3. AOS 1

Question 1

What is a Sole Trader?

Answer 1

A sole trader is a business structure that is owned and operated by one individual.

Question 2

What is Unincorporated?

Answer 2

Unincorporated is a legal status of a business whereby the business owner and the business are viewed as the same legal entity.

Question 3

What is Unlimited Liability?

Answer 3

Unlimited liability is the personal legal responsibility a business owner has for an unincorporated business’s debts.

Question 4

What are the advantages of a Sole Trader business structure?

Answer 4

• Owner has full control.
• Low risk of disputes.
• Easy to set up/register.
• Fewer reporting requirements and minimal government regulation.
• Quick decision making.
• Inexpensive.
• Owner retains all profit.

Question 5

What are the disadvantages of a Sole Trader business structure?

Answer 5

• Owners person assets are at risk and can be seized to pay debts.
• Difficult to take time off.
• Limited skills/knowledge.
• Owner dies = Business dies.

Question 6

What is a Partnership?

Answer 6

A partnership is a business structure that is owned by 2-20 owners.

Question 7

What is a Partnership Agreement?

Answer 7

A partnership agreement outlines the roles and expectations of the partners in a business.

Question 8

What are the advantages of a Partnership business structure?

Answer 8

• Greater access to a range of knowledge ad skills.
• Shared financial and legal risks.
• Shared workload.
• Easy/simple to set up/register.
• Fewer reporting requirements and government regulations.
• Minimal start up costs.

Question 9

What are the disadvantages of a Partnership business structure?

Answer 9

• Personal assets are at risk.
• Potential conflicts.
• Shared profits.
• Debt is held by everyone involved.

Question 10

What is a Private Limited Company?

Answer 10

A private limited company is an incorporated business structure that has at least one director and a max of 50 shareholders.

Question 11

What is ‘Incorporated’?

Answer 11

Incorporated is a legal status of a company whereby the company is established as a separate legal entity to the shareholder/s.

Question 12

What are the advantages of a Private Limited Company?

Answer 12

• Limited liability.
• Variety of expertise.
• No risk in the removal of one director.
• Banks are inclined to provide loans.

Question 13

What are the disadvantages of a Private Limited Company?

Answer 13

• Complex reporting requirements.
• Difficult to change structure once established.
• Complex to establish.
• Expensive to set up.

Question 14

What is a Public Listed Company?

Answer 14

A public listed company is an incorporated business that has an unlimited number of shareholders and lists and sells its shares to the Australian Securities Exchange (ASX).

Question 15

What are the advantages of a Public Listed Company?

Answer 15

• Limited liability.
• Greater expertise.
• No permission needed to trade/sell shares.
• Outlives directors.
• Greater access to capital (money).

Question 16

What are the disadvantages of a Public Listed Company?

Answer 16

• Potential conflicts.
• Complex reporting requirements.
• Complex set up.
• Expensive to set up/operate.

Question 17

What is a Social Enterprise?

Answer 17

A social enterprise is a type of business that aims to fulfill a community or environmental need by selling goods or services.
(At least 50% of profits go towards their social goal)

Question 18

What are the advantages of a Social Enterprise?

Answer 18

• Community benefits.
• Positive reputation.
• Employee’s have meaningful work, feeling fulfilled.
• Easy to receive financial support.

Question 19

What are the disadvantages of a Social Enterprise?

Answer 19

• Balance of finance and social goals may be difficult.
• Bank loans may be difficult to obtain as the goal of the business is not solely financial gain.

Question 20

What is a Government Business Enterprise (GBE)?

Answer 20

A government business enterprise (GBE) is a business owned and operated by the government.

Question 21

What is the Public Sector?

Answer 21

Public sector is the part of the economy that is operated by the government.

Question 22

What are the advantages of a GBE?

Answer 22

• Helps community needs.
• Provides healthy competition to the public sector.
• There is some independence from the government.
• Provides services that the public sector would hesitate to invest in.
• Can rely on the government for initial investment.

Question 23

What are the disadvantages of a GBE?

Answer 23

• Government/politicians can interfere with the business.
• Have to follow ‘red tap’, excessive rules and formalities.
• Possibly less productive than a private-sector business.

Question 24

What are Business Objectives and what are they?

Answer 24

Business objectives are the goals a business intends to achieve.

• To increase market share.
• To fulfill a market need.
• To fulfill a social need.
• To improve efficiency.
• To improve effectiveness.

Question 25

What is Efficiency?

Answer 25

Efficiency is how productively a business uses its resources when producing a good or service.

Question 26

What is Effectiveness?

Answer 26

Effectiveness is the extent to which a business achieves its stated objectives.

Question 27

What are Shareholders, who are they? What do they want?

