unit 3 sac 1 Flashcards
sole trader
an individual owner of a business, entitled to keep all profits after tax has been paid but liable for all losses.
Advantages
-Simple and inexpensive to establish.
-Owner has total control over the business.
-Minimal government regulation
Disadvantages
-Unlimited liability – debts of the business extend to the owners personal assets
-Harder for the owner to get finance.
-Reliant on owners own knowledge or skill.
partnerships
a legal form of business ownership where two or more people (partners) work together with a view of making a profit.
Advantages
-Inexpensive and simple to set up.
-Risk is shared between partners.
-Minimal government regulation.
-Work load may be shared.
Disadvantages
-Unlimited liability
-Liability for debts incurred by other partners.
-Business could be threatened by one person leaving.
-Potential for disputes and personality clashes.
private limited company
a company whose shares may not be offered to the public for sale and which operates under legal requirements less strict than those for a public company.
Advantages
-Limited liability – debts of the business do not extend to the owners’ personal assets.
-Extra capital can be obtained by issuing more shares.
-Separate legal entity.
Disadvantages
-Higher degree if complexity in establishing.
-Higher establishment costs.
-Higher degree of government control.
public listed company
- a company whose shares are traded freely on a stock exchange
Advantages
-limited liability
-extra capital can be obtained by issuing more shares.
-separate legal entity
Disadvantages
-highly complex structure
-higher establishment costs
-needs more accountability and compliance paperwork.
social enterprise
- a private sector business that distributes profit to benefit the community rather than individual shareholders.
Advantages
-provides essential services for disadvantaged people.
-provides employment for the disadvantaged.
-Operates as a company – limited liability
Disadvantages
-Reliant on sales and public support
-Has reporting and taxation requirements.
Two main goals
1.To achieve social, cultural, community or environment outcomes
2.To earn revenue
government business enterprise
GBE) a business that is government owned and operated. GBE’s seek to run profitably by controlling costs and selling their goods and services at a price to cover costs.
Advantages
-Provides essential services that may not have a market.
-Operates as a company – limited liability.
Disadvantages
-May be slow to provide services.
-Has reporting and taxation requirements.
what does efficiency mean
it is how well the organization transforms its in outs into out puts.
what does effectiveness mean
it is how ell an organization uses its resources to achieve its objectives
what are objectives
they are targets or outcomes that the business aims to achieve.
what is the smart principle
- specific
- measurable
- attainable
-realistic - timely
what are the pyramid objectives
- vision statement
- strategic objective - 2-5 years made by senior management
- tactical objectives - 1-2 years made by middle management
- operational objectives - less than 12 moths made by front line management
types of business objectives - to make a profit
relates to a business generating profit to increase shareholders return on investments
types of business objectives - to increase market share
relates to the number of goods and services an organization sells in a particular market
types of business objectives - to fulfil a market or social need
relates to either identifying a gap in the market that is currently not satisfied or fulfilling a social need.
types of business objectives - meet shareholders expectations
shareholders expect the business to make a profit for any shares purchased to increase in value and dividend paid.
types of business objectives - to improve efficiency
increasing the rate in which inputs are transformed into outputs
to improve effectiveness
increase the rate in which resources are use to exceed business objectives
what is a shareholder
it is an individual or group who has a direct or vested interest in a organisation
what is the macro environment
the business has no control over and is external to the business
eg.
- technology
- economic conditions
what is the operating environment
the business has some control over and is external to the business
eg.
-customers
- banks
- suppliers
what is the internal environment
the business has full control over and internal to the business
eg.
- managers
- owners
- employees
what is the conflict between shareholders and customers
shareholders want to sell their good for the highest price to max maximum return whereas customers want to pay the lowest price when purchasing.
corporate culture definition
a system of shared values and beliefs of people within a business
what is corporate culture
- a pattern of basic shared assumptions within a business
- taught to new employees as the correct way of thinking and acting
advantages of positive corporate culture
- increase employee moral therefor increasing productivity
- encourages high standards which improves the quality of goods an services
- reduces staff turnover and absenteeism
disadvantages of positive corporate culture
can be costly to develop and maintain positive corporate culture
can be time consuming to develop and maintain pcc
what is official corporate culture
it is the set of values and beliefs that the business wants to present to the public
what is real corporate culture
what the culture actually is within the business
strategies to develop a positive corporate culture
- host a work party
- create policies that people promote desired behavior
- rewarding positive performance
providing work condition beyond requirements - staff lunches/ free food
- participative management style
- open plan offices.
