Chapter 1 Flashcards
Unincorporated
is an owner and business being viewed as a single legal entity.
Unlimited liability
is the complete responsibility an owner has for a business’s debts
A sole trader
is a business structure owned and operated by a single person
A partnership
is a type of business owned by two to 20 owners
A private limited company
is an incorporated business with at least one director and up to 50 selected shareholders.
A public listed company
is an incorporated business that can sell shares in an open market to an unlimited number of shareholders
A social enterprise
is a business that aims to make a profit and improve the community or environment.
Government business enterprise
is a profit driven business that is owned by but managed separately from the government.
make a profit
By generating more revenue than expenses, a business earns a profit which can then be distributed to owners and
shareholders.
increase market share
A business typically wants to increase its market share to become more competitive
within an industry
meet shareholder expectations
shareholders either expect an income from the business in the form of dividends or they hope to sell their shares at a higher price in the future after the business has grown
meet shareholder expectations
shareholders either expect an income from the business in the form of dividends or they hope to sell their shares at a higher price in the future after the business has grown
fulfil market need
A business fulfils a market need by providing products and services which meet the desires of a group of customers with similar needs
fulfil social need
A business fulfils a social need by improving the community and environment through it business activities.
Internal stakeholders
are groups who have a direct financial share or are employed by the business including owners, board of directors, investors, shareholders and employees.
External stakeholders
are groups that are outside a business but are concerned or affected by its activities including customers, suppliers and the
general community
Stakeholders
are individuals or groups that have a vested interest in the performance and
activities of a business.
Owner/shareholder
Invest funds into a business.
- A return on their investment through profits, dividends or increase in share price.
- Create and maintain a positive impact on other stakeholders.
Manager
Coordinate employees and tasks to achieve business objectives.
- Pay that matches the responsibility of managing the business.
- Status and recognition for work achievements.
- Opportunities for career advancement.
Employees
Complete a business’s work tasks.
- Fair pay and work expectations.
- Opportunities for professional development and promotion.
- Long term job security.
Customer
Purchase and use a business’s
products or services.
- A product or service that is of quality and value for money.
Supplier
Provide raw materials and resources
- To earn a profit by providing supplies.
- To maintain or increase its revenue.
General Community
Observe the impact of a business’s operations.
- Business activities that improves the community and environment.
Corporate social responsibility (CSR)
is the ethical conduct of a business beyond legal obligations to improve the social, economic and environmental outcomes of stakeholders
Advantages and disadvantages of implementing CSR practices.
ADVANTAGES
- CSR practices improve a business’s reputation and may lead to increased sales.
- CSR practices can increase employee satisfaction as they are working for an ethical business, therefore improving employee retention.
- Sustainable supplies last longer compared to unsustainable supplies, reducing the time needed to source supplies repeatedly
DISADVANTAGES
- Can be time-consuming to practice CSR
for multiple stakeholders at a time.
- CSR practices can be more expensive in
the short term.
Manager/Employees CSR considerations
- Provide work from home options.
- Provide flexible working shifts.
- Provide childcare facilities at the workplace.
Customer CSR considerations
- Ethical or green marketing that encourages sustainable purchases.
- Provide customer options that contribute to the general community of the environment.
Supplier CSR consideration
- Provide reasonable delivery schedules and fair payment for supplies.
General community CSR consideration
- Boost local economy by employing local workers.
- Reduce or recycle waste.
- Use renewable energy sources.
- Donate money, time or expertise to arts, sports and charitable organisations.
Operations as an area of management
produces the goods or services that a business sells to customers.
CSR considerations for the business activities within operations
- Use renewable energy sources or energy-efficient machinery and equipment in
production. - Source raw materials and resources from suppliers that provide fair pay and
working conditions to their employees. - Source sustainable raw materials and resources.
- Reduce or recycle waste generated during operations.
Human resources as an area of management
establishes and manages the relationship the business has with its employees, including their hiring, training and termination.
CSR considerations for the business activities within human resources.
- Hire local workers to decrease local unemployment rates.
- Provide internship placements for members of the community.
- Train employees to practice waste reducing methods.
- Improve the employability of employees by increasing their skills and experiences.
- Provide work from home options or flexible working hours.
- Provide additional workplace facilities such as a gym or childcare.
