ABQ (2,3,4) Flashcards
What is an enterprise?
When an individual or group of people takes a risk & decides to start something new.
Example: starting a new hobby - guitar.
What is an entrepreneur?
Someone who spots a gap in the market, takes a risk & comes up with an idea that they can turn into a profitable business.
Example: Roisin Ahearn - Founder of Roisins Sweet Treats.
What are the reasons of becoming an entrepreneur?
• Be your own boss - makes all decisions.
• Unemployment - Out of necessity.
• More money - keep all profits.
• Challenge - enjoy a challenge & work hard.
What are the risks of becoming an entrepreneur?
• Low income - may take a while for profits to rise.
• High stress - total control & decision making.
• Long work hours - risk of burnout.
What are the characteristics of an entrepreneur?
• Decision making.
• Confidence.
• Risk taker.
• Determination.
• Self motivation.
• Creativity.
• Initiative.
• Flexibility.
What does decision making mean for an entrepreneur?
An entrepreneur must make quick & clear decisions, weighing pros & cons to choose the best option.
What does it mean to be a risk taker as an entrepreneur?
Entrepreneurs take financial & personal risks, ensuring they take calculated risks with a high chance of success.
Definition of confidence for an entrepreneur?
The ability to believe in oneself.
What does determination mean for an entrepreneur?
Entrepreneurs are highly determined, finding solutions to problems and not giving up easily.
What is self motivation in the context of entrepreneurship?
Entrepreneurs are motivated to succeed with personal drive & ambition to achieve their goals.
Why is creativity important for entrepreneurs?
Entrepreneurs must come up with unique ideas to stand out from competitors.
What are some skills of an entrepreneur?
• Risk management.
• Human relations.
• Time management.
• Decision making.
• Proactive.
What is intrapreneurship?
Employees of a business that act like entrepreneurs, coming up with new ideas & solving problems.
What are methods of encouraging intrapreneurship?
• Training on idea generation.
• Rewards for cost-reducing ideas.
• Teamwork for brainstorming.
• Providing resources to aid idea development.
What is management?
Involves getting people to work together for a common goal
What is leading in management?
Managers have a clear vision for the future which they share with employees. They encourage employees to work towards a common organizational goal.
What are the leadership styles?
Autocratic, Democratic, Laissez-faire.
What is autocratic leadership?
Leader makes all decisions & orders subordinates to follow instructions. Management makes all decisions without employee input.
Features of autocratic leadership?
Authority: Leader is in complete control of business. Decision making: Do not consult employees. Trust: Don’t trust employees. Motivation: Use threats of punishment.
Advantages of autocratic leadership?
Quick decisions, quick task completion, increase in productivity.
Disadvantages of autocratic leadership?
Management stress, decreased staff motivation, increase in conflict.
What is democratic leadership?
Encourages employees to participate in decision making. The leader has ultimate control but values employees’ ideas.
Features of democratic leadership?
Authority: Total control but listens to employees. Decision making: Employees have input. Trust: Trust employees. Motivation: Employees feel valued.
What is empowerment in management?
When a manager allows employees to make certain decisions on behalf of the business without needing to consult management.
Advantages of democratic leadership?
Decreased management stress, increased employee motivation, better decisions made.
Disadvantages of democratic leadership?
Slow decision making, employee frustration, management resentment.
What is laissez-faire leadership?
Management outlines business goals & trusts employees to decide on the best way to achieve these goals.
Features of laissez-faire leadership?
Authority: Managers set tasks but allow decisions. Decision making: Empower employees. Trust: Trust employees to work independently.
Advantages of laissez-faire leadership?
Employee motivation, improved skills/knowledge, intrapreneurship.
Disadvantages of laissez-faire leadership?
Reduced productivity, poor decisions, poor industrial relations.
What is delegation?
Involves the assignment of authority to another person. A manager delegates tasks to a subordinate.
Requirements for delegation?
Open communication, employee skills and experience, managerial control.
Advantages of delegation?
Decreased management stress, increased employee productivity, faster task completion.
Disadvantages of delegation?
Poor decision making, employee stress, business reputation.
Advantages of delegation for management?
Increased management time, increased quality of tasks, better work-life balance.
Factors that affect leadership style?
Nature of task, span of control, time, types of employees.
Benefits of leadership?
To achieve organizational goals, management time through delegation, increased employee motivation.
What is motivation?
Motivation is the willingness to do something, such as work, which encourages employees to achieve their goals.
What is Maslow’s Hierarchy of Needs?
Maslow’s Hierarchy of Needs consists of 5 categories of needs that every employee has. Once one need is achieved, the next one on the hierarchy motivates the employee.
What are physiological needs in Maslow’s hierarchy?
the need for food, shelter, and warmth.
Achieved by paying a fair day’s wage for a fair day’s work and providing bonus payments for reaching targets.
What are safety needs in Maslow’s hierarchy?
Safety needs involve job certainty and a safe work environment.
Achieved by offering long-term contracts, providing health insurance cover, and ensuring safety equipment is available.
What are social needs in Maslow’s hierarchy?
Social needs pertain to human interaction, such as friendship and love.
Achieved by enabling teamwork, organizing staff events, and offering flexitime arrangements.
What are esteem needs in Maslow’s hierarchy?
Esteem needs involve recognition for hard work, including status, respect, and appreciation.
Achieved by providing praise, job titles, and personal offices.
What are self-actualization needs in Maslow’s hierarchy?
Self-actualization needs are about achieving one’s full potential.
Achieved by providing training, development, promotions, and employee empowerment.
What are the positives of Maslow’s hierarchy of human needs?
Positives include focusing on changing needs, preparing for future promotions, and recognizing that motivation is not solely financial.
What are the negatives of Maslow’s hierarchy of human needs?
