Area of study 1

Question 1

what are the different types of business

Answer 1

1. Sole trader – one owner
2. Partnership – two owners
3. Companies – shareholders
4. Social enterprise
5. Government business enterprise

Question 2

definition of a sole trader

Answer 2

A sole trader business has one person who owns and runs the business. The
owner may employ other people to work in the business, but the owner or sole trader is the person who provides all the finance, makes all the decisions and takes all the responsibility for the operation of the business.

Question 3

advantages of sole traders

Answer 3

-this type of business is easy to establish
low cost of entry
- simplest form
- Owner complete control
- less costly to operate
- profit is taxed as personal income.

Question 4

disadvantages of sole traders

Answer 4

• personal (unlimited) liability for business debts.
• end of business when owner dies (no erpetual succession)
• difficult to operate if sick
• need to carry all losses
• burden of management

Question 5

define partnership

Answer 5

A partnership is a business owned by two or more people. Most partnerships have a maximum of 20 partners.

Question 6

what are the exceptions for a partnership having over 20 people

Answer 6

exceptions to this number, including medical practitioners and stockbrokers (allowed up to
50 partners); veterinarians, architects and chemists (allowed up to 100 partners); and solicitors and accountants
(allowed up to 400 partners).

Question 7

how are partnerships and sole traders alike

Answer 7

not a separate legal entity from
the partners — that is, the owners and the business are regarded as the same.

Like sole traders, the partners in
a business are also subject to unlimited liability, and so could be personally responsible for the debts of the
business.

Question 8

how is a partnership made

Answer 8

A partnership can be made verbally or in writing, or by implication (if two people set up a business together
without a legally binding partnership agreement).

Question 9

how does a partnership work in terms of tax compared to a sole trader

Answer 9

While a sole trader pays tax using their personal tax file number, a partnership has its
own tax file number — separate from those of each of the partners — and lodges its own tax return.

Once the ATO has assessed the partnership’s tax return and all taxes
have been paid, the profits are divided among the partners according to the partnership agreement. Each partner then adds their share of the profit (or loss) to their personal
income to be assessed by the ATO.

Question 10

unlimited liability

Answer 10

refers to when
the business owner is personally responsible for all the debts of their business

Question 11

advantages of a partnership

Answer 11

Low start-up costs
* Less costly to operate
than a company
* Shared responsibility
and workload
* Pooled funds and talent
* Minimal government
regulation
* No taxes on business
profits, only on personal
income
* On death of one partner,
business can keep going

Question 12

disadvantages of a partnership

Answer 12

• Personal unlimited
  liability
• Liability for all debts,
  including partner’s
  debts, even before the
  partnership has begun
• Possibility of disputes
• Difficulty in finding a
  suitable partner
• Divided loyalty and
  authority

Question 13

what does a partnership agreement contain

Answer 13

How long the partnership will exist
* The amount of money that each partner contributes
* How the profits and losses will be shared
* The duties of each partner
* Limitations on the authority of the partners
* How the partnership may be dissolved
* Methods of resolving disputes.

Question 14

Private Limited Company

(Pty Ltd following the business name)

Answer 14

Incorporated business with a minimum of one and a maximum of 50 non-employee shareholders.

Separate legal entity from owners, with limited liability for shareholders.
- Shares are not publicly traded; offered only to people approved by other directors.

Question 15

incorporation

Answer 15

the process that
businesses go through to become a registered company and a separate legal entity from the owner/shareholder

Question 16

advantages of private limited company

Answer 16

• Limited liability protects personal assets of shareholders.
• Easier to attract investment and raise capital.
• Continuity of the business with perpetual succession.
• Company tax rate is generally lower than individual tax rate.
• Potential for growth and expansion.

Question 17

disadvantages of private limited company

Answer 17

• High formation costs compared to sole trader or partnership.
• Compliance with reporting requirements, including annual audited reports.
• Personal liability for directors if debts are incurred knowingly.
• Public disclosure of some financial information.
• Complex decision
  -making and potential for inefficiency with growth.

