Business unit 3 AOS 1 Flashcards
Sole trader
business structure that is owned and operated by one individual.
Partnership
business structure that is owned by two to 20 owners
Public listed company (LTD)
incorporated business that had unlimited number of shareholders
lists and sells its shares on the ASX.
Private limited company (PTY, LTD)
incorporated
business structure
thas at least one director and a maximum of 50 shareholders.
Social enterprise
aims to fulfil a community or environmental need by selling goods or services.
government business enterprise (GBE)
owned and operated by the government.
Sole trader advantages and disadvantages
- 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
Partnership advantages and disadvantages
- 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
private limited company advantages and disadvantages
- 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.
Public listed company advantages and disadvantages
-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.
Social enterprise advantages and disadvantages
-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.
government business enterprise advantages and disadvantages
- 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.
What are business objectives
-To make a profit
-Increase market share
-To improve efficiency
-Improving effectiveness
-To fulfil a market
-To fulfil a social need
-Meeting shareholder expectations
To make a profit?
A fundamental objective for businesses, Profit occurs when a business creates more revenue than expenses
What is a profit?
total revenue earned minus total expenses
Increase market share?
is a business percentage of total sales within an industry
To improve efficiency?
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
Improving effectiveness?
The ability of a business to achieve their objectives
A business stated objectives could be :increase profit
:increase market share
To fulfil a market need?
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.
To fulfil a social need?
improving society and the environment through business activities.
what are dividends
regular sums of money paid out to shareholders from a business’s profit.
what is Capital gain?
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.
Meeting shareholder expectations?
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
unlimited liability
The owner is fully responsible for any debts incurred by the business
-Sole trader
-Partnership
Limited liability
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
What is a stakeholders?
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
Owners?
individuals who establish, invest, and have a share in a business, often with the goal of earning a profit from
its operations.
Owners invested interest?
a positive relationship with other stakeholders. To enhance reputation & performance
receive a return on their investment
Managers?
vested interest?
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
Employees?
vested interest?
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
customers?
vested interest?
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
Suppliers?
vested interest?
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
General community?
vested interest?
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
stakeholder conflicts
Owners: increase profit and decrease manager salary -> managers: want greater rewards and increase salaries
Look in book for more
management styles
Autocratic MS
Persuasive MS
consultative MS
Participative MS
Laissez- faire MS
autocratic management style (telling, one way)
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
Persuasive management style (persuading, one way)
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
Consultative management style ( asking, two way)
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
Participative management style ( sharing, two way & group)
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
Laissez- faire management style (freedom, two way & individual)
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.
The appropriateness of different management styles against factors
-Time
-Experience of employees
- nature of task
-manager preference
Time: which works best for management styles
Autocratic Limited |
persuasive |
consultative |
participative extended v
Experience of employees- which works best for management styles
Autocratic inexperienced |
persuasive |
consultative |
participative highly experienced v
Nature of tasks- which works best for management styles
Autocratic simple |
persuasive |
consultative |
participative complex v
Manager preference- which works best for management styles
Autocratic. high desire control
persuasive |
consultative v
participative low desire control