what are management styles
the manner and approach of providing direction, implementing plans and motivating people.
what is centralized decision making
manager makes decisions and passes on directions to those below in the hierarchy.
what is decentralized decision making
workers are given responsibility for decision-making in their own areas
what is centralized communication
communication is one way ( downwards)
what is decentralized communication
communication is two ways
what is the appropriateness of management style
- the nature of task
- the time
- the experience of employees
- the managers preference
what are management skills
managment skills are the ability to do something well, gained through training and experience.
what is communication relating to managment skills
the process of creating and exchanging information to produce the desired response
communication is essential to liaise with internal and external stakeholders in order to achieve organizational objectives
what are the main form of communication a manager is involved in
- personal communication
- internal organizational communication
- external organizational communication
in the forms of:
- reading
- written
- oral
what is delegation
it is the passing authority down the hierarchy to perform tasks or more decisions; responsibility remains with the person delegating.
what are the advantage’s of delegation
- assists in the smooth flow of production, work process that will continue when the manager is away
- saves time, frees managment up to do more important tasks
- can increase employee motivation as they feel more valued
what are the disadvantages of delegation
- not all managers are able to relinquish control
- dependent on employees having the skills to do the task delegated
- managers lose control over business operations
what is planning
planning is the formalized decision making process that is future orientated
what is the planning process
- set the goals
- gather information via swot analysis
- establish promoting and restraining factors
- develop the action plan to reach the goals
- evaluate and review
what is strategic planning
- undertaken by senior managers
- long-term 2-5 years
what is tactical planning
undertaken by middle management
- medium term 1-2 years
what is operational planning
- undertaking by frontline managers
- short term less than 12 months
what is leading
leading is the skill of a manager when guiding workers towards achieving the goals of the business
it is vital because it it can inspire employees to exert high levels of effort to achieve organizational objectives
what is decision making relation to management skills
it is a multi step approach whereby
what are the steps of decision making
- identify the problem and define the objectives
- gather the necessary info and establish the cause of the problem
- develop alternative solutions
- analyze alternatives
- choose and alternative solution
- evaluate the implementation
what is interpersonal in relation to management skills
they are those skills that are used everyday to communicate and interact with other people both individually and in groups
they are essential to develop and maintain positive relationships with the business stakeholders
what is an eg of an interpersonal skill
- teamwork
- empathy
- communication
- ability to motivate
what is an interest of an owner
- to aim for the profitability of the business
what is an interest of a board of directors
- to develop and direct major business decisions and strategies
what is an interest of management
to achieve goals and objectives
what is an interest of employees
- to receive a fair wage or salary
what is an interest of customers
- to obtain quality goods and services
what is an interest of suppliers
- to be paid promptly
what is an interest of competitors
- ensure they gain a competitive edge of the competitor
what is an interest of community
- to benefit from employment opportunities created by the business
what is autocratic and what does it include
where all decision making is centralized, there i little delegated authority and communication is downwards
ad
- dec made by experienced person
- quick dec
disad
- quick s not always best
- no teamwork
what is persuasive and what does it include
managers make the decisions, the persuade workers of the benefits of those decisions
ad-
- quick dec
- suits high risk dec
disad-
- undervalues benefits of teamwork
- workers opinion are not sought
what is consultative and what does it include
manager consults with employees when discussing an issue; however the ultimate decision is made by the manager based on the suggestions and input received.
ad-
- gains variety of ideas from employees which can lead to a better outcome
disadv-
- employees may understand complexity
what is participative and what it includes
decision making is formed by a team with managment and staff working together with the manager retaining responsibility
ad -
- manager demonstrates trust and faith in employees
- morale is increased
disadv
- conflict can arise
- can be time consuming
what is laissez-faire and what it includes
a leadership style that leaves majority of decision making and running of the businesses operation to the employees.
ad-
- high employee independence
- strong motivation
disadv
- lack of guidance
- doesn’t suit unskilled employees
