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Business Management 3/4 > 3/4 Trial Exam Revision > Flashcards

3/4 Trial Exam Revision Flashcards

1
Q

Sole Trader

A
  • A small business with an individual owner that is backed up by personal assets
  • Entitled to keep all profits but liable for all losses
  • Fully responsible for managing their business in terms of planning, organising and leading
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2
Q

Advantages and Disadvantages of a Sole Trader

A

Advantages:
- Simple and inexpensive to set up
- Owner has full control
- Minimal government regulations
- Gain all profits

Disadvantages:
- Unlimited liability
- Hard to obtain finance
- Limited to owner’s knowledge and skills
- No perpetuity

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3
Q

Partnership

A
  • A legal form of ownership in which 2 or more partners work together to manage and operate a business
  • There is General and Limited partnership
  • Should enter in a partnership with someone you completely trust
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4
Q

Advantages and Disadvantages of Partnership

A

Advantages:
- Simple and inexpensive to set up
- Workload is shared
- Risk is shared
- Broader access to capital, knowledge, skills and experience

Disadvantages:
- Unlimited liability
- Liability for debts incurred by other partners
- Business could be threatened by one partner leaving
- Potential disputes and conflict of interests

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5
Q

Company

A

A separate legal entity that is subjected to the requirements of the Corporations Act 2001

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6
Q

Private Limited Company

A
  • A business that becomes a separate business entity
  • There is a minimum of two shareholders and a maximum of 50 shareholders. Invitation only for shareholders
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7
Q

Advantages and Disadvantages of Private Limited Company

A

Advantages:
- limited liability applies
- extra capital by issuing more shares
- has perpetuity
- exists as a separate legal entity

Disadvantages:
- greater degree of complexity
- higher establishment cost
- higher degree of government control and reporting requirements
- additional compliance costs

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8
Q

Social Enterprise

A

A private sector business that distributes profit to benefit the community rather than individual shareholders.

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9
Q

Government Business Enterprise

A

A business that is government owned and operated. GBEs seek to run profitably by controlling cost and selling their goods and services at a price to cover costs.

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10
Q

Stakeholder

A
  • An individual, group, or organization that has a vested interest in a business
  • Stakeholders can affect or be affected by the operations of a business
  • Ideally, all stakeholders want the business to achieve its objectives
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11
Q

Types of Stakeholders and their interests

A
  • Owners/Shareholders
  • Management
  • Employees
  • Customers
  • Suppliers
  • Trade Unions
  • Community
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12
Q

Objectives

A

Statements of desired achievement that provide direction for the business.

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13
Q

SMART Objectives

A

A useful tool to ensure goals are Specific, Measurable, Achievable, Realistic and Timely.

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14
Q

Hierarchy of Objectives

A
  1. Vision and mission statement (may include values statement as well)
  2. Corporate and Strategic objectives (two to five years)
  3. Tactical objectives (one to two years)
  4. Operational objectives (less than one year)
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15
Q

Motivation

A

Refers to the individual , internal process that directs, energises, and sustains a persons behaviour

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16
Q

Maslow’s Theory

A
  • Humans all have needs that need to be met
  • Striving to fulfil these needs is what motivated employees.
  • Once a need has been met it no longer motivates
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17
Q

Maslow’s Hierarchy of Needs

A
  1. Physiological needs - Food, water etc.
  2. Safety and security - Physical and emotional
  3. Social needs - Affection
  4. Esteem needs - Respect and accomplishment
  5. Self actualisation - Achievements and fulfillment
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18
Q

Goal Setting Theory

A

Employees are motivated to achieve challenging, but not overwhelming, goals when they are evaluated.
1. Setting clear goals
2. Setting challenging (but achievable) goals
3. Secure commitment
4. Provide Feedback
5. Complexity of the task

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19
Q

4 Drives Theory

A

Humans are motivated by the drive to acquire, bond, comprehend and defend.

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20
Q

Motivation Strategies

A
  • Performance-related pay
  • Career Advancement
  • Investment in training
  • Support
  • Sanctions (negative
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21
Q

Training

A

The process of teaching staff how to do their job more effectively and efficiently by boosting their knowledge and skills
- On the job training
- Off the job training

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22
Q

Development

A

Activities that prepare staff to take on greater responsibility in the future

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23
Q

Performance Management

A

Improving business and individual performance by measuring how well employees are achieving business objectives

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24
Q

Management by Objectives

A

Goals are set for each employee and these goals are used to manage performance.