Negatives include the varying value of needs among employees, the assumption of uniform motivation, and the variability of self-actualization.
What is Theory X?
Theory X is a negative management approach where managers take an autocratic stance and do not trust employees.
What do Theory X managers believe?
Theory X managers believe employees dislike work, avoid responsibility, lack ambition, and are only motivated by money.
What are the implications of Theory X management?
Implications include a demotivated workforce, poor time management, and high staff turnover.
What is Theory Y?
Theory Y is a positive management approach where managers use a democratic or laissez-faire style and trust employees.
What do Theory Y managers believe?
Theory Y managers believe employees enjoy work, are ambitious, motivated by various rewards, and seek responsibility.
What are the implications of Theory Y management?
Implications include a motivated workforce, low labor costs, more management time, and high-quality goods and services.
What are the advantages of McGregor’s Theory X and Theory Y?
Advantages include increased employee motivation, decreased recruitment costs, and improved industrial relations.
What is the importance of motivation in the workplace?
Importance includes improved productivity, reduced staff turnover, less absenteeism, and decreased industrial conflict.
What is communication?
The exchange of information between two or more parties. The receiver processes the message and takes action.
What are the principles of effective communication?
- Appropriate language: No technical language to ensure understanding.
- Confidentiality: Correct method chosen for confidential information.
- Feedback: Provides clarification opportunities, reducing errors.
- Accuracy: All facts must be correct and up to date.
What is internal communication?
Occurs between two or more people in an organization, such as employee to employer.
Examples: Email, memos, notice board, intercom.
What is upward communication?
Employees report up the chain of demand, such as a marketing assistant to a marketing manager.
What is downward communication?
Information is sent down the chain of demand, such as a finance manager to an accountant.
What is horizontal communication?
Communication between people at the same level in an organization, such as employee to employee.
Example: Idea generation.
What is external communication?
Takes place between the business and external stakeholders, such as consumers and suppliers.
Examples: Telephone, website, video conferencing, letters.
What are meetings used for?
To exchange information between two or more people.
Example: Discussing topics with the purpose of making a decision.
Why are meetings held?
- Share information: e.g., sales targets between management and staff.
- Decision making: Different skills and experiences come together.
- Problem solving: Brainstorming solutions to organizational issues.
- Confidential: Face-to-face for sensitive issues.
What is a notice in the context of meetings?
An invitation for people to attend a meeting, informing them of the date, time, and venue.
What is an agenda?
A list of topics to be discussed at a meeting, drawn up by the secretary with assistance from the chairperson.
What are minutes?
A record of the meeting taken by the secretary, summarizing what was discussed, who was present, and decisions made.
What is the role of the chairperson?
Responsible for opening, running, and closing the meeting; elected by members.
Responsibilities include having a casting vote and working with the secretary.
What is a quorum?
The minimum number of members required for a business meeting to occur. If not reached, the meeting is postponed.
What are standing orders?
The rules of running a meeting, such as time limits for speaking.
What is a point of order?
When an attendee draws attention to a broken standing order.
What is a proxy?
A person who votes in accordance with the instructions given by someone who cannot attend.
What is the role of the secretary?
Responsible for organizing the meeting, including venue, time, notice, agenda, and minutes.
Assists the chairperson.
What is an AGM?
A meeting held once a year attended by directors and shareholders of a limited company. Shareholders elect the board of directors and appoint auditors.
What is an EGM?
A meeting of the board of directors and shareholders to discuss urgent issues, such as a takeover bid.
What is a board meeting?
Attended by the firm’s board of directors, usually held at regular intervals to discuss business performance and future plans.
What is a statutory meeting?
A meeting that must be held once in the life of a company, informing shareholders about business affairs.
What is an ad hoc meeting?
A meeting that takes place at short notice to discuss urgent matters that need resolution.
What is a general meeting?
Meetings held regularly between management and employees to discuss topics such as planning and marketing.
What is a memo?
A short written message used by a business for internal communication.
What factors should be considered when choosing a method of communication?
- Cost
- Message content
- Urgency
- Confidentiality
- Record
What are barriers to effective communication?
- Language: Jargon may not be understood.
- Lack of trust: Receiver may not believe the information.
- Information overload: Too much info can overwhelm the receiver.
- Timing: Insufficient time may be given to absorb information.
What are the advantages of effective communication?
- Reduced errors.
- Improved industrial relations: No confusion over work.
- Improved decision making.
What does ICT stand for?
ICT stands for Information & Communications Technology.
What is the use of ICT?
The use of computers & other electronic technology to store, transfer, access & manipulate data.
What are some forms of ICT used in a business?
Email, the internet, Electronic Data Interchange (EDI), cloud computing, video conferencing, social media.
What is the internet?
A global network of computers that enable people to share & transfer data, text, pictures & videos instantly, anywhere in the world.
What are the advantages of the internet?
Fast communication, reduces costs, improved advertising.
What are the disadvantages of the internet?
Risk of hacking, high cost, online customer reviews can damage business reputation.
What is email?
Enables people to send messages electronically around the world.
What is phishing?
An attempt to illegally gain access to passwords & usernames for credit cards & bank accounts with the intent to steal money.
What is EDI?
Electronic Data Interchange; it enables businesses to communicate info such as orders, invoices & payments electronically.
What are the advantages of EDI?
Reduces costs, reduces errors, quick method.
What are the disadvantages of EDI?
High investment, increased industrial relations, may not be compatible.
What is cloud computing?
The use of remote servers hosted on the internet to store, manage & process data.
What are the advantages of cloud computing?
Global access, low cost, data is secured.
What are the disadvantages of cloud computing?
High cost, risk of hacking, outages.
What is video conferencing?
Enables a meeting between geographically separated people using a network to transmit video/audio.
What are the advantages of video conferencing?
