Unit 3; Outcome 1- Business Foundations Flashcards

1
Q

Business

A

A business is an organisation that aims to produce goods and/or services to satisfy the needs and wants of consumers, they aim to make a profit.

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2
Q

Unlimited Liability

A

Owner responsible for all debt of the business if the business can’t pay its liabilities

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3
Q

Limited Liability

A

Pty. Ltd. Responsible only liable up to extent of their nominal value- shares

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4
Q

Sole Trader

A

A business owned by one person. Business and owner have same legal entity. Owner has unlimited liability.

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5
Q

Sole Trader- Pros/Cons

A

+ Inexpensive to set up, owner has complete control, less government regulations, owner keeps all net profits.
- Unlimited liability, more difficult to gain finance, take 100% of the financial risk.

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6
Q

Partnership

A

When 2 or more (up to 20) people go into business together and distribute income or losses between themselves.

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7
Q

Partnership- Pros/Cons

A

+ Inexpensive to set up, greater pool of experiences to help make stronger decisions.
- All partners are 100% liable, potential for disagreements between partners, may be difficult to remove a partner.

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8
Q

Public Listed Company

A

A company with a separate legal entity with unlimited shareholders, with shares traded publicly on the ASX.

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9
Q

Public Listed Company- Pros/Cons

A

+ Limited liability for shareholders, greater ability to raise capital through sales of shares.
- Very complex and expensive to establish, no control over who owns the company.

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10
Q

Private Limited Company

A

A company with a separate legal entity with limited shareholders (up to 50) with shares traded privately.

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11
Q

Private Limited Company- Pros/Cons

A

+ Potential tax benefits, life of company can live longer than directors, maintain control over who owns the company.
- More complex and expensive to establish, shares cannot be traded freely.

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12
Q

Social Enterprise

A

An organisation that applies business strategies to maximize improvements in human and environmental well-being

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13
Q

Social Enterprise- Pros/Cons

A

+ May attract customers due to them believing in the social cause, can improve employee morale as the employees feel they are contributing to a worthy cause.
- Difficult to focus on profits while also focussing on the social cause, may need to constantly work with tight budgets.

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14
Q

Government Business Enterprise

A

An enterprise which is owned by the Government (is in the public sector) but operates like a business.

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15
Q

GBE- Pros/Cons

A

+ Able to offer services to the community that other businesses may not find financially desirable, help provide competition to the market.
- Objectives and funding may change with change of government, use of resources may not be as effective/efficient as other business types.

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16
Q

Business Objectives

A

Goals the business is aiming to achieve in the future, they give the business and employees a sense of purpose and direction.

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17
Q

Vision

A

An expression of what the business wants to become. A long term objective.

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18
Q

Mission

A

Defines the company’s business, it’s objectives and it’s approach to reach these objectives.

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19
Q

Objective- to make a profit

A

A business wants to maxmise their profits. Profit is what is left after business expenses have been deducted from sales revenue

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20
Q

Objective- to increase market share

A

Market share is a business’s proportion of total sales in a market or an industry.
To increase market share many large businesses will often develop an extensive product range, using many different brand names to gain an extra few percent of market share

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21
Q

Objective- to improve efficiency

A

Efficiency – how well a business uses resources to achieve objectives

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22
Q

Objective- to improve effectiveness

A

Effectiveness refers to how successful a business has been in terms of achieving its stated objectives.

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23
Q

Objective- to fulfil a market need

A

Businesses may exist to meet customer expectations or provide a good or service that is not otherwise available to a market

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24
Q

Objective- meet shareholder expectations

A

They expect the business they invested in to make a profit and to receive a share of that profit (called dividends)

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25
Objective- to fulfil a social need
Producing/providing a good and service for the purpose of making the world a better place
26
Stakeholders
Those who have a vested interest in the business
27
Stakeholders- Owners
people who own the business (sole traders, partners)
28
Stakeholders- Managers
the person who has the responsibility for successfully achieving the objectives of the business
29
Stakeholders- Employees
the people who work for the business
30
Stakeholders- Customers
the people who purchase goods and services from the business, they expect to purchase quality products at a reasonable price and expect high levels of service
31
Stakeholders- Suppliers
businesses or individuals who supply materials and other resources to a business so that it can conducts its operations
32
Stakeholders- Community
Members of the community, they expect that a business will give back to society. Eg socially responsible business
33
Management Styles
the behaviour and attitude of the manager when making decisions, when directing and motivating staff, and when implementing plans to achieve business objectives
34
Features of Management Styles (CADE)
Communication- one way/two way Authority/Control- centralised/decentralised Decision making- input from employees Level of Employee participation- none, employee valued, high
35
Contingency Management Theory
Stresses the need for flexibility and adaptation of management styles to suit the situation.
36
Autocratic
Manager tells staff when decisions have been made
37
Autocratic- Pros/Cons
+ Fast decisions, clear direction given to business. - Smaller pool of ideas, ideas are not encourages can lead to low morale
38
Persuasive
Manager makes the decisions and sells it to the staff
39
Persuasive- Pros/Cons
+ Fast decisions, employees can feel more valued. - No employee input, possibility for low job satisfaction
40
Consultative
Manager seeks feedback before making decisions. Uses feedback to make informed decisions.
41
Consultative- Pros/Cons
+ Improved job satisfaction, improves confidence in employees. - More time consuming, ideas may be overlooked causing conflict.
42
Participative
Manager joins in with staff to make decisions. Decision-making authority is shared.
43
Participative- Pros/Cons
+ High level of trust, larger pool of ideas. - Time consuming, managers role may be undermined.
44
Laissez-Faire
Manager give employees full responsibility for the operations.
45
Laissez-Faire- Pros/Cons
+ Employees feel a sense of ownership, often encourages teamwork. - Complete loss of control by management, objectives can become lost.
46
Management Skills
the competencies that managers use to help them achieve required objectives
47
Communication
Communication is the transfer of information from sender to receiver, and to listen to feedback.
48
Delegation
The ability to transfer authority and responsibility from a manager to an employee to carry out specific activities.
49
Planning
The ability to define business objectives and determine methods or strategies that will be used to achieve those objectives.
50
Leading
The ability to influence or motivate people to work towards the achievement of business objectives.
51
Decision-making
The ability to identify the options available and then choose a specific course of action from the alternatives.
52
Interpersonal skills
Management’s ability to deal or liaise with people and build positive relationships with staff.
53
Corporate Culture
The shared values and beliefs of the people in the business.
54
Real Corporate Culture
The unwritten rules and values that people within the business have. Seen in; the way staff dress, how employees treat each other and customers.
55
Official Corporate Culture
What the business intend the culture to be. Seen in; official documents such as; mission statement, stated values, and policies.
56
Element of Corporate Culture- Values
Stated values of the business
57
Element of Corporate Culture- Physical Layout
E.g. open spaces encouraging collaboration
58
Element of Corporate Culture- Heroes/Narrative
The unique stories of the business or people they look up to or celebrate
59
Element of Corporate Culture- Rituals
E.g. social gatherings
60
Element of Corporate Culture- Practices
The practical process that are in place within the business.