goals - Stategiesi - Investment plan - choosing tax-effective plans - Taking advantage of super Responsibilities of lenders and advisers - reasonable inquiries and steps to verify and understand a financial situation The role of government agencies (ASIC) - Corporate regulator - Enforce and regulate company and financial services laws - Protect consumers,investors and creditors Banking deregulation - Removal of some strict rules regarding how banks operated Glossary: ASsets - Items of value Blue chip shares - Very safe and secure shares - bank Capital gains tax - Tax on the [profits arising from the increased value of assets Capital growth - Value of an asset increases over time Company tax - Tax on the profit of a company cryptocurrency - Digital currency that operates independently of a central bank debenture - Document issues by a firm when you lend it money - States the amount of interest and term - If the firm is liquidated→ debenture holders get repaid first dividende - Part of a firm’s profit that is divided amongst shareholders economy - Activities undertaken for the purpose of production, distribution, composition of goods and services entrepreneur - Innovative person who builds a successful business in a new field ethical -= acceptable to society's standards Fixed interest rate - Interest rate that remains the same for the period of a loan Income and expenditure account - Ongoing record of income earned and money spent investment - Use of money to gain profit Investment portfolio - All investment owned by an individual Managed fund - Pool of money that comes from people who have similar  investment goals - Invested in assets such as shares or property, by a fund manager Market(s) - Exchange of goods, services or resources between buyers and sellers Mortgage - Loans from financial institution where something is held security in case the loan is not repaid Rate of return - Profit you receive on your investment as a percentage of the original investment share - Part ownership of public company Share Market 0 place where shares in public companies are bought and sold stockbroker - Individual or firm that specialises in buying and selling shares superannuation - Money put aside while working Superannuation fund - Managed fund designed to produce benefits when you retire Unsecured note - document insured by a firm when you lend it money - States amount, interest and term - Unsecured note holder is last to be repaid if firm is liquidated Variable interest rate - Rate that moves parallel to the market f