Saves costs, can have regular meetings, very quick to organise.
What are the disadvantages of video conferencing?
High cost of equipment, technical issues, time zones.
What is social media?
Computer programs & websites that enable people to create & share content such as messages, images, & videos.
What are the advantages of social media?
Large audience, low cost of advertising, customer loyalty.
What are the disadvantages of social media?
Can tarnish reputation, hacking, very time consuming.
What are the benefits of ICT for a business?
Faster communication, better teamwork, reduces costs, high staff morale.
What are the issues with ICT for a business?
High cost, security issues, increased industrial relations.
What does GDPR stand for?
GDPR stands for General Data Protection Regulation.
What are the rights of data subjects?
Right to access, copy of data, correction of data, erasure of data.
What are the responsibilities of data controllers?
Collect data, provide copies of data, keep data secure, report data breaches.
What does DPC stand for?
DPC stands for Data Protection Commission.
What are the functions of the DPC?
Monitors & enforces GDPR, investigates complaints, imposes fines, conducts data audits.
What is planning in management?
Planning occurs when management looks to the future and sets specific goals for the business. The manager must put strategies in place to achieve these goals. It reduces risk.
What does SMART stand for in planning?
All plans need to be SMART: Specific, Measurable, Achievable, Relevant, Timed.
What does ‘Specific’ mean in SMART planning?
‘Specific’ means the goal must clearly state its aim and everyone must understand it.
What does ‘Measurable’ mean in SMART planning?
‘Measurable’ means there should be evidence the goal has been achieved, such as measured in units, sales, or percentage.
What does ‘Achievable’ mean in SMART planning?
‘Achievable’ means the goal must be realistic and should challenge the business to achieve it.
What does ‘Relevant’ mean in SMART planning?
‘Relevant’ means the goal must be relevant to the overall business goals.
What does ‘Timed’ mean in SMART planning?
‘Timed’ means there must be a target date for when the goal is to be achieved.
What are the steps in the planning process?
- Access current situation (SWOT analysis). 2. Set a goal (SMART). 3. Create a plan (e.g., strategic plans). 4. Implement plan (communicate clearly). 5. Review the plan (regular meetings).
What is SWOT analysis?
SWOT analysis is an assessment tool used by management to evaluate a firm in terms of its strengths, weaknesses, opportunities, and threats.
What is a mission statement?
A mission statement is a short written statement that sets out the firm’s overall main goals and objectives for the lifetime of the business.
What are the types of plans in management?
Types of plans include strategic plans, tactical plans, operational plans, contingency plans, manpower plans, and financial plans.
What are strategic plans?
Strategic plans are long-term plans set by senior management that break down the firm’s mission statement into long-term business plans.
What are tactical plans?
Tactical plans are short-term plans set by middle management that break down strategic plans into shorter plans.
What are operational plans?
Operational plans are plans set by all management levels for the day-to-day running of the business.
What are contingency plans?
Contingency plans are backup plans used to deal with unforeseen events or emergencies.
What are manpower plans?
Manpower plans are set by HRM to ensure the business has the correct number of employees with the right skills and qualifications.
What is a financial plan?
A financial plan is prepared by the financial manager to predict the amount of income the business will receive and spend in a particular period.
How does planning impact stakeholders?
Planning impacts stakeholders by providing financial insights to investors, promotion eligibility to employees, and expansion opportunities to suppliers.
What are the benefits of planning?
Benefits of planning include benchmarking, easier finance acquisition, problem identification, risk reduction, and increased employee motivation.
What is organising in management?
Organising occurs when the manager coordinates all business resources, such as employees, money, and raw materials, into the most effective formation to achieve organisational goals.
What are the types of organisational structures?
The types of organisational structures include: Functional, Geographic, Matrix, and Product.
What is a functional organisational structure?
A functional organisational structure divides the firm into departments based on the functions they perform, such as Finance, Marketing, and Production.
What are the advantages of a functional organisational structure?
Advantages include increased employee motivation, expert knowledge, and a clear chain of command.
What are the disadvantages of a functional organisational structure?
Disadvantages include slower communication, lack of teamwork, and over-focusing on departmental goals.
What is a geographical organisational structure?
A geographical organisational structure divides the business into geographical areas based on region, country, or continent.
What are the advantages of a geographical organisational structure?
Advantages include clear pathways for promotion, increased sales, and increased consumer loyalty.
What are the disadvantages of a geographical organisational structure?
Disadvantages include increased costs, lack of communication, and management conflict.
What is a matrix organisational structure?
In a matrix organisational structure, employees work in various departments and come together in cross-functional teams to complete projects.
What are the advantages of a matrix structure?
Advantages include increased employee motivation, improved communication, and improved decision-making.
What are the disadvantages of a matrix structure?
Disadvantages include many managers across project teams, lack of productivity, and increased costs.
What is the chain of command?
The chain of command shows the line of authority and communication in the business, running from the top to the bottom of the organisation.
What is span of control?
Span of control relates to the number of employees who report directly to management.
What is a wide span of control?
A wide span of control occurs when a manager has a large number of employees reporting directly to them, typically used when employees require less supervision.
What are the effects of a wide span of control?
Effects include tarnished business reputation, low employee motivation, and management burnout.
What is a narrow span of control?
A narrow span of control occurs when a smaller number of employees report directly to a manager, used when employees require greater supervision.
What factors affect the span of control?
Factors include employee skills, nature of the task, and managerial workload.
What is delayering?
Delayering involves removing one or more layers of management in an organisation’s structure.
What are the advantages of delayering?
Advantages include faster communication and a decrease in costs.
What are the disadvantages of delayering?
Disadvantages include a decrease in employee motivation and an increase in management stress.
What is controlling in management?
