pob flashcrards

barter

The exchange of goods and services for other goods and services without the use of money

Money(Definition)

Anything that is generally acceptable as a medium of exchange and a mean on settling debts

Functions of money

Medium of exchange, standard of deferred payments, unit of account, store of value

Characteristics of money

Durability, portability, divisibility, limited in supply

Instruments of exchange

Cash, cheques, bank drafts, credit cards,debit cards, bills of exchange, promissory notes, cryptocurrencies

bounce check

When the account attached has insufficient funds

Money order

A secure prepaid financial instrument used to transfer specific amount of money to someone else. It functions similarly to a check but is more secure since it is prepaid

Advantages of a sole trader

Keeps all profit, easy to form, decisions are made easily since no one is needed to consult

Disadvantages of a sole trader

Long working hours, capital is limited, heavy work load

What is a partnership

A legal arrangement that allows two or more people to share responsibility for a business.( 2-20 people) at least 1 person as unlimited liability

Advantages of a partnership

Less financial burden, less paperwork, additional knowledge, shared responsibility

Disadvantages of a partnership

Disagreements and cant make your own decisions (shared control) unlimited liability, shared profits, lack of continuity

What is a certificate of incorporation

An official document that proves a business is legally registered as a corporation

What is a silent/sleeping partner?

Someone who contributes money but has nothing to do with the running of the business

Limited liability

You stand to lose what you invested if the business fails

Unlimited liability

You stand to lose more than what you invested in the business

What is a cooporative?

A type of business formed by a group of people who have a common interest and the profits are shared among members in other words the members are the owners (credit unions are the most common cooperatives in slu)

Private limited companies(LTD)

Up to 50 people. A type of business structure where the company is privately owned. The ownership is divided into shares, but the shares are not sold to the public. The liability is limited

Advantages of private limited companies

Limited liability, separate legal entity, control of ownership, perpetual succession, tax efficiency, raising capital,

Disadvantages of private limited companies

Complex setup, restricted share trading, public disclosure, ongoing compliance, profit sharing,

What is a share?

A share is a small part of a company that you can own

What is a franchise

A business where one person the franchisee) is allowed to open and run a branch of an existing, successful business (the franchiser)the franchisee pays fees to use the brand name, products, and systems of the franchisor

Public limited companies

A business owned by shareholders that sells its shares to the public

Advantages of a public limited company

Raise more money, limited liability, company growth, more credibility

Disadvantages of a public limited company

Complex set up, loss of control, public scrutiny, ongoing costs

3 economic questions

What to produce, how to produce and whom to produce for

Traditional or subsistence system

The main focus is agriculture, fishing etc

Planned, command system

Government answers economic questions

Free market system

Buyers and sellers make economic decisions

Key functional areas of a business

Operations, marketing, finance, Human Resources, sales, owners/shareholders,employees, customers, suppliers, government

Who are stakeholders

People or groups who are affected by or have an interest in a business. Such as owners, employees, customers, suppliers and the government

Difference between unethical and illegal

Ethical- doing what is right and fair

Illegal- going against the law

Examples of unethical issues

misleading advertising, withholding of taxes, money laundering, handling of personal info

What is a code of ethics

A document that makes it clear what is right and wrong

What is management responsible for

1. Owners- to maximize profit, maintaining the assets

2. Employees- provide adequate working conditions, training, good Human Resources

3. Society- provides jobs, sponsor events

4. Customers- settling reasonable prices, providing compensation for injuries on the compound

5. Government- abide by the laws of the land, avoid pollution

What is an organizational chart

A diagrammatic representation of the flow of responsibility and authority in an organization. It shows the roles of people and the relationships between them

Line organizational structure

Authority flows in a straight line from top to bottom

Span of control

Wide: a lot of people to supervise

Narrow: not many people to supervise

Private sector

Businesses that are owned and run by private individuals or companies. Their goal is typically to make a profit

Leadership :autocratic

Autocratic leaders make decisions by themselves and tell staff what to do

Leadership; democratic

One who makes decisions after considering everyone’s ideas

Leadership: charismatic

Where the leader has a strong personality or charisma and can influence others to follow

Sources of conflict

Pay, poor working conditions, harassment, interpersonal relationships

Employer strategies for dealing with conflict

Lock out, scab labour, union busting

Employee strategies for dealing with conflict

Strike, working to rule, go slow, overtime bans

Conflict resolution strategies

Mediation, arbitration, grievance procedure, trade union representation

Guidelines for establishing good relations between managers and employees

Good communication with workers, improved working conditions, motivating workers, good leadership

Teamwork

a situation where a group of people work together to achieve a common goal

Advantages of teamwork

Work gets done quicker, more skills and experience, a sense of common purpose and belonging

Disadvantages of teamwork

Some team members are lazy, group decisions take longer to make than individual ones, can limit creativity

Manager

A manager is a leader who is expected to organize people, resources and finances by setting up systems and procedures in a logical and efficient way. They are responsible for directing and or controlling part of or all of an organization

What is management

The process of bringing the factors of production together to ensure organizational goals are achieved

Senior manager

Has significant management responsibility eg. helping to shape key planning decisions

Middle manager

Makes important decisions involving significant resources

Junior manager

Takes direction from above and is mainly responsible for making sure that operations run smoothly

Trainee manager

Directed heavily from above while learning management skills

Management functions

Directing, motivating, delegating, organizing, planning, controlling, coordinating

Private Sector

The private sector consists of small, medium and large scale businessses. The owners of these businesses are individuals (sole traders) Public corporations are government owned and are in the public sector. Public companies are in the private sector and are owned by private shareholders

Public sector

The public sector consists of enterprises owned and run by the government. In many countries the government owns and runs key utilities such as Rio and bus companies oil, gas, and electricity industries. The central bank and water companies.

