AOS 1 Flashcards
Define sole trader
a business owned and operated by one person
sole trader 3 advantages:
- Low cost/ simple to start up/ operate,
- complete control and 100% of profits
- Lower tax regulations
Define partnership
a business owned by two or more people (generally a maximum of 20)
sole trader 4 disadvantages:
- Unlimited liability
- requires owner to operate
- difficult to get access to finances
- need to perform variety of tasks
partnership 5 advantages:
- Low cost to start/ operate,
- shared workload,
- greater access to resources,
- only tax on business profit,
- minimal government regulations
partnership 4 disadvantages:
- Unlimited liability
- liability for all debts (including partners)
- shared profits/ decision making
- difficult to find a suitable partner
Define private limited company
an incorporated business that has a minimum of one shareholder and a maximum of 50 non-employee shareholders, and whose shares are offered only to those people whom the business wishes to have as part owners
private limited company 5 advantages:
- Limited liability
- access to capital
- ability for growth
- easy to transfer ownership
- company tax rate is lower than personal income tax rate
private limited company 4 disadvantages:
- Costly to form
- company taxed on profits and dividends
- requirements to produce reports for audits
- rapid growth may lead to failure
Define public listed company
an incorporated business with a minimum of one shareholder (and no maximum), and whose shares are openly traded on the Australian Securities Exchange
public listed company 6 advantages:
- Limited liability
- access to capital
- ability for growth
- easy to transfer ownership
- company tax rate is lower than personal income tax rate
- greater access to capital through share selling
public listed company 5 disadvantages:
- Costly to form
- company taxed on profits and dividends
- requirements to produce reports for audits
- rapid growth may lead to failure
- stricter law and regulations
social enterprise
a business with the objective of fulfilling a social need
government business enterprise (GBE)
a type of business that is government owned and operated
social enterprise 2 advantages:
- Access to new markets (meet needs commercial businesses don’t)
- meeting social need has positive influence on market share/ revenue
social enterprise 2 disadvantages:
- Difficult to get capital to start/ operate
- difficult to reach financial and social objectives
government business enterprise (GBE) 2 advantages:
- Access to areas commercial businesses wont
- Can operate with independence from government
government business enterprise (GBE) 3 disadvantages:
- Political interference
- management may be less effective
- less accountability/ productivity
Define Make a profit
what is left after business expenses have been deducted from money earned from sales (revenue)
Define Increase market share
increase in the proportion of total sales in a given market that is controlled or held by a business, calculated for a specific period of time
Define Improve efficiency
how well a business uses resources to achieve objectives
Define Improve effectiveness
the degree to which a business has achieved its stated objectives
Define Fulfil a market need:
Meeting an unmet, gap in the market
Define Fulfil a social need:
Producing a good or service with the goal of helping and making society better
Define Meet shareholder expectations:
Meeting investor goals (generally profit)
Stakeholders
groups and individuals who interact with the business and have a vested interest in its activities
Define Owners
The people who run a business
Owners 2 Interests:
- Want the business to make a profit (may depend on business success for income or wealth)
- want the business to conduct in a socially responsible way
Define Employees
Employees 4 Interests:
- To be paid fairly
- trained properly
- treated ethically
- have job security in return for their contribution to the business
Define Customers
the people who purchase goods and services from the business, expecting high quality at competitive prices
Customers 2 Interests:
- Expect high quality products at reasonable prices
- To receive high levels of service, as well as the business acting in a socially responsible manner
Define Suppliers
businesses or individuals who supply materials and other resources to a business so that it can conduct its operations
Suppliers 3 Interests:
- Provide quality materials of the right quantities
- that are delivered on time
- To be paid promptly by the businesses
Define Manager
the person who has the responsibility for successfully achieving the objectives of the business
Manager 2 Interests:
- Want the business to perform financially and in return be paid fairly
- need to satisfy stakeholder expectations and make sure business position is secure
Define General community
People surrounding a business and its environment
General community 2 Interests:
- Expect the business will give back to society from profits
- expect the business to show concern for the environment
Employees, owners, and shareholders Conflict
- Employees want safe working condition and fair wages, however this may reduce business profits and shareholder dividends
Management and customer Conflict:
- Customers want reasonable priced products, however management may want to increase product price to maintain profits/ high dividends to satisfy shareholders
Management and general community Conflict:
- Management may cut costs by neglecting maintenance, which could put members of community in danger
Suppliers and general community Conflict:
- Suppliers expect to be paid fairly and on time but may use unethical and socially irresponsible practices, which can upset the community
Management and suppliers Conflict:
- Management wants to reduce costs to improve profit, but suppliers using ethical materials may require higher prices to cover costs