A management activity that measures how well an organisation achieves the goals & objectives that it has set. It involves setting standards, measuring the actual performance against the standards set and taking corrective action if needed.
What are the steps in controlling?
• Set standards
• Measure performance
• Compare standards against performance.
• Take corrective action.
What are the 4 types of management control?
• Stock control
• Quality control
• Credit control
• Financial control.
What is stock control?
A management activity that aims to keep optimum stock levels so that the organisation doesn’t have too much or too little stock.
What are the types of stock in a business?
• Raw materials: Materials used to make products, EG: Timber for tables.
• Work in progress: Goods that have been partially completed, EG: Timber that is cut with intent of making table.
• Finished goods: Goods that are completed in manufacturing but not sold to customers, EG: Tables ready for sale.
• Merchandise: Goods bought by a firm, to be sold to consumers, EG: Table.
What is the optimum stock level?
The ideal level of stock that a business should have of a particular item, EG: Ice cream. Varies from time to time, EG: a shop will have more ice cream stock in summer than winter.
What is the maximum stock level?
The largest amount of stock that can be held in a business at once. Depends on the availability of storage in the firm.
What is the minimum level of stock?
The lowest amount of stock that should be held.
What is the re-order level?
The level of stock in which a new order of stock should be placed.
What is lead time?
The time from when an order is placed to the stock arriving in the stockroom.
What are the methods of managing stock levels?
• Manual
• EDI
• JIT.
What is a manual stock take?
Employees physically count and record all stock in the business. Stock can be recorded on computer to identify differences, EG: Due to theft.
What is EDI?
Electronic Data Interchange - Computer - computer communication. Allows info to be exchanged between businesses without the need of human interaction. EG: Orders, invoices & payments.
What are the benefits of EDI to stock control?
• Quick to reorder - Automatically orders when low.
• More efficient - Employees don’t have to manually take it, so saves time & money - spent elsewhere.
• Short lead times: Easier to track stock in real time.
• Shorter processing times: allows business to carry less stock at one time.
What is JIT?
Just In Time - Business holds minimum amount of raw materials & receives regular deliveries from suppliers. This ensures they never run out of stock. All goods are completed just in time for delivery to customers. Reduces costs - rent & insurance.
What are the risks of having too much stock?
• Risk of theft
• Lower profits - High cost of storage - rent warehouse
• Risk of not selling - may become obsolete, eg: new, better tech comes out.
• Lack of money - money may be needed elsewhere and not tied up in stock.
What are the consequences of having too little stock?
• Loss of sales - consumers go elsewhere for goods.
• Loss of economies of scale - as not buying in large amounts, no discounts.
• High cost: Firm has to pay insurance & storage costs even if they run out of stock.
• Production delays: Lack of raw materials to produce goods.
What are economies of scale?
Business benefits when buying stock in large quantities/bulk from suppliers as they may offer a discount. EG: Buy 100 bags of flour but charged the price of 90. Reduces business costs.
What is quality control?
A set of procedures used to monitor work completed to ensure it meets the standards set. Aims to ensure that goods meet legal requirements EG - Sale of goods & supply of services act 1980.
What is the purpose of quality control?
• Detect issues - Poor quality
• Prevent issues arising - Prevent quality issues…TQM.
• Correct issues - Corrective action, new supplier.
• Improve quality - Via TQM.
How does a business achieve quality control?
• Inspections
• Quality circles
• Quality awards
• Total quality management (TQM).
What are inspections in quality control?
A trained inspector carries out tests on finished goods, either by testing them all or just a sample.
• Random sampling includes picking a number of items at random, EG: 10/500, and testing them, if sample passes the entire batch passes but if it fails, the entire batch is scrapped.
What are quality circles?
A group of employees volunteer to form a quality circle. The group meets regularly to identify & discuss quality issues at the firm. They then come up with solutions to resolve quality concerns for management to accept or reject.
What are the benefits of quality circles?
• Increased employee motivation.
• Reduced costs - not selling products that will be returned.
• Improve consumer satisfaction - good quality products.
What are quality awards?
Awards given by independent organisations when a business achieves an agreed quality standard. Encourages firms to aim for high quality standards across the business. EG: Bord bia quality mark & the ISO 9000 series.
What is the Q mark?
An Irish Quality mark awarded by EIQA (Excellence Ireland Quality Association) to businesses who continuously strive to improve quality. They are audited before awarded the mark.
What is the ISO 9000 series?
An international quality award system. Firms must be of very high standard to achieve this & regular spot checks are done to ensure utmost quality. EG: Bord gais & ESB international have received them.
What are the benefits of quality awards?
• Consumer trust - builds consumer loyalty.
• Use of marketing strategy.
• Can charge premium pricing.
What is TQM?
Total quality management - A system of quality management where the whole business seeks to improve quality in all areas of the firm. Employees work hard to achieve it. It involves making improvements at each stage of the production process - distribution.
What are the benefits of quality control?
• Increased consumer satisfaction - Quality Marks - loyalty + trust with consumers.
• Reduced costs - less wasted produce.
• Can charge premium price.
• Increased employee motivation.
• Marketing tactic - Quality awards, EG: Bord bia.
What is credit control?
Ensures customers who use credit facilities pay their bills in full and on time. Helps improve cash flow for business as it gives more certainty on when cash will be received.
What are bad debts?
When a debtor fails to pay the amount owed for the goods or services. EG: Due to financial difficulty.
What are ways to minimise bad debts?
• Set credit limits: EG: per customer (max 500) or for overall business (500,000 max a year).
• Check customers credit rating: Before offering, check credit rating via subs Gazette or bank reference to ensure money can be repaid.
• Adapt an effective debt collection procedure: EG: Sending reminders, offering discounts for early repayments & charging interest on late payments.
What is financial control?