Business technology

Refers to the application of science, data, engineering and information for business purposes such as the achievement f economic and organizational goals

Business technology can also mean

Technology that helps to run a business and its operations. Examples include machines programmed to carry out specific tasks, online selling websisged and computer programs to help accounting and marketing functions

ICT (Information and communication technology) in business

ICT is concerned with the storage, retrieval, manipulation, transmission and receipt of digital data

Span of control

The number of people that he or she manages or supervises directly

Chain of command

The hierarchy of an organization

Hierarchy

The system that organizes people or things into levels or seniority or importance

Organizational chart

A diagrammatic representation of the flow of responsibility and authority in an organization

Line organizational chart adv and disadv

Adv: hierarchy and accountability is clear and helps show the decision making process as well as the reporting relationship

Disadv: tall structure each line on the organizational chart becomes a silo

Difference between Line and staff responsibilities

Line managers: direst the work of subordinates and make important decisions. are responsible for making sure that production and sales targets are met

Staff managers: advise those with line authority and support them with achieving goals and targets

Line and staff organizational chart adv and disadv

Adv: access to specialist or technical advice is possible and decision making is improved

disadv: conflicts may arise between staff and line managers in the execution of orders also it’s more complex with understanding the reporting relationships

Difference between a tall and flat organization

Tall organization: an organizational structure in which there are many layers of management

Flat organization: an organizational structure in which most middle management roles have been eliminated

Delegating

entrust a task or responsibility to another person who is less senior than oneself

Large span of control adv and disadv

Adv: creates flatter structure boosting employee empowerment and faster decisions

Disadv: manager burnout, can hide underperformers

Adv and disadv of autocratic

Adv: quick decision making, good for armed forces as there is fast one way communication when there’s an emergency

Disadv: demotivates workers who want to contribute, decisions do not benefit from workers knowledge and experiences

Adv and disadv of democratic

Adv: makes use of many ideas involves consultation, job enrichment is most likely to be achieved

Disadv: time consuming to make decisions, some issues may be too secret or too sensitive to discuss

Positive conflict

Positive conflict occurs when there are disagreements about how a business should progress. Example what products should be made next

Negative conflict

When there are open disagreements that lead to unpleasantness and a failure to arrive at commonly shared plans for achieving an organizations goals

Internal conflict

Caused by: poor working conditions, a need to change the way a business operates, conflict between different functional areas in an organization

Trade union and its aims

An association of employees that has been formed to protect and promote the interests of its members and to achieve other joint agreed aims

Aims: shorter working hours, benefits for members, better working conditions, better pay, equal opportunities, health and safety

Benefits of trade unions to workers

Unions will support workers with legal advice if they were badly treated at work, industrial action taken by all union members can be very effective, individual workers have very little bargaining power on their own

Benefits of trade unions to employers

Discussions over wages and working conditions can take place with a union representative rattan than many workers saving time,

Grievance at work

Occurs when an employee had complaints or concerns about work treatment

Eg. rate of pay or conditions of work

Can be solved by mediation or arbitration

Benefits of good relationships between employers and employees

• reduced level of conflict

• High levels of motivation productivity and employee efficiency

• Improved communication

Guidelines for establishing good relationships between managers and employees

Good communication with workers

Improved working conditions

Motivating workers

Good leadership is practiced

Flat rate of pay

a set rate of pay based on a set number of hours (easy to calculate but does not give an incentive to work harder)

Example

$300 for a 35 hour week

Time rate

Worker receives a set rate per hour

Eg $9 an hour

( encourages employees to work longer hours)

Piece rate

Payment is made for each ire. Produced that meets the given quality standard

(Encourages employees to produce higher levels of output)

Commission

Payment made as a percentage of the sales that a salesperson has made

(Directly relates pay to sales made or other measures of output)

Performance rates

A good way to encourage high performance. Employees are paid based on their ability to finish and execute tasks in a given time period

(Directly links pay to meeting or exceeding targets)

Profit sharing

Pay varies according to the level of profit a company makes

( helps employees to see the direct link between their own efforts and the company’s profits)

Fringe benefits

non financial incentives given to employees

Communication

The means of exchanging information

It involves sending a message to a receiver

Management functions

Planning

Directing

Motivating

Delegating

Organizing

Controlling

Coordinating

Entrepreneur

An entrepreneur is a risk taker who brings together factors of production to establish and run a business in order to make a profit.

Functions of an entrepreneur

• Conceptualizing: developing ideas related to the product the business will offer

• Planning: setting the goals and objectives and the steps required to achieve them

• Organising: selecting the best location, employing the best workers and providing good quality products

• Accessing funds: obtaining money from sources such as a bank or personal savings

• Operating a business: carrying on with the day activities and looking for ways to improve the products

• Evaluating the performance: making a profit is the main aim and entrepreneurs have to assess if a profit is made

• Bearing risks: there may be risks such as fires, theft, epidemics and lost shipment

Characteristics of an entrepreneur

Resourceful

Persistent

Optimistic

Creative

Innovative

Flexible

Goal oriented

Propensity(to take calculated risks)

Persevering

Business plan definition

A complete description of a business and its plan for the next 1-3 years

Role of entrepreneurs in economic development

Collaborating, providing goods and services to satisfy citizens, creating jobs, earning foreign exchange

Reasons why an individual may want to establish a business

Financial independence, self fulfillment, self actualisation, increased income, increased control

Essential steps when establishing a business

Conceptualization(idea of the business), Research ( what people re willing to buy, where, how much will they pay, consider competition), Identification of resources (

Linkage industry

When an industry gives rise to another