Define autocratic management style
where the manager tells staff what decisions have been made
autocratic management style 4 Features:
- Full control of decisions and work method
- frequently checks employee performance
- limits employee knowledge, doesn’t listen to employee feedback
- motivates through disciplinary actions
autocratic management style 3 advantages:
- Direction and procedure are clear
- employees roles and expectations are clear
- efficiency as there is no discussion
autocratic management style 4 disadvantages:
- No employee input (ideas are not shared)
- Resentment towards management develops
- employees do not feel value therefore low job satisfaction
- potential for conflict
participative management style 3 features
- Recognises strengthens of employees
- Involves them in decision making
- emphasises team work
Define participative management style
where the manager unites with staff to make decisions together
participative management style 4 advantages:
- Opportunities for employees to share new ideas
- employee/ employer relationship is positive
- employees feel valued therefore job satisfaction
- employees acquire more skills
Define persuasive management style
where the manager attempts to ‘sell’ decisions made
participative management style 3 disadvantages:
- Time consuming due to consultation
- employees may be given too much power/ may not want to make decisions
- internal conflict may arise
persuasive management style 3 features:
- One way communication and no opportunity to provide feedback
- managers attempt to make employees accept organisation objectives
- plans and procedures
persuasive management style 3 advantages:
- Direction and procedure are clear
- managers can gain trust through persuasion
- workers believe they’re feelings are being considered in relation to decisions
persuasive management style 3 disadvantages:
- Poor communication (still one way)
- employees remain frustrated as they are denied full access to decision making process
- attitudes remain negative towards management
Define consultative management style
where the manager consults employees before making decisions
consultative management style 3 features:
- Employees have some input on decisions
- Two way communication (employees share ideas, but managers make decisions)
- managers hold meetings and recognise good performance
consultative management style 3 advantages:
- Employee interest increases as they have a voice
- higher quality decisions are made due to multiple points of view
- employees have ownership in way business is run and therefore are more invested in success
consultative management style 2 disadvantages:
- Consultation is time consuming
- due to the number of ideas shared some ideas may be ignored
Define laissez-faire management style
where the employees assume total responsibility for, and control of, workplace operations
laissez-faire management style 2 features:
- Employees are responsible for achieving objectives management sets
- management has no decision making power and role in running day to day operations
laissez-faire management style 3 advantages:
- Employees feel a sense of ownership
- greater ability to communicate
- encouragement of creativity
laissez-faire management style 2 disadvantages:
- Lack of direction, control and reinforcement on achieving business objectives
- no management control
Define management style
the behaviour and attitude of the manager when making decisions, when directing and motivating staff, and when implementing plans to achieve business objectives
Management style: Autocratic
Nature of Task (complexity):
- Simple routine task, require precision
Time (urgency of task):
- High urgency, quick decisions
Employee experience/ skill level:
- Low experience/ skill, supervision
Manager preference/ personality:
- Control and direct decision making
Management Style: Persuasive
Nature of Task (complexity):
- Routine task, with clear objectives
Time (urgency of task):
- Medium urgency, need to justify decisions
Employee experience/ skill level :
- Moderate experience, requires understanding of decisions
Manager preference/ personality:
- Structured control, values communication
Managment Style: Consultative
Nature of Task (complexity):
- Moderate complex task, requiring some input
Time (urgency of task):
- Medium-low urgency, time for discussion
Employee experience/ skill level :
- Skill employees, valuable input
Manager preference/ personality:
- Values collaboration, but wants authority
Management Style: Participative
Nature of Task (complexity):
- Complex, collaborative tasks, requiring innovation
Time (urgency of task):
- Low urgency, time for teamwork and feedback
Employee experience/ skill level :
- Highly skilled, experienced employees
Manager preference/ personality:
- Teamwork, and shared responsibility
Management Style: Laissez-faire
Nature of Task (complexity):
- Creative tasks with clear outcomes
Time (urgency of task):
- Low urgency, flexible time frames
Employee experience/ skill level :
- Highly skilled, employees needing little supervision
Manager preference/ personality:
- Trusts employees, prefers to delegate
Define management skills
the abilities or competencies that managers use to achieve business objectives
Define communication
the ability to transfer information from a sender to a receiver, and to listen to feedback
communication 1 purpose:
- Allows managers to inform, explain, listen and respond to employees to improve their work (more successful in the achievement of business objectives)
Define delegation
the ability to transfer authority and responsibility from a manager to an employee to carry out specific activities
Define planning
the ability to define business objectives and decide on the methods or strategies to achieve them
delegation 2 purposes:
- Allows managers to use time effectively
- Enables staff to learn new skills, bring up new ideas, and become more motivated.
