U3: AOS1: Business Foundations Flashcards
Sole Trader
One owner, unlimited liability, retains all profits
Liability
Any loss or debts of the business
Advantages of a sole trader
Low cost, simple, complete control, no partner disputes
Disadvantages of a sole trader
Unlimited liability, burden of management, difficult to operate when sick, need to perform variety of tasks
Partnership
2-20 owners. All partners equally responsible for liability.
Advantages of a Partnership
Low startup cost, shared responsibilities, pooled funds
Disadvantages of a Partnership
Personal Unlimited liability for all debts, possibility of disputes
Private Limited Company
Has at least one shareholder, and a maximum of 50 non-employee shareholders.
Advantages of private limited company
Limited liability, easier to attract finance, easy transfer of ownership, perpetual succession, company tax rate lower
Disadvantages of private limited company
Cost of formation, company is taxed, public disclosure, inefficiences
Public Listed Company
Incorporated business with a minimum of five shareholders, and shares are trader on the ASX
Advantages of a public listed company
Can attract extra capital by issuing shares on the ASX, Easy transfer of ownership
Disadvantages of a public listed company
Highly complex business structure, significant establishment costs, requires accountability and compliance
Social Enterprise
Has the objective of fulfilling a social need and invests profit into a social need or back into the business
Advantages of a social enterprise
Can meet a demand that commercial businesses may not, meeting a social need may have a positive effect on market share
Disadvantages of a social enterprise
Difficulty in obtaining capital for startup, can be difficult to focus on business objectives and social objectives
Government Business Enterprise
Government owned and operated
Advantages of a government business enterprise
Can carry out business in areas that private companies would be hesitant to invest in, can give healthy competition to other businesses, can operate with some independence from the government
Disadvantages of a government business enterprise
Political interference in the day-to-day operation, inefficiencies, less accountability, heavily regulated
Examples of business objectives
To make profit, to increase market share, to improve efficiency, to improve effectiveness, to fulfil a market need, to fulfil a social need and to meet a shareholder expectations.
What are some business Stakeholders
Owners, managers, employees, customers, suppliers, general community
Company structures
A company structure is incorporated and is a sperate legal entity to an individual or individuals
Stakeholder Conflict
Different stakeholders have competing values or interest for the business
Social entrepreneur
A person who establishes an enterprise with the aim of solving a social problems or effecting social change
Objectives
Statements of desired achievement that provide direction for the business
What is a stakeholder?
Someone that has a direct or vested interest in the activities of a business
Autocratic| Management Style
Manager tells staff what decisions have been made.-Highly centralized, communication from top down, no discussion.
Persuasive| Management Style
Manager makes decision than persuades workers of the benefits.-Decision making rests solely on manager, however employee may feel better about a decision because it is explained.
Consultative| Management Style
When the manager consults employees before making decisions.-Seeks input-Takes into account the opinions of team members
Participative| Management Style
Where the manager unites with staff to make decisions together-Decentralized decision making-two way communication-management ultimately retains control
Laissez-Faire| Management Style
Employees assume total responsibility for workplace operations-Approach problems and tasks in their own way-only constraint being budgets, timelines and goals
Skills
The abilityto do somethingwell, gainedthrough trainingand experience
Communication| Management Skill
A process ofcreating andexchanginginformationbetween peoplethat producesthe requiredresponse.
Personal communication| Dot Point of Management Skill “Communication”
Sharing information betweenthe manager and subordinates
Internal organisational communication| Dot Point of Management Skill “Communication”
Systems used to share with internal stakeholders such as employees
Delegation| Management Skill
Passing ofauthority downthe hierarchy toperform tasks ormake decisions
Planning| Management Skill
Formaliseddecision-makingprocess that isfuture-oriented
SWOT Analysis| Management Skill “Planning” Dot Point
An assessmentof the internalstrengths andweaknessesand the externalopportunitiesand threats fora business in agiven situation
Strategic Planning| Management Skill “Planning” Dot Point
Long term planning undertaken by senior management to achieve business objectives
Operational Planning| Management Skill “Planning” Dot Point
Thedetailed, short termplanningundertaken by abusiness
Tactical Planning| Management Skill “Planning” Dot Point
Timeframe is mediumterm. Undertaken bymiddle-levelmanagement.
