3. AOS 1 Flashcards
What is a Sole Trader?
A sole trader is a business structure that is owned and operated by one individual.
What is Unincorporated?
Unincorporated is a legal status of a business whereby the business owner and the business are viewed as the same legal entity.
What is Unlimited Liability?
Unlimited liability is the personal legal responsibility a business owner has for an unincorporated business’s debts.
What are the advantages of a Sole Trader business structure?
- Owner has full control.
- Low risk of disputes.
- Easy to set up/register.
- Fewer reporting requirements and minimal government regulation.
- Quick decision making.
- Inexpensive.
- Owner retains all profit.
What are the disadvantages of a Sole Trader business structure?
- Owners person assets are at risk and can be seized to pay debts.
- Difficult to take time off.
- Limited skills/knowledge.
- Owner dies = Business dies.
What is a Partnership?
A partnership is a business structure that is owned by 2-20 owners.
What is a Partnership Agreement?
A partnership agreement outlines the roles and expectations of the partners in a business.
What are the advantages of a Partnership business structure?
- Greater access to a range of knowledge ad skills.
- Shared financial and legal risks.
- Shared workload.
- Easy/simple to set up/register.
- Fewer reporting requirements and government regulations.
- Minimal start up costs.
What are the disadvantages of a Partnership business structure?
- Personal assets are at risk.
- Potential conflicts.
- Shared profits.
- Debt is held by everyone involved.
What is a Private Limited Company?
A private limited company is an incorporated business structure that has at least one director and a max of 50 shareholders.
What is ‘Incorporated’?
Incorporated is a legal status of a company whereby the company is established as a separate legal entity to the shareholder/s.
What are the advantages of a Private Limited Company?
- Limited liability.
- Variety of expertise.
- No risk in the removal of one director.
- Banks are inclined to provide loans.
What are the disadvantages of a Private Limited Company?
- Complex reporting requirements.
- Difficult to change structure once established.
- Complex to establish.
- Expensive to set up.
What is a Public Listed Company?
A public listed company is an incorporated business that has an unlimited number of shareholders and lists and sells its shares to the Australian Securities Exchange (ASX).
What are the advantages of a Public Listed Company?
- Limited liability.
- Greater expertise.
- No permission needed to trade/sell shares.
- Outlives directors.
- Greater access to capital (money).
What are the disadvantages of a Public Listed Company?
- Potential conflicts.
- Complex reporting requirements.
- Complex set up.
- Expensive to set up/operate.
What is a Social Enterprise?
A social enterprise is a type of business that aims to fulfill a community or environmental need by selling goods or services.
(At least 50% of profits go towards their social goal)
What are the advantages of a Social Enterprise?
- Community benefits.
- Positive reputation.
- Employee’s have meaningful work, feeling fulfilled.
- Easy to receive financial support.
What are the disadvantages of a Social Enterprise?
- Balance of finance and social goals may be difficult.
- Bank loans may be difficult to obtain as the goal of the business is not solely financial gain.
What is a Government Business Enterprise (GBE)?
A government business enterprise (GBE) is a business owned and operated by the government.
What is the Public Sector?
Public sector is the part of the economy that is operated by the government.
What are the advantages of a GBE?
- Helps community needs.
- Provides healthy competition to the public sector.
- There is some independence from the government.
- Provides services that the public sector would hesitate to invest in.
- Can rely on the government for initial investment.
What are the disadvantages of a GBE?
- Government/politicians can interfere with the business.
- Have to follow ‘red tap’, excessive rules and formalities.
- Possibly less productive than a private-sector business.
What are Business Objectives and what are they?
Business objectives are the goals a business intends to achieve.
- To increase market share.
- To fulfill a market need.
- To fulfill a social need.
- To improve efficiency.
- To improve effectiveness.
What is Efficiency?
Efficiency is how productively a business uses its resources when producing a good or service.
What is Effectiveness?
Effectiveness is the extent to which a business achieves its stated objectives.
What are Shareholders, who are they?
What do they want?
Shareholders are individuals, groups or organisations who have a vested interest in the performance and activities of a business.
- Owners: Earn profit.
- Managers: Achieve business objectives.
- Employees: Fair wages and a safe environment (stable employment).
