BEA Study Notes: / / 22 #___

Personal Resources:
- Refers to our time, money, skills
(means)

Economic Choices:
- The selection we make from a range
of alternative using our limited
‘means’ to satisfy our needs and
wants

Maslow's Hierarchy of Needs:
- Basic Needs:
- Physiological Needs:
- Food, water, water,
warmth
- Safety Needs:
- Security, safety
- Physiological Needs:
- Belongingness:
- Relationships, friends
- Esteem:
- prestige,
acknowledgement
- Self Fulfilment Needs:
- Self Actualization:
- Creative activities
Economic Problem:
- Management of scarce resources to
best satisfy societies unlimited
needs and wants
- An economy has finite resources
that when used cannot satisfy all
humans’ needs and wants
- Scarcity refers to the basic economic
problem of being unable to provide
everyone's needs and wants
- Economic problem is how to make
the best of limited resources
Opportunity Cost:
- When firms or individuals chose to
use resources, this creates
opportunity cost
- It's the next best option missed out
on when an economic choice is
made by a producer or consumer
Types of Resources:
- Natural Resources
- Land, water, wood
- Human Resources:
- Labour
- Efforts of humans in the
production process
- Eg: a dentist using their skills
to provide services to others
- Capital Resources:
- Man made goods
- Used to produce other goods
- Eg: hammer or printer
Product Possibility Curve (PPC):
- PPC shows the maximum amount of
2 goods a business or economy can
produce with a finite amount of
resources
- Any point on the curve represents
full usage of resources
- Ie: Product efficiency
- Any point within the curve
represents less than full usage of
resources