Question 18

Public Listed Company

Answer 18

Incorporated business with no maximum number of shareholders. - Shares are traded openly on the Australian Securities Exchange. - Separate legal entity with limited liability for shareholders. - Must adhere to strict regulations and public disclosure requirements.

Question 19

advantages of public listed company

Answer 19

• Can raise significant capital by selling shares to the public.
• Limited liability protects personal assets of shareholders.
• Greater potential for growth and expansion.
• Continuity due to perpetual succession.
• Professional management through board of directors.

Question 20

disadvantages of public listed company

Answer 20

• Costly to establish and complex to operate.
• Loss of control for original owners due to public ownership.
• Extensive compliance and regulatory requirements.
• Annual reporting requirements for transparency.
• Potential for market pressures, with focus on short
  -term profits to satisfy shareholders.

Question 21

Social Enterprise

Answer 21

Operates to fulfill a social need rather than solely for profit.
- Reinvests profits to support social or environmental goals. - Not structured primarily to distribute profits to shareholders or owners

Question 22

advantages of social enterprise

Answer 22

-Meets specific community needs and has positive social impact.
- Can attract funding and grants for social causes.
- Gains positive public image and increased customer loyalty.
- Ability to open up markets that might not be viable for profit
- Creates social and community benefits alongside revenue.

Question 23

disadvantage of social enterprise

Answer 23

-Difficulty in balancing social and financial objectives.
- Limited access to capital, as profit motive is secondary.
- Higher operating costs, as it may prioritize social goals over cost-efficiency.
- Often needs to rely on government funding or donations to sustain operations.

Question 24

Government Business Enterprise

(GBE)

Answer 24

Owned and operated by the government at federal or state level.
- Provides essential community services while aiming to make a profit.
- Often monopolistic in certain sectors and funded partly through government budgets.
- Operates independently from government in many cases but aligned with public policy objectives.

Question 25

advantages of Government Business Enterprise

Answer 25

Can provide services that private sectors may avoid due to low profitability. - Offers healthy competition to private sector, potentially lowering prices. - Able to implement government policies to benefit society. - Can operate with some autonomy despite being government-owned.

Question 26

disadvantages of Government Business Enterprise

Answer 26

- Subject to political interference, affecting management decisions. - Less efficient than private sector due to government ‘red tape’. - Management of GBEs can lack innovation or responsiveness compared to private sector. - Often seen as having less accountability, leading to potential inefficiencies.

Question 27

limited liability

Answer 27

efers to when the shareholders in a company will not be held personally responsible for the debts of that business

Question 28

Business objectives definition

Answer 28

A objective gives a business direction; that is, it provides the business with a path to follow, increasing its chances of being successful.

Question 29

list of business objectives

Answer 29

- Make a profit - Increase market share - Improve efficiency - Improve effectiveness - Fulfill a market need - Fulfil a social need - Meet shareholder expectations

Question 30

Make a profit

Answer 30

what is left after business expenses have been deducted from revenue

Question 31

a loss

Answer 31

A loss occurs when the expenses exceed the revenue.

Question 32

Increase market share

Answer 32

a market share is the portion of a market or industry that a business owns. increasing business sales creates a higher amount of the market owned by the company

Question 33

Improve efficiency

Answer 33

the degree to which a business has used its resources to achieve objectives

Question 34

Improve effectiveness

Answer 34

measures whether the business has achieved its objectives

Question 35

Fulfill a market need

Answer 35

find the space in the current market, desighn new products or make improvements on existing products to meet customer needs. could relate to function of product, quality, price and convenience.

Question 36

Fulfil a social need

Answer 36

business activity's improves society, human wellbeing. involves production and selling of goods and services for the purpose of making the world a better place.

