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Business > UNIT 3 AOS 1 > Flashcards

UNIT 3 AOS 1 Flashcards

1
Q

Sole Trader

A

Individual owners of a business
Entitled to keep all profits of the business after tax
Liable for all losses
Unlimited liability: liable for all debts accrued by the business
Examples; Plumber, Carpenter, Hairdresser

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2
Q

Sole Trader advantages and disadvantages

A 
Advantages 
Simple and inexpensive to established 
Owner has total control of the business
Simple to close
Minimal government regulation

Disadvantages
Unlimited liability
Harder to get finances
Reliant on the knowledge and skill

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3
Q

Partnership

A

It’s a business owned between 2-50 people
Either partener is jointly liable for the debts in the business (unlimited liability)
Most partnerships have a partnership agreement between the parties
Examples; Accountants, Builders, Cafe owners

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4
Q

General Partnership

A

All partners are equally responsible for the management of the business. Each has unlimited liability

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5
Q

Limited Partnership

A

Liability of one or more partners is limited. Silent partners can be apart of the business partnership but are not involved in the day to day running of the business

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6
Q

Partnership advantages and disadvantages

A 
Advantages 
Inexpensive and simple to start
Risk is shared
Minimal government regulations 
Shared workload
Broader access to capital money (invested in business), knowledge, skill and experience

Disadvantages
Unlimited liability
Liable for debts caused by other partners
Business could be threatened by one partner leaving
Potential personality clashes

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7
Q

Company

A

Separate legal entity
Limited liability
Same rights as a natural person
Has perpetuity (ongoing life)
Must be registered for GST if the earnings are greater than a certain amount ($75,000)
Must keep financial records for at least 7yrs

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8
Q

Private Limited Companies

A

Many sole traders/partnerships become private limited companies due to expansion and the opportunity to gain protection by limited liability
Can have up to 50 shareholders
Shares can only be traded with the permission of the other owners/shareholders

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9
Q

Private Limited Companies advantages and disadvantages

A

Advantages
Limited liability
Extra capital can be obtained by selling more shares
Business will still continue if a shareholder/director leaves or passes away

Disadvantages 
Complex to start 
Expensive establishments costs 
Higher degree of government control and reporting requirements 
Addition compliance costs
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10
Q

Public Listed Company

A

An organisation listed on the Australian stock exchange
Any individual can by shares
Run by a board of directors (runs the company on behalf of the shareholders)
Shareholders are not involved in the day to day running of the business
Examples; BHP, Myer, Commonwealth bank

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11
Q

Public Listed Company advantages and disadvantages

A

Advantages
Limited liability
Able to get more capital by selling more shares
Separate legal entity
Business will still continue if a shareholder/director leaves or passes away

Disadvantages 
Highly complex to start 
High establishments costs 
Needs accountability and compliance paperwork
Extra compliance costs
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12
Q

Social Enterprize

A

A business that uses strategies to improve human wellbeing or the environment rather than maximise PROFIT for its owners/shareholders
GOAL is to achieve socio, cultural, community and environmental outcomes and ern revenu
They aim to make a profit to help solve an environmental or social problem
Example; Thankyou group, The salvation army

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13
Q

Government Business Enterprise (GBE)

A

Operates in the public sector (run by the government). Management of a GBE runs the business, but they must report reguary to the shareholder, parliament and the public.

