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Business Management > Business Foundations > Flashcards

Business Foundations Flashcards

1
Q

business objective

A

goal which an organisation sets out to achieve in a given time period.

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2
Q

mission statement

A

What the business stands for, its purpose
and how it intends to get there.

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3
Q

autocratic management style

A

is one where the manager tends to make all the decisions, dictating work methods, limiting employee knowledge about what needs to be done and frequently checking on employee performance.

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4
Q

communication

A

ability to transfer information from a sender to a receiver, and to listen to feedback

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5
Q

competitive advantage

A

occurs when a firm has a lower cost price structure than its rivals, goods and services can be sold more cheaply, undercutting competitors, and expanding domestic and foreign sales. Includes quality range and flexibility in adapting to new trends in the market.

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6
Q

consultative management style

A

one where the manager recognises the importance of good personal relationships among employees and consults with staff on certain issues before making a decision.

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7
Q

contingency management theory

A

stresses the need for flexibility and the adaptation of management styles to suit the situation

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8
Q

corporate culture

A

the values, ideas, expectations and beliefs shared by members of the business

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9
Q

corporate social responsibility

A

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

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10
Q

customers

A

the people who purchase goods and services from the business, expecting high quality at competitive prices

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11
Q

delegation

A

the ability to transfer authority and responsibility from a manager to an employee to carry out specific activities

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12
Q

directors

A

(of a company) the people who have overall responsibility for managing the company’s business activities

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13
Q

effectiveness

A

the degree to which a business has achieved its stated objectives

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14
Q

efficiency

A

how well a business uses resources to achieve objectives

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15
Q

employees

A

the people who work for the business and who expect to be paid fairly, trained properly and treated ethically in return for their contribution to production

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16
Q

government business enterprise (GBE)

A

a type of business that is government owned and operated

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17
Q

incorporation

A

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

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18
Q

interpersonal skills

A

the ability to deal or liaise with people and build positive relationships with staff

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19
Q

key performance indicators (KPIs)

A

specific criteria used to measure the efficiency and/or effectiveness of the business’s performance

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20
Q

laissez-faire management style

A

one where employees are responsible for workplace operations.

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21
Q

leadership

A

the ability to influence or motivate people to work towards the achievement of business objectives

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22
Q

limited liability

A

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

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23
Q

management style

A

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

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24
Q

manager

A

the person who has the responsibility for successfully achieving the objectives of the business

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25
Q

market share

A

the proportion of total sales in a given market or industry that is controlled or held by a business, calculated for a specific period of time

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26
Q

operational planning
short-term

A

specific details about the way in which the business will operate in the short term
daily and weekly production schedules.

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27
Q

participative management style

A

one where the manager not only consults with employees, but also shares decision-making authority with subordinates.

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28
Q

partnership

A

a business owned by two or more people some partnerships generally have a maximum of 20.

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29
Q

persuasive management style

A

one where the manager attempts to convince employees that management’s way is the right way.

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30
Q

planning

A

the ability to define business objectives and decide on the methods or strategies to achieve them

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31
Q

private limited company

A

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

pty ltd.

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32
Q

public listed company

A

an incorporated business with a minimum of one shareholder (and no maximum), and whose shares are openly traded on the Australian Securities Exchange

ltd (limited)

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33
Q

shareholders

A

(or members) the owners of a company

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34
Q

social enterprise

A

is a business that produces goods and services for the market, but operates with the primary objective of fulfilling a social need.

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35
Q

sole trader

A

a business owned and operated by one person

may employ other people, but owner is the person who provides all the finance, makes all the decisions and takes all the responsibility for the operation of the business.

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36
Q

stakeholders

A

groups and individuals who interact with the business and have a vested interest in its activities

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37
Q

strategic planning
(long term)

A

long-term planning, usually over two to five years
help determine where the business wants to be in the market, and what the business wants to achieve in relation to its competitors.

