U3, Outcome 1 Flashcards
what are the types of Businesses
Sole Trader, Partnership, Private Limited Companies, Public Companies, Government Business Enterprise, Social Enterprise
Limited Liability definition
shareholders in a company will not be held personally responsible for the debts of that business.
Unlimited Liability definition
business owner is personally responsible for all the debts of their business
Sole Trader characteristics
- One owner
- An unincorporated business (not a separate entity from the owner) with unlimited liability
- Simple business structure
- Small businesses often rely on the owner for all decisions and responsibilities
- Owner keeps all profit
Partnerships characteristics
- Between 2-20 owners
- An unincorporated business (not a separate entity from the owner) with unlimited liability
- Simple business structure
- Decisions and responsibility is shared between owners as well as the profits
- Sometimes people act as a silent partner (financial investment, little management/decision making)
Private Limited Company characteristics
- Between 1-50 non-employee shareholders
- An incorporated business (a separate entity from the owner) with limited liability.
- Complex business structure
- At least one director
- Decisions and responsibility is shared between shareholders.
- Profit is paid to shareholders based on their share of the business in the form of dividends.
- Shares are offered only to individuals selected by the business
- Not listed on the ASX
Public Companies characteristics
- Between 1 and an unlimited number of shareholders
- An incorporated business (a separate entity from the owner) with limited liability
- Complex business structure
- At least one director
- Decisions and responsibility is made by directors, based on shareholder input at annual meetings.
- Shareholders receive profits as dividends based on their ownership.
- Shares are offered/sold publicly on the ASX to generate profit.
Government Business Enterprise characteristics
- Owned and operated by gov
- Trades with the aim of making profit
- Run like a company
- Aims to grow company value to shareholder (government) and pay profit to government
Social Enterprises characteristics
- A business which generates revenue through trade
- Operates with the primary objective of meeting a social need.
- Over 50% of their profit is used to fulfill this need.
name the 7 Business Objectives and their definitions
- To make a profit: Money a biz earns after subtracting all its costs and expenses from its total revenue. Profit = Revenue less expenses
- Market share: A business’s proportion of total sales in a market or an industry
- Fulfil a market need: To meet a need that consumers can’t find elsewhere.
- Fulfil a social need: To be able to fulfil a need of society or the environment in order to make the world a better place.
- To meet shareholder expectations:
- Efficiency: How well a business uses resources to maximise its outputs
- Effectiveness: The degree to which a business has achieved its stated objectives
explain ‘To make a profit’
- All biz’s seek to make profit, can be achieved by either; reducing expenses, increasing revenue
- Profit shared among owners/shareholders based on their stake (The portion given to shareholders is called dividends)
explain ‘To increase market share’
- Done through strategies like HR management, marketing, or operations to gain a competitive edge.
- To increase market share is to increase the percentage of industry sales made by biz
explain ‘To fulfil a market need’
- This could be by filling a large gap in the market or providing a more specialised product that meets the needs of a specific group.
- Market needs could be based on cost, quality, innovative services or appeal to changes in the customer base.
explain ‘To fulfil a social need’
- make world better place
- Businesses like social enterprises focus on serving the common good.
explain ‘To meet shareholder expectations’
Companies aim to:
- provide dividends to each shareholder.
- provide capital gains
- provide voting rights at annual meetings.
explain ‘To improve efficiency’
-biz’s aim to minimize the number of resources/inputs used whilst also maximising the number of outputs generated
- Ensures a potential reduction in costs and wastage
explain ‘To improve effectiveness’
- biz’s may set targets for themselves. (Unmet targets = ineffective planning by the business)
- biz’s must ensure effectiveness and plan for short and long term impacts.
Stakeholder definition
individual, group or organisation with interest in a businesses success or activities. This can be financial, commercial, or social interest in a business, either inside or outside the organization
name 6 stakeholders
Employees, general community, managers, owners, customers, suppliers
Owners towards a biz (characteristics)
- Want biz to make profit
- Shareholders want the business to profit, boosting share value and dividends.