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14
Q

3 Characteristics of a GBE

A
  1. The government controls the business
  2. The business is engaged in commercial activities
  3. The business is a separate legal entity to the government department.
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15
Q

Financial Objectives

A

The desired financial performance of the business
Including;
- Profit (looking for new ways to run the business/ increasing profit = reducing business costs)
- Growing sales (advertising, increasing product range, overseas sales, opening new stores)
- Improving market share
- Increasing productivity

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16
Q

Market Share

A
  • Proportion or percentage of the market (and total sales) controlled by the business
  • Market leaders can ask for discounts on supplies
  • Can be cheaper than competitors
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17
Q

Marketing Objectives

A
  • Creation of demand for your good or service

- Maximise the appeal of your good or service to the most people possible

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18
Q

Social Objectives

A
  • Role of business in the community
  • Above and beyond your legal objectives
  • Can also be achieved via workplace policies
    • equal opportunity policies
    • Anti discrimination policies
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19
Q

Shareholders and Stakeholders

A

Shareholder;
Owners of the company, can own the whole part or shares in a business

Stakeholders;
An individual/group that has a direct interest in the activities of the business. (can be shareholders, employees, customers, suppliers)

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20
Q

Macro Environment

A

The conditions that a business operates in that they have no control over
Examples; Exchange rates, Trends, Weather, Political environments

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21
Q

Operating Environemnt

A

The environment immediately external to a business to which it has close interaction with when conducting business
Examples; Suppliers, Customers, Bank, Unions

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22
Q

Internal Environment

A

The areas of a business that have control over

Examples; Staff, Management, Employees

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23
Q

Key stakeholders in the macro environment

A

Community/society, Government

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24
Q

Key stakeholders in the operating environment

A

Creditios/banks, Trade unions, Customers, Suppliers, Competitors

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25
Q

Key stakeholders in the operating environment

A

Shareholders, Directors of a company/partnership, Management, Employees

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26
Q

Issues a stakeholder needs to consider

A
  1. Is the business conducting itself in a fair and ethical manner
  2. Does the business conduct itself in a social responsible manner
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27
Q

Management and customers possible conflicts

A

Management may try to maintain profit and a high dividend to satisfy shareholders
BUT – this will upset customers who want to pay reasonable prices for products

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28
Q

Management and members of

the community

A

Management may decide to cut costs by not completing maintenance
BUT - but this could endanger the community

29
Q

Suppliers and members of the

community

A

Suppliers want to get paid quickly and fairly

BUT – the may use unethical practices which will upset the community

30
Q

Management and suppliers

A

Management wants to reduce costs to increase profit

BUT – suppliers may charge higher prices for ethical material

31
Q

Corporate social responsibility

A

The obligation that a business has over and above the legal responsibilities to the wellbeing of employees, customers, shareholders, the community and the environment

32
Q

Things to consider about CSR

A

How business decisions affect the TRIPLE BOTTOM LINE - (financial) (economic), (social and environmental)
Customers like to deal with businesses that implement a strategy of CSR
Businesses need to understand that reconciling conflict interests and increasing stakeholders values ensure long term growth and survival.

33
Q

Management responsibility; operations

A

Running of business

Responsible for the protection of the business product or the provision of a service

34
Q

Management responsibility; finance

A

Responsible for managing the financial aspect of the business
Includes; Financial policies, raising finance, budgeting, accounting, reporting, cash control

35
Q

Management responsibility; human resources

A

Responsible for coordinating all activities from acquiring to terminating (hiring/firing) employees in the business
Manages the relationship between employer and employee
Focus on employee motivation, staff retention, staff reviews

36
Q

Management responsibility; sales and marketing

A

Responsible for the marketing mix

Includes developing products, pricing, promoting distributing and promoting products to customers

37
Q

Management responsibility; technology support

A

Responsible for installing and maintaining technology, as well as providing assistance to the users of technology in the business

38
Q

Business objectives (5)

A
  • Financial objectives
  • Market share
  • Marketing objectives
  • Social objectives
  • Shareholder expectation
39
Q

Autocratic management style

A

All decision making is centralized
Communication is one way – downward
Managers are in full control and want to retain authority
Focus on achieving the task in a set format and processes must be followed
No input from employees
Managers believe the main motivator is money
Task oriented

40
Q

Autocratic advantages and disadvantages

A

Advantages
Decision making is quick – only one person
Employees roles and expectations are defined and monitored
Communication is direct
Suits high risk and difficult decisions

