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unit 3 aos1 business foundations Flashcards

1
Q

what are the 6 business types?

A

sole trader, partnership, private limited company, public listed company, social enterprise, government business enterprise

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2
Q

sole trader

A

an unincorporated business that is owned and operated by one person

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3
Q

unincorporated business

A

is a legal status of a business whereby the business owner and the business are viewed as the same legal entity

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4
Q

unlimited liability

A

is the personal legal responsibility a business owner has for an unincorporated business’s debts

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5
Q

3 advantages of sole traders

A

owner has full control, low start up costs, owner keeps all profits

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6
Q

3 disadvantages of sole traders

A

unlimited liability where the owner is responsible for all debts of the business, business ends when the owner dies, burden of management

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7
Q

partnership

A

an unincorporated business that is owned by 2-20 people. they typically have a partnership agreement which outlines the roles and expectations of the partners

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8
Q

3 advantages of partnerships

A

greater range of expertise, owners can share the workload, greater access to finance as there are more than one owner

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9
Q

3 disadvantages of partnerships

A

unlimited liability where the partners’ personal assets are at risk, conflicts could arise due to shared decision making, profit is shared between partners

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10
Q

private limited company

A

an incorporated business that has a minimum of one shareholder and a maximum of 50 non-employee shareholders, and whose shares are offered only to those people whom the business wishes to have as part owners. must have at least 1 director

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11
Q

limited liability

A

when shareholders are only liable to the extent of their original investment, meaning they are not personally responsible for the business debts.

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12
Q

incorporated business

A

is a legal status of a company whereby the company is established as a separate legal entity to the shareholder/s.

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13
Q

3 advantages of private limited companies

A

limited liability, greater variety to expertise, business’s existence is not threatened by the removal of one director

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14
Q

3 disadvantages of private limited companies

A

complex reporting requirements (annual reports to shareholders), complex and time consuming to establish, expensive to set up

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15
Q

example of a private limited company

A

Cotton On Clothing Pty Ltd, Australia

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16
Q

public listed company

A

an incorporated business with an unlimited amount of shareholders and whose shares are openly traded on the ASX

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17
Q

3 advantages to public listed companies

A

limited liability of shareholders, greater access to expertise, no permission is needed to sell and trade shares

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18
Q

3 disadvantages to public listed companies

A

conflicts could arise through shared decision making, complex reporting requirements such as annual financial reports that need to be published to the public, expensive to set up

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19
Q

example of a public listed company

A

Woolworths Group Limited, supermarket retailer, Australia. CEO Brad Banducci

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20
Q

social enterprise

A

is a type of business that aims to fulfil a community or environmental need by selling goods or services.

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21
Q

3 advantages of social enterprises

A

the community benefits from their activities, the business can develop a positive reputation, likely to recieve financial support from the government

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22
Q

3 disadvantages of social enterprises

A

difficult to balance the achievement of financial objectives with social objectives, may be difficult to obtain a bank loan, significant operating costs

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23
Q

example of a social enterprise

A

STREAT, cafe, Melbourne

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24
Q

government business enterprises (GBEs)

A

a governement owned and operated business. GBEs carry out government policies while they deliver community services. They operate at a state and federal level of government.