- Provide employees the time to volunteer for social and environmental causes.
- Provide support for employees to find further employment such as resume building or interview skills.
- Reassign employees to other parts of the business if their previous roles are no longer required.
Sales and marketing as an area of management
promotes and sells the business’s goods
or services to customers.
CSR considerations for the business activities within sales and marketing
- Encourage customers to only purchase goods or services
they require. - Encourage customers to purchase goods or services that use sustainable materials.
- Provide customers with sustainable packaging or reusable bags.
- Highlight important information for customers to make informed decisions e.g. health or energy ratings
of products. - Provide options that allow customers to positively contribute to the general community or the environment such as:
- Reusable plastic bags at supermarkets.
- BYO cup at cafes.
- Reduce the amount of packaging in the distribution process.
Finance as an area of management
handles the monetary requirements of a business.
CSR considerations for the business activities within finance.
- Obtain loans from banks that operate ethically.
- Provide funds for CSR initiatives such as:
- Purchasing energy-efficient machinery or equipment.
- Research and development for sustainable products
and processes. - Establishing a gym or childcare centre at the workplace.
- Donate a portion of profits to local arts, sports or charitable organisations.
- Produce honest and transparent financial statements
Technology support as an area of management
installs automated equipment, machinery
and devices within the business and provides assistance to employees on the use of these technologies.
CSR considerations for the business activities within technology support.
- Install energy-efficient equipment or machinery.
- Reduce the use of paper in the workplace by encouraging digital communication.
- Avoid exploitation of customer data for marketing purposes.
Corporate culture
is the shared values and behaviours practised by managers and
employees within a business.
Official corporate culture
is the shared values and beliefs desired by a business and expressed through elements such as formal rules and symbols
Real corporate culture
is the shared values and behaviours that are actually practised by
employees and managers and expressed through informal rules and habits
An autocratic management style
is a manager making decisions and directing employees
without any input from them.
Advantages and disadvantages of the autocratic management style.
ADVANTAGES
* Employees have less responsibility and risk as they only have to follow the manager’s instructions.
* Decision making may be quick as there
is no discussion or consultation with
employees.
* Work tasks can be completed quickly as directions are clear and employee
compliance is immediate.
DISADVATAGES
* All solutions and ideas generally come from the manager, as there is no contribution from employees.
* Business can not benefit from the ideas of
employees
* The cost of replacing employees who may
have left due to low motivation can be high.
A persuasive management style
is a manager making decisions and communicating the reasons for those decisions to employees without their input.
Advantages and disadvantages of the persuasive management style
ADVANTAGES
* Management has full control and may gain
employee’s trust and support by explaining
the reasons for decisions.
* Production can occur quickly due to quick
decision making which results in higher
outputs and potentially increased sales.
* Employees may feel like they are being
considered when the benefits of management decisions are explained to them.
DISADVANTAGES
* All solutions generally come from the
manager, as there is no contribution from
employees.
* Business can not benefit from the ideas of
employee
* The manager has to take some time to
explain business decisions to employees.
A consultative management style
is a manager seeking input from employees on business decisions but making the final decision themselves.
Advantages and disadvantages of the consultative management style.
ADVANTAGES
* Management can gain a variety of ideas
from the suggestions of employees which
can lead to better decision making outcomes.
* May have increased motivation because
they can contribute to decision making
and therefore feel valued by the business
* Potential for increased sales and profit
as the quality of decisions and outcomes
may be improved from employee input
DISADVANTAGES
* Employees may offer suggestions that are not suitable because they do not fully understand the complexity of a business situation
* Potential for employee conflict, resentment
or feelings of being undervalued when ideas
are ignored or overlooked during decision
making
* Decision making may be slower as the
manager consults employees for their input
A participative management style
is a manager communicating and discussing
information with employees in order to make decisions together
Advantages and disadvantages of the participative management style.
ADVANTAGES
* Employee motivation and productivity may
increase due to participation in decision making.
* Employees feel highly valued and can develop a sense of ownership over decisions and meeting business objectives.
* Potential for highly positive and supportive
work environments.
DISADVANTAGES
* Accommodating multiple views may
result in a compromise that decreases
the quality of decisions.