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25
Q

Performance Appraisal

A

Measures how well an employee has performed their job, provides feedback to employees and establishes plans to improve performance.

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26
Q

Self-Evaluation

A

A performance management strategy that involves the employee assessing their own performance
- Positive is they can highlight what they are doing well
- Negative is they can gloss over what they are not doing well.

27
Q

Employee Observation - 360 Feedback

A

A performance management strategy where Feedback on employees is obtained from other employees.

28
Q

Corporate Social Responsibility

A

A concept whereby organisations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities, as well as the environment.

29
Q

CSR Inputs

A

A system of procurement of inputs that allows a business to meet its economic needs while minimising damage to both the environment and society.

30
Q

CSR Processes

A
  • Reuse of resources
  • Recycling of resources
  • Proper training and development of employees
  • Ethical treatment of employees
31
Q

CSR Outputs

A
  • Non-harmful to society
  • Honest marketing
  • Packaging
  • Recyclable and/or biodegradable options
32
Q

Management Styles

A

The ways in which the superiors in the business communicate and motivate staff to achieve corporate objectives.

Types:
Autocratic - ruling with unlimited authority, top to down
Persuasive - persuades you through charisma, logic, personality
Consultative - takes all staff and employees into account
Participative - staff are heavily involved
Laissez-faire - majority of the business in the hands of employees

33
Q

Three Step Model

A

Change Management Model:
1. Unfreeze the status quo
2. Move from the current situation
3. Refreezing

34
Q

Unfreeze the Status Quo

A
  • Moves a business to a state where stakeholders are prepared to undergo change
  • The way to change is to break or destabilise the equilibrium (unfreeze) before the old behaviour could be ‘unlearnt’ and new behaviour successfully adopted
35
Q

Move from the current situation

A
  • The change step moves the business towards the desired state
  • This is the time where managers need to provide ongoing support and training to employees
36
Q

Refreezing

A
  • Ensures that the change is sustained within the business for the long term
  • Involves changing corporate behaviour to ensure change is embraced
37
Q

The need of KPI’s

A
  • KPI’s allow a business to assess their level of performance during and after business change
  • KPI’s can provide a business on how it is performing, in terms of its employees, products, services and efficiency of resources
  • Businesses should respond to KPI’s that highlight poor performance, through the use of appropriate management strategies
38
Q

Staff Training and Development - Staff Absenteeism, Staff Turnover, Number of Workplace Accidents

A
  • Equipping employees with the relevant knowledge and skills required to perform work tasks
  • Improves employee’s skills, knowledge, attitude and behaviour to make them do jobs more efficiently and effectively
  • Staff training can improve the quality, productivity and safety of a business
39
Q

Staff Motivation - Staff Absenteeism, Staff Turnover, Rate of Productivity Growth

A
  • Strategies that seek to drive employees to work towards the achievement of business objectives
  • A business needs to place emphasis on ensuring staff are highly motivated and treated well

Examples: performance related pay, career advancement, safe workplace

40
Q

Management Styles and Management Skills - Almost every KPI

A
  • Managers altering their way of directing and interacting with staff
  • The complexity of the task, experience of staff, time and manager preferences should be considered
    Examples: communicating, delegating, interpersonal skills, planning
41
Q

Increased Investment in Technology - Sales, Market Share, Level of Wastage, Productivity Growth

A
  • The implementation of automated and computerised processes of production and operations
  • When a business experiences low performance, technology can improve productivity, market share and profitability
42
Q

Improving Quality in Production - Market Share, Sales, Number of Customer Complaints, Level of Wastage

A
  • The implementation of processes that increase the perceived value of a product or service
  • The use of this enables businesses to meet customer needs, remain competitive and increase efficiency in production
    Examples: Quality Control, QA, TQM, Benchmarking against industry leader, Standardising
43
Q

Cost Cutting

A
  • Process of reducing business expenses
    Examples: Examining non-essential costs, Declaring employees redundant, Outsourcing non-core functions
44
Q

