AOS1: Business Foundations Flashcards
Sole Trader
One owner, unlimited liability, retains all profits
Liability
Any loss or debts of the business
Advantages of a sole trader
Low cost, simple, complete control, no partner disputes
Disadvantages of a sole trader
Unlimited liability, burden of management, difficult to operate when sick, need to perform variety of tasks
Partnership
2-20 owners. All partners equally responsible for liability.
Advantages of a Partnership
Low startup cost, shared responsibilities, pooled funds
Disadvantages of a Partnership
Personal Unlimited liability for all debts, possibility of disputes
Private Limited Company
Has at least one shareholder, and a maximum of 50 non-employee shareholders.
Advantages of private limited company
Limited liability, easier to attract finance, easy transfer of ownership, perpetual succession, company tax rate lower
Disadvantages of private limited company
Cost of formation, company is taxed, public disclosure, inefficiences
Public Listed Company
Incorporated business with a minimum of five shareholders, and shares are trader on the ASX
Advantages of a public listed company
Can attract extra capital by issuing shares on the ASX, Easy transfer of ownership
Disadvantages of a public listed company
Highly complex business structure, significant establishment costs, requires accountability and compliance
Social Enterprise
Has the objective of fulfilling a social need and invests profit into a social need or back into the business
Advantages of a social enterprise
Can meet a demand that commercial businesses may not, meeting a social need may have a positive effect on market share
Disadvantages of a social enterprise
Difficulty in obtaining capital for startup, can be difficult to focus on business objectives and social objectives
Government Business Enterprise
Government owned and operated
Advantages of a government business enterprise
Can carry out business in areas that private companies would be hesitant to invest in, can give healthy competition to other businesses, can operate with some independence from the government
Disadvantages of a government business enterprise
Political interference in the day-to-day operation, inefficiencies, less accountability, heavily regulated
Examples of business objectives
To make profit, to increase market share, to improve efficiency, to improve effectiveness, to fulfil a market need, to fulfil a social need and to meet a shareholder expectations.
What are some business Stakeholders
Owners, managers, employees, customers, suppliers, general community
Company structures
A company structure is incorporated and is a sperate legal entity to an individual or individuals
Stakeholder Conflict
Different stakeholders have competing values or interest for the business
Social entrepreneur
A person who establishes an enterprise with the aim of solving a social problems or effecting social change
Objectives
Statements of desired achievement that provide direction for the business
What is a stakeholder?
Someone that has a direct or vested interest in the activities of a business
Autocratic
Management Style
Manager tells staff what decisions have been made.
-Highly centralized, communication from top down, no discussion.
Persuasive
Management Style
Manager makes decision than persuades workers of the benefits.
-Decision making rests solely on manager, however employee may feel better about a decision because it is explained.
Consultative
Management Style
When the manager consults employees before making decisions.
-Seeks input
-Takes into account the opinions of team members
Participative
Management Style
Where the manager unites with staff to make decisions together
-Decentralized decision making
-two way communication
-management ultimately retains control
Laissez-Faire
Management Style
Employees assume total responsibility for workplace operations
-Approach problems and tasks in their own way
-only constraint being budgets, timelines and goals
Skills
The ability
to do something
well, gained
through training
and experience
Communication
Management Skill
A process of
creating and
exchanging
information
between people
that produces
the required
response.
Personal communication
Dot Point of Management Skill “Communication”
Sharing information between
the manager and subordinates
Internal organisational communication
Dot Point of Management Skill “Communication”
Systems used to share with internal stakeholders such as employees
External operational communication
Dot Point of Management Skill “Communication”
Delegation
Management Skill
Passing of
authority down
the hierarchy to
perform tasks or
make decisions
Planning
Management Skill
Formalised
decision-making
process that is
future-oriented
SWOT Analysis
Management Skill “Planning” Dot Point
An assessment
of the internal
strengths and
weaknesses
and the external
opportunities
and threats for
a business in a
given situation
Strategic Planning
Management Skill “Planning” Dot Point
Long term planning undertaken by senior management to achieve business objectives
Operational Planning
Management Skill “Planning” Dot Point
The
detailed, short term
planning
undertaken by a
business
Tactical Planning
Management Skill “Planning” Dot Point
Time
frame is medium
term. Undertaken by
middle-level
management.
