Unit 3 AOS 1 BM

Question 1

What is a sole trader

Answer 1

A business which is owned and operated by one person, who is responsible for all aspects of the business

Question 2

What is a partnership

Answer 2

A business structure that involves between 2 and 20 people who run a business together (Partnership has a MAX of 20)

Question 3

What is a private limited company

Answer 3

A business with2-50 shareholders, whose stocks cannot be bought o exchanged on the stock market

Question 4

What is a public listed company

Answer 4

A business without a maximum of shareholders, whose shares are freely traded on the stock exchange

Question 5

What is a social enterprise

Answer 5

Private sector business that distribute profits to benefit the community or social need

Question 6

What is a government business enterprise

Answer 6

A business that is government-owned and operates in the public sector

Question 7

What is a incorporation, and how does it relate to limited liability

Answer 7

Incorporation is
- The process that businesses go through to become a registered company and separate legal entity from the owner/ shareholders.

Limited liability is
- Refers to when the shareholders in a company will not be held personally responsible for the debts of the business

These are related because incorporating a business leads to the owners gaining limited liability within a business

Question 8

What are the 7 business objectives

Answer 8

1. To make a profit
2. To increase market share
3. To improve efficiency
4. To improve effectiveness
5. To fulfill a market need
6. To fulfill a social need
   7.To meet shareholder expectations

Question 9

What is profit and revenue and the difference between the 2

Answer 9

Revenue is
- the income that a business earns from the sale of goods and services to customers
Profit is
- The difference between revenue and expenses
The difference is that revenue is the amount made from all goods or services sold while profit is the money left over from paying off all debts that the business may have incurred

Question 10

What is a stakeholder

Answer 10

‘Stakeholders’ refers to the people and
groups that interact in some way with the business and have a vested interest (or
stake) in its activities.

Question 11

Define Shareholder and Market share

Answer 11

• A shareholder is the owner of a company
• Market share is the percentage of the market controlled by the business

Question 12

What are the 6 types of stakeholders that a business must consider when making decisions (Follow interests)

Answer 12

• Owner
• Manager
• Employees
• Customers
• Suppliers
• The general community

Question 13

What may be conflicted interests of stakeholders (Management and the general community)

Answer 13

Management might decide to cut costs by neglecting maintenance, which could
possibly put members of the community in danger.

Question 14

What may be conflicted interests of stakeholders (Suppliers and the general community)

Answer 14

Suppliers expect to be paid fairly and promptly, but they might reduce costs by using unethical or socially irresponsible practices, which can upset members of the community.
Management and suppliers Management wish

Question 15

What may be the conflicting interests of stakeholders (Managment and suppliers)

Answer 15

Management wishes to keep costs down to improve profit but suppliers providing
ethical materials require higher prices to cover their costs.

Question 16

Define CSR

Answer 16

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 17

What may be the conflicting interests of stakeholders (Employees and owners/ shareholders)

Answer 17

Employees require safe working conditions and reasonable wages, but this may
reduce the business’s profit and dividends to owners/shareholders.

Question 18

What may be the conflicting interests of stakeholders (Management and customers)

Answer 18

Management could attempt to maintain profit and a high dividend to satisfy shareholders by raising the prices of products, but this will upset customers, who expect reasonably priced products.

Question 19

Define management style and state the 5 types of management styles

Answer 19

Managment style is the behavior and attitude of the manager when making decisions, when directing
and motivating staff, and when implementing plans to achieve business objectives

The 5 management styles are

• Autocratic
• Persuasive
• Consultative
• Participative
• Laissez- faire

Question 20

Give a definition of of autocratic management style

Answer 20

Where the manager tells staff what decsions have been made

This managing method referred to as the ‘do it the way i tell you method’ is where managers make all decisions about employees and dictate work methods, limit employee knowledge to what managers believe employees should know at the moment and frequently monitor performance of employees

• This management style gives managers the most power in the workplace and emplyees the least amount of power in the workplace

Note to differentiate from others (Autocratic is close to the work authoritarian)

Question 21

Advantages and disadvantages of autocratic management style

Answer 21

Advantages

• ‘Employees’ roles and expectations are detailed
  and precise, so management can monitor their performance.
• Directions and procedures are clearly defined; there is little uncertainty