Disadvantages
A quick non collaborative decision is not always the best one
Discourages teamwork
No focus on open communication
Low motivation and job satisfaction for employees
Task focused
Employees feel low job security and kept in the dark

41
Q

Persuasive Management style

A

Management make the decision and then persuade employees of the benefit of that decision
Has similar characteristics to an autocratic style
Characteristics
Manager has centralized control and authority
Manager is focused on achieving the task and following process, and regularly checks this process
Decision making is centralized and controlled by management
Communication is centralized

42
Q

Persuasive Management style advantages and disadvanatages

A

Advantages
Decision making is quick and still made by one person
Suits high risk decision (factory closure)
Employees have a clear idea of what they have to achieve

Disadvantages
No input from workers into the decision making process
Workers may feel alienated not respected
Low levels of motivation and job satisfaction

43
Q

Consultative Management style

A

Takes into consideration the opinions of the team member before making a decision
Shifts from being task centered to people centered.
Management consult with employees about the issue/ process, but the manager makes the final decision based on suggestions and input received.
Characteristics
Control and authority are more centralized, employees have the opportunity to voice their opinion, ideas and concepts
Manager involves the employees in decision making which leads to more motivated employees
Decision making, is centralized but decisions are only made after consultation with employees
Two way communication

44
Q

Consultative Management style advantages and disadvantages

A

Advantages
Get lots of ideas from employees, which help in the decision making outcome
Reasonable level of employee involvement
Is a motivator and increase job satisfaction

Disadvantages
Employees may not understand the complexity of the problem
Can take a long time
Employees will be upset if management does not take on their ideas

45
Q

Participative Management style

A

Managers work closely with employees, to get them to work together to improve the businesses overall performance
Encourages employees to share in the decision making and problem solving tasks
Management are still entitled to have the final say but consider employee input
Characteristics
Recognise employees strengths and actively involve them in the decision making process
Makes use of two way communication
Good management style when a business is undergoing rapid change

46
Q

Participative Management style advantages and disadvantages

A

Advantages
Positive employer/employee relationship (less likely for conflict)
High levels of motivation and job satisfaction
Opportunity for employee to put forward ideas and gain skills
Disadvantages
Can take a long time to reach a decision as everyone needs to be considered
Manager’s role may be weak or undermined
Internal conflicts/arguments may arise, employees given to much power
Not all employees want to be involved

47
Q

Laissez Faire Management style

A

Employees assume total responsibility for control of workplace operations
Management does not play a central decision making role in the organisation and employees are empowered to make decisions
Management set the business objectives, BUT employees take responsibility for implementing strategies to achieve these objectives
Works well in creative work or research where employees require minimal supervision and direction

48
Q

Laissez Faire Management style advantages and disadvantages

A

Advantages
Employees feel a sense of ownership and are intrinsic in the results obtained by the business
Dynamic creative environment
Open communication lines and people are valued

Disadvantages
Loss of control by managers
Potential misuse of business resources
Personal conflicts may impact the achievements of business outcomes

49
Q

Influences on management style

A

The manager – personality, experience, values, beliefs, skills
The staffs – personality, experience, values, beliefs, skills
The nature of the task
Internal and external constraints including time and resources
If you have limited time = autocratic, persuasive
If you have lots of times = consultative, participative, laissez faire
Not one best management style

50
Q

Contingency management theory

A

Is the need for managers to adapt their management style to suit the situation at hand
Examples
A manager who prefers a consultative style may be asked to shut down an unprofitable
factory site in Dandenong. She will need to shift her management style from consultative to
authoritative

51
Q

The appropriateness of management styles (4)

A

Managers use different styles when making decisions and working with employees
It often depends on situational variables
Nature of task (what is the task you are asking employees to complete)
- Easy = autocratic
Complex = participative (teamwork)
- Time that is available
- Less time
- Lots of time
The experience and skill level of employees
- Lots of experience = Laissez Faire
Managers experience
- Finding your management style

