aos 1: business foundations Flashcards

1
Q

business

A

organisation where goods and/or services are exchanged for money
- provide employment
- aim to make profit

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2
Q

business sizes

A

the ABS classifies the size of business by the number of people they employ

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3
Q

ABS

A

the Australian bureau of statistics

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4
Q

what are the three business sizes

A
  • small business
  • medium business
  • large business
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5
Q

small business

A

employs 20 or less

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6
Q

medium business

A

employs between 20-200

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7
Q

large business

A

employs 200+

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8
Q

sole trader

A

business structure owned and operated by one person

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9
Q

sole trader characteristics … listed

A
  • simple and cost effective
  • same legal entity (unincorporated)
  • unlimited liability
  • owner retains all profit
  • can hire employees
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10
Q

sole trader advantages … listed

A
  • simple and inexpensive to set up
  • owner has complete control
  • no disputes with partners
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11
Q

sole trader disadvantages … listed

A
  • unlimited liability=personally responsible for all debts
  • more difficult to gain finance
  • often required to perform many different tasks=heavy reliance on owners skills
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12
Q

partnerships

A

type of business owned between 2 and 20 people
- owners=partners

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13
Q

partnerships characteristics .. listed

A
  • simple and cost effective
  • responsibilities and profits are shared
  • same legal entity
  • unlimited liability
  • disputes can occur between partners
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14
Q

partnership advantages … listed

A
  • simple and inexpensive to set up
  • work load can be shared amongst partners
  • different skills and expertise brought into business
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15
Q

partnership disadvantages … listed

A
  • unlimited liability
  • potential for disagreement over key decisions
  • need to share profit amongst partners
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16
Q

the process of beginning a company structure is known as?

A

incorporation

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17
Q

company

A

owned by shares which are known as shareholders

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18
Q

company characteristics … listed

A
  • limited liability
  • business is registered with ASIC
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19
Q

ASIC

A

the Australian securities and investments comission

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20
Q

types of companies … listed

A
  • private limited company
  • public listed company
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21
Q

private limited company

A

incorporated business owned between 1 and 50 private shareholders

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22
Q

a private limited company is controlled by ????

A

board of directors

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23
Q

private limited company characteristics … listed

A
  • seperate legal entity
  • owners are called shareholders
  • limited liability
  • proprietary limited (pty ltd)
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24
Q

private limited company advantages … listed

A
  • limited liability
  • perpetuity
  • can be easier to attract more capital than sole trader and partnerships
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25
Q

perpetuity

A

life of the company can live longer than the directors

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26
Q

private limited company disadvantages … listed

A
  • more complex and expensive to establish
  • more reporting requirements to the government
  • shares cannot be traded freely
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27
Q

public listed company

A

incorporated business whose shares are freely traded on a public exchange to an unlimited number of shareholders

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28
Q

public listed company characteristics … listed

A
  • initial public offering (IPO)
  • purchase at share price on the ASX and earn dividends
  • limited (Ltd)
  • stricter government regulations
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29
Q

public listed company advantages … listed

A
  • limited liability
  • easier to raise capital by selling more shares to public
    *life of the company can live longer than the directors (perpetuity)
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30
Q

public listed company disadvantages … listed

A
  • highly complex and time consuming to establish
  • high cost in establishment
  • possible loss of control
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31
Q

social enterprise

A

business that exists primarily to fulfil a vision that BENEFITS THE COMMUNITY OR A SOCIAL NEED rather than shareholders

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32
Q

social enterprise characteristics … listed

A
  • sell goods and/or services in order to make a profit
  • can rely heavily on grants and donations
  • reinvest profits to help further social/environmental causes
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33
Q

STREAT

A

aims to provide homeless and disadvantages youth with life skills, training and work experience

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34
Q

social enterprise advantages … listed

A
  • meeting a social need can encourage community support=increasing profit
  • improved morale within the business as employees value the work they are doing
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35
Q

social enterprise disadvantages … listed

A
  • difficult to obtain finance to begin the business
  • difficult to focus on financial AND social objectives
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36
Q

government business enterprise (GBE)