Aims to ensure the business is profitable and liquid. If business does not control finances it will become unsustainable and may lead to closure.
What are the methods of financial control?
• Cashflow forecast
• Ratio analysis
• Budget allocation - sets budgets for each department = control spending.
What are the functions of an HR manager?
Performance appraisal, Provide rewards, HR planning, Provide training & development, Employer-employee relationships, Recruitment & selection.
What is an HR plan?
Set by HRM. Ensures that the business has the correct number of employees in the firm, with the correct skills & qualifications to fill all roles in the firm.
What are the steps in HR planning?
Review current staff, Forecast HR needs, Estimate labour turnover, Create a HR plan, Review the plan.
What are the benefits of HR planning?
Identify training needs, Ensures enough staff, Identifies labour turnover.
What is recruitment?
Involves attracting suitable candidates with the relevant skills, qualifications & experience to apply to the role.
What does the selection process involve?
Deciding which applicant is the most suitable for the job vacancy, screening applicants, conducting selection tests, interviews & making job offers.
What is an interview in the context of recruitment?
A selection technique used to identify the candidate that most fits the job description and specification.
What is a panel interview?
A selection technique where the employee is interviewed by a group of interviewers rather than one to reduce bias.
What is a probationary period?
A trial period during which the employer and the new employee can decide whether or not they are a suitable fit for each other.
What is an equal opportunities employer?
An employer that respects the Employment Equality Acts 1998-2015 when recruiting, selecting, promoting and training employees.
What is internal recruitment?
Filling job vacancies with existing employees in the workplace, can be achieved by promotion or redeployment.
What is external recruitment?
Employers use the external labour market to find new employees to fill job vacancies.
What are the benefits of external recruitment?
Find best candidate from a wider pool, Easier to introduce change, Improve current staff.
What are the disadvantages of external recruitment?
Low employee motivation, Expensive, Slow to adapt.
What is training?
A process that ensures employees have the skills, knowledge & attitudes needed to carry out their jobs efficiently.
What are the two types of training?
On the Job and Off the Job.
What is induction training?
Completed at the start of employment to help employees become familiar with the business, employees, culture & procedures.
What is on the job training?
Training that takes place in the workplace, including work shadowing, demonstration, and job rotation.
What are the advantages of on the job training?
Reduces costs, Increases productivity, Faster integration.
What are the disadvantages of on the job training?
Increased errors, Quality of training depends on the trainer, Increased staff resentment.
What is off the job training?
Training that takes place outside the workplace, including workshops, lectures, and courses.
What are the advantages of off the job training?
High quality training, Lower employee absenteeism, Exchange ideas.
What are the disadvantages of off the job training?
High cost, Reduced productivity, Lack of relevance.
What is development in HR?
A long term approach used for existing employees to encourage them to take on new challenges & focus on career development.
What are the advantages of training & development?
Increased productivity/motivation, Reduced industrial relations, Future managers, Reputation.
What is time rate in financial rewards?
Employees receive a fixed amount of pay per hour for an agreed number of hours per week.
What is piece rate in financial rewards?
Employee is paid per item produced or job completed, motivating them to work hard.
What is salary in financial rewards?
Employees are paid a fixed sum regardless of the number of hours worked.
What is commission in financial rewards?
Employees earn a percentage of total sales achieved.
What are bonus payments?
An extra payment received by the employee for reaching a target or at specific times of the year.
What is employees profit sharing?
A percentage of the firm’s annual sales shared amongst employees.
What is an employee share purchase plan?
Employees can buy shares in a business, often at a discounted price.
What is benefit in kind?
Employees receive products, services or discounts instead of money as part of their income.
What is job enlargement?
Employees are given additional duties on top of their normal role in the firm.
What is job enrichment?
Employees are given more responsibilities and are able to make decisions on behalf of the business.
What is job sharing?
Employees share a position in the firm, which can work in two ways: one week on, one week off or working alternate days.
What are extra holidays in non-financial rewards?
Employees are given more annual leave, such as an extra 5 days per year.
What is flexitime?
Employees choose their own working hours within an agreed time frame.
What are the advantages of rewards?
Low staff turnover, Increased motivation, High reputation, Appealing for new candidates.
What is performance appraisal?
A review of an employee’s performance carried out by the HR manager.
What are the methods of performance appraisal?
Set performance targets, Measure employee’s performance, Performance appraisal meeting.
What are the benefits of performance appraisal?
Identify training needs, Identify promotion candidates, Improves employee motivation, Indicate rewards, Reduced industrial relations.
How to achieve positive employer & employee relationships?
Honest communication, Provide training, Health & safety, Grievance procedure, Social activities.
Reasons for change in a business
Tech, Employees, Consumers, Legislation, Competitors
Impact of technology on businesses
E-commerce & social media allow businesses to promote & engage with customers worldwide. Increased efficiency in the firm, with systems such as EDI - faster.
Employee needs for change
Employees may require flexibility, e.g., Flexitime or working from home. More varied financial & non-financial rewards.
Changes in consumer tastes
More emphasis on healthy, low-fat food and demand for greater choice of goods & services.
Growth in demand for products
Growth in demand for environmentally sustainable products.
Legislation impact on businesses
Laws such as sugar tax can increase prices for consumers & deter them from buying, leading to more sugar-free drinks.
Competitors’ influence on business
Monitor competitors’ new products, pricing strategies, and marketing tactics.
Reasons employees may resist change
Fear of failure, fear of redundancy, loss of control, low effort, and lack of rewards.
Methods to overcome resistance to change
Open communication, provide rewards, provide training, and involve employees.
Facilitator and controller in management
Facilitator = Theory Y; Controller = Theory X.
Employee empowerment
Management gives employees independence & responsibility for decision making.
Methods of empowering employees
Provide training, provide rewards, trust employees, and encourage teamwork.
