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VCE Business Management > U3AOS1 - Business Foundations > Flashcards

U3AOS1 - Business Foundations Flashcards

1
Q

sole trader

A
  • an individual establishes and runs the business
  • can use their own TFN and bank accounts
  • operate with their own name or a registered business name
  • assume total responsibility and unlimited liability
  • have sole right to all profits and capital of the business
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2
Q

sole trader - advantages

A
  • simple to setup
  • most inexpensive business to setup
  • easy to close the business
  • minimal government regulation
  • no potential disputes
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3
Q

sole trader - disadvantages

A
  • unlimited liability
  • harder for owner to get capital / financing
  • relies on owners skill
  • business ends when the owner dies (no perpetuity)
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4
Q

partnership

A
  • combines expertise and resources from 2-20 partners
  • each partner is jointly liable (unlimited liability)
  • partnerships should be based on a formal agreement (not just verbal as this isn’t easily legally enforcable)
  • if one partner leaves a new partnership should be formed
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5
Q

partnership - advantages

A
  • inexpensive and simple to setup
  • risk is shared
  • minimal government regulation
  • workload is shared
  • broader access to capital / knowledge / skills
  • tax is calculated on personal income
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6
Q

partnership - disadvantages

A
  • personal unlimited liability of partners
  • liability for debts of other partners
  • business is threatened if one partner leaves
  • potential for disputes and clashes
  • difficulty finding who are suitable
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7
Q

companies

A
  • the company is a seperate entity and developed through a legal process called incorporation
  • requires an Australian Company Number (ACN) and name needs to be registered with the Australian Securities and Investments Commission (ASIC)
  • the company can sue or be sued and must lodge an annual tax return with the ATO
  • private vs public
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8
Q

public companies

A
  • at least one shareholder
  • shares can be traded freely on the ASX
  • at least three directors
  • at least one company secretary
  • a prospectus needs to be issued to invite people to invest
  • easy to transfer owner by selling and buying stocks
  • only has ‘ltd’ after the business name
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9
Q

private companies

A
  • min 1 max 50 shareholders
  • at least one director living in Australia
  • company secretary not required
  • shares can only be traded with permission
  • creates protection and allows for more funding without listing on the ASX
  • has ‘pty ltd’ at the end of the name
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10
Q

companies - advantages

A
  • limited liability for shareholders
  • seperate legal entity
  • existence not threatened by the death of a shareholder
  • extra capital can be obtained by issuing more shares
  • experienced management team and directors
  • company tax rate is lower
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11
Q

compaines - disadvantages

A
  • highly complex structures
  • higher establishment costs
  • additional complience costs
  • high degree of reporting and government control
  • need more accountabtility and paperwork
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12
Q

social enterprises

A
  • use strategies to maximise improvements to human wellbeing and the environment
  • can be structured non-for profit or for-profit
  • main goal is to achieve a social objective
  • sometimes have difficulty financing or attracting business partners
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13
Q

government business enterprises (GBE)

A
  • operate in the public sector of the economy
  • the government operates as a company shareholder
  • provide essential services
  • controlled by gov. but have seperate existence
  • carries out government policies
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14
Q

objectives

A
  • statements of desired achievement which provide direction for the business
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15
Q

key objectives

A
  • make a profit
  • meet shareholder expectations
  • increase market share
  • fulfil a market or social need
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16
Q

SMART Goals

A
  • specific (outcomes should be set and explicit)
  • mesaureable (need to be measured)
  • attainable (need to be reachable)
  • relevant (goals should relate to larger goals or the business vision)
  • timebound (need to be achieved in a specific period of time)
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17
Q

vision statement

A
  • contains the aspirations and goals for the future
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18
Q

mission statement

A
  • present and the core purpose of the business
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19
Q

values statement

A
  • outline the core values of the business
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20
Q

corporate / strategic objectives

A

split into three different levels (corporate, tactical. operational)