52
Q

Relationship between management style and skill

A

The type of management style a manger selects determines the management skills they will need
Example
An autocratic manager would not need to use delegating or interpersonal skills, but they would use planning, leading and communication skills

53
Q

Management skill; Communication

A

Is the transfer of information from a sender to receiver
Non-verbal communication (body language, visual)
Verbal communication (written, oral form)
Can be used to help explain a vision, outline changes and ask for opinions

54
Q

Management skill; Delegation

A

Is the ability to transfer authority and responsibility from a manager to an employee to carry out specific activities
Helps with the time management and enables staff to learn new skills
Helps build trust and lead to a mutual understanding
Example
Mcdonalds assigned a shift to complete cafe for 2 hours then for the 2 hours the employee is incharge of cafe while the manger does other jobs.

55
Q

Management skill; Planning

A

The ability to define business objectives and decide on methods and strategies to achieve them - help with long term planning of the business

56
Q

3 types of planning (time)

A 
Strategic (long term) planning 
- 2-5 years 
Tactical (medium term) planning
- Flexible, adopting planning 1-2 years 
- Helps achieve the strategic planning 
Operational (short term) planning 
- Specific details on how the business can conduct in the short term
57
Q

Management skill; Leading

A

Is the skill of a manager when guiding workers towards achieving the goal of the business
Effective leading requires a manger to…
Have conditions that motivates, engages and inspires staff
Good communicator
Be able to build teams
Role model
Resolves conflicts

58
Q

Emotional intelligence

A

The ability to perceive, understand, monitor and regulate emotion in each other and themselves

59
Q

Management skill; Decision making

A

Is a multi step approach where a selection is made between a range of alternatives
Decision making may be routine and easy OR complex and difficult

60
Q

Steps to making a decision (6)

A
  1. Identify the problem and define the objective
  2. Gather necessary information to establish the cause of the problem
  3. Develop alternative solutions (plan B)
  4. Analyse the alternatives
  5. Choose and implement an alternative
  6. Evaluate
61
Q

Management skill; Interpersonal skills

A 
Skills used everyday to communicate and interact with other people both individually and groups 
Team player
Empathetic and assertive 
Good communicator 
Good motivator
62
Q

Corporate Culture

A

The shared values and beliefs and behaviours of the people in the business

63
Q

Official corporate culture

A

The preferred values, beliefs and behaviours of the people, within a business stated in official documents like a company motto or mission statement

64
Q

Real corporate culture

A

How things actually operate, the actual values and beliefs presented in the company

65
Q

Why is corporate culture important?

A

Offers better retention rates
Makes the organisation attractive to potential employees - allows companies to choose employees to be the best in their field
Improved productivity - more business success

66
Q

What helps create a good corporate culture

A

Employees desire to win - wanting to achieve business objectives
Considering the impact of the decision on the business
Focus on internal (people inside the business eg colleges managers) and external customers (suppliers, people that buy products)
Prioritising teamwork
Delivering what was promised

67
Q

How can you determine the corporate culture of an organisation?

A 
Communication channels 
- Top down
- Collaborative
- Bottom up
Dress code - more relaxed - more relaxed corporate culture is
Willingness to achieve
Staff interaction
68
Q

Strategies to develop corporate culture (official and real)

A
  1. The creation of a vision statement.
  2. Branding of the business - it represents the way customers view the business
  3. People - employing the right people that suit the business
  4. Physical environment and material symbols - eg open plan offices. Business location, size of offices
  5. Stories, narratives and rituals - Employees of the week, Christmas parties
69
Q

Types of vision statements

A

Vision statement = the future vision for the business (aspirational)
Mission statement = written statement that defines a business core purpose and focus
Values statement = the values of the organisation (trustworthy, honest, organised, reliable)

Business (8 decks)

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