Science Study Notes: / / 21 #___

BEA Study Notes
- Allocative Efficiency occurs on the
PPC but only where the combination
of goods produced best meets
consumers needs and wants
- Allocative efficiency occurs at only
one point where there is productive
efficiency
Consumer Goods:
- Produced for the consumption of
consumers
- Eg: clothing, food
Barter:
- The exchange of goods or services
you own for those that you want or
need
- Barter systems continue to be used
in some circumstances, but has its
limitations
- For barter to work, there must be a
coincidence of wants
Koha:
- Gift
- Traditionally traded food
- Island revenue defines it as a
practice of giving a gift
- It can be money, food, time etc…
Medium of Exchange:
- Currency
- Legal tender differs in different
countries
- Legal tender is the medium of
exchange for a government
- Eg: WON, NZD, AUD
Economic Systems:
- The way that countries or economies
solve the economies problem
Command Economy:
- Aka planned economy
- Government makes all decisions to
solve economic problem
- production, and distribution of goods
and services is all done by the gov. .
- eg: former Soviet Union, Vietnam,
North Korea, Republic of Congo and
Cuba.
- Govs can reduce unemployment
levels by producing more readily
creating jobs
- No competition amongst business
stifles innovation and economic
growth
Free Market Economy:
- Consumers controls
- Relies on price system that signals
to producers what to create and in
what quantities
- The price system, the market
efficiently allocates resources and
goods through the invisible forces of
supply and demand
Government Interference in Markets:
- In a mixed economy, Gov can
intervene to correct market failure
- Eg: to provide free and
affordable healthcare
Market Failure occurs because:
- Goods may not be provided by
private businesses.
- E.g. Street lights, roads, police,
coast guard.
- Goods may not be consumed in
quantities that is best for society
Merit Goods:
BEA Study Notes
- e.g. healthcare, education, electric
vehicles) are good for us and under
consumed.
Demerit Goods:
- are bad for us and over consumed
(e.g. alcohol, sugar).
Traditional Economy:
- Relies on customs and beliefs
- Depend on agriculture, fishing
- Scientists believe all economies
started as traditional
Demand:
- Amount of a good or service a
consumer is willing and able to buy a
a range of prices
Demand Schedule:
- A table that show the quantity of a
good or service at each given price
level
Demand Curve:
- A line graph that shows graphically
the quantity of a good demanded at
each price level
Ceteris Paribus:
- We assume all other factors remain
unchanged except for the price of
the good
Writing Paragraphs:
- S: Statement
- B: Because: explain why
- W: What this leads to
Changes in consumers income causes
changes in demand
Price Changes of Complementary Good:
- Goods that go together
- Eg: petrol and cars
- As the price of a good increases,
demand for its complement
decrease; vice versa
Price Changes of Substitutes:
- Goods that can be used in place of
others
- Ie: goods that satisfy the need or
want
- An increase in the price of a good
will lead to an increase in demand
for its substitute
- Some consumers move to its
substitute as it is relatively more
affordable and better value for
money
Supply:
- Supply is the quantity of a good or
service a producer is willing and able
to supply at different prices over a
period of time
- Can refer to anything in demand
Individual Supply vs Market Supply:
- Individual Supply is The quantity of a
good a producer is willing and able
to supply at each price in a period of
time
- Market supply is the total of all
producers supplied quantities in a
market at each price
- Market supply is the key driver for
market price
Changes in Supply:
- Non Price Factors:
- Cost of production
- Level of tech
- Weather and natural events
- Taxation and subsidies
- Rahui
BEA Study Notes
Supply - Cost of Production:
- CoP influences how a business is
able to supply at different prices
- Producers will not receive goods or
services when the cost of production
is greater than the selling price
- This is because the
producer will be making a
loss when producing the
good
- Cost of production rises for each
additional good produced
- The first good a producer
makes will have the lowest
cost of production
Decreased Production Costs:
- Higher pc decrease supply and shift
supply curve to the left
- Higher pc restrict a business to
supply less at each price
- This is because fewer are
produced at a cost less than
the potential selling price
decreasing profits for the
business
- A decrease in supply mean
businesses produce less at each
price
Supply and New Tech:
- New tech advances increase supply
- New tech enables producers to
reduce wastage and use each raw
material more efficiently
Subsidies:
- A subsidy is a payment from the gov
to producers that reduces production
costs and increased supply
- Govs pay subsidies to :
- Encourage production of a
good
- Eg: healthcare
- Increase competitiveness of
exports
- Keep workers employed
- When a gov pays subsidies, the
supply curve shifts down by the
amount of the subsidy
- This is because a subsidy
lowers the cost of
production meaning they
will accept lower price from
consumers for their products
while still making a profit
Taxation:
- Producers pay indirect taxes to the
governments on each good they
produce
- Indirect taxes decrease supply by
the amount of the tax
- Indirect taxes are mostly imposed to
