U3 AOS1 Flashcards
Business Foundations
sole trader definition
an individual owner of a business entitled to keep all profits after tax has been payed but liable for all losses, operating under their own name or RBN.
sole trader features
Simplest and most inexpensive
Total responsibility for decisions, planning, operations
Rights to all profits and capital
Owner held totally responsible for all debts of the business unlimited liability.
partnership definition
legal form of business ownership, 2 or more people work together with a view of making a profit
partnership features
2 types, general and limited partnership
Combining expertise and resources of 2-20 people
Each partner is jointly reliable for debts unlimited liability
No perpetuity, not ongoing if a partner leaves/dies, new partnership must be formed.
private listed company features/definition
- shown by (Pty Ltd)
- seperate legal entity where there is a minimum of 1 shareholder and a max of 50 non-employee shareholders
- limited liability
- has perpetuity
public listed company definition/features
- (Ltd)
- separate legal entity
- Used to increase number of shares and access to more capital.
- Limited liability for debts incurred (separate legal entity)
- Has perpetuity
social enterprise definition
private sector business that distributes profit to benefit the community rather than individual shareholders
social enterprise features
Uses strategies to maximise improvements in human wellbeing or the environment.
Aims to earn revenue while achieving social, culture, community, or environmental outcomes.
government business enterprise definition
government owned and operated, they seek to run profitably by controlling costs and selling their good at a price to cover costs
government business enterprise feature
Governments act as the shareholders and have a strong interest in their performance and financial returns.
business objectives
statements of desired achievement that provide direction for the business. Successful business would have had clear objectives established.
What is the acronym for businesss objectives, and what are the objectives
PMEEMSS
objective of to make a profit
the difference between revenue and expenses. If a business makes a profit, it may be considered successful
Profits may be earned to unsure survival, growth and expansion over time.
objective of to increase market share
proportion or percentage of the market (and total sales) controlled by the business.
Aiming to gain a greater percentage of the market through its sales resulting in an increased revenue stream.
Buis should aim to maximise appeal of their product/service where possible.
objective of to improve efficiency
the best use of resources in the production of goods and/or services
A buis should review and evaluate operations to determine improvements (whilst working with financial constraints of the business)
objective to improve effectiveness
degree to which a business achieves its stated objectives
Businesses must have strategies in place to achieve stated objectives.
They must also consider tools to use to assess whether the outcome meets the stated objectives.
objective of to fulfil a market need
set of actual or potential buyers of a product or service.
It is important for a business to recognise and satisfy the needs of its market.
This allows the business to increase profits and sell more products and services (enabling greater concentration on the size and type of market)
objective of to fulfil a social need
relate to the role of a business in the community.
Going beyond the financial objectives, focusing on the business being a ‘good citizen’
May relate to the provision of services, contribution to causes, provision of local job opportunities and focussing on the environment.
Can also be promoted through policies and practices within the workplace.
objective of to meet shareholder expectations
shareholders expect to make a profit, for shares to increase in value and dividends to be paid.
Shareholder: owner of a company, earn money for the business
Stakeholders: an individual or a group that has direct or vested interest in the activities of a business e.g. employees, customers, competitors
stakeholder
An individual or a group that has a direct or vested interest in the activities of a business, can affect the operations of a business in a positive or negative way
*All shareholders are stakeholders, not all stakeholders are shareholders
what are the 7 stakeholders
owners/shareholders
managers
employees
customers
suppliers
competitors
general community/society
stakeholder interest of owner/shareholder
Profitability of business
Ethical operations via adoption of socially responsible behaviour
(For shareholders) to receive dividends/increased share value
stakeholder interest of managers
Involved in setting and achieving business objectives
Fair remuneration and benefits
Job satisfaction, secure position and career development opportunities
Work for ethically and socially responsible business
stakeholder interest of employees
Fair wage/salary provision
Work for ethically and socially responsible business
Opportunity for career development
Gain of job satisfaction and security
stakeholder interest of customers
To obtain high quality goods/services (products)
Establish a relationship with the business
To support Australian owned and Australian made
Ensuring the business is acting in an ethically and socially responsible manner
stakeholder interest of suppliers
Ensure their customers business is profitable because of their supply & 4 payment
Value prompt payments
Establish long term supplier preferred relationship
stakeholder interest of competitors
Gain competitive edge over the business (greater market share)
Differentiation of good or service
Compare and evaluate performance against rival businesses
stakeholder interest of the general community/society
Benefit from employment opportunities provided by the business
Participate in the community
Ensure the business is an ethically and socially responsible citizen who considers the environment and sustainability in their operations
what can conflicts between stakeholders occur about
Profit/distribution of profit
Prompt and fair payment
Provision of good quality goods/supplies
Consideration of CSR
Environmental issues because of inputs, process or business outputs
what are the 5 management styles from task to people oriented
Autocratic, Persuasive, Consultative, Participative, Laissez-Faire (CLAPP)
autocratic management style define
all decision-making is centralised, there is little delegated authority and communication is one-way (downwards)
features of an autocratic management style
Desire for control
Centralisation of decision making
Task Emphasis, procedures must be followed
Limited opportunities for change
Communication from them at the top down
Expectations of compliance, rewards (monetary) used to motivate staff,
Don’t think staff will be motivate by kindness from employer, so they don’t bother
persuasive management style define
managers make the decisions, then persuade workers of the benefits of those decisions
features of a persuasive management style
Desire for control
Centralisation of decision making, decision explained to staff, emphasis on task