A

business that’s owned by the government

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37
Q

government business enterprise (GBE) characteristics … listed

A
  • aim to fulfil government policies and offer services to the community
  • aim to make a profit
  • normally controlled by a board of directors
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38
Q

government business enterprise (GBE) examples … listed

A
  • aus post
  • VCAA
  • vic roads
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39
Q

government business enterprise advantages .. listed

A
  • provides healthy competition to private sector businesses and can lower prices in the market
  • may be invest in areas that private companies may hesitate to invest
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40
Q

government business enterprise disadvantages .. listed

A
  • strategic directions can change with changing governments
  • can be political interference
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41
Q

unlimited liability

A

business owner must pay for any losses the business makes

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42
Q

unlimited liability example

A

if he/she doesn’t have enough money, then he/she would have to sell his/her house or car to pay the debt

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43
Q

business types with business unlimited liability … listed

A
  • sole traders
  • partnerships
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44
Q

limited liability

A

provides protection to the people investing in your company (the shareholders)

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45
Q

limited liability characteristics … listed

A
  • can only lose the amount that they invested in the company - no more
  • personal assets are protected (car, house, bank account)
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46
Q

types of businesses that have limited liability … listed

A
  • private limited companies
  • public listed companies
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47
Q

business objectives … listed

A
  • make a profit
  • increase market share
  • improve efficiency
  • improve effective ness
  • fulfil a market need
  • fulfil a social need
  • meet shareholder expectations
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48
Q

business objective

A

goal that a business has set and is aiming to achieve in a specified period of time (clear specific measurable)

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49
Q

profit

A

the amount of money remaining after expenses have been deducted from revenue

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50
Q

market share

A

the proportion of sales that a business has compared to the total sales in the industry, expressed as a percentage

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51
Q

market share characteristics … listed

A
  • to increase market share, means you steak it from someone else
  • increase market share doesn’t always mean an increase in profit
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52
Q

efficiency

A

how well a business uses its resources (time, raw materials, labour, machinery, technology etc) when producing a good or service

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53
Q

improving efficiency could … listed

A
  • allow the business to get products to the market quicker
  • reduce costs in the business (improving profits)
  • reduce the amount of waste, minimise impact on the environment
  • allow the business to lower prices for customers
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54
Q

improve effectiveness

A

the extent to which a business achieves its stated objectives

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55
Q

improve effectiveness example

A

a business may set a target of increasing net profit by 10% in the coming year.

if it doesn’t increase profit by 10%, the business has been effective

if profit is increased by 8%, then it hasn’t been effective as it planned

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56
Q

market

A

specific group or industry that a business focuses selling its goods or services to

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57
Q

fulfil a market need

A

business fulfils market need by providing products and services which meet the desires of a group of customers with similar needs

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58
Q

gap in the market

A

needs or un met or unserved

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59
Q

fulfil a social need

A

business fulfils social need by improving the community and environment through its business activities

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60
Q

fulfil a social need example

A

profit earns is used to support a cause (social need) eg, thank you water

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61
Q

shareholders

A

those that have invested a sum of their own money into a business by purchasing company shares; they own a share of the business

they expect to make a return on their investment through capital gains and dividends

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62
Q

capital gains

A

value of the business increases

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63
Q

dividends

A

their share in the company profits

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64
Q

business strategies

A

the actions that a business takes to achieve specific objectives

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65
Q

business strategies example

A

a strategy to achieve the objective of increased profit may be the introduction of a new product range

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66
Q

stakeholders

A

people or groups that interact in some way with the business and have a vested interest in its activities

67
Q

vested interest

A

strong connection to a business that leads to personal gain or benefit

68
Q

stakeholders characteristics … listed

A
  • have different interests in the business
  • can come from inside the business or outside the business (internal environment or external environment)
69
Q

stakeholders … listed

A
  • owner
  • manager
  • employees
  • customer
  • supplier
  • general community
70
Q

owner

A

invest funds into a business

71
Q

manager

A

coordinate employees and tasks to achieve business objectives

72
Q

employees

A

complete a business’s work tasks

73
Q

customers

A

purchase and use a business’s products or services

74
Q

supplier

A

provide a raw materials resources

75
Q

general community

A

observe the impact of a business’s operations

76
Q

owners characteristics … listed

A
  • may be owned by sole trader, partners or number of shareholders
  • varying levels of involvement in the day-to-day operations
77
Q