create income for the gov or to
discourage consumption of harmful
products
- Eg: alcohol
Rahui:
- Temporary restriction on an area,
resource of body of water
- A rahui will be placed by a high
ranking member of iwi
- Has legal standing
- Will be lifted after an appropriate
amount of time
- While a rahui is in place, affected
business will need to limit or cease
supply and production of goods and
services
Market & market equilibrium:
- A place where parties meet to
exchange goods or services
- Financial markets where shares,
currencies are traded:
- Eg: NZX
Market Equilibrium:
BEA Study Notes
- Market forces guide the behaviour of
consumers and producers
- Markets will naturally movie towards
the equilibrium quantity
Market Disequilibrium:
- MD occurs when quantity supplied is
not equal to the Q demanded
- At MD, here will be either a shortage
or surplus of the good
- Shortage occurs when the quantity
demanded of a good or service is
greater than quantity supplied:
- Surplus occurs when the quantity
supplied of a good or service is
greater than the quantity demanded
- Happens due to shifts in demand
and supply
Surplus:
- Surplus occurs when the quantity
supplied of a good or service is
greater than the quantity demanded
- Surplus means producers will not be
able to sell their product despite
being able to sell them profitly at the
market price
- Occurs at any price above
equilibrium
- Creates more su[[;y creation but less
demand
Shortage - Market Response:
1. Consumers bid up the prices as
they compete for the limited quantity
supplied
2. As prices rise producers increase
quantity supplied due to law of
supply
3. Prices increase cause Quantity
supplied to rise and quantity
demanded decrease until equilibrium
is reached
4. At EQUI, market clears, there is no
shortage and is restored to
equilibrium
Surplus - Market Response:
- Any price above the equilibrium is
surplus
1. Producers bid down prices to sell
surplus
2. As prices decrease, consumers
increase quantity demand due to law
of demand
3. As prices decrease, producers
decrease quantity supplied due to
law of supply
4. Prices decrease causing quantity
demanded to rise and quantity
supplied to decrease until
equilibrium is reached, QS = QD
5. At Equilibrium, market clears and
there is no surplus
Subsidies & Surplus:
- Subsidy will cause a temporary
surplus due to increase in supply
- The effect of the subsidy reduces
the cost of production
- The reduced production cost takes
places before the market price
changes
- Producers are able to produce more
good profitably at original market
BEA Study Notes
price, but demand remains the same
- Eg: at original market price of $30, Q
supplied on the new supply curve
S S
1 2
3 su
0 rpl
2 us
2 sub
sid
y 80
1 su
6 rpl
us
- At S2 , a surplus is created of 80
because the demand has not
changed despite of the supply
change
- Producers bid down prices to restore
equilibrium
Changes in Demand and Market
Equilibrium:
-
- Consumers will bid up the prices due
to the shortage to encourage
producers to supply more goods as
demand has increased, per the law
of supply
Demand Decrease & Surpluses:
- Due to the decrease in demand of a
product, the demand curve shifts
down creating a surplus,
- To clear surplus, producers offer
lower prices to encourage more
people to buy the product and
restore the equilibrium
====
NZ’s Tax Income System:
- Nz has a progressive tax system
- Higher income = higher tax
rate
-
- Don't need to memorise tax rates
BEA Study Notes
Types of Income (4):
- Wages:
- Based on time worked
- Weekly or monthly or units
produced
- Salary:
- Calculated on yearly basis
- Paid out weekly or fortnightly
- Eg: teacher or banker
- Fees:
- Paid by customers to
workers for a particular
service they provide
- Eg: doctor, lawyer
- Commision:
- Payment for selling goods on
behalf of someone else
- Real estate agent
Taxable Income:
- Most people earning salary or wages
pay the correct amount of tax
through the PAYE system
- Tax is deducted from payout,
automatically paid to gov
NZ Sharemarket:
- Shareholding refers to an ownership
stake in a company
- Size of your shareholding refers to
how many shares you won
- A company is a business ownership
structure where shareholders are not
personally responsible for business
debt
- Investors purchase shares for capital
gain , dividend income or both
- Shareholders are paid a share of the
business profits
- A company has a board of directors
who is responsible for hr governance
and actions of the business
- BoD owe shareholders as duty to
manage the company sensibly and
for shareholders’ benefit
Dividend Yield:
- the amount of money a company
pays shareholders for owning a
share of its stock divided by its
current stock price, shown as a
percentage
Earnings Per Share (EPS):
- EPS = Full Year Profit divided by
number of shares on issue
- Eg: a $10m profit & 1m shares:
- EPS: $10m / 1m = $10
- EPS shows investors a company's
potential to pay dividend income,
since dividends mostly paid from
profits
- EPS is widely used by investors,
analysts and banks to estimate the
value of a business
- Higher EPS = higher value
Price to Earnings Ratio (P/E):
- p/e = share price / EPS
- Eg: Paddleboards Ltd have a
share price of 6.40 and EPS
of 0.30:
- P/E Ratio = 6.40/0.30
= $21.3
- P/E ratio shows how much money
has to be invested in a company in
order to potentially receive $1 of the
companies revenue
Net Tangible Assets Per Share:
- Tangible = can be touched
BEA Study Notes