Question 37

Meet shareholder expectations

Answer 37

shareholders expect to make a return on investments therefore expect business to make a profit, as they recieve a proportion(dividends) shareholder expectations willl be met by the profit made by compant being returned to shareholders or the value of company shares increase.

Question 38

list of stakeholders

Answer 38

- Owners - Managers - Employees - Customers - Suppliers - General community

Question 39

what is stakeholder

Answer 39

Business stakeholders are Individuals and groups that interact in some way with the business and have a vested interest in the business performance and sactivities

Question 40

internal and external stake holders

Answer 40

Internal business stakeholders: owners, managers, employees External business stakeholders: customers, suppliers, general community

Question 41

Owners

Answer 41

Owners are individuals who establish, invest and have a share in a business, often with the goal of earning profit from it operations.

Question 42

Owners interests:

Answer 42

-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 increases in share price, dividends, or profits.

Question 43

managers

Answer 43

managers are individuals who oversee and coordinate a businesses employees and lead its operations to ultimately achieve the business’s objectives.

Question 44

managers interest:

Answer 44

-Being recognised for the achievement of business objectives. -Having opportunities to increase status and engage in career advancement and promotion. - Receiving bonuses from business owners for achieving business objectives. -Receiving appropriate wages and working conditions that reflect their managerial role and responsibility within the business.

Question 45

Employees

Answer 45

Employees are individuals who are hired by the business to complete work tasks and support the achievement of its objectives.

Question 46

Employees interests:

Answer 46

-Provision of long-term job security. -Receiving fair pay and working conditions. -Having opportunities to engage in personal and professional development, as well as training to advance their careers and receive promotions.

Question 47

Customers

Answer 47

individuals or groups who interact with a business by purchasing and utilising its goods and services.

Question 48

Customers interests:

Answer 48

-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.

Question 49

Suppliers

Answer 49

Suppliers are individuals or groups that source raw materials, component parts and processed materials and sell them to a business for use in the production of its goods and services.

Question 50

Suppliers interests:

Answer 50

-Increasing their revenue. -Earning a profit from the raw materials and resources they supply. -Having reliable and honest relationships with businesses they supply.

Question 51

general community

Answer 51

the general community is the individuals and groups who are impacted by a businesses operations and decision often because they are located in close proximity to the business.

Question 52

general community’s interests:

Answer 52

-Observing business activities that lead to improvements in the community and environment. -Increasing the local employment rate and boosting the local economy.

Question 53

list Management styles

Answer 53

1. Autocratic 2. Persuasive 3. Consultative 4. participative 5. laissez- faire

Question 54

definition of management style

Answer 54

Management styles is the behaviour and attitude of the manager when making decisions, when directing and motivating staff, and when implementing plans to achieve business objectives

Question 55

Autocratic management style

Answer 55

- “do it the way I tell you” where the manager tells staff what decisions have been made without listening to or permitting any employee input.

Question 56

advantages of Autocratic managment style

Answer 56

Direction and procedure are clearly defined with little uncertainty. Control is centralised at top management level, so time is used efficiently and problems are dealt with quickly, because there is no discussion or consultation Employee’s roles and expectations are set out plainly

Question 57

disadvantages of Autocratic managment style

Answer 57

No employee input is allowed, so ideas are not encouraged or shared. - which means Employees do not get a chance to develop their skills ad they do not feel valued Job satisfaction decreases because no responsibility is given to low level staff. Conflict or the potential for conflict increases. - Workers are often forced to compete for the approval of managers which leads to disagreements and tension.

Question 58

Persuasive management style definition

Answer 58

Persuasive management is where the manger attempts to “sell” or convince employees that the management’s way is the best way.

Question 59

Characteristics of persuasive management style

Answer 59

*Authority and control are centralised with senior management *Managers attempt to make employees accept the objectives of the organisation and work to certain plans or procedures *Communication is one-way (top down) *Workers are not given the opportunity to share ideas or provide feedback (similar to Autocratic)

Question 60

Advantages of persuasive management style

Answer 60

Managers can gain some trust and support through persuasion. Workers believing that their feelings are being considered may approach tasks, and the organisation on a whole, more positively instructions and explanations remain clear and constant.