managers characteristics … listed

A
  • responsible for day to day operations
  • ensure the overall strategy of business is implemented
78
Q

employees characteristics … listed

A
  • work for business in exchange for money
79
Q

customers characteristics … listed

A
  • important for businesses to meet expectations of customers in order to remain competitive
80
Q

suppliers characteristics … listed

A
  • important for business to develop strong relationships with suppliers
81
Q

general community characteristics … listed

A
  • business is part of community and should look to benefit it
82
Q

owners vested interests … listed

A
  • establishing and fostering positive relationships with other stakeholders to enhance business reputation and performance
  • receiving a return on their investment, often through business growth, in the form of increasing in share price, dividends or profits
83
Q

mangers vested interests … listed

A
  • being recognised for the achievement of business objectives
  • receiving bonuses from business owners for achieving business objectives
  • having opportunities to increase their status and engage in career advancement and promotion
84
Q

employees vested interest … listed

A
  • provision of long term job security
  • receiving fair pay and working conditions
  • having opportunities to engage ion personal and professional development, as well as training to advance their careers and receive promotions
85
Q

customers vested interests … listed

A
  • receiving high quality goods and services at affordable prices
  • engaging with businesses that are ethical and sustainable
  • receiving friendly and helpful customer service and assistance
86
Q

suppliers vested interests … listed

A
  • increasing their revenue
  • earning a profit from the raw materials and resources they supply
  • having reliable and honest relationships with businesses they supply
87
Q

general community vested interests … listed

A
  • observing business activities that lead to improvements un the community and environment
  • increasing the local employment rate and boosting the local economy
88
Q

conflict between employees and shareholders

A

employees require safe working conditions and reasonable wages, but this will reduce the business’s profit and dividends to shareholders

89
Q

conflict between management and customers

A

management could attempt to maintain profit and a high dividend to satisfy shareholders by raising the prices of products, this will upset customers who expect reasonably priced products

90
Q

conflict between management and members of the community

A

management might decide to cut cots by neglecting maintenance, which could possibly put members of community in danger

91
Q

conflict between suppliers and members of the community

A

suppliers expect to be paid fairly and promptly, but they might reduce costs by using unethical and socially irresponsible practices, which can upset members of the community

92
Q

conflict between management and suppliers

A

management wishes to keep costs down to improve profit but suppliers providing ethical materials require higher prices to cover their costs

93
Q

management style

A

the attitude of the manager when making decisions and communicating with employees

94
Q

management styles … listed

A
  • autocratic
  • persuasive
  • consultative
  • participative
  • laissez-faire
95
Q

autocratic management style

A

makes the decisions and tells the employees what tasks to perform

96
Q

autocratic management style characteristics … listed

A
  • manager has full control
  • one-way communication
  • centralised decision making
97
Q

autocratic management advantages … listed

A
  • decisions are made quickly
  • clear communication to employees
  • employees know exactly what their tasks are
98
Q

when is autocratic best?

A
  • nature of task: simple or lack complexity
  • time: when time is lacking and decisions need to be made quickly
  • employee expectations: when employees lack experience and knowledge
  • manager preference: prefer to have control
99
Q

persuasive management style

A

manager makes the decision and then sells the decision to employees

100
Q

persuasive management style characteristics … listed

A
  • centralised decision making (+info)
  • one way communication
101
Q

persuasive management style advantages … listed

A
  • decisions are made quickly
  • clear communication to employees
  • employees are clear about what it is they need to achieve
102
Q

persuasive management style disadvantages … listed

A
  • no opportunity from employees
  • small pool of ideas due to no consultation
  • task focused with lack of employee development
103
Q

when is persuasive best? … listed

A
  • nature of the task: similar to autocratic-simple/lack complexity
  • time: when time is lacking
  • employee experience: inexperienced
  • manager preference: complete control but would rather convince employees
104
Q

consultative management style

A

seeks the ideas and opinions of employees before they make a final decision

105
Q

consultative management style characteristics … listed

A
  • two way communication
  • centralised decision making
  • discussion encouraged
106
Q

