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
perpetuity
life of the company can live longer than the directors
26
private limited company disadvantages ... listed
- more complex and expensive to establish - more reporting requirements to the government - shares cannot be traded freely
27
public listed company
incorporated business whose shares are freely traded on a public exchange to an unlimited number of shareholders
28
public listed company characteristics ... listed
* initial public offering (IPO) * purchase at share price on the ASX and earn dividends * limited (Ltd) * stricter government regulations
29
public listed company advantages ... listed
* limited liability * easier to raise capital by selling more shares to public *life of the company can live longer than the directors (perpetuity)
30
public listed company disadvantages ... listed
* highly complex and time consuming to establish * high cost in establishment * possible loss of control
31
social enterprise
business that exists primarily to fulfil a vision that BENEFITS THE COMMUNITY OR A SOCIAL NEED rather than shareholders
32
social enterprise characteristics ... listed
* 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
33
STREAT
aims to provide homeless and disadvantages youth with life skills, training and work experience
34
social enterprise advantages ... listed
* meeting a social need can encourage community support=increasing profit * improved morale within the business as employees value the work they are doing
35
social enterprise disadvantages ... listed
* difficult to obtain finance to begin the business * difficult to focus on financial AND social objectives
36
government business enterprise (GBE)
business that's owned by the government
37
government business enterprise (GBE) characteristics ... listed
* aim to fulfil government policies and offer services to the community * aim to make a profit * normally controlled by a board of directors
38
government business enterprise (GBE) examples ... listed
* aus post * VCAA * vic roads
39
government business enterprise advantages .. listed
* 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
40
government business enterprise disadvantages .. listed
* strategic directions can change with changing governments * can be political interference
41
unlimited liability
business owner must pay for any losses the business makes
42
unlimited liability example
if he/she doesn't have enough money, then he/she would have to sell his/her house or car to pay the debt
43
business types with business unlimited liability ... listed
* sole traders * partnerships
44
limited liability
provides protection to the people investing in your company (the shareholders)
45
limited liability characteristics ... listed
* can only lose the amount that they invested in the company - no more * personal assets are protected (car, house, bank account)
46
types of businesses that have limited liability ... listed
* private limited companies * public listed companies
47
business objectives ... listed
* make a profit * increase market share * improve efficiency * improve effective ness * fulfil a market need * fulfil a social need * meet shareholder expectations
48
business objective
goal that a business has set and is aiming to achieve in a specified period of time (clear specific measurable)
49
profit
the amount of money remaining after expenses have been deducted from revenue
50
market share
the proportion of sales that a business has compared to the total sales in the industry, expressed as a percentage
51
market share characteristics ... listed
* to increase market share, means you steak it from someone else * increase market share doesn't always mean an increase in profit
52
efficiency
how well a business uses its resources (time, raw materials, labour, machinery, technology etc) when producing a good or service
53
improving efficiency could ... listed
* 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
54
improve effectiveness
the extent to which a business achieves its stated objectives
55
improve effectiveness example
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
56
market
specific group or industry that a business focuses selling its goods or services to
57
fulfil a market need
business fulfils market need by providing products and services which meet the desires of a group of customers with similar needs
58
gap in the market
needs or un met or unserved
59
fulfil a social need
business fulfils social need by improving the community and environment through its business activities
60
fulfil a social need example
profit earns is used to support a cause (social need) eg, thank you water
61
shareholders
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
62
capital gains
value of the business increases
63
dividends
their share in the company profits
64
business strategies
the actions that a business takes to achieve specific objectives
65
business strategies example
a strategy to achieve the objective of increased profit may be the introduction of a new product range
66
stakeholders
people or groups that interact in some way with the business and have a vested interest in its activities
67
vested interest
strong connection to a business that leads to personal gain or benefit
68
stakeholders characteristics ... listed
* have different interests in the business * can come from inside the business or outside the business (internal environment or external environment)
69
stakeholders ... listed
* owner * manager * employees * customer * supplier * general community
70
owner
invest funds into a business
71
manager
coordinate employees and tasks to achieve business objectives
72
employees
complete a business's work tasks
73
customers
purchase and use a business's products or services
74
supplier
provide a raw materials resources
75
general community
observe the impact of a business's operations
76
owners characteristics ... listed
* may be owned by sole trader, partners or number of shareholders * varying levels of involvement in the day-to-day operations
77
managers characteristics ... listed
* responsible for day to day operations * ensure the overall strategy of business is implemented
78
employees characteristics ... listed
* work for business in exchange for money
79
customers characteristics ... listed
* important for businesses to meet expectations of customers in order to remain competitive
80
suppliers characteristics ... listed
* important for business to develop strong relationships with suppliers
81
general community characteristics ... listed
* business is part of community and should look to benefit it
82
owners vested interests ... listed
* 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
mangers vested interests ... listed
* 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
employees vested interest ... listed
* 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
customers vested interests ... listed
* 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
suppliers vested interests ... listed
* increasing their revenue * earning a profit from the raw materials and resources they supply * having reliable and honest relationships with businesses they supply
87
general community vested interests ... listed
* observing business activities that lead to improvements un the community and environment * increasing the local employment rate and boosting the local economy
88
conflict between employees and shareholders
employees require safe working conditions and reasonable wages, but this will reduce the business's profit and dividends to shareholders
89
conflict between management and customers
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
conflict between management and members of the community
management might decide to cut cots by neglecting maintenance, which could possibly put members of community in danger
91
conflict between suppliers and members of the community
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
conflict between management and suppliers
management wishes to keep costs down to improve profit but suppliers providing ethical materials require higher prices to cover their costs
93
management style
the attitude of the manager when making decisions and communicating with employees
94
management styles ... listed
* autocratic * persuasive * consultative * participative * laissez-faire
95
autocratic management style
makes the decisions and tells the employees what tasks to perform
96
autocratic management style characteristics ... listed
* manager has full control * one-way communication * centralised decision making
97
autocratic management advantages ... listed
* decisions are made quickly * clear communication to employees * employees know exactly what their tasks are
98
when is autocratic best?