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25
3 advantages of GBEs
deliver goods and services that help the community and their needs, they can operate with some independence from the government, can rely on the government for initial financing
26
3 disadvantages of GBEs
goverment can interfere with the strategic direction of the business, GBEs have to follow excessive rules and formalities, Productivity may be lower
27
example of a GBE
Australia Post, parcel and mail delivery, Australia
28
business objectives
Business objectives are set goals that helps management and relevant stakeholders to understand the priorities and what the business aims to achieve over a period of time.
29
strategies
Strategies are the activities undertaken to achieve objectives, usually set by management, and undertaken by employees
30
mission statement
A brief description of why a business exists
31
what are the 7 business objectives
to make a profit, to increase market share, to fulfill a market need, to fulfill a social need, to meet shareholder expectations, to increase efficiency, to increase effectiveness
32
to make a profit
Businesses seek to minimise costs and/or maximise revenue so that revenue is greater than expenses leading to the achievement of net profit and financial objectives
33
why do businesses want to make a profit (3)
- Expand locations - Improve product range (innovation) - Offer more or better services
34
example of a business making a profit
Woolworths recorded a profit of $2865 million for the 2023 financial year. 19.1% increase from 2022
35
to increase market share
Businesses seek to increase their control over an industry/market by increasing sales relative to competitors
36
why do businesses want to increase market share
When sales increase, relative to competitors, a business is able to reduce the power of its competitors and use its resources to grow/improve the businesses operations.
37
increasing market share is achieved by: (3)
* improved marketing strategies * increased quality standards * improved delivery of goods or services to the customer
38
example of a business increasing market share
Woolworths market share has remained steady at 37% in 2023, compared to 37.1 in 2022. Their biggest competition is Coles at 28%
39
to fulfill a market need
Businesses seek to provide a product that is not otherwise available to customers who need the service or wish to buy the product.
40
why do businesses want to fulfill a market need
they want to provide products that customers need/want that they cannot obtain otherwise.
41
example of a business fulfilling a market need
Woolworths created two new customer fulfillment centres to meet the increasing demand for online grocery shopping (same-day delivery) in the inner city suburbs
42
to fulfill a social need
Businesses seek to sell products for the purpose of generating an income that can be used to improve the wellbeing of the community.
43
why do businesses want to fulfill a social need?
to improve community wellbeing.
44
Fulfilling a social need is achieved by: (3)
* donate funds to charities * establish a charity/foundation within the business * reduce environmental damage
45
example of a business fulfilling a social need
Woolworths (in partnership with Community Corporate) has provided sustainable employment for over 245 refugees since 2018
46
to meet shareholder expectations
Shareholders have the expectation of receiving a return on their investment, and the expectation that the business will act in an ethical and corporate socially responsible manner
47
shareholder
investors who buy a portion (a ‘share’) of a business, with the aim of making more money from the business than their initial investment
48
why do businesses want to meet shareholder expectations
Shareholders are entitled to some level of decision-making
49
Meeting shareholder expectations (recieving dividends) is achieved by: (3)
* reducing operating costs * downsizing (reduces wages expense) * increasing net profit
50
example of a business meeting shareholder needs
Woolworths, In 2023 they delivered strong returns to investors and shareholders with a 13.7% increase in net profit
51
efficiency
is about how well resources (materials, time, money, labour) are used to make a good or service
52
3 ways to increase efficiency
LOWER COSTS INCREASE OUTPUT USE LESS TIME TO MAKE THE PRODUCT
53
example of a business improving efficiency
Woolworths has implemented AI tech at self serving checkouts to detect incorrect item scanning
54
effectiveness
related to achievement of business objectives such as improved quality, decreased waste, meeting CSR goals, increased customer or employee satisfaction
55
how do we increase effectiveness (3)
INCREASE COSTS IN SHORT TERM BUT LONGER TERM BENEFITS such as improving quality, meeting corporate social responsibility goals, improving customer satisfaction,
56
example of a business improving effectiveness
Woolworth's emmisions have reduced by 8% in the last year, resulting in a cumulative reduction of 36% from its 2015 baseline. The company is on track to achieve 100% renewable electricity by 2025
57
stakeholders
are individuals, groups, or organisations who have a vested interest in the performance and activities of a business.
58
what are the 6 stakeholders?
owners/shareholders, managers, employees, suppliers, customers and the general community
59
owners
are internal stakeholders who establish, invest, and have a share in a business, often with the goal of earning a profit from its operations. In public listed and private limited companies, owners are known as shareholders.
60
qantas example of an owner
Vanessa Hudson
61
An owner's interest in a business
Receiving a return on their investment, often through business growth, in the form of increases in share price, dividends, or profits.
62
managers
are internal stakeholders who oversee and coordinate a business’s employees and lead its operations to ultimately achieve the business’s objectives.
63
qantas example of managers
Qantas senior managers e.g. Chief Customer Officer, Chief financial officer as well as regional and team managers
64
a manager's interest in a business
Receiving appropriate wages and working conditions that reflect their managerial role and responsibility within the business.
65
employees
are internal stakeholders who are hired by a business to complete work tasks and support the achievement of its objectives.
66
qantas example of employees
head office employees, ground crew, flight crew, pilots
67
an employee's interest in a business
Receiving fair pay and working conditions.
68
customers
are external stakeholders or groups who interact with a business by purchasing and utilising its goods and services.
69
a customer's interest in the business
Receiving high-quality goods and services at affordable prices.
70
suppliers