Benefits of employee empowerment
Faster decision making, increased employee motivation, and increased management time.
Drawbacks of employee empowerment
Increased errors, reduced control, risk of tarnishing reputation, and low employee motivation.
Definition of teamwork
A group of people who work together to achieve a common goal.
Stages in the formation of a team
Forming, Storming, Norming, Performing.
Forming stage of a team
Team members come together for the first time; the team leader builds relationships and outlines the overall goal.
Storming stage of a team
Conflict may arise as members have different opinions; the team leader resolves conflicts.
Norming stage of a team
Greater trust between team members and ground rules are set.
Performing stage of a team
The team focuses on achieving the goal, trusting each other and solving problems effectively.
Benefits of teamwork
Increased employee motivation, better decision making, faster task completion, and improved communication.
What is TQM?
Total Quality Management - a system where the whole business seeks to improve quality in all areas.
Benefits of TQM
Increased consumer satisfaction, lower costs, high employee motivation, and increased sales.
Drawbacks of TQM
Slow process, high cost, and high staff stress.
Impact of technology on a business
New products, e-commerce, improved decision making, and improved customer service.
Types of technology in business
CAD, CAM, CIM, and Voice recognition software.
What is CAD?
Computer-aided design - using computer programs to create models of future products.
What is CAM?
Computer-aided manufacturing - software used to control manufacturing machinery.
What is CIM?
Computer-integrated manufacturing - using computers to control the entire production process.
What is voice recognition software?
Software that allows control of devices by speaking instead of using a keyboard or mouse.
What is Risk Management?
A planned approach used by businesses & households to deal with risks that can affect them. It involves identifying all possible risks and calculating the cost of preventing these risks.
What are ways to minimise risks?
- Install security cameras: Can prevent security risks, e.g., theft.
- Provide training: Make everyone aware of health & safety procedures, e.g., where to go in a fire.
- Appoint a health & safety officer: Report safety issues & conduct regular safety inspections.
- Get insurance: Take out insurance cover to transfer the risk to an insurer firm in return for paying a premium.
What is insurance?
Protection against a possible future financial loss.
What is the importance of insurance?
- Saves money - Small premium & large payouts.
- Legal requirement: e.g., motor insurance - by law.
- Risk management - Reduces risks as they must carry out risk assessment before taking out insurance.
What is a proposal form?
The form you fill in when applying for insurance. You must reveal all material facts.
What is a claims form?
The form you fill in when making a claim, e.g., when fire has occurred in building. Must reveal all material facts.
What is an insurance policy?
The document you receive when you buy insurance. It is a legally binding contract and must be in writing.
What is a renewal notice?
This document is sent out before the policy is due for renewal. It reminds the insured that their policy is due for renewal and the premium for renewing the policy.
What is a cover note?
Temporary document that proves you are insured until full policy document is sent out.
Who is the insured?
The household/business that takes out insurance policy.
Who is the insurer?
The insurance firm in which the insured has taken out their policy.
What is a premium?
The fee paid for insurance. It consists of basic premium & loadings/discounts.
What is loading in insurance?
An additional charge on top of basic premium due to increased risk.
What is a no claims bonus?
A reduction in the premium if the person has not claimed on their insurance since the last renewal date.
What are days of grace?
A short period of time given to the insured to pay the insurance premium.
What is the average clause?
This applies in cases of under-insurance and is closely linked with indemnity. It is used to calculate compensation when an item has been insured for less than its actual value.
What is an actuary?
Calculates insurance premium to be paid by insured.
What is an assessor?
Calculates the amount of compensation to be paid.
What is a loss adjuster?
When a loss occurs, the amount of compensation to be paid is decided by the insurance firm.
What is an insurance agent?
A person/business that sells insurance on behalf of one insurance business.
What is an insurance broker?
A person or business who sells insurance on behalf of a number of different insurance companies.
What are the 5 principles of insurance?
- Insurable interest
- Utmost good faith
- Indemnity
- Contribution
- Subrogation
What is insurable interest?
The insured person must own the item for it to be insured. They must benefit from its existence & suffer financially from its loss.
What is utmost good faith?
When completing proposal & claims forms, you must be truthful & reveal all material facts.
What are material facts?
Includes things that may not be on the form but you must disclose as they can affect premium & compensation.
What is indemnity?
You cannot profit from insurance. The insurer will pay compensation but only of the value suffered.
What is the formula for average clause?
Amount insured x claim / Real value of item = Compensation.
What is contribution in insurance?
Used when a household/business insures an item with 2 or more insurance firms.
What is subrogation?
States that once you have received compensation you give up the right to make any further claims.
What factors does insurance premium depend on?
- RISK: The more likely, the higher the premium.
- CLAIMS: The amount of claims made to insurer in the past will affect the premium.
- VALUE: High value = high premium.
- LOADINGS: Increase cost of premium due to higher risk.
- DISCOUNTS: e.g., installing smoke detectors can help reduce premium.
What are the 3 forms of life assurance?
- Whole life policy
- Term life policy
- Endowment policy
What is a whole life policy?
A person pays a premium for the duration of their life. When they die, the insurance firm pays out the named person.
What is a term life policy?
A person takes out this policy for a certain length of time. The policy only pays out when the person dies within the timeframe of the policy.
What is an endowment policy?
Policy will pay out when (a) a person reaches maturity, or (b) when they die. Whichever is first.
What insurance do both households & businesses take out?
- PRSI
- Motor
- Contents
- Property/premise (Home insurance)
What insurance policies are for households?
- Health insurance
- Mortgage protection
- Income protection
- Personal accident insurance
- Travel
- Life assurance
What is health insurance?
Protects people against costs of hospital fees & day-to-day medical expenses.
What is mortgage protection?
