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Flashcards in unit 3 AOS 1 sac 1 Deck (83):
1

Sole trader

- individual owner of a business
- entitled to keep all profits after tax
- unlimited liability (liable for all debts)
example - Plumber

2

sole trader
Advantages and Disadvantages

advantages
- simple and inexpensive to establish
- owner has total control
- minimal government regulation

Disadvantages
- unlimited liability
- harder to get finances
- reliant on knowledge and skill

3

Partnership

- owned between 2-50 people
- either partner is jointly liable for debts
- they have partnership agreements

example - accountants

4

two types partnership

general partnership
- partners have equal responsibility for the management of business
- unlimited liability

Limited partnership
- limited liability
- silent partners = business partners who are not involved in the day to day running of the business

5

Partnership
advantages and disadvantages

Advantages
- inexpensive and simple to start
- risk is shared
- minimal government regulations

Disadvantages
- unlimited liability
- liable for partners debts
- potential personality clashes
- business could be threatened by one partner leaving

6

Company

- seperate legal entity
- limited liability
- same rights as a natural person
- has perpetuity (on going life)
- must keep finical records for at least 7yrs

7

two types of Companies

private limited company
Public listed companies

8

Private limited companies

- sole traders/partnerships become private limited companies due to expansion and opportunity and gain protection
- can have up to 50 shareholders
- shares can only be sold if granted permission from owners

9

Private limited companies
Advantages/Disadvantages

Advantages
- limited liability
- business will still continue if shareholder/director leaves
- extra capital can be gained by selling shares

Disadvantages
- complex to start
- expensive establishment costs
- high degree of government control

10

Public listed companies

- an organisation listed on the Aus stock exchange
- anyone can buy shares
- run by a board of directors
- shareholders are not involved in the business

examples
BHP
Myer

11

Public listed companies
Advantages/disadvantages

Advantages
- limited liability
- separate legal entity
- business will still continue if owner leaves

disadvantages
- Highly complex to start
- high establishment costs

12

Social enterprise

- business that uses strategies to improve human wellbeing or the environment rather then maximising profits

Example
- thank you group

13

Government business enterprise

- operates in the public sector
- run by the government
- management must report regularly to shareholders

example
- Aus post

14

3 characteristics of GBE

1. the government controls the business
2. the business is engaged in commercial activities
3. the business is a separate legal entity to the government department

15

Business objectives (5)

1. Financial objective
2. Market share
3. Marketing objective
4. Social objective
5. Shareholder expectations

16

BO: Financial objective

- the desired financial performance of the business

including
- profit
- Improving market share

17

Profit

the difference between revenue and expenses

18

BO: market share

percentage of the market controlled by the business

19

Improving productivity

Improving operations and efficiency

20

BO: Market objectives

-demand for you good or service
- maximise the appeal to the most people

21

BO: Social objectives

- role of business in the community
- above and beyond your legal objectives
- equal opportunity and anti discrimination policies

22

BO: Shareholder expectations

shareholder
- owners of the company
- can own the whole part or shares in a business

Stakeholders
an individual or group that has a direct interest in the activities of the business

23

Characteristics of business stakeholders

people/groups who have a vested interest in the business

24

Macro environment

the conditions that a business operates in that they have no control over
- exchange rates
- political environment

25

Operating environment

The environment immediately external to a business to which it has close interaction with when conducting business

26

Internal environment

the areas of a business that have control over

27

Key stakeholders
Macro (2)

community/society
government

28

Key stakeholders
operating (5)

- creditors/banks
- trade unions
- customers
- suppliers
- competitors

29

Key stakeholders
internal (4)

- shareholders
- directors of a company/partnership
- Management
- employees

30

issues that stakeholders need to consider

1. is the business conducting itself in a fair ethical manner

2. is the business conducting itself in a social responsible way

31

Social responsibility

Requires a business to work on improving its positive impact on society and reduce its negative impact

32

Possible conflicts between stakeholders
employees and shareholders

employees require safe working conditions and reasonable wages
but
this reduces businesses profits and dividends to shareholders

33

Possible conflicts between stakeholders
Management and customers

management may try to maintain profits and high dividends to satisfy shareholders
but
will upset customers who want to pay reasonable prices for products

34

Possible conflicts between stakeholders
management and suppliers

management wants to reduce costs to increase profit
but
suppliers may charge higher prices for ethical material

35

corporate social responsibility

the obligation that a business has over and above the legal responsibilities to the wellbeing of employees, customers, shareholders, the community and the environment

36

things to consider around CSR

- how business decisions affect the TRIPLE BOTTOM LINE (financial, social, environmental)

- customers like to deal with business that implement a strategy of CSR

- fixing conflict and increasing stakeholders values will ensure long term growth and survival

37

Areas of management responsibility (5)

1. operations
2. finance
3.human resources
4. sales and marketing
5. technology support

38

Areas of management responsibility
Operations

responsible for the running and protection of the business

- maintenance
- procurement of goods and services

39

Areas of management responsibility
Finance

responsible for managing the financial aspect of the business
- bugeting
- reporting
- cash control

40

Areas of management responsibility
Human resources

-responsible for coordinating all activities from acquiring to terminating employees
- manages relationship between employer and employee
- focuses on employee motivation, staff control and staff reviews

41

Areas of management responsibility
Sales and marketing

- responsible for the marketing mix

includes
- developing products
- pricing
- promoting distribution

42

Areas of management responsibility
Technology support

- responsible for installing and maintaining technology as well as providing assistance to the users

includes
- phone s
- computers
- computer networks

43

Operations strategies

the use of technology, materials management, quality management and waste minimisation