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21
Q

corporate objectives

A
  • long term

- 2-5 years

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22
Q

tactical objectives

A
  • medium term

- 2-3 years

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23
Q

operational objectives

A
  • short-term

- <1 year

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24
Q

areas of objectives

A
  • financial
  • marketing
  • social
  • meeting shareholder expectations
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25
Q

financial objectives

A
  • making profit
  • increasing market share
  • increasing productivity
  • reducing operating costs
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26
Q

marketing objectives

A
  • if there is not a need for a product or service then the business won’t read other objectives
  • a business will strive to create publicity and appeal for their products or recognise a niche
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27
Q

social objectives

A
  • relate to the role of the business in the community

- these goals can be promoted through policies and procedures in the workplace

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28
Q

meeting shareholder expectations

A
  • shareholders are core stakeholders in the business and expect it to be successful
  • shareholders put on pressure for the business to make decisions and therefore influence the strategic objectives of the business
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29
Q

areas of management responsibility

A
  • operations
  • finance
  • human resources
  • sales and marketing
  • technology support
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30
Q

operations

A
  • responsible for the creation of goods and services
  • involves planning, organising, coordinating and controlling all resources needed to produce the goods or services
  • core to the business in terms of profitibality
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31
Q

finance

A
  • responsible for planning and preparing internal finance information (budgets etc.)
  • ensures the business stays profitable and has sufficient working capital
  • provides data for the business to see if they have reached their financial objectives
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32
Q

human resources

A
  • manage the relationship a business has with its employees
  • helps plan, recruit and train the employees
  • manages the full employement cycle
  • hire the right people to perform and meet objectives
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33
Q

sales and marketing

A
  • can be split into marketing and sales as seperate areas*
  • marketing: responsible for developing strategies to create demand and promote to customers
  • sales: create an ongoing relationship with the individual customer
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34
Q

technology support

A
  • have the primary focus of assisting the business to create value by using technology
  • increase efficiency and effectiveness
  • technology can be used in all other areas and sometimes it is at the core of the business (especially ecommerce)
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35
Q

CEO

A

Chief execuitive officer

- manage over all the areas of management responsibility

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36
Q

stakeholders

A
  • at each level of the business there are different shareholders who want the business to achieve its aim / not achieve its aim (competitors)
  • they have a VESTED INTEREST in the business
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37
Q

internal environment - stakeholders

A
  • shareholders / owners
  • directors of company or partners in a partnership
  • management
  • employees
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38
Q

shareholders / owners

A
  • all forms of ownership are interested in the profitability of the business
  • also want the business to have ethical and socially responsible operations
  • shareholders receive dividends and expect an increase in the value of their shares
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39
Q

directors of company / partners in partnership

A
  • develop and direct major business decisions and strategies
  • ensure adherence to corporate governence. social responsibility and ethical behaviour
  • gain personal power and status by being director or partner
  • to receive remuneration
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40
Q

management

A
  • to be involved in setting goals or objectives to achieve them
  • to secure their position in the business
  • to receive fair remuniration
  • to gain job satisfaction
  • to work for a socially and ethically responsible business
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41
Q

employees

A
  • to receive a fair wage and salary
  • work in a non-discriminatory and ethical workplace
  • job security
  • to gain job satisfaction
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42
Q

operating environment - stakeholders

A
  • trade unions
  • customers
  • suppliers
  • creditors/banks
  • competitors
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43
Q

trade unions

A
  • negotiate for workers rights including fair pay
  • to be represented in the workplace
  • to be involved with decision making issues
  • ensure welfare for their members
  • act as a bargining agent for employees when negotiating agreements
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44
Q

customers

A
  • want to have high quality goods and services
  • achieve high levels of customer service
  • potentially want a long term relationship with the business
  • to support ethical and Australian owned businesses
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45
Q

suppliers

A
  • to ensure the business stays profitable
  • to be paid fast
  • to establish a long term relationship with the business
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46
Q

creditors/banks

A
  • to be paid repayments with the principle and interest money
  • to have loans fully repaid
  • to ensure business interests are secured by the bank
  • that businesses are open and honest in their dealings
47
Q

competitors

A
  • to gain a competitive edge over the business
  • to grow market share
  • differentiate their product or service from the competitors
  • compare and evaluate their performance against other businesses
48
Q

macro environment - stakeholders

A
  • community and society

- government

49
Q

community and society

A
  • to benefit from employment opportunities from the business
  • for the business to participate in the community
  • for the business to be socially responsible and ethical in their operations
50
Q

government

A
  • to recieve tax revenue
  • to provide incentives for the business to relocate to benefit the community
  • to provide legislative framework to control business operations
  • assist the business to establish and run their operations
51
Q

potential conflicts

A
  • business owners/directors and shareholders
  • management/suppliers
  • business owners/community
  • customers/management
52
Q