are external individuals or groups that source raw materials and sells them to a business for use in the production of its goods and services.
71
qantas example of suppliers
Qantas partners with Orro Group for IT infrastructure
72
supplier's interest in a business
Earning a profit from the raw materials and resources they supply.
73
general community
are the external stakeholders and groups who are impacted by a business’s operations and decisions, often because they are located in close proximity to the business.
74
the general community's interest in a business
Increasing the local employment rate and boosting the local economy.
75
what are the 5 management styles?
autocratic, persuasive, consultative, participative, laissez-faire
76
autocratic management
involves a manager making decisions and directing employees without any input from them.
77
3 advantages of autocratic style
communication is quick and direct, full decision making control lies with manager, efficient
78
3 disadvantages of autocratic style
leads to low employee motivation as they feel undervalued, increased staff turnover, decisions may be incorrect as employees may have relevant info that is unconsidered.
79
persuasive management style
involves a manager making decisions and communicating the reasons for those decisions to employees without their input.
80
3 advantages of persuasive management
communication is quick and direct, full decision making control lies with manager, employees feel more respected when managers justify decisions
81
3 disadvantages of persuasive style
leads to low employee motivation as they feel undervalued, increased staff turnover, time may be wasted justifying decisions
82
consultative management style
involves a manager seeking input from employees on business decisions but making the final decision themselves.
83
3 advantages to consultative style
communication is two way therefore improving the quality of decisions, employees feel valued, management still retains control over the final decision
84
3 disadvantages to consultative style
some input by employees may be ignored due to their inexperience, time consuming, employee conflict and resentment could arise if their ideas are ignored
85
participative management style
involves a manager sharing information with employees so that employees can participate in decision-making.
86
3 advantages of participative style
Relationships between management and employees may improve, Employees may feel more motivated, Employees can broaden their skillset
87
3 disadvantages to participative style
time consuming, manager loses control, some employees do not like the lack of direction
88
laissez-fair management style
involves a manager communicating business objectives to employees and giving them freedom to make decisions independently.
89
3 advantages of laissez-fair style
employees work independently, higher employee motivation, manager acts more as an administrator of budgets
90
3 disadvantages to laissez-fair style
Loss of control by management, Business objectives may not be met, potential for employees to make poor decisions
91
4 considerations when deciding the appropriateness of management styles
time, experience of employees, nature of the task, manager preference (high or low control)
92
what are the 6 management skills? (CLIPDD)
communication, leadership, interpersonal, delegation and decision making
93
communication
is the skill of effectively transferring information from one party to another.
94
leadership
is the skill of motivating others in order to achieve a business’s objectives.
95
interpersonal
is the skill of creating positive interactions with other employees, to foster beneficial professional relationships.
96
planning
is th e process of determining a business’s objectives and establishing strategies to achieve these aims.
97
delegation
is the skill of assigning work tasks and authority to other employees who are further down in a business’s hierarchical structure.
98
decision making
is the skill of selecting a suitable course of action from a range of plausible options.
99
3 management skills required in an autocratic style
decision making, communication (one-way), planning
100
3 managament skills required in a persuasive style
decision making, communication (one way), planning
101
4 managment skills required in a consultative style
communication (two-way), interpersonal, decision making and delegation
102
4 managment skills required in a participative style
communication (two-way), interpersonal, decision making and delegation
103
4 managment skills required in a laissez-faire style
communication (two-way), interpersonal, leadership and delegation
104
corporate culture (+2 types)
is the shared values, ideas, expectations and beliefs of a business and its employees. official and real
105
official corporate culture
involves the shared views and values that a business aims to achieve, often outlined in a written document
106
real corporate culture
involves the shared values and beliefs that develop organically within a business and are practised on a daily basis by its employees.
107
2 similarities between official and real corporate culture
Concerned with the shared values and beliefs of people in the business, aim to change the way employees interact with each other and the business
108
the difference between official and real corporate culture
Official corporate culture is often written in business documents (policies and rules), whereas real corporate culture is usually unwritten (what the employees do on a daily basis).
109
what are the 4 elements of corporate culture?
values/practices, symbols, rituals/celebrations, heroes
110
values and practices element of corporate culture
The way things are done in the business. E.g. honesty, hard work, teamwork, and innovation.
111
symbols element of corporate culture
The events or objects that are established to represent something the business believes to be important.
112
rituals, rites and celebrations element of corporate culture
The routine behavioural patterns in a business’s everyday life. E.g. regular social gatherings can be held to help develop a sense of belonging among employees who work in small teams during the week.
113
heroes element of corporate culture
The business’s successful employees who reflect its values and, therefore, act as an example for others.
114
difference between efficiency and effectiveness
Efficiency is concerned with how well resources are used to create output; such as how well you are using time, raw materials, labour, or machinery to produce goods and services, whereas effectiveness is the degree to which a business has achieved its stated objectives; for example whether the business has achieved its profit or market share target, or whether they have met their shareholder expectations

business management 3/4 (3 decks)

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