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38
Q

strategies

A

the actions that a business takes to achieve specific objectives

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39
Q

suppliers

A

businesses or individuals who supply materials and other resources to a business so that it can conduct its operations

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40
Q

SWOT analysis

A

the identification and analysis of the internal strengths and weaknesses of the business, and the opportunities in, and threats from, the external environment

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41
Q

tactical planning
medium term

A

flexible, adaptable, medium-term planning, usually over one to two years

supports the implementation of the strategic plan and allows the business to respond quickly to changes. The emphasis is on how business objectives will be achieved through the allocation of resources.

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42
Q

unlimited liability

A

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

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43
Q

vision statement

A

states what the business aspires to become

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44
Q

Sole trader: are the business and the owner separate entities?
+ unlimited liability

A

A sole trader is not regarded as a separate legal entity — that is, the owner and the business are regarded as the same.
If the business runs into financial difficulties, the owner is personally responsible for any business debts known as unlimited liability.

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45
Q

Advantages of sole trader?

A

simplest form
complete control
less costly to operate
no partner disputes
owner’s right to keep all profits
less government regulation
profit is taxed as personal income

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46
Q

Disadvantages of sole trader?

A

Unlimited liability
end of business when owner dies
difficult to operate when sick
need to carry all losses
burden of management
need to perform wide variety of tasks
difficulty in raising finance for expansion

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47
Q

Partnership separate legal entity?

A

A partnership is similar to a sole trader in that it is not a separate legal entity from the partners — that is, the owners and the business are regarded as the same.
Also subjected to unlimited liability.

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48
Q

Written partnership agreement?

A

A partnership can be made verbally or in writing, or by implication. A written partnership agreement is not compulsory, but worthwhile if disputes arise. A partnership agreement usually has a standard set of conditions.

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49
Q

Limited partnership + silent sleeping partners?

A

Limited partnerships were introduced to allow one or more partners to contribute financially to the business but take no part in running the partnership. In this case, the partner is referred to as a silent or sleeping partner. The main reason for their investment is to add more capital or finance to an existing partnership.

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50
Q

sole trader pays tax using personal tax file number what about partnership?

A

a partnership has its own tax file number 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.

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51
Q

advantages of partnership

A

low start-up costs
less costly to operate than a company
shared workload and responsibility
pooled funds and talent
minimal government regulation
no taxes on business profit
death of one partner, business can keep going

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52
Q

disadvantages of partnership

A

personal unlimited liability
liability for all debts including partner’s debts
possibility of disputes
difficulty in finding suitable partner
divided loyalty and authority

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53
Q

incorporation brings limited liability

A

In limited liability companies, the most money that a shareholder can lose is the amount that he or she paid for their shares. If the company goes into liquidation, the shareholders cannot be forced to sell their personal assets to pay for the debts of the business. This same protection does not extend to the directors of a company, as they have an obligation to ensure the company obeys the law and acts in the interests of the shareholders.

54
Q

private limited companies shares

A

Shares in a private company are offered only to those people whom the business wishes to have as part owners. Shareholders can sell their shares only to people approved of by the other directors.

55
Q

public listed companies shares

A

The shares for a public listed company are listed on the Australian Securities Exchange, and the general public may buy and sell shares in this type of company.

56
Q

A public company has to:

A

a minimum of one shareholder, with no maximum number

no restrictions on the transfer of shares or raising of money from the public via share offers

a requirement to provide certain information when selling its shares for the first time

a minimum requirement of three directors (of whom two must live in Australia)

the word ‘Limited’ or ‘Ltd’ in its name

a requirement to publish its audited financial accounts each year — included in an annual report.

57
Q

Advantages Public listed company

A

public listed companies can attract extra capital by issuing shares on the share market. This means that there is a greater potential for growth. However, because of this capital-raising capacity, public listed companies are required to abide by stringent compliance rules and disclose corporate financial information.