business owners/directors and shareholders - potential conflict

A
  • the way the profit is distributed at the end of the year

- shareholders want good dividents and distribute less of the profit

53
Q

management/suppliers - potential conflict

A
  • suppliers want a guaranteed relationship where the money is paid properly
  • management still want the quality but need the lowest cost possible and reliable / fast delivery
54
Q

business owners/community

A
  • operating may cause environmental issues

- the community want to live in a safe pollution free area

55
Q

customers/management

A
  • reduction in the quality of goods and services but the same price
  • customers want quality for a reasonable price but are not overcharged
56
Q

management structures

A
  • this is the way the business determines how work is divided and structured
  • shows who holds authority and the relationships between different parts of the business
57
Q

the main features of management structures are

A
  • division of labour
  • segmentation of employees into departments and divisions
  • chain of command, control and authority
  • communication channels (up, down, lateral..)
  • patterns of decision making (central or decentralised)
  • number of layers in the hierachy
58
Q

hierarchical vs dynamic

A
  • traditional businesses use more of a hierachical structure with senior and execuitive managers, middle-line managers and front-line managers
  • more businesses are moving away from this structure so they can be more dynamic and adaptable
  • removing layers is called delayering
59
Q

management styles

A
  • management styles refer to the different ways in which business managers behave
  • the choice of style will depend on the nature of the business (highly structured businesses are more likely to be autocratic)
  • more employee focused styles improve job satisfaction as employees feel
60
Q

policies

A

a written statement detailing processes, procedures, rules and regulations that must be observed in a given situation

  • policy should reflect values and beliefs of the business
  • policy can assist in the development of corporate culture
61
Q

official documentation

A
  • documents in a business which are official should have the same branding and the logo should be thought about to choose the messages the business wants to convey
62
Q

corporate culture

A

corporate culture is a system of values, business direction, priorities, commitments and beliefs shared by people in the business and influences how people act towards one another.
- management need to be able to achieve the desired corporate culture and distinguish between real and official (should be put into questions re: real and official corporate culture)

63
Q

official corporate culture

A

the corporate culture which is aimed for or desired by management

  • this is found in policies, objectives and slogans
  • management can influence by training, communicating, rewarding and recruiting
  • the management style they choose can also influence the culture
64
Q

real corporate culture

A

actual corporate culture within the business

- this is unwritten an informal – can be expressed by the way which people speak to one another

65
Q

corporate culture - made up of…

A

observable
- artefacts (language, symbols, objects, appearance, uniform)
non-observable
- values (shared rules that influence and control people behaviour)
- assumptions (beliefs about human nature and the environment)

66
Q

formal statments

A

mission (defines the purpose of the business and its reason for being)
vision (sets out the businesses aspirations and the future the business wishes to aspire to)
values (what the business wants to recognise as its values)

67
Q

the culture is reflected in

A

people
physical environment
stories and rituals

68
Q

people - cc

A
  • the level of formality indicates the relationship between managment and the employees
  • diversity shows an inclusive workplace in which it is the person that is valued not specific personal characteristics)
  • work life balance is extremely important for employees and can be an indication of the corporate culture
69
Q

physical environment - cc

A
  • open plan offices promote lateral connection and team building / collaberation
  • the location of businesses also affects the culture (inner city may be more progressive)
  • physical symbols such as bigger offices are also extremely important for employees and can be an indication of whether the business’ corporate culture is positive
70
Q

stories and rituals - cc

A
  • rituals such as social get togethers or ceremonies can show recognition of employees and encourage people to adopt the key values and expectations
  • stories can recognise the heroes of the business
71
Q

management styles

A 
autocratic
persuasive
consultitive
participative
laissez-faire
72
Q

autocratic

A

managers have the desire to be in control and to retain authority and to have things done their way

  • have a high regard for efficiency
  • believe pay motivates people
  • often use punishment / reward
  • little value on the value of employee contribution
  • communication with top down approach
  • centralised decision making (done by manager)
73
Q

autocratic - advantages

A
  • decision are made quickly by an experienced leader
  • comunication is direct
  • employees roles and expectations are defined and monitored
  • high regard for effectiveness, efficiency and production
  • suits high risk and difficult decisions
74
Q

autocratic - disadvantages

A
  • a quick decision isn’t always the best
  • discourages teamwork
  • too task-focused
  • doesn’t allow for communication and ideas
  • creates feelings of unease and being kept in the dark
  • no open communication
75
Q

