unit 3 aos 1 Flashcards
what are the different types of businesses?
- sole trader
- partnership
- private limited company
- public listed company
- social enterprise
- government business enterprise
what is a sole trader business?
a business that is owned and operated by a single person. It is also unincorporated.
what are the advantages and disadvantages of a sole trader business?
ADVANTAGES:
- simplest and most cost effective
- owner keeps all profits
- do not have to pay company tax
- owner makes all business decisions
DISADVANTAGES:
- unlimited liability
- owner has to source all funding
- owner must manage a wide variety of tasks by themself
what is a partnership?
a business that is owned by 2 to 20 people
what are the advantages and disadvantages of a partnership business?
ADVANTAGES:
- simple and cost effective
- tasks are shared
- funding is shared
DISADVANTAGES:
- profits are shared
- unlimited liability
- disputes between partners
what is a private limited company?
a business with at least one director and up to fifty shareholders. It is incorporated and is a seperate legal entity to the owners.
what are the advantages and disadvantages of a private limited company?
ADVANTAGES:
- limited liability (“proprietary limited” Pty.Ltd.)
- board of directors with different skills
DISADVANTAGES:
- have to pay company tax
- shareholders pay personal income tax
what is a public listed company?
an incorporated business that can sell shares in an open market (the ASX) to an unlimited amount of shareholders. It is a seperate legal entity to owners, has at least 3 directors, and always has Ltd. at the end.
what are the advantages and disadvantages of a public listed company?
ADVANTAGES:
- shareholders earn money through dividends
- shareholders can also sell their shares for money
- shareholders have limited liability
DISADVANTAGES:
- shareholders have limited decision making
- stricter government regulations (min of 3 directors, have to produce financial report annually)
what does the ASX stand for?
the Australian Securities Exchange
what is a social enterprise?
a business that aims to make a profit and improve the community or environment. It’s different to charities because most of the income comes from sales not donations
what are the advantages and disadvantages of a social enterprise?
ADVANTAGES:
- better customer relationships
- employees have higher motivation
DISADVANTAGES:
- profits do not go to the owner
- harder to get funding from banks
what is a government business enterprise?
a business that is owned but not managed by the government. It fulfills a purpose outlined by the government, usually a large scale public service (e.g. housing, transport, mail).
what are the advantages and disadvantages of a government business enterprise?
ADVANTAGES:
- provide competition for private sectors
DISADVANTAGES:
- possible political interference
- directions can change with changing governments
list the business objectives
- make a profit
- increase market share
- meet shareholder expectations
- fulfill a market need
- fulfill a social need
describe the business objective ‘make a profit’
happens when a business generates more revenue than expenses, and is essential for any business to survive and grow.
describe the business objective ‘increase market share’
when a business aims to have a higher / the highest percentage of sales in their industry. It makes them more competitive.
describe the business objective ‘meet shareholder expectations’
paying dividends to shareholders of the business, who expect to receive a return on their investments at a higher price than they initially invested.
describe the business objective ‘fulfill a market need’
filling a gap in the market, and providing goods or services that meet the desires of customers with similar needs (results in loyal customer base).
describe the business objective ‘fulfill a social need’
improving the community and the environment through the business’ activities, improving reputation. (issues may include poverty, drug abuse, pollution etc.)
what are stakeholders?
individuals or groups that have a vested interest in the performance and activities of a business.
what are internal stakeholders?
groups who have a financial share in or are employed by the business (owners, shareholders, employees…)
what are external stakeholders?
groups outside the business who are concerned or affected by it’s activities (customers, suppliers, general community…)
why do stakeholder conflicts occur?
because a business achieving it’s objectives can result in conflict between stakeholders
give examples of stakeholder conflicts
- manager wants increased salaries x owner wants to reduce salaries to increase profits
- employees want less tasks or hours x customers want higher quality
- suppliers using cheaper unsustainable methods x general community wants no harm to the environment
what is corporate social responsibility (CSR)?
when a business performs ethically above it’s legal obligations to improve social, economic, and environmental outcomes.
how can businesses implement CSR for their stakeholders?
by considering the impact of their activities on different stakeholders, and adjusting to suit them.
what are some CSR considerations a business can consider for it’s managers or employees?