58
Q

advantages of social enterprises

A

can open up new markets (meeting a commercial need business chose not to)
meeting a social need can have a positive effect on profit and market share

59
Q

disadvantages of social enterprises

A

difficulty in obtaining capital to start the business (hard to find finance)
significant operating costs
difficult to focus on both social and financial objectives

60
Q

what is a GBE

A

GBEs also aim to increase the value of their assets and returns to their shareholder (the government). A board of management or board of directors usually controls a GBE, with government input into the board. The government maintains a strong interest in the performance and financial returns of the GBE.

61
Q

Advantages of GBE

A

able to carry out government policies delivering community services in areas commercial business may hesitate to
operate with independance from government
provision of healthy competition to business operating in the private sector leading to lower prices in markets where GBEs are competing

62
Q

Disadvantages of GBE

A

political interference in day to day operation
inefficiencies caused by excessive regulation by government
management is less effective than that of the private sector
less accountability within a GBE = less productivity

63
Q

To make a profit

A

Profit is what is left after expenses have been deducted from revenue.

A major indicator of a business’s success is the size of its profit, so many businesses not only want to make a profit, they want to maximise their profit.

64
Q

To increase market share

A

Market share is a business’s proportion of total sales in a market or an industry.
Percentage of sales the business has in relation to all its competitors.

65
Q

To improve efficiency

A

minimise the resources used and/or to maximise the outputs generated from those inputs. This can be achieved by using up-to-date technology and innovative processes, having highly skilled employees.

reduce the waste generated by the business, which will reduce the costs of the business.

66
Q

To improve effectiveness

A

The business should be able to consider its effectiveness in relation to all the objectives that it set, either short- or long-term, and should always be looking to improve in these areas.

67
Q

To fulfil a market need

A

A business can ‘fill a gap in the market’ by providing a service which satisfies customer needs which are currently unmet or underserved by other businesses.

Therefore, the business can attract more sales and generate more revenue.

68
Q

To fulfil a social need

A

This objective involves the production and/or selling of goods and services for the purpose of making the world a better place. A business with such a focus may generate an income, but its primary purpose is the common good.

69
Q

To meet shareholder expectations

A

Shareholders expect to make a return on their investment. They expect the business that they have invested in to make a profit, as they receive a proportion of the profits (called dividends). They also make a capital gain if the value of a company’s shares increases.

70
Q

Strategies

A

Strategies outline how the business will attempt to achieve its objectives — they are a series of actions undertaken to achieve an end result.

71
Q

(Stakeholder) Owner/shareholders

A

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

72
Q

(stakeholder) managers

A

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

73
Q

(stakeholder) employees

A

Employees are the people who work for the business. Their contribution is vital as they are involved in the manufacture or production of the good or service that the business sells.

74
Q

(stakeholder) suppliers

A

Suppliers provide resources to a business that will be used in its production process.

75
Q

(stakeholder) The general community

A

individuals and groups who are impacted by a business’s operations and decisions, often because they are located in close proximity to the business

76
Q

Owner/shareholder interests

A

Want the business to make profit — they may depend on the success of the business for their income or wealth
Shareholders want the business that they have invested in to make profit as this affects the value of their shares and the amount of dividends they receive
Will typically want the business to conduct itself in a socially responsible manner

77
Q

Manager interests

A

Want the business to perform financially and, in return, expect to be fairly remunerated
wants the business to be socially responsible = increased sales
Need to satisfy as many stakeholder expectations as possible while making sure that their position in the business is secure

78
Q

Supplier interests

A
  • Increasing their revenue.
  • Earning a profit from the raw materials and resources they supply.
  • Having reliable and honest relationships with businesses they supply.
    Expect to be paid promptly and in full
79
Q

Employees interests

A

Expect to be paid fairly, trained properly and treated ethically in return for their contribution to production
Need to know that their job is secure in the long term

80
Q

Customer interests

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.

81
Q

The general community interests

A

Expect that a business will give back to society something of what they take out in generating profit
* Observing business activities that lead to improvements in the community
and environment.
* Increasing the local employment rate and boosting the local economy.