- Customers: Quality (affordable) goods/services and customer service.
- Suppliers: Reliable relationship with businesses, profit and Revenue.
- Community: Employment opportunities, local economy.
What is an Autocratic management style?
An autocratic management style involves a manager making decisions and directing employees without any input from them.
What are the advantages of an Autocratic management style?
- Management makes all decisions.
- Employees have defined roles.
- Quick decision making.
- Processes are completed quickly.
What are the disadvantages of an Autocratic management style?
- Limited views, ideas and approaches.
- Restricted chance at promotion.
- Low employee motivation.
- Increased turnover.
What is a Persuasive management style?
A Persuasive management style involves a manager making decisions and communicating the reasons for those decisions to employees without their input.
What are the advantages of a Persuasive management style?
- May gain employee trust by explaining decisions.
- Employees have defined roles.
- Employees feel slightly more involved.
- Quick decision making, which increases productivity possibly increasing revenue.
What are the disadvantages of a Persuasive management style?
- Limited views, ideas and approaches.
- Restricted chance at promotion.
- Low employee motivation.
- Employees ay leave.
- Takes time to inform employees of decisions.
What is a Consultative management style?
A consultative management style involves a manager seeking input from employees on business decisions but making the final decision themselves.
What are the advantages of a Consultative management style?
- Multiple perspectives and suggestions = informed decision making.
- Employee motivation and increased sense of value.
- Quality of decisions may increase sales and profits.
What are the disadvantages of a Consultative management style?
- Employees may not understand the complexity of decisions and makes unuseful suggestions.
- Employee conflict may arise if their suggestions are ignored.
- Including employee perspectives takes up time.
What is a Participative management style?
A participative management style involves a manager sharing information with employees so that employees can participate in decision making.
What are the advantages of a Participative management style?
- Improved quality in decisions due to various perspectives.
- Relationships (employee and management) may improve due to two-way communication.
- Employee motivation and increased sense of value.
- Positive corporate culture.
- Employees can develop skills due to workplace opportunities.
- Quality decisions may increase sales and profit.
What are the disadvantages of a Participative management style?
- Multiple perspectives may end in compromise and decrease decision quality.
- Managers may lose control and hierarchical structure may be compromised.
- Perspectives and suggestions may collide causing conflict.
- Some employees prefer direction and may feel uncomfortable sharing ideas.
- Including employee perspectives takes up time.
What is a Laissez-Faire management style?
A laissez faire management style involves a manager communicating business objectives to employees an giving them freedom to make decisions independently.
What are the advantages of a Laissez-Faire management style?
- Fosters creativity and innovation, and broader decisions.
- Employees may feel more motivated and trusted.
- Collaborations and quality decisions may increase sales and profit.
What are the disadvantages of a Laissez-Faire management style?
- Management loses control of decisions.
- Business objectives may not be met as employees may lack direction.
- Employee discussion may be very time consuming.
- Employees may make poor decision s, costing time, resources and money.
In order, which management style has the least employee freedom to the most employee freedom, respectively.
Limited time for tasks, inexperienced, simple tasks, high management control.
- Autocratic
- Persuasive
- Consultative
- Participative
- Laissez-Faire
Extended time for tasks, highly experienced, complex tasks, low management control.
What are the six management skills?
- Planning
- Decision Making
- Communication
- Delegation
- Interpersonal
- Leadership
Which management styles require a high amount of planning and decision making skills?
- Autocratic
- Persuasive
- Consultative
Which management styles require a high amount of communication skills?
- Consultative
- Participative
- Laissez-Faire
Which management style requires the most delegation?
Laissez-Faire
Which management styles requires the most interpersonal skills?
Participative
Which management styles require a high amount of leadership skills?
- Participative
- Laissez-Faire
What is Corporate Culture?
Corporate culture is the shared values and beliefs of a business and its employees.
What is Official Corporate Culture?
Official corporate culture involves the shared views and values that a business aims to achieve, often outlined in a written format (such as mission statements, vision statements and policies).
What is Real Corporate Culture?
Real corporate culture involves the shared valued and beliefs that develop organically within a business, and are practiced on a daily basis. This can be achieved through diversity, rituals, celebrations, hiring criteria, etc.