- want biz to conduct itself in a socially responsible manner to improve reputation
Managers towards a biz (characteristics)
- Want biz to do well financially and expect fair pay in return
- Want biz to act responsibly which generally boosts sales and reputation
- Need to meet stakeholder expectations while securing their position in biz
Suppliers towards a biz (characteristics)
- Must deliver quality materials on time and in the right amount to ensure profit.
- Expect to be paid promptly and in full
Employees towards a biz (characteristics)
- Expect fair pay, proper training, and ethical treatment in return for their contribution to production
- Need to know that their job is secure in the long term
- Work-Life balance
Customers towards a biz (characteristics)
- Expect quality products, fair prices, and high level service
- Are more aware of socially responsible businesses and prefer to buy from them
General community towards a biz (characteristics)
- Expect bix will give back to society a portion of their profits
- Expect biz to show concern for their future welfare through employment
- Expect biz to show concern for the environment
Stakeholder Conflicts process
Stakeholders have various interests > Interests may conflict > Conflict may lead to concept of CSR (corporate social responsibility)
*look at example on notes
Management styles and order them from most control to least
autocratic, persuasive, consultative, participative and laissez-faire
Autocratic
- definition
- characteristics
def: managers tells staff what decisions have been made
- One way control (manager > employee - top down control)
- Manager dedicates all decisions
- Quick decisions (+)
- Employees motivation decreases (-)
Persuasive characteristics
- definition
- characteristics
def: managers attempts to sell decisions made
- One way control (manager > employee - top down control)Manager dedicates all decisions
- Quick decisions (+)
- Employees motivation decreases (-)
- Manager attempts to convince employees that management’s approach/decision is right way
Consultative characteristics
- definition
- characteristics
def: manager seeks input from employees before making decisions
- Manager consults employees before making decisions
- Two way communication process (opportunity for feedback)
- Manager still make decision
- Employees feel valued (+)
- Can be time consuming (-)
Participative characteristics
- definition
- characteristics
def: manager unites with staff to make decisions together
- 2 way communication and decision making
- Manager consults with employees and shares decision making authority
- A management style where decisions are spread out, not just made at the top.
- Knowledge is considered (+)
- Time consuming (-)
Laissez-faire
- definition
- characteristics
def: employees assume total responsibility/control of workplace operations
- Employees dictate business activities
- No central decision making
- Boosts job satisfaction and engagement (+)
- Employees assume complete responsibility which can lead to lack of direction (-)
SOME adv and dis of a sole trader
adv:
- Simple to establish; only need to register name with ASIC if different from owner’s name
- Simplest form
- Complete control
- Less costly to operate
- No taxes on business profits, only personal income
dis:
- unlimited liability
- End of business when owner dies/ hard to operate if sick
- Need to carry all losses
- Need to perform wide variety of tasks
SOME adv and dis of a partnership
adv:
- Low startup costs
- Less costly to operate than companies
- Shared responsibility and workload
- Pooled funds and talent
- No taxes on business profits, only personal income
- death of one partner, business can keep going
dis:
- unlimited liability
- Difficulty in finding a suitable partner
SOME adv and dis of a company (priv and pub)
adv:
- Easier to attract public finance
- Limited liability - separate legal entity
- A long life
- Experienced management board of directors
- Company tax rate lower than personal income tax
- Growth potential
dis:
- Cost of formation
- Double taxation - company and personal
- Requirement to publish an annual report
- Too much growth, resulting in inefficiencies
SOME adv and dis of a GBE
adv:
- GBEs implement gov policies, providing community services where private businesses may hesitate to invest.
- GBEs introduce healthy competition, potentially lowering prices in markets they enter
dis:
- Management can be less effective than that of the private sector
- less accountability within a GBE, resulting in less productivity and negative attitudes amongst staff
SOME adv and dis of a social enterprise
adv:
- Can open up new markets
- Meeting a social need can have a positive effect on profit and market share.
dis:
- Getting startup capital can be tough; finding finance is challenging.