82
Q

Conflicting Interests
employees and owners/shareholders

A

Employees require safe working conditions and reasonable wages, but this may reduce the business’s profit and dividends to owners/shareholders due to increased wages and other expenses.

83
Q

Conflicting Interests
Management and customers

A

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

84
Q

Conflicting Interests
management and general community

A

Management might decide to cut costs by neglecting maintenance, which could possibly put members of the community in danger.

85
Q

Conflicting Interests
suppliers and the general community

A

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

86
Q

Conflicting Interests
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.

87
Q

features of autocratic management style

A

provides clear directives
without listening to or permitting any employee input.
motivates through threats and disciplinary action
expect compliance and obedience
give more negative and personalised feedback.
This style is centralised (management has control) and communication is one-way.

can be effective in a time of crisis, when immediate compliance with rules or procedures is needed, or in meeting an unexpected deadline, when speed is important. This approach is also effective when team members do not know each other well or when individuals lack skills and knowledge.

this style does not encourage the best performance from employees.

88
Q

advantages of autocratic

A

Directions and procedures are clearly defined; there is little uncertainty.

Employees’ roles and expectations are detailed and precise, so management can monitor their performance.

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.

89
Q

disadvantage of autocratic

A

No employee input is allowed, so ideas are not encouraged or shared. This means employees do not get the chance to develop their skills, and they do not feel valued.

When no responsibility is given to lower level staff, job satisfaction decreases. This impacts on issues such as absenteeism and staff turnover.

Conflict, or the potential for conflict, increases. Workers are often competing for the approval of managers, which can lead to disagreements and tension.

An ‘us and them’ mentality may develop because of the lack of employee input.

90
Q

features of persuasive management style

A

Authority and control remain centralised with senior management
make employees accept the objectives of the business and work to certain plans and procedures.
Communication is one-way
very task-oriented
seek the trust of employees by taking the trouble to assure them that a decision is in their best interest.

91
Q

adv of persuasive management style

A

Managers can gain some trust and support through persuasion.

Workers believing that their feelings are being considered may approach tasks, and the business as a whole, more positively.

There is some acceptance of negative situations when the benefits are explained.

Instructions and explanations remain clear and constant.

92
Q

disadv of persuasive management style

A

Attitudes and trust remain negative. Employees fail to give full support to management.

Communication is still poor and limited to a top-to-bottom, one-way system.

Employees remain frustrated because they are denied full participation in the decision-making process.

93
Q

features consultative management style

A

seeks the opinions of employees, holds information-sharing meetings and recognises good performance.
two-way communication
employees can be motivated through their greater involvement in decision-making.

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.

94
Q

adv of consultative management style

A

greater variety of ideas and improves quality of management decisions.

Employees begin to have some ownership of how the business is run, so they take more of an interest in it. This is reflected in their levels of motivation and commitment, which increase.

When decisions are discussed and fine-tuned before implementation, tasks are completed more efficiently and with better results.

95
Q

disadv of consultative management style

A

The time taken to consult all the relevant employees can slow the entire process.

Some issues to be decided on are simply not suitable for a widespread consultation process.

When a number of ideas are shared, some are bound to be ignored or overlooked in the final decision. This may cause conflict or resentment.

96
Q

features of participative style

A

recognise the strengths and abilities of employees and actively involve them in all the stages of the decision-making process.
decentralised management style.
two-way communication
likely that they will have a commitment to the business’s objectives via their own input.

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. This makes the business more responsive to change.

97
Q

adv of participative style

A

Employer/employee relations are positive and there is reduced likelihood of disputes.

Motivation and job satisfaction are optimal, because employees play active roles in allocating tasks and implementing actions to meet objectives.

greater opportunity to acquire more skills.

This power-sharing approach encourages the development of work teams, high levels of commitment.

There is a high level of trust = improved employee performance.

98
Q

disadv of participative style

A

Reaching decisions and introducing tasks can be time-consuming when differing views have to be considered. The quality of decisions may also suffer because compromises are made, rather than decisive, clear directions given.

