SAC 1 Flashcards
Business foundations
Sole trader
a business owned and operated by one person
advantages of sole trader
owner has full control of the business decisions
easy to set up and register-inexpensive
disadvantages of sole trader
unlimited liability puts personal assets at risk to pay off debts
skills and knowledge limited to the owner
Partnership
a business structure owned and operated by 2 to 20 people
characteristics of partnership
easy and inexpensive to setup
unincorporated
advantages of partnership
greater range of expertise
shared workload
disadvantages of partnership
split profit
unlimited liability
private limited company
an incorporated business that has at least one director and up to 50 shareholders
characteristics of private limited company
incorporated structure, same legal entity, limited liability
director responsible for overseeing affairs of company
advantages of private limited company
greater access to capital, as incorporated business more inclined from banks to get loans
limited liability, different legal entity
public listed company
an incorporated business that has an unlimited number of shareholders and sells its shares on the asx
characteristics of public listed company
-must produce annual financial reports
managed by board of directors
disadvantage of public listed company
conflicts could arise due to shared decision making
expensive to maintain as annual fees are paid to the ASX
advantages of public listed company
shareholders have limited liability
greater access to expertise as more people are involved with the business
social enterprise
a type of business that aims to fulfil a community or environmental need by selling goods or services
characteristics of social enterprise
must donate a minimum 50% of profits
earns most of revenue through donations
advantages of social enterprise
community benefits from business activities
autocratic management style
involves a manager making centralised decisions and directing employees without any input
business objectives
goals that a business intends to achieve that gives direction to the business
capital gains
an increase in value of a share
centralised control
one individual making decisions (manager)
communication
the ability to effectively transfer information from a sender to receiver
consultative management style
involves a manager seeking input from employees on decisions but still being centralised
decentralised control
multiple people have authority to make decisions
delegation
the manager transfers authority and responsibility to employees to complete business tasks
dividends
regular sums of money paid out to shareholders
effectiveness
how a business achieves its objectives
efficiency
how well a business uses its resources in producing G & S
general community
individuals or groups effected by business decisions
government business enterprise
a profit driven business that is owned by the government but managed separately
incorporated
seperate legal entity
interpersonal skills
the ability to deal with people and build positive professional relationships with staff
laissez-faire management
involves a manager communicating business objectives to employees and giving them freedom to make decisions independently
leadership
ability to influence and motivate people to work towards the achievement
limited liability
protection of shareholders personal assets against a business debt
management skill definition
the behaviour of the manger when making decisions
managers
the people that overseeing different areas of the business to ensure its achieving its objectives
market share
a business’ percentage of the market
mission statement
Formally expressing why the business exists
objectives
the stated goals that a business aims to achieve in the future
official culture
shared views and values that a business aims to achieve, often outlined in written format
owner
individuals who establish, invest and have a share of the business
participative management style
involves a manager sharing and discussing information with employees so that employees can participate in decision making
planning
is the process of determining the business objectives and establishing strategies to achieve them
policies
the formal and written rules of the business
productivity
number of G&S that are produced compared to the number of resources used in production process
profit
revenue minus expenses
real culture
shared values and beliefs that develop organically within a business, practised daily by employees
shareholder expectations
part owners of the business, they expect dividends and capital gains
stakeholder definiton
groups of individuals that have a vested interest in the activities of a business
suppliers
individuals or groups that source materials and sell them to a business to use in the production of goods and services
unlimited liability
same legal entity and owner is responsible for business debts
vision statement
states what the business aspires to become
persuasive management
manager communicates reasons for business decisions, centralised decision making, one way commmunication.
stakeholders
managers, owners, customers, employees, general community, suppliers
types of management skills
delegation, communication, decision making, interpersonal skills, leadership
style approipriateness
time, nature of the task, experience of employees, manager preference
decision making
is the skill of selecting a suitable course of action from a range of plausible options
types of offical culture
policies, vision statement
types of real culture
celebrations, rituals, office layout
types of business objectives
increase profit, increase market share, fulfil a social need, fulfil market need, meet shareholders expectations
meet share holder expectations
captial gains on investment, paid in dividends
owners interests
Receiving a return on their investment, often through business growth
manager interests
Being recognised for the achievement of business objectives.
supplier interests
Paid on time
Professional relationship with business
Continued business to continue revenue
Discuss
Advantages and disadvantages
evaluate
strengths snd weaknesses overall statement
outline
brief overview
compare
similarities and differences