Managers can interpret a situation and can convince staff to work towards achieving a goal in the way desired by the manager
Some value placed on staff contributions
Top-down communication
Expectation of compliance, some limited opportunities for change
consultative management style define
manager consults with employees when discussing an issue, however, the ultimate decision is made by the manager based on the suggestions and input received
features of consultative management style
Two-way communication as opinions and feedback are sought
Consultation is important, staff performance linked to consultation process, a reasonable level of employee involvement in decision making
Control is centralised but staff ideas are taken into an account
Staff are more likely to perform when given a say
participative management style define
decision making is performed as a team with management and staff working together, with the manager retaining responsibility and accountability
features of a participative management style
Decentralisation of control and authority
Team/department/individual setting of objectives
Focused on people, not task, encourages motivation as staff needs are met
Trust in staff is high
Open communication
Positive corporate culture, staff contributions are valued
laissez-faire management style define
leaves most of the decision making and running of the business to employees, they leave broad outlines of internal environment constraints are made known by management to employees such as budget, timelines, and objectives
features of laissez-faire management style
Employees are empowered to set own objectives, solve their problems, and make decision
Teamwork is usual and communication is open and two-way
Generally used in workplaces that have highly educated and skilled staff
High levels of intrinsic motivation are common amongst such staff
acronym for appropriateness of management styles, and what it stands for
MENT
- manager preference
- experience of employees
- nature of the task
- time
appropriateness of time
How much time is available is important when deciding which management style to use
If a quick decision needs to be made, a task-oriented style such as autocratic could be justified
If there is more time for discussion with employees and other stakeholders, an employee-oriented style could be more appropriate
appropriateness of nature of task
Manager considers the type of task that needs to be performed
If tasks are simple, manager might quickly communicate what needs to be completed (task-oriented style)
If tasks require more thought and discussion, may be more valuable to include employees in decision making process (employee-oriented approach)
appropriateness of experience of employees
If employees have vast experience and knowledge regarding a situation, the manager may rely on that experience and use the employee-oriented styles
If employees lack experience and knowledge, they won’t be able to offer meaningful suggestions, in this instance the manager may decide to use more task-oriented style
appropriateness of manager preference
Many managers have a preferred style to use
Some like to have full control over situations and would prefer the more task-oriented styles or autocratic and persuasive
Other managers prefer to use the experience of employees by embracing the more employee oriented consultative, participative or laissez faire styles of management
management skills acronym and what it stands for
CLIPDD
management skill of communication define
process of creating and exchanging information between people (sender and receiver) that produces the required response
features of management skill communication
Used in internal and external business environments
Communication must be effective, clear, concise, articulate
Communication skills are vital to clarify tasks, explain business vision, dealing with suppliers and resolving conflict
management skill of leadership define
skill of manager when guiding workers towards achieving a business’s goals
features of the management style leadership
Motivate, engage, inspire, communicate
Act as a role model, and mentor
Understand the skills of others
Resolve conflict
Be able to build teams and respond quickly to change
interpersonal management skill define
skills used every day to communicate and interact with other people, individually and in groups
interpersonal management skill features
Be a team player, be able to motivate/encourage others
Work effectively with others in internal and external environment
Be empathetic and assertive
Be a good communicator, be ethical, be honest
planning management skill define
formalised decision-making process that is future oriented
planning management skill features
Ability to define business objectives and decide on strategies to achieve them
Can assist business to reduce uncertainty about the future
Levels of planning:
Strategic: long term 2-5 years, impacts direction & objectives that business pursues
Tactical: medium term 1-2 yrs., implement strategic plan & quickly respond 2 change
Operational: short term up to a yr., planning around rosters, reorganising
delegation management skill define
passing of formal authority down the hierarchy to perform tasks and make decisions, responsibility remains with the person delegating
delegation management style features
Important to enable objectives of business to be attained
Delegation builds trust, supports, motivates employees to learn new skills
Clear communication to the subordinate to ensure they know what’s going on
decision making management style define
multistep approach whereby a selection is made between a range of different alternatives
decision making management skill features
Ability to identify options available then choose a course of action
Effective decision-making means to identify options and evaluate within a strict timeframe
Using a systematic process when trying to reach a decision reduces the likelihood of overlooking important factors that should be considered
relationship between management styles and management skills
All managers have a particular style and al have skills.
The types of style used will determine the skills that are used AND how they are used
Every style of manager uses every skill, but they use it in a DIFFERENT WAY
define corporate culture
system of shared values and beliefs of people within a business
define official corporate culture
desired culture that a business wished to establish, and convey to the public
how to see official corporate culture
Formal written expression of the values and beliefs of the business
Who we are and what we say we do.
Visible through business or company documents, goals, mission and official statements, often slogans and logos are developed to represent culture.
define real (unofficial) corporate culture
actual values or beliefs present in a company, observable from dress, behaviour, way employees and managers relate to eachother.
how to see real corporate culture
What happens in a business
Who we actually are and what we do.
Obtained through observation of what occurs and the real relationships and interactions between people.
indicators of positive corporate culture
- Values and practices
- Symbols
- Heroes
- Rituals, rites, celebrations
- Physical environment, spaces to interact