The role of management, and the control of the manager, may be weakened and undermined.

Internal conflict can arise with so many views and opinions being shared.

Not all employees may want to contribute.

99
Q

features of laissez-faire management style

A

Management has no central role or decision-making power.
no role in the day-to-day running of the business.
Management sets objectives and is accountable for overall performance
employees responsible for decisions and accountable for results.
decentralised management style

The laissez-faire management style is most effective for creative work or research, with employees who are highly talented or qualified and where minimal supervision and direction are required.

100
Q

adv of laissez faire management style

A

Employees feel a sense of ownership, which can promote outstanding results.

There is continual encouragement of creativity, which is conducive to a dynamic working environment.

Communication is completely open, and ideas are both discussed and shared.

101
Q

disadv of laissez faire management style

A

There is a complete loss of control by management. No control or direction means there is potential for misuse of the business’s resources.

This style can breed personal conflicts, where individuals do not cooperate or wish to implement only their own ideas.

The focus on meeting business objectives can be easily eroded.

102
Q

appropriateness of a management task
the nature of a task

A

Simplistic tasks require little two-way communication between managers and employees, whereas more complex tasks would benefit from increased amounts of collaboration between employees and management.

103
Q

appropriateness of a management task
time

A

Limited time.
Extended time.
The more people involved in, and responsible for the decision making processes increases the amount of time it takes to form a consensus to make a decision.

104
Q

appropriateness of a management task
experience of employees

A

Experienced employees.
Inexperienced employees.
Inexperienced employees would find difficulty in making business decisions, whereas experienced employees are more capable of contributing to making meaningful decisions.

105
Q

appropriateness of a management task
experience of employees
manager preference

A

A high desire for control.
A low desire for control.
Managers who desire a high degree of control would adhere to centralised decision making with minimal disruption from employees, whereas manager who desire a low level of control benefit from employees playing an active role in the decision making process.

106
Q

Management Skills

A

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

107
Q

Communication skill

A

when explaining a vision, outlining possible changes to the business, or simply to let staff know what is expected of them.
can lead to conflict, as employees may use communication to agree or disagree with each other which can lead to resentment and tension, with the possible outcome of tasks not being completed.

Effective communication — clear, articulate and concise — helps maintain good relationships.

108
Q

Delegation

A

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

109
Q

Delegation skill

A

manager remains accountable for the outcome of the delegated work, but allows the employees to make their own decisions.
manage time effectively and to enable staff to learn new skills.
fresh ideas and an improvement in employee motivation.

110
Q

Weaknesses delegation

A

wary of delegating major projects or executive responsibilities
Providing support to employees, setting deadlines and evaluating the task when completed can reduce the risk of the delegated assignment not being completed adequately.
subordinate employee may misuse their new power

111
Q

planning process

A

Step 1. Define the objective. Management begins the planning process by considering where they believe the business is headed.

Step 2. Analyse the environment. Managers attempt to work out exactly where the business currently stands. (SWOT analysis)

Step 3. Develop alternative strategies. In response to the question, ‘How will the business get there?’

Step 4. Implement an alternative. The strategy that has been agreed upon needs to be put into place.

Step 5. Monitor and seek feedback on the implemented strategy. Management must set targets and check whether they are met. If business objectives are not met, the planning process would have to be repeated.

112
Q

planning strengths and weaknesses

A

+
creates unity and motivation, likely to feel that they have a reason for working for the business. Planning reduces risk and uncertainty, and should result in resources being used efficiently.

-
expensive and time-consuming. Opportunities can be lost while managers are planning, and innovation or creativity can be hindered because everything needs to be planned.

113
Q

transactional leadership

A

provides staff with rewards in return for their compliance and acceptance of authority. Incentives such as pay rises or promotions are offered depending on whether or not performance goals are met.

114
Q

transformational leadership

A

inspires or enthuses staff with a vision to ensure that they are committed to achieving the objectives of the business. They consider each member of staff as a unique individual and provide opportunities for team members to exercise their own judgement on decisions.