44

Finance strategies

accounting and financial management

45

management styles
definition

the manner and approach of providing direction to staff, implementing business plans and strategies and motivating employees

46

Management styles (5)

1. autocratic
2.persuasive
3. consultative
4. participative
5. laissez faire

47

Autocratic

- All decision making is centralised
- Communication is one way
- no input from employees
- managers are in full control

48

Autocratic
Advantages/disadvantages

Advantages
- decision making is quick
- communication is direct
- suits high risk and difficult decisions

disadvantages
- a quick non collaborative decision is not always the best one
- discourages teamwork
- low motivation

49

Persuasive

- Management make the decision and then persuade employees of the benefit of that decision
- Has similar characteristics to an autocratic style

50

persuasive characteristics

- manager has centralised control and authority
- communication is centralised
- decision making is centralised and controlled by management

51

Persuasive
Advantages/disadvantages

Advantages
- decision making is quick
- suits high risk decisions
- employees have a clear idea of what they have to achieve

Disadvantages
- no input from emplyoees
- employees may feel alienated not respected

52

Consultative

- takes into consideration the opinions of the team before making a decision
- managers still makes the final decision based on the suggestions and input received

53

Consultative characteristics

- employees have the opportunity to voice their opinions
- two way communication
- decisions are made after consulting with employees

54

Consultative
Advantages/disadvantages

Advantages
- lots of ideas from employees helps decision making
- motivator and increase job satisfaction

disadvantages
- take a long time
- employees will be upset if management don't take on their ideas

55

participative

- managers work closely with employees, work together to improve the overall performance of the business
- encourages employees to share in decision making and problem solving

56

participative characteristics

- recognising employees strengths and actively involving them in decision making
- two way communication
- used when business is undergoing rapid change

57

participative
Advantages/disadvantages

Advantages
- positive employer/employee relationship
- high levels of motivation
- opportunity for employees to put forward ideas and gain skills

disadvantages
- can take a longer process as everyone needs to be considered
- internal conflict may arise
- not all employees want ti be involved

58

Laissez faire

- employees have total responsibility of workplace
- managers don't play a central decision making role
- works well in creative work and research where employees require minimal supervision

59

Laissez faire
Advantages/disadvantages

Advantages
- employees feel a sense of ownership
- open communication
- dynamic creative relationship

disadvantages
- loss of control by managers
- potential miss use of business resourses
- personal conflict may impact the business outcome

60

Influences on management style

1. the manager - personality, experience, values, beliefs, skills
2. the staff - personality, experience, beliefs, skills
3. the nature of task
4. internal and external considerations including time and resources
- limited time= autocratic/persuasive
- lots of time= consultative/participative

61

contingency management theory

Is the need for mangers to adapt their management style to suit the situation at hand

62

management skills

the abilities or skills that a manger uses to achieve business objectives

63

Management skills (6)

- Communication
- Delegation
- Planning
- Leading
- Decision making
- Personal

64

Relationship between management style and skill

- The type of mangement style a manger selects determines the management skills they will need

65

Communication

is the transfer of information from sender to receiver

- non-verbal (body language, visual)
- verbal (written, oral)
- can be used to explain a vision, outline changes and ask for opinions

66

Delegation

is the ability to transfer authority and responsibility from a manager to an employee to carry out specific activities

- helps with time management
- enables staff to learn new skills
- helps build trust

67

Planning

the ability to define business objectives and decide on methods and strategies to achieve them

68

3 types of planning

1. strategic planning (long term)
- 2-5yrs

2. tactical planning (medium term)
- 1-2yrs
- flexible
- helps achieve strategic planning

3. operational planning (short term)
- specific details on how the business can conduct in the short term

69

Leading

is the skill of a manger when guiding workers towards achieving the business objective

70

Effective LEADING requires a manager to...

- have conditions that motivate, engages and inspires staff
- good communicator
- be able to Build teams
- role model
- resolve conflicts

71

Emotional Intelligence

The ability to perceive, understand, monitor and regulate emotion in each other and themselves

72

Decision making

Is a multi step approach where a selection is made between a range of alternatives

- it may be routine and easy OR complex and difficult

73

Steps to making a decision

1. Identify the problem and define the objective
2. Gather necessary information to establish the cause of the problem
3. Develop alternative solutions (plan B)
4. Analyse the alternatives
5. Choose and implement an alternative
6. Evaluate

74

Interpersonal skills

Skills used everyday to communicate and interact with other people both individually and groups

- Team player
- Empathetic and assertive
- Good communicator
- Good motivator

75

The appropriateness of management styles

mangers use different styles when making decisions and working with employees

76

The appropriateness of management styles

It often depends on situational variables such as

1. Nature of task
2. time available
3. the experience and skill level of employees
4. managers experience

77

Corporate culture

The shared values and beliefs and behaviours of the people in the business

78

Official corporate culture

The preferred values, beliefs and behaviours of people, within a business stated in official documents like a company motto or mission statement

79

Real corporate culture

How things actually operate, the actual values and beliefs presented in the company

80

Why is corporate culture important? (4)

- Offers better retention rates
- Makes the organisation attractive to potential employees
- allows companies to choose employees to be the best in their field
- Improves productivity

81

What helps create a good corporate culture (5)

- Employees desire to win
- Considering the impact of the decision on the business
- Focus on internal and external customers
- Prioritising teamwork
- Delivering what was promised

82

How can you determine the corporate culture of an organisation? (4)

- Communication channels
- Dress code
- Willingness to achieve
- Staff interaction

83

Strategies to develop corporate culture (official and real) (4)

- The creation of a vision statement, Mission statement and Values statement

- Branding of the business

- People - employing the right people that suit the business

- Physical environment and material symbols - open plan offices, Business location, size of offices