- NTA = total assets - intangible - Creditors will consider the following

assets - liabilities
- NTA per share = Net Tangible 1.
Assets / Number of Shares Issued 2.
- Used to access the financial strength
of a company based on what it owns 3.
- Determines monet each shareholder 4.
would receive if a company was
liquidated and the assets were sold 5.
- Eg: $250m/$100m =$2.50
6.
before giving someone a loan:
Income
Employer and how long you've
worked there
Asset as security: eg: house
Existing debt: Inland revenue has
priority of repayment
Credit history: and any failure to
repay debt
Purpose of loan

Credit: Assets as Security:

- Refers to borrowing money
- Allows people to spend beyond their
limited means
- Future resources will be needed to
repay debt or risk bankruptcy
- Interest is charged on leans (credit)
as a cost of borrowing
- Until it is payed back it is considered
a liability
- You don't need to pay tax on loan,
banks pay tax on interest they earn
Types of Credit (7):
1. Student loan
2. Credit card
3. Hire purchase
4. Car finance
5. Mortgage
6. Personal loans
7. Overdraft
Interest Rate v Finance Rate:
- Interest Rate %: interest cost per
year / amount borrowed * 100
Financer Rate % = total interest costs on
loans / amount borrow * 100
Getting Credit:
- Creditors are more likely to lend to a
borrower who has assets that can be
seized if they cant repay debt:
- Home contents
- Consumer electronics
- Car
- Land
- Buildings
- Cash in the bank
- Shares and investments
Savings:
- Described as forgone consumption
- Improve people's ability to consume
in the future
Interest and Saving:
- Banks pay you for putting money in
the bank and them using your
money
- Higher interest rate encourage
people to save more = higher return
rate
Compound Interest:
- Some savers do not withdraw the
interest income and leave it in the
bank to become more savings
Net Worth:
BEA Study Notes
- Calculated by considering the total
value of tour assets
- Net Worth = assets -
liabilities
- Assets: what you own, eg: book
- Liabilities: what is owed: eg :
mortgage, overdraft
Overdraft:
- The negative balanced owed on a
credit card
What is a Business:
- An organisation that produces
and/or sells good or services for
money
- Can be “for profit” or “non profit”
Types of Businesses:
- Sole Trader
- Unlimited liability
- Owns the business
- Self employed
- Must declare profit / loss
- Must follow rules and
regulations
- Partnership:
- Unlimited liability
- 2 or more people
- Private Limited Company
- Limited liability
- Private shares
- Public Limited Company
- Limited liability
- On stock exchange
- Community Org
- Non-profit (RSPCA & Rotary)
- Government
Unlimited Liability:
- Gov views company and owner
same person / entity
- Owners of the business are
personallu liable for all the debts of
the business
- If the business is unable to repay
debt, it must be paid in full by
owners and their assets
- The owners could be forced to sell
their assets as repayment
Limited Liability:
- Owners are only responsible for the
debts of the business upto the
amount they have invested into the
business
- If the business cannot repay the
debts, the owners will only lose the
amount they invested
Sole Trader:
- Sources of finance
- Loans from friends
and family
- Savings
- Government (Grants)
- Bank
- Previous job savings
- Advantages:
- Easy to setup
- Owner has complete control
- Owner keeps all profits
- Flexible working times
- Disadvantages:
- Unlimited liability
- Long hours
- When the owner dies, so
does the business
Partnership:
- 2 or more people
- Self employed
- Unlimited liability
- Partners have unlimited liability
- Advantages
BEA Study Notes
- Partners may specialise in
different areas of business
management
- Shared decision making and
creative input for problem
solving
- Additional capital
- Disadvantages:
- Unlimited liability
- Profits are shared
- Capital is limited
Unincorporated vs Corperated:
- Busines can either be privater, or
public (Gov) sector
- Private sector businesses can be
unincorporated or corporated
- Unincorp: sole
trader ,partnership
- Incorp: limited companies
- A company must be incorporated to
be called a company
Public v Private Companies:
- Private
- Shares owned by few select
indivduals
- Public:
- Shares available on StockX
Companies:
- Limited companies are owned by
their shareholders
- A share gives you the right to vote at
the gompany general meetings
- Directors are chosen by
shareholders to set objectives and
monitor the performance of the
business and management
- They have an obligation to ensure
the company is run in the interest of
the shareholders
- Private Limited:
- Owned by same people who
are both shareholders and
directors
- Shareholders are usually
close to the business
- Public Limited:
- Owned by shareholders but
run by directors
- To have a company listed on NSX,
company must be worth at least
$10m and have at least 100
shareholders who hold a minimum of
20% of shares between them
Tripple Bottom Line:
- People
- planet
- Profit
Corprate Social Responsibility (CSR):
- Business taking responsible attitude
and extra steps beyond legal
requirements
- Decision making that considers
benefits ands cost to others not just
shareholders
- Commitment to act ethically
- Contribute to economic development
and improve quality of life
How does CSR impact Customers:
1. Brand loyalty
2. Feel good factors for customers by
contributing to the community
3. Customers gain respect for values
a. Free range eggs
4. CSR often costs more and
customers pay for it in a higher
price
a. Fair trade coffee
Financial Info (8):
1. Profits and losses
2. Cash
BEA Study Notes

3. Value of assets Role of Accounting:

4. Income / revenue - Maintain a systematic complete accurate
5. Expenses and permanent record of all transactions of
6. Loans a business, which can be retrieved when
7. Value of investments the company needs it
8. budgeting ➢ Accountants help manages in
making a range of business
How is it communicated: decisions
- Writing ○ What selling price should be
- Verbal charged for products
- Media ○ Weather a business needs to
- Virtual presentations acquire financing
- Internet ○ Wearther a business should
offer credit to certain
Non Financial Info: consumers
- Quality of a good or service ➢ Helps in determining how well a
- Customer satisfaction business is performing by
- Employee morale summarising financial info
- Strength of brand image ➢ Shows how well the business is able
- Enviro impacts to pay back any debts
- Contribution to community ➢ Legal requirement for most
businesses
Who uses Financial Info:
1. Stakeholders Accounting Equation:
2. Owners - Assets = Liabilities + Owners’ Equity
3. Investors, shareholders + Revenue - Expenses - Drawings
a. To determine risk and return - Owners Equity= monety invested
4. Employees into business by owner
a. See sales, and see if they - Should always be balanced
expect a raise - Tral balances record the balances of
5. Banks the items listed in the accounting
6. Suppliers equation
7. Customers - Debits
8. Competitors - Assets + Expenses
9. Future investors - Credits
a. Should you invest or not - Drawings
10. Suppliers: - Liabilities
a. Determine worthiness of a - Income
business - Owners’ equity
b. Need to know if they can be - To increase debit account
repaid - Debit it
11. Gov - To decrease debit account
a. Tax owed - Credit it
- To increase credit account
BEA Study Notes