Leading
Management Skill
The skill
of a manager
when guiding
workers towards
achieving the
goals of the
business
Decision-Making
Management Skill
A multistep
approach
whereby a
selection is
made between a
range of different
alternatives
Interpersonal Skills
Management Skills
Skills
used every day
to communicate
and interact with
other people,
both individually
and in groups
Corporate Culture
Corporate Culture
System of shared
values and beliefs
of people within a
business
Official Corporate Culture
Corporate Culture
Formal written expression of values and beliefs desired by management
Real Corporate Culture
Corporate Culture
Actual practises and values that are actually held by the employees in a business
What are some strategies to develop positive corporate culture?
Corporate Culture
Creating mission, vision and values statements
Establishing management structures
Choice of management styles
Implementing policies
Business documentation and forms of communication
People
Physical environment and material symbols
Stores, narratives and rituals
Benefits of Delegation
Dot point of Delegation
Assists with smooth flow of production, acts as a time saver, provides opportunity for development and training.
5 Step Process for Delegation
Dot point of Delegation
Analysis, Appointment, Briefing, Control, Apprasial.
5 Step Process for Planning
Set Goals, Gather info, establish promoting and restricting factors, develop action plan, evaluate and review
Details of Decision Making
Requires use of a Systematic Approach that is evidence based. Helps reduce errors and bad decisions, reflects the management style.
Best skills for Autocratic style
High: Planning, decision-making, communication
Best skills for Persuasive style
High: Planning, decision-making
Medium: Communication, delegation, interpersonal
Best skills for Consultative style
High: Planning, decision-making, communication
Best skills for Participative style
High: Communication, interpersonal, leading
Medium: Decision-making, delegating
Best skills for Laissez-Faire style
High: Communication, delegating, leading
Market Share
Market share is the business’s percentage of total sales controlled by the business in a industry
Efficiency
The best use of resources in the production of goods and services
Effectiveness
How successful a business is at achieving its objectives
What are business owners concerned with?
Stakeholder conflict
Profit, market share, adherence to rules
What are Managers concerned with?
Stakeholder conflict
Set and achieve objectives, career development, fair remuneration, job satisfaction
What are employees concerned with?
Stakeholder conflict
Fair pay, safe workplace, career advancement, job satisfaction, secure job
What are customers concerned with?
Stakeholder conflict
Quality product, customer service, ethical and socially responsible business
What are suppliers concerned with?
Stakeholder conflict
Ensure that the business is profitable, paid promptly, long term supplier relationship
What is the general community concerned with?
Stakeholder conflict
Business to participate in the community, ethical business, socially responsible business
Advantages of Autocratic
Quick decisions, made by experienced leader, communication is direct
Advantages of Persuasive
Decision making is quick, suits high risk decisions
Advantages of Consultative
Variety of ideas, employee involvement, motivation and employee satisfaction
Advantages of Participative
Trust and faith in employees, morale increased, Open communication
Advantages of Laissez-Faire
Employee independence, motivation and satisfaction, creavity and innovation, teamwork
Disadvantages of Autocratic
Quick decision is not always the best, discourages teamwork and opinions, low motivation and satisfaction
Disadvantages of Persuasive
No input from workers, workers can still feel alienated, employee initiative and commitment overlooked
Disadvantages of Consultative
Empoyees may not understand, time-consuming, employees may not feel valued if their ideas aren’t used
Disadvantages of Participative
Can give rise to employee conflict, time consuming and lack of contribution by all employees
Disadvantages of Laissez-Faire
Lack of guidance can cause some employees to have a lack of direction, does not suit untrained employees or those who need structure
How is the appropriateness of management styles measured?
Nature of the task, time, experience of the employees and the manager’s preference.