Covers cost of mortgage repayments if households cannot meet payments.
What is income protection?
Covers the financial loss to a household if the main earner is unable to work for a short time or permanently.
What is personal accident insurance?
Covers loss if the insured person has a serious accident.
What is travel insurance?
Covers risks such as loss of baggage & delayed flights.
What is life assurance?
Pays compensation to a named person when the person who took out the policy dies.
What insurance policies are for businesses?
- Product liability
- Public liability
- Employer liability
- Key personnel
- Fidelity guarantee
- Consequential loss
- Cash in transit
- Plate glass insurance
What is product liability?
Covers a business against claims made against its products.
What is public liability?
Covers a business against claims made from the public who were injured at your premise.
What is employer liability?
Covers claims made by employees who were injured, accident or ill due to work.
What is key personnel insurance?
Covers the loss a business may suffer when a key employee leaves the business.
What is fidelity guarantee?
Covers a business against loss suffered due to fraudulent activities.
What is consequential loss insurance?
Covers a business against a loss that can arise as a result of another risk happening.
What is cash in transit insurance?
Covers theft of cash while in transit between the business and bank.
What is plate glass insurance?
Covers a business against large shop windows being broken or damaged.
What is premise/building insurance?
This provides the business with protection against loss suffered due to damage of structure of building.
What is contents insurance?
This covers a business for losses suffered due to the theft/damage to items inside a building.
Reasons for taxation
- Government revenue - Run country.
- Redistribution of wealth - PAYE system collects money & uses it for social welfare.
- Discourage consumption - High taxes on unhealthy products, Cigarettes.
What is direct taxation?
Taxes imposed on the income earned by household/business & paid directly to the government.
Examples: PAYE & Corporation Tax.
What is indirect taxation?
Taxes based on what you spend rather than what you earn.
Examples: VAT & Import duties.
What is VAT?
A tax on goods & services paid by both households & businesses. Some goods & services are exempt from VAT & % can vary. Standard rate = 23%.
Example: 0% on food staples & medicine.
What is customs duty?
A tax levied on goods imported to Ireland from countries outside of the EU, making it more expensive to import goods & encouraging citizens to buy Irish/EU.
What is CGT?
Capital gains tax on the gain made when a household/business sells an asset, e.g., land/shares. The capital gain is the difference between the selling price & original price.
Current rate = 33%.
What is excise duty?
A tax on certain goods like alcohol and tobacco, used by the government to discourage consumption. Different rates apply to different goods.
What is carbon tax?
A tax levied on products that emit carbon into the atmosphere, e.g., heating oil, coal. Used to discourage consumption as it is harmful & funds climate programmes.
What is PRSI?
Pay Related Social Insurance, a compulsory deduction taken from gross income. Both employee & employer share the cost of PRSI, used to fund Jobseeker’s benefit & maternity benefit.
Need 39 PRSI to claim these benefits.
What is PAYE?
Pay As You Earn, a direct tax that is compulsory. Under PAYE system, the employer must collect it & send directly to revenue commissioners. It is used to run the country.
Charged at 2 rates: standard (20%) + higher (40%).
Features of the PAYE tax system
- Progressive - imposes higher rates on higher incomes.
- Direct - levied on income & paid directly to revenue commissioners.
What is USC?
Universal social charge, a compulsory deduction taken from gross income & sent directly to revenue commissioners. All employees earning over 12,000 pay it.
What is self-assessment tax?
A tax paid by self-employed people on their business profits & other income earned. By 31st of October each year, an estimate of tax due for the current year must be paid.
What is DIRT?
Deposit interest retention tax, a tax on interest earned on savings in deposit accounts, e.g., banks & credit unions. Financial institution is responsible for deducting it.
What is LPT?
Local property tax, based on the value of residential property, e.g., main home/house rented to people. It is paid by households each year to local authority.
What is CAT?
Capital acquisitions tax, a tax on gifts & inheritance. The amount paid is based on the relationship with the person giving & receiving the money.
Example: 0% for spouse. Rate of 33%.
What taxes are only paid by businesses?
- Corporation tax.
- Commercial rates.
What is corporation tax?
A tax on a firm’s annual profits. Standard rate is 12.5%, one of the lowest in the EU, attracting FDI (MNCs) to set up here.
Example: Google.
What are commercial rates?
Taxes levied by local authorities on property used for commercial purposes to help finance local government services.
Example: Street cleaning.
What is a progressive tax?
Taxes that impose higher rates on those who earn higher incomes.
Example: PAYE.
What is a regressive tax?
The amount of tax is levied uniformly, not based on income, resulting in a larger % of income from low earners than high earners.
Example: VAT.
What are tax credits?
Reduces the amount of PAYE income tax a person has to pay. They are non-refundable.
Example: Single person tax credit & employee tax credit.
What is tax evasion?
Households & businesses avoid paying the correct amount of tax by under-declaring income/over-claiming tax credits. This is illegal & has high penalties awarded by revenue commission.
What is tax avoidance?
Reduces the tax liability through legal methods, achieved by minimizing income & maximizing tax credits.
What is depreciation of assets?
The loss of value of an asset over its economic life.
What is a cashflow forecast?
A financial plan that shows the business how much money it expects to receive (Receipts) and spend (Payments) over a specific period of time.
What are the three different outcomes of a cashflow forecast?
- Surplus - More cash coming into business than going out.
- Deficit - More cash going out of the business than coming in.
- A balanced cash flow - The same amount coming in & out.
What is liquidity?
The ability of a business to pay debts as they fall due.
What is working capital?
The level of cash available for the day to day running of the business. Used to pay current liabilities such as: Bank overdrafts.
What is the purpose of a cashflow forecast?
- To identify times of surplus/deficit.
- Applying for finance: Provided as part of a business plan given to investors (Banks) when applying for loans. Proves business can/cannot repay.
