Term 1

Question 1

Sole trader

Answer 1

Only has 1 owner. The business owner is responsible for al business debts (unlimited liability which is a disadvantage). It is simple and inexpensive to set up.

Question 2

Partnership

Answer 2

It is owned and operated by 2-20 partners. There should be a written partnership agreement. There is a greater pool of expenses to help makes stronger decisions. However all partners are 100% liable.

Question 3

Private Limited company

Answer 3

Business owned and operated by 1-50 shareholders. Shareholders own shares in a company. Limited liability for shareholders (not responsible for debts). However there are more reporting requirements to the owners and the government.

Question 4

Public listed company

Answer 4

Business owned by a minimum of 1 shareholder and no maximum amount of shareholders. The sale of shares are listed on the ASX and the public can buy shares. There is limited liability (shareholders are not responsible for debts). However a public listed company can be very complex and expensive to set up.

Question 5

Social enterprise

Answer 5

Owned and operated by a group of members or a privately owned business. Exists to benefit the community rather than shareholder. It can improve employee morale as the employees feel as though they are contributing to a worthy case. However it can be difficult to focus on profits while also focusing on the social cause.

Question 6

Government Business Enterprise

Answer 6

It sells essential community services with an aim of making profit. Participate in commercial activities and aims to make profit. It is able to offer services to the community that other businesses may not find financially desirable. However objectives and funding may change with change of government.

Question 7

Objective

Answer 7

A desired outcome or specific result that a business intends to achieve.

Question 8

Profit

Answer 8

What is left after business expenses have been deducted from money earned from sales (revenue)

Question 9

Market Share

Answer 9

The proportion of total sales in a given market or industry that is controlled or held by a business, calculated for a specific period of time.

Question 10

Shareholder expectations

Answer 10

Shareholders expect to make a return on their investment.

Question 11

Efficiency

Answer 11

How well a business uses resources to achieve objectives.

Question 12

Effectiveness

Answer 12

The degree to which a business has achieved its stated objectives.

Question 13

Market need

Answer 13

For many businesses, their purpose is to fulfil some sort of market need. For eg. a business may exist to meet customer expectations or provide a good service that is not otherwise available to the market.

Question 14

Social Need

Answer 14

Involves the production and/or selling of gods and services for the purpose of making the world a better place.

Question 15

7 Business Objectives

Answer 15

-To make profit
-To increase market share
-To fulfil a market need
-To fulfil a social need
-To meet shareholder expectations
-To improve efficiency
-To improve effectiveness

Question 16

To make a profit (business objective)

Answer 16

Profit is the surplus remaining after total costs (expenses) are deducted from total revenue, and the basis on which tax is calculated and dividends are paid. Profit applies to all six businesses as one of their objectives will always be to make profit, to keep the business running and earn money.

Question 17

To increase market share (business objective)

Answer 17

Market share is defined as the proportion of total sales in an industry controlled by a particular business. It is typically expressed as a percentage and is used to give a general idea of the size of a company relative to its market and competitors.

Market share is important for competitive advantage, company reputation and awareness. A business can increase its market share by lowering costs, lower prices, increase sales, boost reputation, increase advertising or by damages occurring to a competitor.

Question 18

To improve efficiency (business objective)

Answer 18

Efficiency is how well a business uses resources to achieve objectives. Business that use efficiency will use raw materials, machinery, labour, and time etc and information.

Question 19

Effectiveness (business objective)

Answer 19

Effectiveness is the degree to which a business has achieved its stated objectives. For example, if one of your objectives is to increase profit by at least 10% in the next year. And once you achieve it you have been effective in achieving that objective.

Question 20

To fulfil a market need (business objective)

Answer 20

Meeting the demands of customers. A business can measure that they are meeting a need if they see that their profits are increasing as well as increased market shares and increasing costs.

Question 21

To fulfil a social need (business objective)

Answer 21

For example Westpac’s Lifesaver Rescue Helicopter service, they do it to increase their reputation while having/fulfilling a social need to attract new customers and increase market share.

Question 22

To meet shareholder expectations

Answer 22

A person who owns at least one share in a company making them a partial owner. Shareholders apply to businesses that are privately or publicly owned.

Question 23

Stakeholder

Answer 23

Are groups and individuals who interact with the business and have a vested interest in its activities

Question 24

Managers

Answer 24

The person who has the responsibility for successfully achieving the objectives of the business.

Question 25

Employees

Answer 25

The people who work for the business and who expect to be paid fairly, trained properly and treated ethically in return for their contribution and production.

Question 26

Customers

Answer 26

The people who purchase goods and services from the business, expecting high quality at competitive prices.

Question 27

Suppliers

Answer 27

Businesses or individuals who supply materials and other resources to a business so that it can conduct its operations.

Question 28

General community

Answer 28

Wants a business to be a good corporate citizen-members of the community expect that a business will give back to society something of what they take out in generating profit.

Question 29

Corporate social responsibility

Answer 29

The obligations a business has over and above its legal responsibilities to the wellbeing of employees and customers, shareholders and the community as well as the environment.

Question 30

Owners

Answer 30

Want the business to make profit- they may depend on the success of the business for their income and wealth.

