Specific SAC cue cards AOS1 Flashcards
sole trader definition
A business structure that is owned and operated by one individual
what are 4 ways to identify a sole trader?
- unlimited liability
- owner retains all profits after personal income tax is paid
- simple and cost effective
- single individual makes all decisions
partnership definition
A business that is owned by 2 to 20 people
what are 4 ways to identify a partnership?
- 2-20 owners
- simple and cost effective structure
- profits shared between owners
- unlimited liability
Private limited company definition
An incorporated business structure that has at least one director and a maximum of 50 shareholders
what are 4 ways to identify a private limited company?
- pty ltd after business name
- only up to 50 shareholders
- limited liability of the shareholders
- shares can only be sold privately
public listed company definition
An incorporated business that has an unlimited number of shareholders and lists and sells its shares on the ASX
what are 6 ways to identify a public listed company?
- ltd after business name (limited liability)
- shares sold publicly
- unlimited shareholders
- limited liability of shareholders
- stricter regulations due to public listing
- have to display financial info publicly
social enterprise definition
Type of business that aims to fulfil a community or environmental need by selling goods or services
what are 2 ways to identify a social enterprise?
- mission, focus is on social or environmental cause
- profits are reinvested in the business or donated to charities
Government Business Enterprise definition
A business that is owned and operated by the government
what are 3 ways to identify a GBE?
- owned by the government but managed separately
- exists to provide a public service
- accountable to the government and the public
what are business objectives?
the goals a business intends to achieve
what are the 7 main business objectives?
- to make a profit
- to increase market share
- to meet shareholders expectations
- to fulfil a market need
- to fulfil a social need
- to improve efficiency
- to improve effectiveness
what is making a profit?
make more revenue than business expenses
what is increasing market share?
to increase the total sales within an industry, and it reflects a businesses competitiveness
what is to meet shareholder expectations?
providing a financial return on their investment in the company, which is in the form of dividends or capital gains.
what are dividends?
regular sums of money paid out to shareholders from a business’s profit.
what is to fulfil a market need?
When a business addresses customer needs that are currently unmet or underrepresented by other businesses in the same industry
what is to fulfil a social need?
improving society and the environment through business activities.
what is improving efficiency?
How well a business uses its resources when producing a good or service.
what is improving effectiveness?
Effectiveness is the extent to which a business achieves its stated objective
what is the difference between effectiveness and effciency?
effciency is ensuring that the materials are not going to waste, whereas effectiveness is to what extent the business is completing their objectives.
what are stakeholders?
Stakeholders are individuals, groups, or organisations who have a vested interest in the performance and activities of a business.
what are 3 internal stakeholders?
- owners
- employees
- shareholders
what are 3 external stakeholders?
- customers
- competitors
- general community
owners definition
individuals who establish, invest, and have a share in a business, often with the goal of earning a profit
employees definition
individuals who are hired by a business to complete work tasks and support the achievement of its objectives
shareholders definition
Individuals who have purchased shares in a company and are therefore part owners of that company
customers definition
Individuals or groups who interact with a business by purchasing and utilising its goods and services
competitors definition
a business rival in the same market offering the same/similar product or service of a business
general community definition
individuals and groups who are impacted by a business’s operation and decisions often because they are located in close proximity to the business
what are 2 interests of owners
- having positive relationships with other stakeholders to enhance business reputation and performance
- receiving a return on their investment through business growth in the form of increases in its share price, dividends or profits
what are 3 interests of employees
- to receive a fair wage or salary
- to receive sufficient training
- To gain job satisfaction
what are 3 interests of shareholders
- profitability of the business
- increasing the value of their investment through capital gains and dividends (portion of the profits made)
- ethical business operations
what are 3 interests of customers
- to receive high-quality goods and services at affordable prices
- to receive high levels of customer service
- to potentially establish a long-term relationship with the business
what are 3 interests of competitors
- to gain a competitive edge over another business
- to gain a larger market share
- to differentiate the products or services from their competitors
what are 3 interests of the general community
- to ensure the business operations are environmentally responsible and sustainable
- to increase the local employment rate and boost the local economy
- to observe business activities that lead to improvements in the community and environment
what are management styles
the approach and manner in which employees are directed and motivated within a business.
what are the 5 management styles
autocratic, persuasive, consultative, participative, laissez-faire
what are 3 things to look for when identifying a management style?