- Credit it - year on year changes on

- To decrease credit account business performance
- debit it - achieving business
objectives
- used by:
Double Entry Accounting: - shareholders
- At least 2 accounting entries per row - managers
per transaction - potential investors
- These entries may occur in our - banks
asset, liability, equity, expense, - inland revenue
drawing or revenue accounts
Balance Sheet – Changes in Equity:
Drawings is not a business expense, but - equity increases when:
eventually decreases equity - owner invests more money
or assets
- business makes profit
Buying Inverntory: - equity decreases when (2):
- With cash / bank - owner takes money out
- Debit purchase (expenses) - business makes a loss
- Credit Bank (asset) - more expenses than
- On credit profit
- Debit purchases
- Credit Acc payable
Goodwill:
Accounts Payable v Accounts Receiveble: - when a business’s goods are sold
- Acc Payable for more than whats its worth
- What you owe to suppliers - Gucci
- Acc Receivable - Intangible asset that arises at the
- What customer owe you time of a business acquisition when
when they buy on credit the price paid for the business
Balance Sheet: exceeds the fair value of the net
- a statement of the assets, liabilities, identifiable assets
and capital of a business or other - Reflects the brands strength
organization at a particular point in
time Accounting Analysis:
- Used to evaluate the current and
TERM 3: expected future prospects of the
business
Statement of Financial Position: - They look for 3 major factors of a
- shows snapshot of business business’ activity:
finances providing insight into (5): - Profitability
- shareholder wealth - Shareholders’ return
- ability to pay debts on equity invested
- size of business - Liquidity
BEA Study Notes

- Ability to pay off debts Net Profit %:

- Solvency
Analysis of Accounts – Ratio Analysis:
1. Calculate % or ratio
2. Explain the meaning of the ratio and
describe the trend
3. Suggest reasons for the trend
4. Make reccomendations for
improvements
- Net Profit % = Net Profit after Tax /
Net Sales x 100
- Higher % = business is efficient at
converting sales into profit
Expense %:
- Total expenses / net sales x 100
- Indicates how much of sales prive is
needed for production and business
cost

Ratios: Distribution Costs %:

- Distribution costs / net sales x 100
Profibility Ratio: - Indicates how much of sale price is
- % change in sales used to cover distro costs of getting
- Gross profit % items to customers
- Markup %
- Expense % Finance Costs %:
- Show how indebt a company is
Liquidity Ratios: - Finance costs / net sales x 100
- Working capital - How much businesses borrow to
- Current ratio fund its assets
- Quick ratio - Higher finance % = it has a
lot of debt
Solvency Ratio:
- Debt to Equity Ratio Administrative Costs %:
- Administrative costs / net sales x
Gross Profit %: 100
- Gross Profit % = Gross Profit / Net - Indicates how proficient a business
Sales x 100 is at generating sales
- Gives insight into how effective the - Higher % suggests an inefficient
business is at turning its resources business structure
into profit
- Gives insight into avbility to cover Measuring Solvency and Liquidity:
overheads and ability to cover - Liquidity is how fast a business can
additional overheads turn sassets into cash to pay off
liabilities
Markup %: - Cash is most liquid asset
- Markup % = Gross Profit / COGS x - Industry specific goals are not often
100 liquid due to the limited amount of
- NZ Independent Retailers average a potential buyers and high costs
108% markup
BEA Study Notes
- It also refers to the businesses
ability to pay back its current
liabilities from its current assets
Why is Liquidity Important?”
- Failing to meet current liabilities may
result in:
- Higher interest costs
- Loss of assets as seized
- Legal costs
- what they must provide their
Working Capital:
- = current assets – current liabilities
- Assesses a companys ability to pay
its current liabilities with current
assets
- Shows ability to pay off short term
loans
Current Ratio:
- Provides insight into a firms ability to
pay its current liabilities
- Current assets / current liabilities : 1
- Greater than 1 suggests that the
business has enough liquidity to
cover current liabilities
- If it is 2:1 or higher, it suggests that it
has too much cash on hand and
could be used elsewere
Quick Ratio:
current assets−inventory
- :1
current liabilities
- Shows if business can repay debts
without having to sell inventory
Solvency:
- The ability of a business to meet its
longterm debts and financial
obligations
Debt to Equity Ratio:
- Total liabilities / owners equity :1
- Indicates how much of the business
is financed by outsiders
CGA 1993:
- Person gifting a good to someone is
protected by CGA
- Provides business on guidelines on
customers with when selling
products
- If a product does not meet CGA
standards, consumers are entitled to
a remedy
CGA Does NOT Cover (5):
1. Goods bought for commercial or
business use
2. goods bought through a private sale
- Garage Sale, Facebook
Marketplace
3. goods bought for resale in trade
4. goods used in a production process, raw
ingredients
5. goods given by a charitable organisation
Purpose of CGA is to Ensure (4):
- Interests of consuimers are
protected
- Businesses compete effectively
- Consumers and businesses
participate in sales confidently
- Provides clear guidance to
consumers on what they are entitled
to
CGA Guarantees (6):
1. Goods are of an acceptable quality
2. Goods match the description and
sample
3. Services are carried out with
reasonable care and skill
BEA Study Notes
4. Supplier has right to sell goods
5. A 3rd party doesn’t have rights to the
good
6. Goods are delivered when agreed or
within a reasonable time
CGA Warranties:
- CGA exists alongside any warranty
given by supplier
Guarantees of Acceptable Quality:
1. Fit for purpose wich the good is
commonly supplied for
2. Acceptable in appearance and finish
3. Free from minor defects
4. Safe for consumption and usage
5. Durable
Acceptable Quality will reflect a reasonable
consumers understanding of the:
1. Nature Goods: durable goods versus
disposable and oneoff usage goods
2. Price: cheap = lower quality
3. Any statements made about the
goods on any packaging or label
4. Any representation made by
manafactuers advertising
5. Nature of Supplier: corporate vs flea
market trader
Fit for Purpose:
- Reflects what a customer tells the
business they intend to use the good
for
- 2 Exceptions:
- Does not apply where
circumstances show the
consumer did not rely on the
customers skill or judgement
- It is unreasonable to rely on
the suppliers skill or
judgement:
- Discussing the
product with the
receptionist in a large
company
Exceptions to the Guarantee of Acceptable
Quality:
1. Goods have been used in a manner
or to an extent which is inconsistent
on how a reasonable consumer
would use the good
2. Where any defects in the good have
been made aware to the consumer
before purchasing the goods
3. The cponsumer modifies the product
which causes it to fail
4. Consumers looses the product or
breaks it accidentally or willfully
Supply of Services – Guarantee of
Reasonable Care and Skill:
- Services must be carried out with
reasonable care and skill
- There are 2 exceptions:
- When the circumstances
show that the consumer does
not rely on suppliers skill or
judgement / advice
- E.g. You insist that a
house cleaner
washes your house
on a rainy day,
despite the house
cleaner stating that
rain washes away the
cleaning chemicals.
- 2. It is unreasonable for the
consumer to rely on the
supplier’s skill or judgment.
- E.g. You hire a house
painter to repaint your
Maserati supercar
Rights of Redress Against Suppliers and
Manufactuers:
BEA Study Notes
- If goods or service fail to comply with
CGA guarantees, consumers has
right for redress / remedy
- On discovering a fault, the consumer
should contact the manufacturer
directly and give them an option to
remedy it
- If the supplier does not remedy the
situation, the consumer can take it
futher and go to the Disputes
Tribunal
CGA Remedies:
- Businesses are required to remedy a
failure of their goods or services by:
- Repairing the good
- Replacing the good
- Providing a refund
- Curing any defect in the
ownership of the good if a 3rd
party has an interest
- Business must remedy within a
reasonable time
- If the supplier refuses or fails to
remedy the issue within a
reasonable time, the consumer can
get the failure remedied elsewhere
and recover from the supplier all
reasonable costs incurred from the
other supplier
Consequential Damage & Loss Caused by
Defective Goods:
- Consumers can obtain
compensations from supplier for any
loss or damage from a defective
good
- A consumer must avoid or minimise
extra loss if possible
- The loss can only relate to the failure
of the product
Business Fails to Remedy a Breach Of
CGA:
1. Talk to manager
2. If the business has a head office,
call them
3. Keep notes of any discussions with
the business
4. Get a 2nd opinion on fault from
another business
5. Write a letter to the company
- If the company still doesn’t fix it,
consumer can take them to dispute
tribunal
Dispute Tribunal:
- Less formal, cheap, quick
- A lwayer cannot represent a party
and there are no judges
- Raising a dispute is known as
lodging a claim
- they are carried out in hearings
- there is a referee who works with the
parties to come to a resolution, and
a legally binding decision
- claims need to be made within 6
years after the event that caused the
dispute
- applicants are allowed to have a
support person
-
- private and closed to the media
- for claims upto 30,000$
- for larger more expsensive
claims, they will go to District
Court
- you can use the disputes tribunal
even after signing an agreement
saying you will not
Types of Issues DT helps with:
1. Buying Goods or Services:
2. Car Accidents
3. Business Deals
4. Neighbour Disputes
Issues DT can NOT help with:
BEA Study Notes