Disadvantages

• An ‘us and them’ mentality may develop because of the lack of employee input.
• Conflict between employee and manager may erupt

Question 22

Give a definition of the Persuasive management style

Answer 22

A management style where the manager attempts to quote unquote “sell” decisions made

manager attempts to convince employees
that management’s way is the right way. Authority and control remain centralized with senior management, but managers attempt to make employees accept the objectives of the business and work to certain plans and procedures

• This style still gives management a lot of control but less so than autocratic

Question 23

Advantages and disadvantages of the persuasive management style

Answer 23

Advantages

• Managers can gain some trust and support through persuasion.
• May lead to higher moral in the staff

Disadvantages

• Employees remain frustrated because they are denied full participation in the decision-making process
• Communication is still poor and limited to a
  top-to-bottom, one-way system

Question 24

Define consultive management style

Answer 24

A management style one where the manager
consults employees before making decisions.

where the manager
recognizes the importance of good personal relationships among
employees and consults with staff on certain issues

Question 25

Advantages and disadvantages of consultive management style

Answer 25

Advantages

• Asking for suggestions from employees allows for
  a greater variety of ideas and should improve the
  quality of management decisions
  -When decisions are discussed and fine-tuned
  before implementation, tasks are completed more
  efficiently and with better results.

Disadvantages
- The time taken to consult all the relevant employees can slow the entire process.
- When a number of ideas are shared, some are
bound to be ignored or overlooked in the final
decision. This may cause conflict or resentment.

Question 26

Define Participative management style

Answer 26

a management style where the manager unites
with staff to make decisions together (Shares decision making with employees quite frequently)

Question 27

Advantages and disadvantages of participative management style

Answer 27

Advantages
-Employer/employee relations are positive and
there is reduced likelihood of industrial disputes.
Employees are more likely to accept management
decisions
- Employees have a greater opportunity to acquire
more skills.

Disadvantages
- The role of management, and the control of the
manager, may be weakened and undermined, with
employees given too much power in some cases.
- Not all employees want to contribute

Question 28

Define the Laissez- faire management style

Answer 28

one where the employees assume total responsibility for, and control of, workplace operations/ decisions, Managment has no power in day to day running of the business.

Question 29

Advantages and disadvantages of the Laissez- faire management style

Answer 29

Advantages
-Employees feel a sense of ownership which can help enhance outstanding results
- Communication in the business is completely open and ideas are both discussed and shared

Disadvantages
- No control from management, which can lead to misuse of a businesses resources
- This style can breed personal conflicts, where
individuals do not cooperate or wish to implement only their own ideas. In these cases, management is not there to direct or negotiate

Question 30

what are the 4 things that must be kept in mind before choosing a management style, to make sure it is appropriate for a task/ employees

Answer 30

• The nature of the task
• Time
• Experience of employees
• Preference of the manager

Question 31

Define management skills and the 6 types of management skills

Answer 31

Managment skills are the abilities or competencies that managers use to achieve business objectives

• Communication
• Delegation
• Planning
• Leadership
• Decision- making
• Interpersonal

Question 32

Define the management skill of communication

Answer 32

The ability to transfer information from sender to receiver as well as listen to feedback

Communcation can occur 2 ways in the workplace non verbally (Body language or visual) or it can happen verbally (In a written statement or oral)

Managers will use communication to convey to the staff many things such as explaining visions, outlining changes in the workplace, letting staff know what is expected of them ect ect

Question 33

Define the management skill of Delegation

Answer 33

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

Question 34

Define the management skill of planning

Answer 34

Planning is the ability to define business objectives

Question 35

Define the management skill of leadership

Answer 35

The ability to influence or motivate people to work towards the achievement of business objectives

Question 36

Define the management skill of interpersonal skills

Answer 36

the ability to deal or liaise with people and build positive relationships with staff

Question 37

Define corporate culture

Answer 37

the values, ideas, expectations and beliefs
shared by members of the
business

Question 38

4 elements of corporate culture

Answer 38

• Values and practices
• Symbols
• Rituals, rites and celebrations
• Heros
  These elements can be used to create a positive moral between the employees and be the building blocks for a positive corporate culture