planning 1 purpose:
- Gives the business a purpose and direction,
(improving efficiency and motivating employees)
Define leadership
the ability to influence or motivate people to work towards the achievement of business objectives
leadership 1 purpose:
- Motivates employees to work hard, more efficiently and productively
Define decision-making
the ability to identify the options available and then choose a specific course of action from the alternatives
decision-making 1 purpose:
- Allows risks to be assessed and the best decision made for the business to achieve objectives
Define interpersonal skills
the ability to deal with people and build positive relationships with staff
interpersonal skills 2 purposes:
- Inspires and motivates staff,
- encourages collaboration in the workplace
Management Style: Autocratic Relationship
3 Management skills required:
1. Decision making
2. communication (one-way)
3. planning
1 Key features of the Relationship:
1. Manager makes all the decisions
- Therefore requires strong decision making and communication skills
Management Style: Persuasive Relationship
3 Management skills required:
1. Decision making
2. communication (one-way)
3. planning
1 Key features of the Relationship:
1. Manager persuades employees on decisions
- Therefore communication is important for employees to understand why
Management Style: Consultative Relationship
4 Management skills required:
1. Decision making
2. communication (two-way)
3. planning
4. interpersonal
1 Key features of the Relationship:
1. Manager seeks input but still makes decisions
- Therefore interpersonal skills build trust and openness.
Management Style: Participative relationship
4 Management skills required:
1. Decision making
2. communication (two-way)
3. delegation
4. interpersonal
1 Key features of the Relationship:
1. Manager shares decision making
- Therefore delegation and interpersonal skills are important for collaboration
Management Style: Laissez-Faire relationship
4 Management skills required:
1. Communication (two-way)
2. Delegation
3. Interpersonal
4. leadership
1 Key features of the Relationship:
1. Managers provide minimal direction and trust employees
- Therefore delegation and interpersonal skills are important for accountability
Define corporate culture
the values, ideas, expectations and beliefs shared by members of the business
Define Official corporate culture
The shared values and beliefs a business wants to be perceived as by external stakeholders, shown through policies, slogans and logos.
Official corporate culture 1 feature:
- How a business is perceived to external stakeholders
(evident in policies, business objectives and slogans)
Define Real corporate culture
The shared values and beliefs which are demonstrated by the internal stakeholders of a business, shown through staff uniform, language and how business actually operates
Real corporate culture 1 features:
- How internal stakeholders of a business actually operate
(evident in staff dress, language and the way customers are treated)
What is Values and practices
Way things are done at a business (hard work, teamwork, honesty)
What is Symbols
Events or objects that represent something the business believes to be important (logo, or slogan)
What is Rituals, rites and celebrations:
Routine behavioural patterns in a businesses day to day operations (social gathering, after work drinks)
What is Heroes
Business’s successful employees who reflect the values, and therefore are an example for others (employee of the month)
Define limited liability
refers to when the shareholders in a company will not be held personally responsible for the debts of that business
Define unlimited liability
refers to when the business owner is personally responsible for all the debts of their business
Define business
any activity conducted by an individual or individuals to produce and sell goods and services that satisfy the needs of society, as well as making profit
define corporate social responsibility
the obligations a business has over and above its legal responsibilities to the wellbeing of employees and customers, shareholders and the community, as well as the environment
Define incorporation
the process that businesses go through to become a registered company and a separate legal entity from the owner/shareholder