Question 61

Disadvantages of persuasive management style

Answer 61

Attitudes and trust remain negative as employees fail to give their full support to management Communication is still poor and limited to a top-bottom approach Employees remain frustrated, because they are denied full participation in the decision making process.

Question 62

what is Consultative Management Style

Answer 62

the manager recognises the importance of good personal relationships among employees and “listens” to staff on issues before making decisions. is most effective when a new operating procedure is to be introduced or some business change implemented. It provides an opportunity for employees to have some input at the time of decision-making

Question 63

what does consultative management style believe in

Answer 63

*Motivating employees will help achieve performance objectives. *In enhancing personal relationships by offering: job Security, social activities and fringe benefits

Question 64

Characteristics of consultative management style

Answer 64

*Employee-centred which means employees have some input at the time the decisions are made. *Two-way communication process where employees can share their ideas with the manager BUT the decision still made by the manager. *Manager will seek opinions of the employees, hold information-sharing meetings and recognise good performance.

Question 65

advantages of consultative management

Answer 65

Allows for a greater variety in ideas It should improve the quality of the decisions being made. Employees begin to have some ownership in the way the organisation is run, so they will take more interest in it. Decisions are fine tuned and discussed prior to their implementation

Question 66

disadvantages of of consultative management

Answer 66

Consultation of employees requires time, this means The decision making process will be slower. When a number of ideas are shared , some are bound to be ignored or overlooked, this means Some resentment and conflict may be a result of this.

Question 67

Participative Management Style

Answer 67

* is one where the manager not only consults with employees, but also shares decision-making authority with subordinates. *This management style is most effective when a business is operating in an environment undergoing rapid change. Individual employees accept responsibility for, and can implement, changes.

Question 68

characteristics of participative management style

Answer 68

*Recognises the strength and abilities of of employees and actively involves them in all stages of the decision making process. *Emphasises team work in a flatter management structure especially where diverse groups are coordinated. *Decentralised management style.

Question 69

advantages of Participative Style

Answer 69

Communication is a two way process as there are more opportunities for employees to put forwards ideas. Employer/employee relations are positives and there is reduced likelihood of industrial disputes. There are high levels of trust, Often resulting in improved employee performance Employees have a greater opportunity to acquire more skills, this means Employees have more job satisfaction

Question 70

disadvantages of Participative Style

Answer 70

Reaching decisions and introducing tasks can be time consuming when differing views have to be considered - this means Decision making process is slower and may not be as responsive as the situation at hand requires. Or too many compromises. In some cases employees may be given too much power. - this means The role and control of management may be weakened and undermined More involvement may bring about disagreement with so many opinions being shared. - Internal conflict may arise and no decision may be made.

Question 71

Laissez-faire management style

Answer 71

* employees are responsible for workplace operations. most effective for creative work or research, with employees who are highly talented or qualified in the tasks to be performed and where minimal supervision and direction is required.

Question 72

* Characteristics / features of Laissez management style

Answer 72

*Management has no central role or decision-making power:no role in the day-to-day running of the business. *Management will set objectives and is still accountable for the overall performance, but employees take responsibility for implementing the means of achieving the objectives. *Completely decentralised management style, with employees operating individually or in small groups to complete tasks.

Question 73

advantages of Laissez management style

Answer 73

- employees feel a sense of worship which can promote outstanding results - there is continual encouragement of creativity, which is conductive to dynamic working environments - communication is completely open and ideas are discussed and shared

Question 74

disadvantage of Laissez management style

Answer 74

- there is a complete loss of control by management - no control or direction means that there is potential for misuse of business resources, including time and money because they have been placed in the hands of business employees. - this style can breed personal conflicts were individuals do not cooperate and only wish to implement their ideas.