Question 31

Managers (interest)

Answer 31

Want the business to perform financially and in return, expect to be fairly rewarded. Will typically want the business to be socially responsible as this is likely to lead to increased sales. Need to satisfy as many stakeholder expectations.

Question 32

Employees (interest)

Answer 32

Expect to be paid fairly, trained properly and treated ethically in return for their contribution to production. Need to know that their job is secure in the long term.

Question 33

Customers (interests)

Answer 33

Expect to purchase quality products at reasonable prices and receive high levels of service. Are becoming increasingly aware of socially responsible businesses, and many will purchase products from businesses they know have acted in a socially responsible manner.

Question 34

Suppliers (interests)

Answer 34

Must provide quality materials that are delivered reliably (in the right quantities at the right times) to ensure that the business makes a profit. Expects to be paid promptly and in full.

Question 35

General Community (interest)

Answer 35

Expect that a business will give back to society something of what they take out in generating profit. Expect businesses to show concern for their future welfare through their own employment with businesses. Expect the business to show concern for the environment.

Question 36

Management style

Answer 36

The behavior and attitude of the manager when making decisions, when directing and motivating staff, and when implementing plans to achieve business objectives.

Question 37

Autocratic "tells"

Answer 37

A management style where the leader dictates what the objectives are how they should be achieved. Management makes all decisions and tells the staff the decision made. Centralised authority, no staff input and one way communication (top to bottom)

Question 38

Persuasive management style "sells"

Answer 38

A management style where the reader dictates what the objectives are and persuades employees as to how they should be achieved. Centralised authority, no staff input as manager has already made decision and one way communication (top to bottom)>

Question 39

Consultative management style

Answer 39

A management style where the leader asks employees for their feedback and opinions before making a decision. Centralised authority as manager still makes the final decision. Manager values employees input, opinions, ideas and feedback. Two-way communication, top to bottom and then bottom to top.

Question 40

Participative management style

Answer 40

A management style where the manager unites with staff to make decisions together. Decentralized authority- manager and employees make decisions together. Employees put forward ideas and discuss and are apart of the decision making process. Two-way communication.

Question 41

Laissez-faire management style

Answer 41

Where the employees assume total control of and responsibility of workplace operations. Manager gives autonomy and trusts employees to carry out tasks and make decisions. Decentralized authority- employees make decisions. Staff work independently and make their own decisions to carry out tasks. Bottom-up but still two way communication.

Question 42

Management Skills

Answer 42

The abilities or competencies that managers use to achieve business objectives

Question 42

Communication- management skill

Answer 42

The ability to transfer information from a sender to a receiver, and to listen to feedback. Managers can use communication to ensure that all team members understand the tasks and goals they are working towards and feedback and guidance.

Question 42

Delegation- management skill

Answer 42

The ability to transfer authority and responsibility from a manager to an employee to carry out specific activities/tasks. Delegation can improve the efficiency of the business as more work can be completed.

Question 43

Leadership- Management skill

Answer 43

Is the ability of the manager to motivate and inspire others towards the achievement of business objectives. It builds trust, helps lead by example as well as support when they find times challenging, and creates a positive environment by communicating, listening and supporting others. Transactional: Managers who provide employees with rewards for their competence and acceptance of authority. eg. wage/salary/promotion Transformational: Managers who inspire and enthuse employees with a vision to ensure they are committed to achieving the business objectives

Question 44

Planning

Answer 44

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

Question 45

Strategic planning

Answer 45

Strategic: Long term planning (3-5 years) Setting overall direction of the business.

Question 46

Tactical Planning

Answer 46

Tactical: Medium term planning (1-2 years). More specific steps that can be achieved, helping achieve the strategic plan.

Question 47

Operational Planning

Answer 47

Short term planning (daily, weekly or monthly plans.) These very tangible goals that break down the tactical goals.

Question 48

Developing a planning process to improve one of the business objectives.

Answer 48

1. Set the objective: outline what is to be achieved. 2. Analyze the environment. Gathering information to make an informed decision. Could involve a SWOT Analysis. 3. Develop alternatives: Developing a range of strategies that can help the business achieve the set objective. 4. Implement the plan: After analyzing the alternatives, the manager will put the most appropriate into place 5.Monitor

Question 49

Decision-making

Answer 49

Choosing the best course of action from a range of alternatives. Effective decision making will ensure the best strategies are implemented so the business can achieve their objectives and drive the business forward.

Question 50

Features of an effective decision making process

Answer 50

Objectives - Gather information - Develop alternatives - Analyze the alternatives - Choose the best alternative ad implement - Evaluate

Question 51

Interpersonal

Answer 51

Interpersonal skills are the ability of managers to interact with others and build positive relationships. Effective interpersonal skills allows the manager to communicate accurately and honestly, yet maintain strong relationships.

Question 52

Corporate Culture

Answer 52

Defined as the shared values, beliefs and practices of a business.

Question 53

Official corporate culture

Answer 53

The values and beliefs that a company is trying to convey to the public, usually observed in mission statements, logos, symbols and slogans.

Question 54

Real Corporate Culture

Answer 54

The actual values and beliefs present in a company. Observable from dress, behavior, and the way employees and managers treat each other.