Unit 3 - AOS 1A Flashcards
Define ‘Business’
An enterprise or firm or entity, that are registered and offer goods and services for consumers to purchase. This exchange of goods and services aims to generate profit.
Sole Trader - Pros and Cons + Define
a business that is owned and operated by a singular person - they must provide their own finance.
PROS; Inexpensive and easy to set up. Owner makes all business decisions meaning their is no partner conflict.
CONS; Unlimited liability and owner must put up all the capital to start the business.
Partnership - Pros and Cons + Define
2-20 people share ownership in the business - general partners are equal, limited partners have there liability limited to only there investment, silent partner is an investor.
PROS; More capital and financial security. Brings different skillsets to the business.
CONS; Usually unlimited liability and decisions must be agreed on by all partners.
Private Listed Company - Pros and Cons + Define
An independent legal entity limited to 50 shareholders, shares are sold privately with the consent of shareholders.
PROS; Limited liability as it is a separate legal entity. Company tax rates and selling of shares make it easier to gain/save money.
CONS; More expensive and difficult to set up. Shareholders all get a say. Reporting to ASIC and shareholders is expensive and lengthy.
Public Company - Pros and Cons + Define
Is a separate legal entity that is listed on a stock exchange for members of the public to buy shares in.
PROS; Lots of capital can be raised by selling shares. Company tax rates. Limited liability.
CONS; Lots of money to set up, ownerships goes to shareholders, lots of reporting to ASIC
Government Business Enterprise - Pros and Cons + Define
Is an organisation owned and operated by the government that sells goods and services for the purpose of making a profit - which is then put back into the business..
PROS; The business is a separate legal entity. Profit can be used to grow the company.
CONS; Government approval from ‘shadow ministers’ is needed for all decisions. The Government also limits what the company can actually do/sell.
Social Enterprise - Pros and Cons + Define
A company that sells goods + services for the purpose of using profit to fulfil a social vision.
PROS; Helps out people in need and snowballs sales I the form of good public relations.
CONS; No profit for owners to actually keep, all this time and effort put in for no reward.
Vision
What a business wants to become.
Mission
What a business stands for, its purpose and how it will achieve its mission.
Define ‘Business Objectives’
A business objective refers to a stated goal that a business is aiming to achieve. These goals give employees a direction within the business and varies depending on time frame.
Define ‘Strategies’
Involves actions undertaken by a business to achieve its objectives. Example; by cutting wages, costs and reduced and profit increases.
The 5 Main Business Objectives
- To Make a Profit
- To Increase Market Share
- To Fulfil a Market Need
- To Fulfil a Social Need
- To Meet Shareholder Expectations
Define ‘Stakeholder’
Are groups and individuals who have a vested interest in a business and are affected by the decisions that it makes.
Define ‘Corporate Social Responsibility’
CSR refers to managing a business in such a way that the boarder social welfare of the community is taken into consideration when making business decisions.
Manages - Define, Interests, CSR
Employed to oversea employees and ensure a business is reaching its objectives.
Interests; To ensure employees work hard and complete tasks. To ensure objectives are met and take corrective action of needed.
CSR; Must consider the effects of decisions on other stakeholders.
Shareholders - Define, Interests, CSR
People invested in a business, are partial owners.
Interests; Profit be made, increase share prices, ethical business operations.
CSR; Not use there ownership to influence decisions that increase profit at the expense of other stakeholders/factors.
Employees - Define, Interests, CSR
Work in exchange for remuneration.
Interests; Receive fair pay, ethical and non-discriminatory workplace, job advancement and security.
CSR; Business must be socially responsible when dealing with employees - introducing new technology for example.
Lenders - Define, Interests, CSR
Parties that provide funds for business operations and expansions.
Interests; Repaid money + interest, ensure all banking interests of the business are secured by the bank.
CSR; Shouldn’t use their power to heavily influence business decisions in their favour.
Competitors - Define, Interests, CSR
Rival businesses selling similar products in the same market.
Interests; To gain a competitive advantage by creating a POD. Compare performance to competitors.
CSR; Expect fair and ethical competition with-in a market, no corporate espionage.
Suppliers - Define, Interests, CSR
A business that provides goods and services to another business.
Interests; Ensure business is profitable, be paid promptly, create a good relationship with the business.
CSR; Ethically source goods as to not damage its own and the businesses image.
Customers - Define, Interests, CSR
People purchase goods and services from a business.
Interests; Quality goods and services, good customer service and business relationship.
CSR; No unethical practises hat could drive off customers, business must demonstrate CSR to attract customers.
Trade Unions - Define, Interests, CSR
Groups that represent and protect workers rights.
Interests; Negotiate fair rights for workers, be involved in decision making for employee related issues.
CSR; Businesses should go above and beyond when working with unions to create happy, hardworking employees.
Community - Define, Interests, CSR
People that live in an area where a business is located.
Interests; Benefit from employment opportunities. For business to be active in the community and be a good corporate citizen.
CSR; Not to negatively impact local area with operations. Demonstrate CSR in the LOCAL community.
Conflicting Employees and Shareholders
Shareholders want to increase profit by for example cutting wages which is likely to anger employees.
Conflicting Managers and Customers
Increasing prices may increase profits but it may also leave customers unsatisfied with the amount of money they have to pay.
Conflicting Suppliers and Community
Suppliers are more profitable if they gather goods unethically, however this can anger the community.
Conflicting Managers and Suppliers
Mangers want to pay as little as possible for more expensive ethical goods - causing tension between the two.
Conflicting Management and Community
Managing may neglect cleaning and maintenance costs to save money but will anger customers/community by doing so.
Operations Management and how it helps achieve objectives
Is responsible for managing the process of creating goods and services by turning inputs into outputs.
This involves planning, organising, co-ordinating and controlling all the resources needed for this to happen.
With-out effective management there may be wasted resources and bad quality products.
Objectives; Quality inputs create quality outputs, which leads to customer satisfaction, more sales, meaning increased profit/market share.
Finance Management and how it helps achieve objectives
Involves managing the monetary aspects of a business - cashflow eg; budgets, financial reports.
Strategies relating to accounting (recording and analysis of business transactions) and financial (how activities are actually funded) management are used.
If not done effectively a business may struggle to operate eg; unpaid suppliers wont provide goods.
Objectives; Ensure that revenue is higher than expenses - means more profit and dividends that meet shareholder expectations.
Sales and Marketing Management and how it helps achieve objectives
Involves generating awareness of a businesses products that result in increased purchases for customers.
Marketing is about creating strategies through market research and for example the 7p’s. It creates an ongoing relationship with a businesses customer base.
Sales is about developing a relationship with an individual customer; so they buy a product.
Objectives; Increasing customer awareness about products increases sales and profit; meaning more market share and dividends.
Human Resources Management and how it helps achieve objectives
Responsible for managing employees from acquiring, to maintaining and terminating them.
Manages the relationship between employer and employees - a valuable resource.
Must be done well to keep employees motivated, productive and at a low turnover rate.
Objectives; Motivated and well trained employees mean increased productivity, meaning better customer service or more work done, meaning more profit.
Technology Support Management and how it helps achieve objectives
Installing and maintaining technology with-in a business.
Businesses rely heavily on this management area to allow tasks to be completed more efficiently.
Objectives; Increased productivity without paying for more employees reduces costs and therefore increases profits.