Question 75

The Appropriateness of Management Styles

Answer 75

The consideration of the appropriateness of management styles in relation to the nature of the task, time, experience of employees and manager preference is often referred to as ‘situational management’.

Question 76

An autocratic management style features:

Answer 76

*Motivates through threat and disciplinary actions *Expects compliance and obedience *Is controlling and gives negative and personalised feedback. *Provides clear objectives by telling employees what to do, without listening to or permitting any employee input.

Question 77

appropriateness of management style depends on:

Answer 77

- time - experience of employees - nature of task - manager preference

Question 78

management skills

Answer 78

- communication - delegation - planning - leadership - decision-making - interpersonal

Question 79

communication

Answer 79

The ability to transfer information from a sender to a receiver and to effectively listen to feedback. -important in building relationships with stakeholders. -helps prevent misunderstandings, ensures employees are clear on business directions

Question 80

Management skills: leadership/leading definition

Answer 80

Leadership occurs when managers endeavour to influence or motivate people in the business to work to achieve the business objective.

Question 81

examples of leadership within good managers

Answer 81

*lead by example *encourage and praise good performance *actively listen to what employees say and welcome new ideas *remain calm in the face of conflict and stressful situations.

Question 82

what are the Two types of leaders:

Answer 82

Transactional leader Transformational leader

Question 83

Transactional leader

Answer 83

Transactional leaders occur when followers are moved to complete their roles as agreed with a leader in exchange for a reward -Focused on goals -Uses rewards and punishments -Are reactive in nature

Question 84

Transformational leader

Answer 84

Moves followers to awareness about what is important, and away from own self-interests. -Focus on vision -Uses charisma and enthusiasm -Are proactive in nature

Question 85

Management skill: Delegation definition

Answer 85

Delegation occurs when the authority and responsibility to carry out specific activities is transferred from a manager to an employee.

Question 86

what is positive about delegation management skill

Answer 86

it allows manager to manage time effectively, -enable staff to learn new skills, -can lead to fresh ideas and increase staff motivation.

Question 87

Management sill: Decision making definition

Answer 87

Decision making involves identifying available options and then choosing one course of action from the alternatives.

Question 88

Effective decision-making involves

Answer 88

- make decisions within a particular timeframe. - requires a manager to adequately assess the risk involved if the decision is implemented: SWOT analysis.

Question 89

Management style: Planning definition

Answer 89

The ability to set objectives and determine methods or strategies that will be used to achieve these objectives

Question 90

3 levels of planing

Answer 90

Strategic planning (long term Tatical planning ( medium term) Operational planning (short term)

Question 91

define Corporate Culture

Answer 91

is the shared values and beliefs of a business and its employees. It is determined by the behaviour of individuals within a business, as well as the business’s intentions when making decisions.

Question 92

what can a positive copra culture lead to

Answer 92

can lead to more motivated employees, and the widespread expectation of high standards, leading to improved performance overall.

Question 93

what does negative coprate culture lead to

Answer 93

negative corporate culture and acceptance of low standards can negatively impact the achievement of objectives.

Question 94

Elements of corporate culture

Answer 94

-values and practices the way things are done in the in the business, eg honesty, hard work, teamwork and innovation. -symbols the events of objects that are established to represent something the business believes to be important -rituals, rites and celebrations

Question 95

ways to develop corporate culture

Answer 95

- introducing new policies - change in dress code - training staff to build new skill sets introducing new symbols/rituals (e.g. introducing lunch to welcome new staff)

Question 96

official copra culture

Answer 96

Official corporate culture involves the shared views and values that a business aims to achieve, often outlined in a written format. generally reflects what a business intends to accomplish, and therefore represents its best intentions and aspirations

Question 97

Real corporate culture

Answer 97

Real corporate culture involves the shared values and beliefs that develop organically within a business, and are practised on a daily basis by its employees. It includes the unwritten rules and behaviours that determine how employees interact with the business they work for.