* 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
persuasive management style
manager makes the decision and then sells the decision to employees
100
persuasive management style characteristics ... listed
* centralised decision making (+info) * one way communication
101
persuasive management style advantages ... listed
* decisions are made quickly * clear communication to employees * employees are clear about what it is they need to achieve
102
persuasive management style disadvantages ... listed
* no opportunity from employees * small pool of ideas due to no consultation * task focused with lack of employee development
103
when is persuasive best? ... listed
* 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
consultative management style
seeks the ideas and opinions of employees before they make a final decision
105
consultative management style characteristics ... listed
* two way communication * centralised decision making * discussion encouraged
106
consultative advantages ... listed
* 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
consultative disadvantages ... listed
* 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
when is consultative best? .... listed
* 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
participative management style
manager communicating and discussing info with employees in order to make decisions TOGETHER
110
participant management style characteristics ... listed
* two way communication * de centralised decision making
111
participant style advantages ... listed
* 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
participant style disadvantages ... listed
* 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
when is participative best? ... listed
* 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
laissez-faire management style
manager leaves majority of the decision making and authority with the employees
115
laissez faire management style characteristics ... listed
* two way communication * highly de centralised decision making
116
laissez faire advantages ... listed
* 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
laissez faire disadvantages ... listed
* 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
when is laissez-faire best? ... listed
* 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
management skills
abilities or competencies that managers use to help them complete the tasks that are necessary for the c\achievement of business objectives
120
management skills ... listed
* communication * delegation * planning * leading * decision making * interpersonal skills
121
communication
the transfer of info from on individual to another
122
communication characteristics ... listed
* can be verbal or non verbal * can boost employee morale
123
communication advantages ... listed
* effective communication=maintains good relationships * informs people of business objectives * effective communication=resolved conflict
124
communication disadvantages... listed
* possible to communicate disagreement thereby causing conflict * time consuming, over sharing * positive relationships formed through communication=distraction
125
communication link to management styles ... listed
* autocratic:one way, from manager to employee * consultative, participative, laissez faire: two way communication
126
delegation
the passing of authority and responsibility from a manger to employee
127
delegation characteristics ... listed
* spreads workload * free up time * gain experience/skills * job satisfaction
128
delegation advantages ... listed
* enables staff to learn new things * allows for effective time management * can lead to fresh ideas and an improvement in employee motivation
129
delegation disadvantages ... listed
* must still provide support and set deadlines for employees=time consuming
130
delegation link to management styles ... listed
* autocratic/persuasive: delegation of tasks but NO delegation of responsibility or decision making * consultative, participative, laissez faire: delegation of authority/responsibility
131
planning
the ability to set objectives and develop strategies to achieve them
132
3 levels of planning ... listed
* strategic: long term goals (3-5 years) * tactical: medium term goals (1-2 years) * operational: short term goals (day to day)
133
planning characteristics ... listed
* provides direction and reduces uncertainty * identifying alternative options * outlining strategies to achieve them
134
logical planning process
SADIM
135
SADIM ... listed
* Set: the objective * Analyse: the environment (use swot analysis) * Develop: alternatives * Implement: the plan * Monitor: and evaluate
136
planning advantages... listed
* gives business purpose and direction * planning reduces risk and uncertainty=resources being used efficiently
137
planning disadvantages ... listed
* can be expensive * time consuming * opportunities will be lost while managers are planning
138
planning link to management styles ... listed
* 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
leadership
ability of a manger to motivate and inspire employees to achieve business objectives
140
leadership characteristics ... listed
* motivates employees * communicates direction * responsible * empathetic/supportive * demonstrate values
141
business managers can lead by ... listed
* providing employees with a clear sense of direction aligned with business objectives * influencing staff behaviour and decision making to meet the business goals
142
leadership advantages ... listed
* good leadership=motivated employees * good leadership=high staff morale
143
leadership disadvantages ... listed
* 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
leadership link to management styles ... listed
* 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
decision making
ability to make a choice on a course of actions from a range of alternatives
146
decision making characteristics ... listed
* informed=positive impact * assess available info and draw conclusions * independent/collaborative
147
common decision making process :
IGDACE
148
IGDACE... listed
* 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
decision making advantages.. listed
* 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
decision making disadvantages ... listed
* team decision making=time consuming * if excluded from the decision making process, employees may feel ignored
151
decision making link to management styles
centralised v decentralised
152
interpersonal skills
managers ability to communicate and interact with a range of people to create and maintain POSITIVE relationships
153
interpersonal skills characteristics ... listed
* empathetic * getting to know employees personalities and backgrounds * recognising individual employees motivation
154
interpersonal skills advantages ... listed
* 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
interpersonal skills disadvantages ... listed
* 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
interpersonal skills link to management styles ... listed
level interpersonal skills for each style relies on ... * communication (one way or two) level of staff interaction
157
corporate culture
the shared values, ideals, beliefs and expectations of the people within the business
158
corporate culture is also known as..
VIBE
159
two types of corporate culture ...
* official * real
160
official CC
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
official corporate culture characteristics ... listed
* vision statement/mission statement * business policies and procedures doccuments * scheduled training programs * business name, logos, slogans * compulsory uniform for employees
162
real corporate culture
the ACTUAL shared values and beliefs of the people within the business expressed through unwritten rules and habits
163
real corporate culture characteristics ... listed
* hiring * promotion criteria * management style * work layout * dress code * rituals * celebrations * how employees treat each other
164