- communication
- decision-making
- employee involvement
what does the autocratic management style involve
a manager making decisions and directing employees without any input from them
what types of control and communication is used in a autocratic management style
centralised control, and one-way top down communication
what does the persuasive management style involve
a manager making decisions and communicating the reasons for those decisions to employees without their input (trying to convince the employees)
what types of control and communication is used in a persuasive management style
centralised control, and one-way communication
what does the consultative management style involve
a manager seeking input from employees on business decisions but making the final decision themselves
what types of control and communication is used in a consultative management style
centralised control, two-way communication
what does the participative management style involve
a manager sharing information with employees so that employees can participate in decision-making (making decisions jointly)
what types of control and communication is used in a participative management style
decentralised control, two-way communication
what does the laissez-faire management style involve
a manager communicating business objectives to employees and giving them freedom to make decisions independently
what types of control and communication is used in a laissez-faire management style
decentralised control, two-way communication
what are 2 advantages of an autocratic management style
- Directions and procedures are clearly defined; there is little uncertainty
- Employees’ roles and expectations are clear
what are 3 disadvantages of an autocratic management style
- No employee input; fewer ideas; employees less able to develop; employees don’t feel valued
- No responsibility for lower-level staff, resulting in lower job satisfaction & low motivation
- Increased potential for conflict
what are 3 advantages of an persuasive management style
- Decisions can be made quickly as there is no consultation
- Managers gain some trust/support by explaining reasons for their decisions
- More positive response, as employees receive more information
what are 3 disadvantages of an persuasive management style
- Attitude and trust remain negative as there is no employee participation
- Employees remain frustrated because they are denied any participation in the decision-making process
- Time may be wasted at meetings that justify decisions, but don’t seek employee input
what are 3 advantages of an consultative management style
- there is greater variety of ideas, which can help make a better decision
- Employees have some ownership in the way in which the business is run and take more interest in it
- Employees are more involved in the business so can feel a sense of fulfilment which can improve morale
what are 3 advantages of an participative management style
- Positive relations between management and employees = a lower likelihood of disputes
- The two-way communication process = greater flow of ideas
- High motivation and job satisfaction
what are 3 disadvantages of an consultative management style
- it takes time to consult with employees prior to making decisions
- Some issues don’t suit a consultation process
- if the process is not consistent, staff will be uncertain of their roles
what are 3 disadvantages of an participative management style
- More time consuming, as more views must be considered
- Compromises made rather than clear, decisive decisions
- Not all employees may wish or be equipped to contribute
what are 3 advantages of an laissez-faire management style
- Helps employees feel a sense of ownership towards the project they are working on
- Encourages creativity, which is conducive to a dynamic working environment
- Communication is open and ideas are shared
what are 3 disadvantages of an laissez-faire management style
- Resources, including time and money may be misused or used ineffectively, due to the loss of management control
- May lead to creative differences and thus internal conflict
- Focus on business objectives can be easily lost
what are the 4 factors when deciding a management style that needs to be considered
time, employee experience, nature of the task and manager preference
what management styles are suitable when there is limited amount of time and why
autocratic or persuasive as the manager can make decision quickly and do not need to discuss with employees
what management styles are suitable when there is a lot of time available and why
consultative, participative, or laissez-faire as there can be lots of discussion about the best option (two-way discussions)
what management styles are suitable when they have inexperienced employees and why
autocratic or persuasive, as they will be unlikely be able to help
what management styles are suitable when they have experienced employees and why
consultative, participative, or laissez-faire as they can give there experienced opinion and ideas (two-way communication)
what management styles are suitable when the tasks are simple and why
autocratic or persuasive, the discussion of ideas may not be needed so the manager can figure it out themselves
what management styles are suitable when the tasks are complex and why
consultative, participative, or laissez-faire
they allow for two-way conversations and managers and employees can make more innovative and well-informed decisions by sharing ideas and suggestions
what management styles are suitable when the manager likes to have control and why
autocratic or persuasive, has centralised decision-making and one-way communication
what management styles are suitable when the manager likes to have shared control and why
consultative, participative, or laissez-faire, allows for two-way conversations and employee involvement in the decision-making processes
what are management skills
the abilities or competencies that managers use to complete tasks for business objectives
what are the 6 main management skills?
- planning
- decision-making
- communication
- delegation
- interpersonal skills
- leadership
planning definition
The process of determining a business’s objectives and establishing strategies to achieve these aims.
what are 2 examples of how planning can be used?
- identify training needed
- plan product launches
decision making definition
The skill of selecting a suitable course of action from a range of plausible options
what are 3 examples of how decision making can be used
- To set long-term objectives
- To guide the development of new products or services,
- To allocate resources effectively
communication definition
Communication is the skill of effectively transferring information between parties.
what are 3 examples of how communication can be used
- To clarify tasks
- To resolve conflict
- To maintain good working relationships
delegation definition
Delegation is the skill of assigning tasks and authority to lower-level employees in the business hierarchy.
what are 2 examples of delegation being used
- To ensure efficient task distribution and meet tight deadlines
- To provide growth opportunities for employees
interpersonal definition
the skill of creating positive interactions with other employees
to foster beneficial professional relationships
what are 3 examples of interpersonal being used
- Active listening
- Empathy towards employees
- Collaboration (Actively participating in group discussion)
leadership definition
the skill of motivating others in order to achieve a business’s objectives
what are 3 examples of leadership being used
- To set a vision
- To lead by example
- To build team culture
what management skills are used frequently or sometimes in the autocratic style? (2,1)
- planning, decision-making
- communication
what management skills are used frequently or sometimes in the persuasive style? (2,3)
- planning, decision-making
- communication, delegation, interpersonal
what management skills are used frequently or sometimes in the consultative style? (3,3)
- planning, decision-making, communication
- delegation, interpersonal, leadership
what management skills are used frequently or sometimes in the participative style? (3,2)
- communication, interpersonal, leadership
- decision-making and delegation
what management skills are used frequently or sometimes in the laissez-faire style? (3,1)
- delegation, communication, leadership
- interpersonal
what is corporate culture (CC)
the shared values and beliefs of a business and its employees.
what does official corporate culture involve
the shared views and values that a business aims to achieve
what does real corporate culture involve
the shared values and beliefs that develop naturally within a business, and are practised on a daily basis by its employees.
what are 3 indicators of official corporate culture
- logos
- slogans
- written policies
what are 3 indicators of real corporate culture
- language used
- dress
- behaviours of employees
what are 3 benefits of positive culture
- Increased productivity
- Increased work ethic
- Greater profitability
what are 3 costs of negative culture
- Decreased productivity
- Decreased work ethic
- Decreased profitability
what is unlimited liability
the personal legal responsibility a business owner has for an unincorporated business’s debts
what is limited liability
when shareholders are only liable to the extent of their original investment
meaning they are not personally responsible for the business debts