Lean Production Techniques - Sales, Net Profit, Market Share

A
  • Adopting approaches that reduce waste in production while increasing the value of goods to the customer
  • Lean production can improve the efficiency, reduce costs and improve customer satisfaction
    Examples: JIT, Benchmarking
45
Q

Redeployment of Resources - Level of Wastage, Net Profit, Level of Staff Turnover

A
  • The reallocation of natural labour and capital materials to different areas of the business to improve their effectiveness and productivity
    Types of Redeployment:
    Labour Resources, Capital Resources, Natural Resources
46
Q

Opportunities for Growth

A
  • Exploring new business opportunities in the domestic and global markets
  • Finding a market niche
  • Researching and developing or improving a product or service
  • Taking advantage of new technologies
47
Q

Strategy: exporting products and services

A
  • Expanding to the global market and global economy to increase market share and increase net profit
    Considerations:
    Legal Structure, Taxation, Staffing
48
Q

Strategy: Innovation

A
  • a new idea or improvement, which will enhance or extend how a business can operate
49
Q

Strategy: Developing a Market Niche

A
  • filling a gap in the market, which is either not being catered for at all or is being done poorly
    Questions to ask:
    1. How should the niche be developed?
    2. Exactly what will the business sell and to whom?
    3. What concerns and potential customers have?
    4. Plan the business and test in the market
50
Q

Strategy: Research and Development

A
  • allows businesses to come up with new ways to provide services and products
51
Q

Strategy: New Technologies

A
  • Businesses need to adapt and be prepared to develop or use new technologies in order to properly connect with their customers
52
Q

Driving Forces for Change

A
  • Managers
  • Employees
  • Competitors
  • Regulations
  • Reduction in Costs
  • Technology
  • Innovation
  • Societal Attitudes
53
Q

Restraining Forces for Change

A
  • Managers
  • Employees
  • Time
  • Organisational Inertia
  • Regulations
  • Financial Considerations
54
Q

Porter’s Generic Strategies

A

A framework that allows business to adopt one of three strategies to achieve a sustainable competitive advantage

55
Q

How to determine which generic approach to focus on

A
  1. Carry out a SWOT analysis
  2. Porter’s Five Force Analysis
    Supplier Power
    Buyer Power
    Competitive Rivalry
    Threat of substitution
    Threat of new entry
  3. Compare the two
56
Q

Cost Leadership

A

A strategy that allows a business to achieve a competitive edge by reducing production or delivery costs

  1. A business could increase its profits by reducing its costs and, at the same time, charge similar prices to its competitors.
  2. Increase market share by charging lower prices but sill make a profit due to savings made in reducing costs and other expenses.
57
Q

Differentiation

A

Selecting one or more attributes that customers in that market find appealing.
Developing the uniqueness of a product or service or enhancing its attractiveness to entice customers.
To implement must do the following:
• Deliver high quality products
• Develop effective marketing and promotion strategies by emphasising the benefits of the brand
• Ensuring that there is a focus on research and development in order to facilitate innovation

58
Q

When is differentiation appropriate

A

• When the target market is not price sensitive
• When there is a competitive market
• Where customers have specific needs not adequately met
• When business has the resources and ability to satisfy customer needs in a way rivals cannot copy, including intellectual property and talented employees.

59
Q

When is differentiation successful

A
  • The business can charge a premium price
  • Gains increased revenue per unit sold
  • The business gains customer loyalty
60
Q

Low-risk Strategies

A
  • Gradual management approaches that encourage employees to accept and participate in a business change
    Examples: two-way communication, empowerment of employees, support and incentives
61
Q

Elements of an Operations System

A

Inputs
Processes
Outputs

62
Q

Characteristics of an operations system

A

Goods - tangible, can be stored, easily standardised, no customer contact,

Services - intangible, difficult to store, often customised, high degree of customer contact

63
Q

Materials Management

A

Forecasting
Master Production Scheduling - what will be produced in what time frame
Master Requirement Planning - computerised system used to plan and schedule materials orders
Just In time - aims to reduce costs through minimisation of inventory

Business Management 3/4 (2 decks)

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