Business Management Flashcards
Advantages of a Sole Trader
Low cost of entry
Complete control
Disadvantages of a Sole Trader
Unlimited Liability
Difficult to operate if sick
Advantages of a Partnership
Shared responsibility
and workload
Pooled funds and talent
Disadvantages of a Partnership
Unlimited liability
Divided loyalty and
authority
Advantages of a Private Limited Company
Limited liability
A long life/perpetual
Disadvantages of a Private Limited Company
Public disclosure — reporting
Cost of formation
Advantages of a Public Listed Company
Limited liability
Has perpetuity
Disadvantages of a Public Limited Company
Needs more accountability and compliance
paperwork
High establishment costs
What do Social Enterprises aim to fulfill
providing essential services to disadvantaged communities
creating accessibility to a better quality of life for disadvantaged members of the community
Advantages of a Government Business Enterprise
Can operate with some
independence from
government
Provision of healthy
competition to businesses
operating in the private
sector
Disadvantages of a Government Business Enterprise
Political interference in
the day-to-day
operation of the GBE
There can be less
accountability within a GBE,
resulting in less productivity.
Advantages of social enterprise
Can open up new
markets — the social
enterprise may meet a
need that commercial
businesses choose
not to
Meeting a social need
can have a positive
effect on profit and
market share.
Disadvantages of social enterprise
- Difficulty in obtaining
capital to start the
business - It can be difficult to
focus on both social
and financial objectives.
Define Sole Trader
sole trader a business owned
and operated by one person
Define Partnership
partnership a business owned by
two or more people (generally a
maximum of 20)
Define private limited company
private limited company 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
Define Public listed company
public listed company an
incorporated business with a
minimum of one shareholder
(and no maximum), and whose
shares are openly traded on the
Australian Securities Exchange
Define Social enterprise
social enterprise a business with
the objective of fulfilling a social
need
Define Government Business Enterprise
government business
enterprise (GBE) a type of
business that is government
owned and operated
What are some business objectives
To make a profit
To fulfil a social need
To improve effectiveness
To improve efficiency
what are some potential conflict between Employees and
owners/shareholders
Employees require safe working conditions and reasonable wages, but this may
reduce the business’s profit and dividends to owners/shareholders
what are some potential conflict between Management and
customers
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.
what are some potential conflict between Management and the
general community
Management might decide to cut costs by neglecting maintenance, which could
possibly put members of the community in danger
what are some potential conflict between Suppliers and the general
community
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