- working from home options
- flexible shifts and hours
- childcare facilities at work
what are some CSR considerations a business can consider for it’s customers?
- encouraging ‘green’ or sustainable purchases
- options to contribute to the general community like donating
what are some CSR considerations a business can consider for it’s suppliers?
- providing reasonable delivery schedules and fair payments
what are some CSR considerations a business can consider for the general community?
- employing local workers
- reducing or recycling waste
- using renewable energy
- donating to local clubs or charities
what are some legal obligations of business’ that do not count as CSR?
- paying minumum wage
- providing safe working conditions
- providing goods and services as advertised
- honouring refunds
- meeting supplier agreements like payments
- disposing waste properly
list the areas of management (AOM)
- operations
- human resources
- sales and marketing
- finance
- technology support
what does the operations area of management do?
produce the goods or services that a business sells to it’s customers.
they establish facilities, machinery, and equipment needed, source raw materials and manufacture goods or delivering services.
how can the operations area of management consider CSR?
- renewable energy machinery
-source raw materials from suppliers who provide fair pay and working conditions - sourcing sustainable raw materials
how do the operations area of management achieve business objectives?
the goods and services they produce generate revenue which contributes to making a profit
what does the human resources area of management do?
establish and manage the relationship between the business and it’s employees.
they recruit and hire, train, support, and terminate employees.
how can the human resources area of management consider CSR?
- hire local workers
- train employees in waste reduction
- provide working from home, childcare facilities or time for employees to volunteer
how do the human resources area of management achieve business objectives?
they provide other AOM with employees to achieve objectives, they pay, support and train employees giving them motivation and better performance, increasing profit
what does the sales and marketing area of management do?
promotes and sell the business’ goods and services to customers.
they promote through advertising, determining purchase options, and determining distribution methods and locations
how can the sales and marketing area of management consider CSR?
- encourage customers to only purchase goods they require
- encourage customers to purchase sustainable options
- highlighting info like health ratings
- reducing plastic in distribution
how do the sales and marketing area of management achieve business objectives?
they attract customer, increasing sales and therefore business value, increasing market share
selling goods and services increases revenue and contributes to making a profit
what does the finance area of management do?
handles the monetary requirements of the business
how can the finance area of management consider CSR?
- obtain loans from ethical banks
- provide funds for CSR initiatives like childcare facilities or energy efficient machines
- donating to local organisations
how do the finance area of management achieve business objectives?
can contribute to making a profit when distribution of funds and budgeting is done well
distributes funds to other AOM, achieving their objectives
what does the technology support area of management do?
installs automated equipment, machinery, and devices within the business and provides assistance to employees on their use
how can the technology support area of management consider CSR?
- install energy efficient equipment
- reduce use of paper by encouraging digital use
- avoid exploitation of customers data
how do the technology support area of management achieve business objectives?
provides other AOM with electronic equipment and expertise to achieve there objectives
what is corporate culture?
the shared values and behaviours practised by managers and employees within a business
what are the two types of corporate culture?
official and real
what is official corporate culture?
the shared values and behaviours desired by a business.
often expresses through elements like formal rules and symbols
what are some strategies for official corporate culture?
- vision and mission statements
- policies and procedures
- training for employees
- a business name / logo / slogan
- uniform
what is real corporate culture?
the shared values and behaviours that are actually practised by employees and managers.
often expressed through informal rules and habits
what are some strategies for real corporate culture?