* Manager may lose some control as
employees now have decision making
power as well
* Decisions can take a long time as a
consensus between everyone has to be
reached.
A laissez-faire management style
is a manager communicating business objectives to employees and allowing them to make decisions independently.
Advantages and disadvantages of the laissez-faire management style.
ADVANTAGES
* May have increased motivation and
productivity due to a highly independent
work environment, high levels of trust
and empowerment.
* Can increase opportunities for employee
growth that are either coached or selfdirected.
* Potential for increased sales and profit
as the quality of decisions and outcomes
are improved through highly innovative
solutions
DISADVANTAGES
* Accommodating multiple views may result in a compromise that decreases the quality of decisions.
* Manager may lose some control as employees now have decision making power as well.
* Potential for employees to spend large
amounts of time on discussions regarding
decision making.
Choosing management styles
- Time available for a task
- Experience of employees
- Nature of tasks
- Manager preference
Planning
is the manager’s ability to establish objectives and strategies to achieve them.
Decision-making
is the manager’s ability to determine a suitable course of action for the
business from a range of alternatives
Communicating
is the manager’s ability to clearly exchange information with employees
and relevant stakeholders.
Delegating
is the manager transferring authority and responsibility to employees for
business tasks.
Interpersonal skills
is the manager’s ability to interact positively with employees to create
and maintain professional relationships.
Leading
is the manager’s ability to motivate employees to work towards business
objectives.
Relevant skills for the autocratic management style
- Only the manager can set objectives, choose strategies and
organise required resources. - The manager must consider all alternatives and choose
the appropriate course of action since they make all business decisions. - Used to clearly deliver information, instructions and provide feedback to employees.
- One way communication means the skill is not used to receive any information from employees.
- Used to assign tasks to different employees.
- Choosing the most appropriate employee is not as important
under this management style as tasks are usually simple or for
inexperienced employees. - Employees are expected to implement decisions made by the manager which reduces the need for interpersonal
relationships. - Leading is less important as employees are expected to implement the decisions made by the manager.
Relevant skills for the persuasive management style
- Only the manager can set objectives, choose strategies and organise required resources.
- The manager must consider all alternatives and choose the appropriate course of action since they make all
business decisions. - Used to clearly deliver information, instructions and provide feedback to employees.
- Used to explain the benefits and reasons for business decisions so that employees support them.
- One way communication means the skill is not used to receive any information from employees.
- Used to assign tasks to different employees based on their skills.
- Can be helpful in maintaining an employee’s desire to continue working for the manager.
- Can be helpful for employees to understand the purpose of the work.
- Leading is less important as employees are expected to implement the decisions made by the manager.
Relevant skills for the consultative management style
- Only the manager can set objectives, choose strategies and organise required resources.
- The manager must consider all alternatives and choose the
appropriate course of action since they make all business decisions. - Used to deliver information, instructions and provide feedback to employees.
- Also used to receive and respond to ideas or feedback from employees.
- Used to assign tasks to different employees based on their skills and preferences.
- Developing a positive relationship with employees can improve the quality of an employee’s contributions to business decisions.
- Motivating employees towards the business’s vision can improve the quality of employee’s contributions to business decisions.
Relevant skills for the participative management style
- Plans are made by groups which allows planning responsibilities to be shared between the manager and employees.
- Decisions are made by all members of the group, reducing the importance of this skill on the manager.
- Used to share and discuss information with employees to make
business decisions together. - Also used to receive and respond to ideas or feedback from employees.
- Decisions on the allocation of tasks may be made collectively by managers and employees.
- Productive and positive relationships can directly affect the quality of group discussions and decisions.
- Decisions made by the group are more likely to achieve objectives if employees are genuinely motivated by the business’s purpose and there is respect for the manager.
Relevant skills for the laissez-faire management style
- Strategies most likely determined by employees.
- Most business decisions are made by employees.
- Decision-making required on selecting appropriate employee for business tasks.
- Used to clearly outline the business’s vision to employees.
- Used to be kept up to date on the progress of objectives.
- Used to listen to requests from employees for additional support required to achieve business objectives.
- Used to select appropriate employees to take ownership of different areas of the business.
- Manager may have limited contact with employees.
- A clear business purpose and respect for the manager directly affects the quality of business decisions made by employees to
achieve business objectives.