1. Renting disputes - outlines the responsibilities of

2. Rates, taxes, social welfare
3. Intellectual property & copyright
4. Employment
5. Wills
6. Land
7. Family law
8. Debts
- Renting disputes and employment
issues are considered at other
tribunals
How is a DT Settled:
- The referee will give a legally
binding decision called an order
- The order sets out what needs to
happen and when by
- The disputes tribunal doesnot check
weather the order has been followed
through
If the order is not followed by the deadline,
then the applicant can:
1. Apply to the District Court to enforce
the order.
2. Hire a debt collection agency to
collect any payment that is owed by
the respondent
3. Hire a lawyer to act on their behalf. –
a. A formal letter from a lawyer
may be enough to get the
order followed
4. Where the Disputes Tribunal
ordered the respondent to do work,
a. e.g. repairs, then the
applicant can reapply to the
Disputes Tribunal to order
money compensation
instead.
Fair Trading Act 1986:
businesses to act in a fair manner,
when supplying goods or services
- applies to all businesses
- applies all advertising and all
dealings with consumers
The FTA:
- prohibits certain unfair conduct and
practices in relation to trade
- promotes fair conduct in practices
- promotes safety in respect of goods
& services
- busineses cannot opt-out of their
FTA obligations
False or Misleading Representation:
- businesses may not make false
claims about their products
False Representation:
1. statements that say products are of
a particular skill, kind, standard or
quality
2. representation that a specific person
uses it when they don’t
3. where product ingredients are from
4. misleading price / sale
5. not disclosing hidden / additional
costs
6. false representation about the need
for a good or service
7. false claims about effect of good
8. leaving out important info
Who is responsible for enfocing the FTA:
- Commerce Commision
- Investigat businesses and acts to
ensure businesses follow their FTA
obligations by
- Giving advice
- Taking them to court
- Fining companys
Contract Law:
BEA Study Notes

- An agreement between 2 or more - An outward looking approach basing

parties,c creating rights and duties product decisions on consumer
that are legally enforceable demand, as established
- A promise is not legally binding - by market research.

Elements of a Valid Contract (5): Product Orientation:

1. Must be serious and commercial
2. Offer and acceptance terms must be
present
3. Exchange must occur
4. People must have capacity to
understand agreement
5. Consent must be given freely
- What does the business consider a
suitable or excellent product
- an inward‐looking approach that
focuses on making products that can
be made (or have
- been made for a long time) and then
trying to sell them.

Offer & Acceptence: Niche Marketing:

- All parties must agree to all terms of - Identifying and exploiting a small
the contract segment in the market
- Can be made verbally, by actions, or - Gluten free bread
in writing
- It is easier to prove a dispute if it is Mass Marketing:
in writing - selling the same products to the
whole market with no attempt to
Consent Given Freely: target groups within it.
- Unfair means:
- Blackmail Market Orientation vs Product Orientation:
- Threatening behaviour - MO is customer focus
- Undue influence - Nbusiness will produce a
- If consent is not given freely, product that the customer
contract is not valid wants rather than try to sell
MARKETING them something they may
not really want to buy
Marketing Involves: - Benefits:
- Marketing research - Chances of newly
- Product design developed products
- Packaging reduced
- Pricing - Higher business
- Advertising survival
- Distribution - Higher profits
- Customer service - Focused on
continuous
Market Orientation: improvement
- What do potential customers need - PO is making the product first, then
and want seeing if anyone wants to buy it
- Benefits:
BEA Study Notes
- Product released to
market sooner as less
time spent consulting
potential customers
- Costs saved as
business has not
spent money
consulting potential
customers
- innovators in the
business are given
absaloute decisions
making power over
product
Advantages of Niche Marketing:
- enhanced customer relationships
- reduced competition
- increased visibility with target
customers
- word of mouth grows sales amongst
target customers
- business becomes expert over niche
market
- less resources required for
marketing
- employees able to be more creative
with marketing to niche
Advantages of Mass Marketing:
- higher sales
- lower marketing cost per product
- less exposed to changing customer
interests
Market Segment:
- group of people who share one or
more common characteristics, which
businesess lump together for
marketing purposes
- age, gender, culture, jobs,
values
- market segments are known to
respond somewhat predictably to a
marketing strategy or plan
Market Research:
- process of collecting and analysing
data about customer, competitors
and the market
Primary Research:
- involves field research by gathering
data directly from potential and
existing customers
- expsensive
- more relevant and upto date
- can be sold or leased
- can give business further insight into
potential market and consumer
needs changes
- time consuming and expensive
- can be misleading if not enough
people are sampled
Seccondary Research:
- uses info that is already available
from data collected by organisations
- quicker to gather
- cheaper to gather
- wide range of info online
- may not be specific to needs
- may be out of date as need and
wants change
- data may be misleading
Market Research Helps Identify:
1. existing customers, who they are
and why they buy the product
2. new potential customers; who they
are and what they want
3. realisrtic targets for the business
4. successful strategies to help the
business adhere to its target
BEA Study Notes
5. solve the existing challenges and
problems
6. new product opportunities
Helps Businesses analyse customer
reactions to :
- businesses existing brand and
products
- competitors brands and products
Info is gathered by:
- quantitative info
- measures facts and statistics
- qualitative info
- descriptive judgement Based
on emotional rewsponses
and opinioons
Methods of PD Collection:
- face to face interview
- telephone or online services
- experiments
- public observation
- focus groups
Sampling:
- involves finding your target market
and pick out a group of consumers
from within that target market
- more people = more accurate data
- more people asked = time
consumed
4 P’s of Marketing:
- product
- developing a desirable
product
- promotion
- how to make consumers
awarwe of the product
- place
- where the product should be
sold in the target market
- price
- how much it should be sold
for
Product:
- anything capable of satisfying a
customers’ needs and wants
- needs to be fit for purpose
Packaging:
- packaging serves to:
- protect the product along its
journey from production to
the time a consumer uses it
- attract consumers to the
product
- tell consumers what the
product is
- disclose important
information like where it was
made
- make it easy to open and use
the product
- support the brand of the
business
- containing and preserving
the product
- consuming the product
- 1 time disposable
bowl
- Providing information that is
critical to consumers
decisions
- If it contains specific
ingredients
- Distinguishing the product
from competitors
- Supporting environmental
objectives
Product Differentiation:
BEA Study Notes
- Marketing strategy that attempts to
distinguish a companys products
from the competition
- It will communicate to
consumers the unique
qualities a product provides
them which is not found in
compeititors products
Unique Selling Point:
- The factor that differentiates ap
roduct from its compeititors
- Lowest cost, highest quality
- Can be thought of as what your
company is providjng to the
customer that competitors are not
Branding:
- Brand is the unique identity
associated with a product name or
business
- A successful brand is positively
remembered by the target market
and allows thebusiness to
- Charge a higher price then
less known brands
- Launch new products into
markets more successfully
- Retain customers when
competitors aggersivbly
promote their products
- Brand loyalty develops with frequent
adevertising
- Customers with brand loyalty
promote the products to friends and
family
- Some brands become some famous
they have become the word for the
product
- Glad Wrap, Bubble Wrap,
Jetski
How does a business Build a strong brand?:
1. Identifys the target audience and
define them using market research
a. Only when consumers can
relate to the product, will they
find a reason to buy the
product, find it useful, and
meet their expectations.
2. Identify the products USP and what
value it creates for customers
a. Understanding the problem it
solves for customers
3. Choose advertising platforms that
aligns with how the business wants
to project its brand image
4. Foster healthy customer
relationships where the customers
want to interact with the branf and
project its brand image
5. Package the product to boost the
businesses brand image
Price:
- When setting price the business
should take into account the
following factors:
- Cost of making the product
- Competition
- Business objectives
- Branding of a product
- Target market
- Seasons
- The cost of making a product mustv
be less then the consumers are will
to pay for
- Busineses naturally wan to charge
mire for their products to achieve
greater profits per sold product
Price Elasticity of Demand:
- Price directly influences sales
revenue due to the impact on
quantity demanded
- Refers to the exrtent to which
quantity demanded chanes when the
price changes
BEA Study Notes
- If a product is elastic, uantity
demanded will charge proportiantly
more than the change in price
- If a product is inelastic, quantity
demanded will change proportiantly
less then the change in price
- A price increase for an inelastic
product will increase revenue, while
a price increase on an elastic
product will decrease revenue.
- A price decrease on inelastic
products will decrease revenue,
while a price decrease on an elastic
product will increase revenue.
Pricing Strategies:
- Competitive Pricing:
- Setting the price at the same
level as competition
- Cost plus pricing
- Involves adding a markup to
the total cost of producing
each product to arrive at a
selling price
- Penetration Pricing:
- Setting price lower than
competitors initially to gain
market share, and then
raising price later once
customer loyalty develops
and market share has been
gained
- Predatory Pricing:
- Where a business lowers its
prices below its cost for a
sustained period of tine to
drive competitors out of the
market
- It will raise prices in the
future after competition has
been eliminated or hurt
- Price Skimming:
- Setting the price high initially
when there is little or no
competition, to maximise
profit in the short run
- Once competition
establishes and
similar products
appear, price is
lowered to maintain
market share.
- Used by companies
that have first mover
advantage or the
initial patent of an
idea or invention.
- Enables businesses
to get higher prices
from consumers who
really desire the
product.
- Promotional Pricing:
- reducing the price of a
product in the short term to
attract more customers and
increase sales volumes
- Psychological Pricing:
- Using prices to influence
consumers perception of a
product and its value for
money
Promotion:
- Firms use it in a range of ways:
- Adevertising media
- Television, cinema,
display signs,
newspaper, radio,
internet, posters
- Personal selling
- Often expensive
products, trade fairs
- Public relation
- Sponsorships,
donations, community
events, charaties
- Customer service
BEA Study Notes

Advertising:
-