- hiring employees with similar values / that work well together
- promotions based on performance
- considering which management style works best
- work layout (open plan, closed cubicles)
- dress code (uniform vs casual)
- rituals like celebrations and social gatherings
list the different management styles
- autocratic
- persuasive
- consultative
- participative
- laissez - faire
describe the autocratic management style
where the manager makes all decisions and directs employees without their input
(one way communication, centralised control)
give advantages and disadvantages of the autocratic management style
ADVANATGES:
- management has full control
- employees have less responsibility = less risk
- decision making and task completion is quick
DISADVANTAGES:
- no benefit from potential employee ideas
- employee growth and motivation is low
- high cost of replacing employees who are likely to leave
describe the persuasive management style
where the manager makes all decisions and communicated the reason to employees without their input
(one way communication, centralised control)
give advantages and disadvantages of the persuasive management style
ADVANTAGES:
- gain more employee trust
- employees have less responsibility = less risk
- decision making and task completion is quick
DISADVANTAGES:
- no benefit from potential employee ideas
- employee growth and motivation may be low
- takes time to explain reasoning to employees
describe the consultative management style
where the manager seeks employees input on decisions, but makes the final decisions themselves
(two way communication, centralised control)
give advantages and disadvantages of the consultative management style
ADVANTAGES:
- management gains a variety of ideas
- employees may have increased motivation / feel valued
- better quality decisions
DISADVANTAGES:
- employees may offer unsuitable suggestions
- potential employee conflict for ignored suggestions
- decision making may be slower
describe the participative management style
where the manager communicated and discusses business objectives with employees to make decisions together
(two way communication, decentralised control)
give advantages and disadvantages of the participative management style
ADVANTAGES:
- may improve quality of decisions
- improve manager x employee relationship
- employee motivation and productivity may increase
- positive and supportive workplace
- higher decision quality
DISADVANTAGES:
- difficult to accomodate multiple views
- manager may lose some control
- potential employee conflict
- decisions may take a long time
describe the laissez faire management style
where the manager communicates business objectives to employees and allows them to make decisions independently
(two way communication, decentralised control)
give advantages and disadvantages of the laissez faire management style
ADVANATGES:
- an encouraging creative, innovative environment
- employees grow and have increased motivation
- highly innovative solutions = increased sales
DISADVANTAGES:
- difficult to accomodate multiple views
- manager may lose control
- potential employee conflict
- may spend large amounts of time on decision making or allocate excessive resources
what factors need to be considered when choosing a management style?
- time (limited - extended amount)
- experience of employees (inexperienced - experienced)
- nature of tasks (simples - complex)
- manager preference (high - low desire for control)
list the different management skills
- planning
- decision making
- communicating
- delegating
- interpersonal
- leading
what is the planning management skill and how is it applied?
the manager establishing objectives and strategies to achieve them
applied by setting objectives, outlining strategies, searching for alternate options, and organising resources to execute strategies
what is the decision making management skill and how is it applied?
the manager determining a suitable course of action from alternative options
applied by considering relevant information, evaluating advantages / disadvantages, and determining an appropriate choice to achieve objectives
what is the communicating management skill and how is it applied?
the manager clearly exchanging information with employees and relevant stakeholders
applied by conveying objectives to employees, sharing relevant business decisions with employees, providing feedback, and listening to employee’s updates and ideas
what is the interpersonal management skill and how is it applied?
the manager interacting positively with employees to create or maintain professional relationships
applied by praising and thanking employees, getting to know employees background or personality, and recognising employees motivations
what is the leading management skill and how is it applied?
the manager motivating employees to work towards business objectives
applied by sharing the business vision with employees, creating a positive corporate culture, and practising behaviours they want employees to adopt
list the management skills in order of high, medium, or low importance for the autocratic management style
high: planning, decision making
medium : communication
low: delegating, interpersonal, leading
list the management skills in order of high, medium, or low importance for the persuasive management style
high: planning, decision making
medium: communication, delegating, interpersonal
low: leading
list the management skills in order of high, medium, or low importance for the consultative management style
high: planning, decision making, communicating
medium: delegating, interpersonal, leading
list the management skills in order of high, medium, or low importance for the participative management style
high: communication, interpersonal, leading
medium: decision making, delegating
low: planning
list the management skills in order of high, medium, or low importance for the laissez-faire management style
high: communication, delegating, leading
low: planning, decision making, interpersonal
