Business: ownership, objectives and the marketing mix
What the Business domain tests
The Business domain tests how a business idea becomes an operating entity: ownership, objectives, stakeholders, the marketing mix and core functions. You need to apply these ideas to a New Zealand sole trader, partnership, company or franchise, not just define them.
Core rules
- Ownership and liability. A sole trader is the business: unlimited liability, simple setup, owner keeps profit. A partnership shares capital and risk, but partners are personally liable. A registered company is a separate legal entity, so shareholders have limited liability. A franchise buys a brand and system, paying initial and ongoing fees.
- Objectives. Profit, survival, growth, market share, social or environmental goals. Objectives can conflict: growth may reduce short-term profit.
- Stakeholders. Owners, employees, customers, suppliers, lenders, community, government. A wage rise helps employees but raises costs for owners.
- Marketing mix. Product, price, place, promotion, matched to a target market. Promotion is communication; place is distribution.
- Functions. Operations, marketing, finance and human resources.
Worked example
A baker has $30,000 and wants to open a gluten-free bakery. As a sole trader she keeps control and all profit, but bears unlimited liability and all risk. A franchise gives a proven brand, training and supplier network, but charges fees and limits menu choices. A company limits her personal liability but adds compliance costs. The best choice depends on capital, risk tolerance and control: if the brand is essential and she can afford royalties, franchise; if control and low setup cost matter, sole trader.
Traps
Do not say limited liability means no risk - the company can fail and shares lose value. Do not confuse revenue with profit. Do not treat all stakeholders as wanting the same outcome. Do not call distribution promotion.