consultative advantages … listed

A
  • larger pool of ideas to choose from=improved quality of decision
  • increased motivation as employees are more involved
  • employees more likely to take ownership due to involvement in decision making
107
Q

consultative disadvantages … listed

A
  • more time consuming to make decisions
  • some employees may feel undervalued if their ideas are overlooked
  • some employees may not want to be consulted regularly
108
Q

when is consultative best? …. listed

A
  • nature of the task: tasks are more complex (more ideas generated)
  • time: when more time is available
  • employee experience: higher level of experience which allows strong ideas to be put forward
  • manager preference: prefers to include employees in the process (values input)
109
Q

participative management style

A

manager communicating and discussing info with employees in order to make decisions TOGETHER

110
Q

participant management style characteristics … listed

A
  • two way communication
  • de centralised decision making
111
Q

participant style advantages … listed

A
  • employees feel trusted and valued
  • improved morale and motivation due to involvement
  • employees gain experience in decision making which can help with career development
112
Q

participant style disadvantages … listed

A
  • more time on forming decision=less time completing work
  • time consuming as decisions are often discussed and debated
  • some employees may not want to be involved in decision making
113
Q

when is participative best? … listed

A
  • nature of the task: tasks are complex
  • time: long period of time required
  • employee experience: high level of experience and knowledge
  • manager preference: prefer to include employees/collaborative
114
Q

laissez-faire management style

A

manager leaves majority of the decision making and authority with the employees

115
Q

laissez faire management style characteristics … listed

A
  • two way communication
  • highly de centralised decision making
116
Q

laissez faire advantages … listed

A
  • creates an environment that can encourage creative and innovative solutions
  • increased motivation and productivity due to a highly independent work environment, high levels of trust and empowerment
117
Q

laissez faire disadvantages … listed

A
  • potential for employees to allocate excessive resources to business decisions
  • potential for conflict when employees don’t cooperate and insist on implementing their own ideas
118
Q

when is laissez-faire best? … listed

A
  • time: extended time available or when not much time and decisions can be delegated to highly experienced staff
  • experience of employees: highly experienced employees that can be trusted to take control
  • nature of tasks: either simple or simple
  • manager preference: low desire for control or show full trust in employees
119
Q

management skills

A

abilities or competencies that managers use to help them complete the tasks that are necessary for the c\achievement of business objectives

120
Q

management skills … listed

A
  • communication
  • delegation
  • planning
  • leading
  • decision making
  • interpersonal skills
121
Q

communication

A

the transfer of info from on individual to another

122
Q

communication characteristics … listed

A
  • can be verbal or non verbal
  • can boost employee morale
123
Q

communication advantages … listed

A
  • effective communication=maintains good relationships
  • informs people of business objectives
  • effective communication=resolved conflict
124
Q

communication disadvantages… listed

A
  • possible to communicate disagreement thereby causing conflict
  • time consuming, over sharing
  • positive relationships formed through communication=distraction
125
Q

communication link to management styles … listed

A
  • autocratic:one way, from manager to employee
  • consultative, participative, laissez faire: two way communication
126
Q

delegation

A

the passing of authority and responsibility from a manger to employee

127
Q

delegation characteristics … listed

A
  • spreads workload
  • free up time
  • gain experience/skills
  • job satisfaction
128
Q

delegation advantages … listed

A
  • enables staff to learn new things
  • allows for effective time management
  • can lead to fresh ideas and an improvement in employee motivation
129
Q

delegation disadvantages … listed

A
  • must still provide support and set deadlines for employees=time consuming
130
Q

delegation link to management styles … listed

A
  • autocratic/persuasive: delegation of tasks but NO delegation of responsibility or decision making
  • consultative, participative, laissez faire: delegation of authority/responsibility
131
Q

planning

A

the ability to set objectives and develop strategies to achieve them

132
Q

3 levels of planning … listed

A
  • strategic: long term goals (3-5 years)
  • tactical: medium term goals (1-2 years)
  • operational: short term goals (day to day)
133
Q

planning characteristics … listed

A
  • provides direction and reduces uncertainty
  • identifying alternative options
  • outlining strategies to achieve them
134
Q

