Unit 3 Aos 1 Business Management

Sole trader

A business structure owned and operated by one individual with unlimited liability.

Partnership

A business structure owned by 2 to 20 people who share profits, responsibilities, and unlimited liability.

Private limited company (Pty Ltd)

An incorporated business with 1 to 50 non-public shareholders and limited liability.

Public listed company (Ltd)

An incorporated business with an unlimited number of shareholders whose shares are traded on the stock exchange (ASX).

Social enterprise

A business structure that trades to make a profit but exists primarily to fulfill a social or environmental cause.

Government business enterprise (GBE)

A government-owned and operated business that runs commercially to make a profit while delivering essential public infrastructure or services.

Profit objective

Generating more revenue than expenses over a given period.

Market share objective

Increasing the percentage of total industry sales controlled by a business.

Shareholder expectations

Maximizing financial returns through dividends and capital gains (share price growth).

Capital gains

The profit made when selling an asset or share at a higher price than its purchase price.

Dividends

A portion of a business's profit paid out to its shareholders.

Market need objective

Fulfilling customer demand for products or services that are currently unmet or underrepresented in the market.

Social need objective

Improving community or environmental wellbeing through business operations and strategies.

Efficiency

The ability of a business to optimize its resources by maximizing the amount of outputs generated from a minimum level of inputs.

Effectiveness

The degree to which a business achieves its stated objectives.

Operations management area

The management area responsible for producing goods or services efficiently and effectively.

Finance management area

The management area responsible for managing financial resources, budgeting, and record-keeping.

Human resources management area

The management area responsible for managing the employment relationship, including hiring, training, and performance.

Sales and marketing management area

The management area responsible for promoting, pricing, and selling products to consumers.

Technology support management area

The management area responsible for implementing and maintaining IT systems to assist business operations.

Stakeholder

An individual or group with a direct interest in or who is affected by the operations and decisions of a business.

Internal stakeholders

Groups within the business, such as owners, managers, and employees, who directly influence daily operations.

External stakeholders

Groups outside the business, such as customers, suppliers, competitors, and the general community, who are affected by its actions.

Stakeholder conflict

When the interests and expectations of two or more stakeholder groups compete or clash with one another.

Corporate social responsibility (CSR)

The ethical obligation of a business to go above and beyond legal requirements to improve social and environmental wellbeing while maintaining economic viability.

Management Styles Continuum

A spectrum that ranks management styles based on their level of control, from completely centralized/manager-driven (Autocratic) to completely decentralized/employee-driven (Laissez-faire).

Autocratic management style

A management style where the manager makes all decisions alone and tells employees what to do using one-way top-down communication.

Persuasive management style

A style where the manager makes all decisions alone and then "sells" or explains the rationale to convince employees of the benefits, utilizing one-way communication.

Consultative management style

A management style where the manager asks employees for input and feedback using two-way communication before making the final decision.

Participative management style

A management style where managers and employees share decision-making power using two-way communication to reach consensus.

Laissez-faire management style

A management style where employees are given full responsibility and authority to make decisions with minimal managerial intervention.

Relationship between styles and skills

The management style chosen by a manager directly dictates which management skills they will need to rely on and how those skills will be applied in the workplace.

Communication skill

The transfer of clear information from a sender to a receiver, with feedback to confirm understanding.

Delegation skill

The assignment of authority and responsibility from a manager to an employee to perform specific tasks, while the manager remains accountable.

Planning skill

The process of defining business objectives and determining the strategies and actions required to achieve them.

Planning process (PADSA / SOS AIM)

A sequential process: Set objectives, Analyze environment (SWOT), Develop/Formulate alternatives, Select and implement, Assess/Monitor results.

Leading skill

The ability to inspire, motivate, and guide employees toward achieving business objectives.

Decision-making skill

The ability to identify available options and select the best course of action from alternatives.

Interpersonal skills

The ability to communicate, build trust, and maintain positive relationships with people in the workplace.

Corporate culture

The shared values, ideas, expectations, and beliefs held by the members of an organization.

Official corporate culture

The desired values and beliefs a company presents to the public through mission statements, logos, and slogans.

Real corporate culture

The actual unwritten values, behaviors, and relationships present among staff within a business.

Strategies to develop corporate culture

Methods to shape culture, including changing management style, altering hiring practices, offering targeted training, establishing rituals/rewards, and leading by example.

Sole trader (Pros/Cons)

Pros: Full owner control, easy to set up. Cons: Unlimited liability, difficult to raise capital, heavy workload.

Partnership (Pros/Cons)

Pros: Shared workload, pooled skills and capital. Cons: Unlimited liability, potential for partner conflict, shared profits.

Private limited company (Pros/Cons)

Pros: Limited liability, separate legal entity, easier access to capital. Cons: High setup costs, complex compliance and reporting.

Public listed company (Pros/Cons)

Pros: Limited liability, high capital-raising potential via ASX. Cons: High establishment costs, risk of hostile takeover, strict disclosure laws.

Social enterprise (Pros/Cons)

Pros: Positive brand image, high staff motivation. Cons: Difficult to balance social and financial goals, hard to secure capital.

Government business enterprise (Pros/Cons)

Pros: Delivers public services, backed by government funds. Cons: Political interference, excessive red tape, less flexible decision-making.

Autocratic style (Pros/Cons)

Pros: Fast decision-making, clear direction. Cons: Low staff morale, no worker input, high employee turnover.

Persuasive style (Pros/Cons)

Pros: Fast decision-making, clear tasks, employees understand the rationale behind decisions. Cons: No employee input limits ideas, low staff morale, employees do not feel valued.

Consultative style (Pros/Cons)

Pros: Better decision-making, improved morale. Cons: Time-consuming, potential employee resentment if ideas are rejected.

Participative style (Pros/Cons)

Pros: High motivation, strong team ownership. Cons: Extremely time-consuming, potential conflict when seeking consensus.

Laissez-faire style (Pros/Cons)

Pros: Fosters high creativity and autonomy for skilled staff. Cons: Loss of management control, risk of uncoordinated team direction.