persuasive

A
  • a manager uses their ability to strongly influence an employee to do a task to achieve objectives the manager’s way
  • centralised system of decisions and control
  • place great importance on achieving a task and following the process
  • little importance on employee contribution
  • believe money is the main motivator for work
  • commmunication is centralised with a top down approach
76
Q

persuasive - advantages

A
  • quick devisions
  • suits high risk situations
  • employees have a clear views about what they have to do
77
Q

persuasive - disadvantages

A
  • no input from workers in the decision making process
  • workers can feel alienated as their opinions aren’t sought
  • opportunities for employee initiative and commitment are overlooked
  • possible low motivation and job satisfaction
78
Q

consultitive

A
  • takes into account opinions of the team members when making a decision
  • control and authority exercised
  • more employee based when making decisions
  • allows for a reasonable amount of employee input // more motivation
  • manager focuses on achievement but balance ‘people’
  • value is placed on the employee’s contribution
  • involves two way communication
79
Q

consultitive - advantages

A
  • gain a varity of ideas from employee suggestions
  • reasonable level of employee involvement
  • acts to motivate and increase the level of job satisfaction
80
Q

consultitive - disadvantages

A
  • emplouees may not understand the complexity of the problem being discussed
  • time consuming if stakeholders are consulted
  • employees may still not feel valued of their ideas are overlooked
81
Q

participative

A
  • manager takes a decentralised approach to control and authority (power is delegated over different levels)
  • the orientation towards employees by the manager means they take into account their needs
  • manager places an importance on the contribution of the employee to the success of the business
  • decentralised decision making (workers are responsible for their own devision making areas)
82
Q

participative - advantages

A
  • manager demonstrates trust and faith in the ability of the employees
  • employee morale improves and they feel a sense of ownership and empowerment when they make their own decisions
  • open communication within the business
  • creates good employee relations
  • shared vision and direction between management and employees towards the achievement of objectives of the businesss
83
Q

participative - disadvantages

A
  • give rise to conflict between employees who question coworkers
  • workers would prefer their level of producivity to link to money
  • lack of contribution by some employees who don’t want to make decisions
  • can be time-consuming with the involvement of employees
  • conflict may arise with varying viewpoints
84
Q

laissez-faire

A
  • provides little direction to employees; they determine objectives. solve their own problems etc.
  • extremely dynamic and therefore only works for some businesses
85
Q

laissez-faire - advantages

A
  • high employee independence
  • strong motivation and job satisfaction
  • good for encouraging creativity
  • conducive to teamwork
  • decentralised business allows for open communication
86
Q

laissez-faire - disadvantages

A
  • employees may feel unsettled without direction
  • does not suit unskilled employees
  • lack of guidence could cause employees to lose direction
87
Q

managment approaches

A
  • should be situational (contingency style approach) to ensure that all aspects of the current external and internal environment are taken into account when picking the management style
  • an authoritarian style may be appropiate when there are new and unskilled workers or a crisis situation arises
88
Q

what influences what management style is picked

A
  • external environmental factors
  • types of tasks and risk
  • employees knowledge, skills, experience and values
  • corporate culture
  • constraints (money, time and resources)
  • manager personality and skill
89
Q

management skills

A

skill : the ability to do something well, with the ability gained through training and experience

  • interpersonal
  • leading
  • planning
  • delegation
  • communication
  • decision-making
90
Q

communication

A

the process of creating and exchanging information between people that produces required responses

  • personal (between two parties // manager and a subordinate group)
  • internal-organisational (where systems are used to inform and share information to people inside an organisation (inc. policy and procedure manuals))
  • external-operational (when managers need to communication with stakeholders external to the business)
  • ** OPEN COMMUNICATION IS VITAL TO GAIN EMPLOYEE INVOLVEMENT***
91
Q

weak communication leads to…

A
  • frustration
  • lack of motivation
  • inadequate direction and feedback
92
Q

three forms of communication

A

reading (interpreting and understanding)
written (experessing thoughts and ideas through electronic and non electronic forms of comunication)
oral (talking to people individually or in a group to gain feedback and distribute information)

93
Q

delegation

A

passing of authority down the hierachy to perform tasks or mke decisions; responsibility remaining with the person delegating

  • the authority to delegate always comes from above
  • the acceptance of a task is the acceptance of the responsibilty which goes with it
94
Q

delegation - process

A

analysis (determine tasks to be delegated)
appointment (nominate subordinate people to the task)
briefing (define the task to be delegated)
control (monitor and encourage from a distance)
appraisal (review and revise)