logical planning process

A

SADIM

135
Q

SADIM … listed

A
  • Set: the objective
  • Analyse: the environment (use swot analysis)
  • Develop: alternatives
  • Implement: the plan
  • Monitor: and evaluate
136
Q

planning advantages… listed

A
  • gives business purpose and direction
  • planning reduces risk and uncertainty=resources being used efficiently
137
Q

planning disadvantages … listed

A
  • can be expensive
  • time consuming
  • opportunities will be lost while managers are planning
138
Q

planning link to management styles … listed

A
  • autocratic, persuasive: have more formal planning process, involving only management
  • consultative, participative, laissez faire: slow planning process down, take ideas from a number of staff
139
Q

leadership

A

ability of a manger to motivate and inspire employees to achieve business objectives

140
Q

leadership characteristics … listed

A
  • motivates employees
  • communicates direction
  • responsible
  • empathetic/supportive
  • demonstrate values
141
Q

business managers can lead by … listed

A
  • providing employees with a clear sense of direction aligned with business objectives
  • influencing staff behaviour and decision making to meet the business goals
142
Q

leadership advantages … listed

A
  • good leadership=motivated employees
  • good leadership=high staff morale
143
Q

leadership disadvantages … listed

A
  • time consuming=take time away from other important business activities
  • clashes can occur between leaders and employees if staff feel they cannot relate to management
144
Q

leadership link to management styles … listed

A
  • autocratic, persuasive: involves more instruction, telling staff what they need to be doing
  • consultative, participative: involves high level of leading, management has more interactions with staff
  • laissez faire: no leading from management
145
Q

decision making

A

ability to make a choice on a course of actions from a range of alternatives

146
Q

decision making characteristics … listed

A
  • informed=positive impact
  • assess available info and draw conclusions
  • independent/collaborative
147
Q

common decision making process :

A

IGDACE

148
Q

IGDACE… listed

A
  • Identify: the problem/objective
  • Gather: info on the issue
  • Develop: alternatives
  • Analyse: alternatives
  • Choose: and implement the most appropriate alternative
  • Evaluate: gather feedback on final decision and see if it meets the objective
149
Q

decision making advantages.. listed

A
  • important in situations where there’s an emergency or crisis requiring quick decision making
  • team decision making generates a lot of knowledge and ideas
150
Q

decision making disadvantages … listed

A
  • team decision making=time consuming
  • if excluded from the decision making process, employees may feel ignored
151
Q

decision making link to management styles

A

centralised v decentralised

152
Q

interpersonal skills

A

managers ability to communicate and interact with a range of people to create and maintain POSITIVE relationships

153
Q

interpersonal skills characteristics … listed

A
  • empathetic
  • getting to know employees personalities and backgrounds
  • recognising individual employees motivation
154
Q

interpersonal skills advantages … listed

A
  • likely tp lead to greater staff morale and higher productivity
  • managers with solid interpersonal skills often better at conflict resolution
  • creates a workplace where people feel respected and work well together
155
Q

interpersonal skills disadvantages … listed

A
  • may use these skills to manipulate others
  • can take a long time to learn and make use of interpersonal skills
  • manager may be prone to making emotional decisions
156
Q

interpersonal skills link to management styles … listed

A

level interpersonal skills for each style relies on …
* communication (one way or two)
level of staff interaction

157
Q

corporate culture

A

the shared values, ideals, beliefs and expectations of the people within the business

158
Q

corporate culture is also known as..

A

VIBE

159
Q

two types of corporate culture …

A
  • official
  • real
160
Q

official CC

A

what the owners/directors of the business want shared values and beliefs to be, is often expressed through elements such as formal rules and symbols

161
Q

official corporate culture characteristics … listed

A
  • vision statement/mission statement
  • business policies and procedures doccuments
  • scheduled training programs
  • business name, logos, slogans
  • compulsory uniform for employees
162
Q

real corporate culture

A

the ACTUAL shared values and beliefs of the people within the business expressed through unwritten rules and habits

163
Q

real corporate culture characteristics … listed

A
  • hiring
  • promotion criteria
  • management style
  • work layout
  • dress code
  • rituals
  • celebrations
  • how employees treat each other
164
Q
A