Business unit 3 AOS 1

Question 1

Sole trader

Answer 1

business structure that is owned and operated by one individual.

Question 2

Partnership

Answer 2

business structure that is owned by two to 20 owners

Question 3

Public listed company (LTD)

Answer 3

incorporated business that had unlimited number of shareholders

lists and sells its shares on the ASX.

Question 4

Private limited company (PTY, LTD)

Answer 4

incorporated
business structure

thas at least one director and a maximum of 50 shareholders.

Question 5

Social enterprise

Answer 5

aims to fulfil a community or environmental need by selling goods or services.

Question 6

government business enterprise (GBE)

Answer 6

owned and operated by the government.

Question 7

Sole trader advantages and disadvantages

Answer 7

• the owner has full control and decision-making power.
  -owner can retain all business profits.
  -Least expensive type of business to set up.

-Unlimited liability puts the owner’s personal assets at risk
-The life of the business ends when the owner dies.
-It may be difficult to take time off work, as no one else can operate the business

Question 8

Partnership advantages and disadvantages

Answer 8

• Easy and simple to register and set up.
  -Owners can share the workload and take time
  -The financial and legal risks are shared between partners.

-Unlimited liability means that the partners’ personal assets are at risk
- Profit needs to be shared between the partners.
-conflicts could arise due to shared decision-making

Question 9

private limited company advantages and disadvantages

Answer 9

• There is limited liability for shareholders.
• greater variety of expertise and ideas as more people are involved.

-It is expensive to set up and operate
- It is difficult to change structure once a company has been established.

Question 10

Public listed company advantages and disadvantages

Answer 10

-Shareholders have limited liability
- The life of the company can live longer than the directors.

-It is expensive to set up and operate.
-Conflicts could arise through shared decision-making between directors.

Question 11

Social enterprise advantages and disadvantages

Answer 11

-Employees have purposeful work so they are more likely to be satisfied with their job.
-The community benefits from the business’s activities.

• Difficult to balance the achievement of financial objectives with social objectives.
• May be difficult to obtain a bank loan as the business does not solely focus on financial objectives.

Question 12

government business enterprise advantages and disadvantages

Answer 12

• operate with some independence from the government.
  -delivers goods and services that help the community and the community’s needs.

-Governments and politicians can interfere and change the strategic direction of the business
-GBEs have to follow significant ‘red tape’, which refers to excessive rules and formalities, compromising how quickly GBEs can do things.

Question 13

What are business objectives

Answer 13

-To make a profit
-Increase market share
-To improve efficiency
-Improving effectiveness
-To fulfil a market
-To fulfil a social need
-Meeting shareholder expectations

Question 14

To make a profit?

Answer 14

A fundamental objective for businesses, Profit occurs when a business creates more revenue than expenses

Question 15

What is a profit?

Answer 15

total revenue earned minus total expenses

Question 16

Increase market share?

Answer 16

is a business percentage of total sales within an industry

Question 17

To improve efficiency?

Answer 17

Measure of how well a business is using it resources to achieve objectives

EG: using fewer resources like employees, material and time
- By improving efficiency business can lower prices

Question 18

Improving effectiveness?

Answer 18

The ability of a business to achieve their objectives

A business stated objectives could be :increase profit
:increase market share

Question 19

To fulfil a market need?

Answer 19

a business fills a gap in the market, which involves addressing customer needs that are currently unmet or underrepresented by other businesses in the same industry.

Question 20

To fulfil a social need?

Answer 20

improving society and the environment through business activities.

Question 21

what are dividends

Answer 21

regular sums of money paid out to shareholders from a business’s profit.

Question 22

what is Capital gain?

Answer 22

increase in the value of a share, meaning an investor can sell their shares at a higher price than what they originally purchased them for.

Question 23

Meeting shareholder expectations?

Answer 23

Shareholders: as owners of the business, have an interest in the performance of the company, and are commonly looking for a return on their investment

Question 24

unlimited liability

Answer 24

The owner is fully responsible for any debts incurred by the business

-Sole trader
-Partnership

Question 25

Limited liability

Answer 25

means the owners of a business are only financially responsible for the debts of the company up to them amount of their investments.

-private limited company
-public listed company

Question 26

What is a stakeholders?

Answer 26

individuals, groups, or
organisations who have a vested interest in the performance and activities of a business.

:owners, managers, employees, customers, suppliers and generally community

Question 27

Owners?

Answer 27

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

Question 28

Owners invested interest?

Answer 28

a positive relationship with other stakeholders. To enhance reputation & performance

receive a return on their investment

Question 29

Managers?
vested interest?

Answer 29

individuals who oversee and coordinate a business employees and lead its operations to achieve the business objectives

-being recognised for the achievement of Business objectives
-receiving bonuses from business owners from achieving objectives

Question 30

Employees?
vested interest?

Answer 30

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

-receive fair pay and working conditions
-provision of long term job security

Question 31

customers?
vested interest?

Answer 31

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

-receive high quality goods and services at affordable prices
-getting friendly & helpful customer service

Question 32

Suppliers?
vested interest?

Answer 32

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.

-increase their revenue
-having reliable and honest relationships with businesses they supply

Question 33

General community?
vested interest?

Answer 33

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

-increase local employment rate -> boost local economy

Question 34

stakeholder conflicts

Answer 34

Owners: increase profit and decrease manager salary -> managers: want greater rewards and increase salaries

Look in book for more

Question 35

management styles

Answer 35

Autocratic MS
Persuasive MS
consultative MS
Participative MS
Laissez- faire MS

Question 36

autocratic management style (telling, one way)

Answer 36

Making decisions and directing employees without any input from them

AD-decision making power lies solely with manager
DI-Business lack the idea to take broader range of ideas from employees

Question 37

Persuasive management style (persuading, one way)

Answer 37

involves a manager making decisions
and communicating the reasons for those decisions to employees without their input.

AD- the decision making quick as its only done by manager and no consultation required by employees

DI-Business lack the idea to take broader range of ideas from employees

Question 38

Consultative management style ( asking, two way)

Answer 38

involves a manager seeking input from employees on business decisions but making the final decision themselves.

AD- Employees may feel more motivated and involved as there able to contribute there ideas
DI- Employee conflict could arise if there ideas are ignored or overlooked when final decision is made

Question 39

Participative management style ( sharing, two way & group)

Answer 39

involves a manager sharing information with employees can participate in decision making.

AD- employees and managers relation improve because of two way communication

DI- conflict between managers and employees when there a disagreement between different ideas

Question 40

Laissez- faire management style (freedom, two way & individual)

Answer 40

involves a manager communicating business objectives to employees and giving them freedom to make decisions independently.

AD-employees may increase their motivation as they feel empowered and trusted in work environment

DI- Loss of control by management since employees make decisions.

Question 41

The appropriateness of different management styles against factors

Answer 41

-Time
-Experience of employees
- nature of task
-manager preference

Question 42

Time: which works best for management styles

Answer 42

Autocratic Limited |
persuasive |
consultative |
participative extended v

Question 43

Experience of employees- which works best for management styles

Answer 43

Autocratic inexperienced |
persuasive |
consultative |
participative highly experienced v

Question 44

Nature of tasks- which works best for management styles

Answer 44

Autocratic simple |
persuasive |
consultative |
participative complex v

Question 45

Manager preference- which works best for management styles

Answer 45

Autocratic. high desire control
persuasive |
consultative v
participative low desire control