115
Q

good leadership results in?

A

motivated employees and high staff morale and trust
tend to work harder or more efficiently, which can lead to high productivity and the attainment of business objectives.

116
Q

weaknesses of leadership

A

busy leading that they have no time for contributing to productive activities.
Clashes can occur between leaders and employees, and an ‘us versus them’ mentality can develop if staff feel that they cannot relate to management. This can be particularly true if the manager uses transactional leadership.

117
Q

Decision-making

A

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

118
Q

Decision-making processes

A

1) Develop objectives and criteria

2) Outline the facts
including the circumstances that may have caused the issue, as well as the possible obstacles that may prevent the attainment of the desired goal.

3) Identify alternative solutions

4) Analyse the alternatives

5) Choose one alternative and implement it

119
Q

decision making strengths and weaknesses

A

+
may be able to make decisions quickly, but this may not be true if decisions are made in a group.
On the other hand, making decisions within a group has the potential to collect more ideas and knowledge, which can result in better decisions and more effective implementation.

-
Teams working together to make decisions tend to take a longer time, because there is a need to discuss all the options and reach consensus.

Group decision-making may not suit all situations. In the case of an emergency or a crisis requiring immediate action, an individual may be required to make a hasty decision.

120
Q

interpersonal skills strengths and weaknesses

A

+
uses clear communication when working with staff and is sensitive to their needs, not threatening. inspire and influence staff while overcoming conflict, creating a workplace where people respect each other and work well together

-
it can take a long time for a manager to learn and make use of interpersonal skills. It is also possible that some managers will misuse their understanding of interpersonal skills and utilise them for their own ends

121
Q

Official corporate culture

A

revealed officially in the policies, objectives or slogans of a business.

122
Q

real corporate culture

A

seen in the unwritten or informal rules that guide how people’s behaviour such as the way staff dress, the language staff use, and the way that staff treat each other and customers.

123
Q

Elements of corporate culture
values and practices

A

These are the way things are done in the business.
Examples of corporate values and practices include honesty, hard work, teamwork, quality customer service, employee participation and innovation.

124
Q

Elements of corporate culture
symbols

A

These are the events or objects that are established to represent something the business believes to be important.

125
Q

Elements of corporate culture
rites, rituals, celebration

A

These are the routine behavioural patterns in a business’s everyday life. Eg, regular social gatherings can be held to help develop a sense of belonging among employees.

126
Q

Elements of corporate culture
Heroes

A

Heroes, or champions, are the business’s successful employees who reflect its values and, therefore, act as an example for others.

127
Q

Corporate social responsibility considerations of a business

A

socially aware businesses recognise the importance and necessity of concentrating on sustainable business objectives; that is, focusing on financial outcomes while also being conscious of environmental and social performance

128
Q

advantages of private limited company

A

easier to attract finance
limited liability - separate legal entity
easy transfer of ownership
a long life/perpetual succession
experienced management through board of directors
greater spread of risk
company tax rate is lower than personal income tax rate
growth potential

129
Q

disadvantages of private limited company

A

cost of formation - more expensive than sole trader or partnership
company is taxed on any profits and dividends and the income from the company to the shareholder is taxed as personal income
personal liability for directors if they knew debts could not be paid
requirement to produce an annual report of audited accounts
public disclosure - reporting of certain info
rapid growth may lead to inefficiencies

130
Q

lack of social responsibility?

A

By comparison, a lack of social responsibility can damage a business’s reputation and reduce its competitive advantage. Customers may react and stop purchasing a business’s product if they learn that the business is exploiting employees, accepting bribes or polluting the environment.

131
Q

Adv and disadv of csr

A

Customers who believe that a business has a reputation for being socially responsible are more likely to continue to deal with the business. They are also likely to refer the business to other customers. Employees will want to work for the business, reducing costs of replacing staff and increasing productivity.

While it can be expensive and time-consuming to introduce socially responsible strategies, they would be expected to bring about increased sales and profits.

Business Management (5 decks)

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