Answer 27

Shareholders are individuals, groups or organisations who have a vested interest in the performance and activities of a business. - Owners: Earn profit. - Managers: Achieve business objectives. - Employees: Fair wages and a safe environment (stable employment). - Customers: Quality (affordable) goods/services and customer service. - Suppliers: Reliable relationship with businesses, profit and Revenue. - Community: Employment opportunities, local economy.

Question 28

What is an Autocratic management style?

Answer 28

An autocratic management style involves a manager making decisions and directing employees without any input from them.

Question 29

What are the advantages of an Autocratic management style?

Answer 29

- Management makes all decisions. - Employees have defined roles. - Quick decision making. - Processes are completed quickly.

Question 30

What are the disadvantages of an Autocratic management style?

Answer 30

- Limited views, ideas and approaches. - Restricted chance at promotion. - Low employee motivation. - Increased turnover.

Question 31

What is a Persuasive management style?

Answer 31

A Persuasive management style involves a manager making decisions and communicating the reasons for those decisions to employees without their input.

Question 32

What are the advantages of a Persuasive management style?

Answer 32

- May gain employee trust by explaining decisions. - Employees have defined roles. - Employees feel slightly more involved. - Quick decision making, which increases productivity possibly increasing revenue.

Question 33

What are the disadvantages of a Persuasive management style?

Answer 33

- Limited views, ideas and approaches. - Restricted chance at promotion. - Low employee motivation. - Employees ay leave. - Takes time to inform employees of decisions.

Question 34

What is a Consultative management style?

Answer 34

A consultative management style involves a manager seeking input from employees on business decisions but making the final decision themselves.

Question 35

What are the advantages of a Consultative management style?

Answer 35

- Multiple perspectives and suggestions = informed decision making. - Employee motivation and increased sense of value. - Quality of decisions may increase sales and profits.

Question 36

What are the disadvantages of a Consultative management style?

Answer 36

- Employees may not understand the complexity of decisions and makes unuseful suggestions. - Employee conflict may arise if their suggestions are ignored. - Including employee perspectives takes up time.

Question 37

What is a Participative management style?

Answer 37

A participative management style involves a manager sharing information with employees so that employees can participate in decision making.

Question 38

What are the advantages of a Participative management style?

Answer 38

- Improved quality in decisions due to various perspectives. - Relationships (employee and management) may improve due to two-way communication. - Employee motivation and increased sense of value. - Positive corporate culture. - Employees can develop skills due to workplace opportunities. - Quality decisions may increase sales and profit.

Question 39

What are the disadvantages of a Participative management style?

Answer 39

- Multiple perspectives may end in compromise and decrease decision quality. - Managers may lose control and hierarchical structure may be compromised. - Perspectives and suggestions may collide causing conflict. - Some employees prefer direction and may feel uncomfortable sharing ideas. - Including employee perspectives takes up time.

Question 40

What is a Laissez-Faire management style?

Answer 40

A laissez faire management style involves a manager communicating business objectives to employees an giving them freedom to make decisions independently.

Question 41

What are the advantages of a Laissez-Faire management style?

Answer 41

- Fosters creativity and innovation, and broader decisions. - Employees may feel more motivated and trusted. - Collaborations and quality decisions may increase sales and profit.

Question 42

What are the disadvantages of a Laissez-Faire management style?

Answer 42

- Management loses control of decisions. - Business objectives may not be met as employees may lack direction. - Employee discussion may be very time consuming. - Employees may make poor decision s, costing time, resources and money.

Question 43

In order, which management style has the least employee freedom to the most employee freedom, respectively.

Answer 43

Limited time for tasks, inexperienced, simple tasks, high management control. - Autocratic - Persuasive - Consultative - Participative - Laissez-Faire Extended time for tasks, highly experienced, complex tasks, low management control.

Question 44

What are the six management skills?

Answer 44

- Planning - Decision Making - Communication - Delegation - Interpersonal - Leadership

Question 45

Which management styles require a high amount of planning and decision making skills?

Answer 45

- Autocratic - Persuasive - Consultative

Question 46

Which management styles require a high amount of communication skills?

Answer 46

- Consultative - Participative - Laissez-Faire

Question 47

Which management style requires the most delegation?

Answer 47

Laissez-Faire

Question 48

Which management styles requires the most interpersonal skills?

Answer 48

Participative

Question 49

Which management styles require a high amount of leadership skills?

Answer 49

- Participative - Laissez-Faire

Question 50

What is Corporate Culture?

Answer 50

Corporate culture is the shared values and beliefs of a business and its employees.

Question 51

What is Official Corporate Culture?

Answer 51

Official corporate culture involves the shared views and values that a business aims to achieve, often outlined in a written format (such as mission statements, vision statements and policies).

Question 52

What is Real Corporate Culture?

Answer 52

Real corporate culture involves the shared valued and beliefs that develop organically within a business, and are practiced on a daily basis. This can be achieved through diversity, rituals, celebrations, hiring criteria, etc.