Unit 3 AOS 1 BM Flashcards
(38 cards)
What is a sole trader
A business which is owned and operated by one person, who is responsible for all aspects of the business
What is a partnership
A business structure that involves between 2 and 20 people who run a business together (Partnership has a MAX of 20)
What is a private limited company
A business with2-50 shareholders, whose stocks cannot be bought o exchanged on the stock market
What is a public listed company
A business without a maximum of shareholders, whose shares are freely traded on the stock exchange
What is a social enterprise
Private sector business that distribute profits to benefit the community or social need
What is a government business enterprise
A business that is government-owned and operates in the public sector
What is a incorporation, and how does it relate to limited liability
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
What are the 7 business objectives
- To make a profit
- To increase market share
- To improve efficiency
- To improve effectiveness
- To fulfill a market need
- To fulfill a social need
7.To meet shareholder expectations
What is profit and revenue and the difference between the 2
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
What is a stakeholder
‘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.
Define Shareholder and Market share
- A shareholder is the owner of a company
- Market share is the percentage of the market controlled by the business
What are the 6 types of stakeholders that a business must consider when making decisions (Follow interests)
- Owner
- Manager
- Employees
- Customers
- Suppliers
- The general community
What may be conflicted interests of stakeholders (Management and the general community)
Management might decide to cut costs by neglecting maintenance, which could
possibly put members of the community in danger.
What may be conflicted interests of stakeholders (Suppliers and the general community)
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
What may be the conflicting interests of stakeholders (Managment and suppliers)
Management wishes to keep costs down to improve profit but suppliers providing
ethical materials require higher prices to cover their costs.
Define CSR
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
What may be the conflicting interests of stakeholders (Employees and owners/ shareholders)
Employees require safe working conditions and reasonable wages, but this may
reduce the business’s profit and dividends to owners/shareholders.
What may be the conflicting interests of stakeholders (Management and customers)
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.
Define management style and state the 5 types of management styles
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
Give a definition of of autocratic management style
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)
Advantages and disadvantages of autocratic management style
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
Give a definition of the Persuasive management style
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
Advantages and disadvantages of the persuasive management style
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
Define consultive management style
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