95
Q

delegation - benefits

A
  • assists in smoth plans of production and work processes so they can continue without a manager
  • acts as a time saver, frees management to be involved in longer term planning and more important tasks
  • provides opportunity for skill training, personal development and job satisfaction
  • shows faith and trust in employees
96
Q

delegation - manager needs these skills for effectiveness

A
  • the ability to analyse a job and a clear understanding of whats required
  • ability to establish performance checkpoints and deadlines
  • skill to select appropiate people for the job
  • good communication
  • ability to assess completed tasks and provide feedback
97
Q

delegation - tasks suited

A
  • tasks forming part of a larger project
  • repetitive tasks
  • collection or organisation of data
  • training and development of subordinates
98
Q

delegation - tasks not suited

A
  • strategic planning
  • high risk or cost decisions
  • confidential matters
  • highly specialised areas requiring specific training
99
Q

planning

A

a formalised decision making process that is future oriented

100
Q

planning process

A
  • set the goals
  • use SWOT to gather info
  • establish and promote restricting factors
  • develop action plan to reach goals
  • evaluate and review
101
Q

set the goals

A
  • important to consider values held by management and the appearance of the business in terms of social responsibility when establishing goals
102
Q

gather information

A
  • analyse internal and external business environments using SWOT
  • strengths, weaknesses, opportunities, threats
103
Q

establish and promote restraining factors

A
  • determine possible opportunities and threats or problems that currently or in the future will face the business
104
Q

develop an action plan to reach goals

A
  • create the strategies to take advantage of the opportunites
  • contingency plans may need to be made to deal with identified threats
105
Q

evaluate and review

A
  • results need to be evaluated and reviewed to see if the plan was successful (this can be done with KPI’s
106
Q

types of planning

A
  • strategic (2-5 years, overall direaction of the business inc. values, philosophy, direction and objectives)
  • tactical (1-2 years, department or functional areas of the business creating objectives)
  • operational (<1 year, setting goals for small groups or individuals)
107
Q

leading

A

the skill of a manager when guiding workers towards achieving goals of the business

  • involves influencing others towards the objectives of the business
  • links to the emotional intellegence theory
108
Q

effective leading requires the manager to……

A
  • be a good communicator
  • establish conditions that motivate, engage and inspire subordinates
  • act as a role model
  • be able to build teams
  • understand people they are going to lead
  • inspire, build loyalty, dedication and commitement to those who lead
  • conflict resolution skills
  • act as a mediator
  • respond quickly and appropiately to change and help others do the same
109
Q

effective team leadership skills

A
  • ability to function as a coach or team member
  • encouraging all team members to achieve the objectives
  • building a cohesive and trusting group of team-members
  • facilitating the resolution of any problems encountered by a team or group
  • managing team dynamics and the relationships
  • **TEAMWORK IS BEST UNDERSTOOD AS A SET OF BEHVIOURS WHICH TWO OR MORE PEOPLE DEMONSTRATE WORKING TOWARDS COMMON OBJECTIVES
110
Q

decision making

A

a multistep approach whereby a selection is made between a different range of alternatives

  • descisions can be difficult due to uncertainty, complexity, high-risk, interpersonal issues and lots of options to choose from
  • using a systematic approach to decision-making reduces the liklihood of overlooking important factors
111
Q

systematic approach to decision-making

A
  • identify the problem and define objectives
  • gather the necessary information to establish the cause of the problem
  • develop alternative solutions
  • analyse the advantages and rank / sort them
  • choose an alternative to implement
  • evaluate the implementation
112
Q

interpersonal skills

A

skills used to communicate and interact with other people both individually and in groups… core skills include:

  • being a good communicator
  • working in a team both in the external and internal parts of the business
  • being empathetic
  • encouraging others
  • ethicality and honesty (being able to respect the beliefs etc of others)
  • conflict management skills
113
Q

relationship between management styles and skills

A

it is important to evaluate the effectiveness of the management style constantly in case it isn’t working well and need to be adjusted …. this includes considering:

  • outcome and results
  • relationship with internal or external environment
  • communication
  • motivation and satisfaction of staff
  • teamwork levels
  • staff absenteeism and turnover rates
  • training and development opportunities
  • performance appraisal

VCE Business Management (6 decks)

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