- Identify bad debts: When someone who purchased goods on credit does not pay back amount owed. This can reduce business profits.
- Benchmarking: Can use cash flow forecast to compare their expected spending to their actual spending. If it’s high they can take action, EG: Reduce payments.
How can a business deal with a cash flow deficit?
- Increase selling price.
- Adjust payments: Cut employees wages due to rising costs/source cheaper materials.
- Obtain finance: EG: Bank Overdraft to cover deficit.
Define short term finance.
Short term finance is finance that is available for a period up to one year. It should be repaid within 12 months. Used to finance short term assets, EG: Stock.
What are short term sources of finance?
- Bank overdraft.
- Credit card.
- Trade credit.
- Factoring.
- Accrued expenses.
What is a bank overdraft?
A facility where a bank allows its customers who have a current account withdraw more money than they have in their account.
Used by businesses to pay wages.
What are the advantages of a bank overdraft?
- Low interest: Interest is only paid on the amount used.
- No security.
- Fast.
What are the disadvantages of a bank overdraft?
- High interest rates: Interest on the amount used can be high, EG: 8-14%.
- Bad penalties: If household or business exceeds agreed limit/fails to pay penalties are applied.
- Damage credit rating: If not paid back on time.
What are accrued expenses?
Short term source of finance. Involves delaying payments until the last moment.
EG: Used to pay bills.
What is factoring?
Occurs in a business only. Business sells its debts to a factoring firm (Debt collection business) at a discounted price. The factoring firm then collects the amounts owed directly from debtors and makes a profit.
What are the advantages of factoring?
- No security.
- Immediate.
- No loss of control: No impact on ownership.
What are the disadvantages of factoring?
- High fees.
- Risk of bad debts: If debts are factored with recourse, the business is still exposed to risk of bad debts.
- Business relationship.
What is trade credit?
When a business receives goods & services from suppliers and pays by an agreed date in the future. The amount of credit available depends on the credit worthiness of the customer.
What is medium term finance?
Refers to all sources of finance of one to five years in duration. The finance is used mainly to pay for cars and machines.
What are the sources of medium term finance?
- Hire purchase.
- Medium term loan.
- Leasing.
What is hire purchase?
A business may not be able to afford full purchase price of item upfront. For some purchases, EG: Cars & machinery, the purchaser can enter into a HP agreement to enable them to buy the item and pay installments.
What are the advantages of hire purchase?
- Immediate use: Item can be used once a deposit is paid.
- No security.
- Fast.
What are the disadvantages of hire purchase?
- Delayed ownership: The buyer does not own the item until the final payment is made.
- High rate of interest.
- Risk of repossession: If payments not made.
What is a medium term loan?
The borrower takes out a loan from a financial institution (Bank) and repays it within 5 years, with interest paid. Interest rates may be fixed or variable.
What is needed for a medium term loan?
- Business details: Nature of business, EG: Marketing firm.
- Loan details: Purpose of loan, EG: Re-do offices & amount needed.
- Business reputation: EG: Credit rating.
- Business plan: Including cash flow forecast & a balance sheet to ensure business can repay loan.
What is leasing?
A business (Lessee) enters a lease agreement with the owner of the asset (Lessor). The lessee makes regular repayments to the lessor for an agreed period of time while they use their asset. EG: Machinery.
What are the advantages of leasing?
- Immediate use.
- Access to up to date items: EG: best machines.
- No security needed.
What are the disadvantages of leasing?
- Ownership: Will never own item.
- High cost: Can be more expensive to lease an item if over long time.
- Risk of repossession: If payments are not made.
What is long term finance?
This is finance to cover long term business expenses & is paid back over a term greater than 5yrs.
What are the sources of long term finance?
- Retained earnings.
- Equity capital.
- Debt capital.
- Grants.
- Debenture.
- Sale & leaseback.
What are retained earnings?
Profits saved by a business over time. The firm can reinvest this money back into the business, EG: To expand.
What are the advantages of retained earnings?
- Large amount of finance: If business is successful and profitable.
- No financial cost: Using own money.
- No security required.
What are the disadvantages of retained earnings?
Long saving period: Can take a long time to build up retained earnings.
What is equity capital?
A business sells shares to investors. The investors become shareholders & have a say in the running of the business & are entitled to dividends (Share of the profits).
What are the advantages of equity capital?
- No security.
- No financial cost.
- Repayment: Does not have to be repaid until firm ceases trading.
What are the disadvantages of equity capital?
- Loss of control: More shareholders.
- Shareholders may sell shares: If business does not pay sufficient dividends the shareholders may sell their shares. This can result in a fall in share price & potential takeover.
- Shareholder disputes: EG: over dividends & can lead to a tarnished business reputation.
What is debt capital?
Long term source of finance. Money loaned to a business with the understanding that the money will be repaid, with interest, in a certain time period. No effect on ownership.
What are grants?
A grant is money given to a business by a government agency, EG: LEO or enterprise Ireland. It does not have to be repaid as long as it’s used for the purpose intended.
What are the advantages of grants?
- No repayment.
- High amounts available: EG: Business start-up grants.
- No security.
What are the disadvantages of grants?
- Slow application.
- Partial funding: May not cover full cost and you bear the rest.
- Criteria of grant: Grants must be used for specific reasons.
What is a debenture?
A long term finance, similar to a mortgage. It is obtained using a firm’s assets as security, EG: Deeds of property. The business makes interest-only payments on debenture & repays full amount borrowed in one lump sum at a later date.
What are the advantages of a debenture?
- Fixed interest payments.
- No loss of control: Firm has no say in business operation.
- Amounts available: High amounts.
What are the disadvantages of a debenture?
- Security required.
- Risk of losing asset.
- Risk of business failure.