- Significant operating costs (will often take on costs that other businesses wouldn’t)
- can be difficult to focus on both social and financial objectives.
define Business objective
Clear, measurable goal that a company aims to achieve within a set timeframe to support its mission and strategy.
what is CSR and its definition
- Corporate Social Responsibility;
company contributes positively to society, the environment, and its stakeholders, beyond just making a profit
Management styles def
ways managers lead and work with their team. It includes how they make decisions, communicate, and motivate employees
TEMT stand for
- Time
- Employee experience
- Manager preference
- Task
6 Management Skills
communication, delegation, planning, leadership, decision-making and interpersonal
Communication (Management Skills) definition
the transfer of information from sender to receiver. Can be non-verbal, written, verbal.
communication (Management Skills) points
- Effective communication is CLEAR, ARTICULATE and CONCISE
Communication can cause conflict, thus leading to incomplete tasks, resentment and workplace tension. (-)
Delegation (Management Skills) definition
ability to transfer authority/responsibility from manager to employee to carry out specific activities
Delegation (Management Skills) points
- allows employees to make their own decisions
- Clear communication
- improves time management and helps staff develop new skills. (It fosters trust, motivation, and mutual understanding between managers and employees.) (+)
- Employees may misuse power by sharing confidential information, or managers may assign tasks beyond their capability. (-)
Planning (Management Skills) definition
allows businesses to define objectives and decide on strategies to achieve them.
Planning (Management Skills) 3 types
- Strategic: Long-term planning (2-5 years)
- Tactical: Flexible medium-term planning (1-2 years)
- Operational: specific details about the way business will operate in the short term.
Leading (Management Skills) definition
ability to influence or motivate people to work towards achievement of business objectives
Leading (Management Skills) 2 types
- Transactional: Rewards compliance and may offer promotions for meeting goals.
- Transformational: Inspires staff, creates opportunities, encourages employee decision-making.
Planning (Management Skills) steps
- develop objective
- analyse environment
- develop alternative strategies and implement one
- monitor and seek feedback
Leading (Management Skills) points
- Leaders should be involved in operations during changes to show expectations and build trust with employees.
- Effective leadership boosts morale, motivates employees, and may reduce resistance during periods of change. (+)
- can time-consuming and cause clashes if staff feel neglected/disconnected from management. (Mostly common in transactional leadership) (-)
Interpersonal Skills (Management Skills) definition
Management’s ability to deal/connect with people and build pos staff relationships.
Interpersonal Skills (Management Skills) points
- This skill is crucial as business objectives are achieved through people.
- having emotional self awareness, empathy, social skills, etc
Decision Making (Management Skills) definition
Ability to identify options available and to then choose a specific course of action.
Decision Making (Management Skills) points
Managers must adapt, respond to change and be willing to assess risk
Decision-making can be individual or group-based; group discussions allow diverse input but take time.
explain relationship between management styles and skills:
skill affects the style adopted and style affects area (outcome result based on objectives)
Management Skills definition
abilities needed by managers to plan, lead, organise, and control a team or business
name the 4 things apart of corporate culture and whats it definition
- Values and practices, symboles, rituals and rites and celebrations, heroes
- System of shared values/beliefs of people in a business
what is values and practices (corporate culture)
Reflect the values of the business itself and employees (Recycling)
what is rites, rituals and celebrations (corporate culture)
action/ behavior followed by a business tends to increase employee engagement (Staff morning tea every Friday)
what is heroes (corporate culture)
Someone who models the desired behaviour/expectations or can be seen as a celebrity status (employee of the month)
what is Symbols (corporate culture)
Logos branding of the company ( symbol > reflect those values)
Official culture what is it
- what we are promoting as a business to the public, evident in written formal statements
- Formal written expression of the values and beliefs of the business
- Who we are and what we say we do - Visible in business documents, goals, values, end-of-financial year reports, mission, and official statements. Slogans and logos often represent this culture.
*symbols and heroes
Real Culture (unofficial) what is it
- actual practices that we are doing which shows internally what the values are
- What really happens in a business, who we actually are
- Seen by watching what really happens and how people interact.
*Actual values and practices and Rites and rituals/celebrations - allow for strong interpersonal
relationships to develop between management and employees in a non-formal setting.