Leading| Management Skill
The skillof a managerwhen guidingworkers towardsachieving thegoals of thebusiness
Decision-Making| Management Skill
A multistepapproachwhereby aselection ismade between arange of differentalternatives
Interpersonal Skills| Management Skills
Skillsused every dayto communicateand interact withother people,both individuallyand in groups
Corporate Culture| Corporate Culture
System of sharedvalues and beliefsof people within abusiness
Official Corporate Culture| Corporate Culture
Formal written expression of values and beliefs desired by management
Real Corporate Culture| Corporate Culture
Actual practises and values that are actually held by the employees in a business
What are some strategies to develop positive corporate culture?| Corporate Culture
Creating mission, vision and values statementsEstablishing management structuresChoice of management stylesImplementing policiesBusiness documentation and forms of communicationPeoplePhysical environment and material symbolsStores, narratives and rituals
Benefits of Delegation| Dot point of Delegation
Assists with smooth flow of production, acts as a time saver, provides opportunity for development and training.
5 Step Process for Delegation| Dot point of Delegation
Analysis, Appointment, Briefing, Control, Apprasial.
5 Step Process for Planning
Set Goals, Gather info, establish promoting and restricting factors, develop action plan, evaluate and review
Details of Decision Making
Requires use of a Systematic Approach that is evidence based. Helps reduce errors and bad decisions, reflects the management style.
Best skills for Autocratic style
High: Planning, decision-making, communication
Best skills for Persuasive style
High: Planning, decision-makingMedium: Communication, delegation, interpersonal
Best skills for Consultative style
High: Planning, decision-making, communication
Best skills for Participative style
High: Communication, interpersonal, leadingMedium: Decision-making, delegating
Best skills for Laissez-Faire style
High: Communication, delegating, leading
Market Share
Market share is the business’s percentage of total sales controlled by the business in a industry
Efficiency
The best use of resources in the production of goods and services
Effectiveness
How successful a business is at achieving its objectives
What are business owners concerned with?| Stakeholder conflict
Profit, market share, adherence to rules
What are Managers concerned with?| Stakeholder conflict
Set and achieve objectives, career development, fair remuneration, job satisfaction
What are employees concerned with?| Stakeholder conflict
Fair pay, safe workplace, career advancement, job satisfaction, secure job
What are customers concerned with?| Stakeholder conflict
Quality product, customer service, ethical and socially responsible business
What are suppliers concerned with?| Stakeholder conflict
Ensure that the business is profitable, paid promptly, long term supplier relationship
What is the general community concerned with?| Stakeholder conflict
Business to participate in the community, ethical business, socially responsible business
Advantages of Autocratic
Quick decisions, made by experienced leader, communication is direct
Advantages of Persuasive
Decision making is quick, suits high risk decisions
Advantages of Consultative
Variety of ideas, employee involvement, motivation and employee satisfaction
Advantages of Participative
Trust and faith in employees, morale increased, Open communication
Advantages of Laissez-Faire
Employee independence, motivation and satisfaction, creavity and innovation, teamwork
Disadvantages of Autocratic
Quick decision is not always the best, discourages teamwork and opinions, low motivation and satisfaction
Disadvantages of Persuasive
No input from workers, workers can still feel alienated, employee initiative and commitment overlooked
Disadvantages of Consultative
Empoyees may not understand, time-consuming, employees may not feel valued if their ideas aren’t used
Disadvantages of Participative
Can give rise to employee conflict, time consuming and lack of contribution by all employees
Disadvantages of Laissez-Faire
Lack of guidance can cause some employees to have a lack of direction, does not suit untrained employees or those who need structure
How is the appropriateness of management styles measured?
Nature of the task, time, experience of the employees and the manager’s preference.
