VCE Business Management Units 3 & 4 Review

Comprehensive practice flashcards reviewing Victorian Curriculum VCE Business Management Units 3 and 4, covering business structures, management styles, operations, KPIs, motivation theories, and change models.

What is a sole trader, and what is the legal liability of its owner?

A sole trader is a business structure owned and operated by one individual. The owner and business are considered the same legal entity (unincorporated), meaning the owner has unlimited liability for unincorporated business debts.

How is a partnership defined in terms of ownership and liability?

A partnership is an unincorporated business structure owned and operated by $2$ to $20$ owners who have unlimited liability over business debts.

What are the structural characteristics of a private limited company regarding directors and shareholders?

A private limited company is an incorporated business structure that has at least $1$ director and a maximum of $50$ shareholders who have limited liability over the business's debts.

What requirement must a business meet to be considered a social enterprise in Victoria?

A business must contribute at least $50\%$ of its profits towards fulfilling a social or environmental cause.

What is a Government Business Enterprise (GBE), and what is one disadvantage of operating as one?

A GBE is a business owned and operated by the government. A key disadvantage is that government and politicians can interfere and change its strategic direction, and it must follow significant 'red tape' (excessive rules and formalities).

What are the start and end dates of the Australian financial year?

The Australian financial year begins on $1\text{ July}$ and ends the following year on $30\text{ June}$.

What is the distinction between efficiency and effectiveness?

Efficiency is how productively a business uses its resources when producing a good or service, whereas effectiveness is the extent to which a business achieves its stated objectives.

What distinguishes an autocratic management style from a persuasive management style?

In an autocratic style, the manager makes decisions and directs employees without any input using one-way communication. In a persuasive style, the manager still makes decisions without employee input but communicates the reasons behind the decisions to gain employee support.

How does time availability determine the appropriateness of different management styles according to the continuum below?

An autocratic style is most appropriate when there is limited time available, transitioning through persuasive, consultative, and participative styles, to a laissez-faire style when there is extended time available.

How do strategic, tactical, and operational planning differ by time frame?

Strategic planning covers the broadest scope of what a business aims to achieve in the next $2\text{ to }5\text{ years}$, tactical planning involves strategies for the next $1\text{ to }2\text{ years}$, and operational planning involves short-term daily actions.

What is the difference between official corporate culture and real corporate culture?

Official corporate culture involves the shared views and values that a business aspires to achieve, outlined in written form (e.g., mission and vision statements). Real corporate culture involves the shared values and beliefs that develop organically and are unwritten and practiced daily by employees.

What are the five levels of Maslow's Hierarchy of Needs from lowest order to highest order?

From lowest to highest order: Physiological needs, Safety and security needs, Social needs, Esteem needs, and Self-actualisation needs.

What are the four universal drives identified in Lawrence and Nohria's Four Drive Theory?

The drive to acquire (achieve rewards and high status), the drive to bond (participate in social interactions and feel belonging), the drive to learn (gain knowledge, skills, and experience), and the drive to defend (protect personal security and business values).

What are the five key principles of Locke and Latham's Goal Setting Theory?

Clarity (specific and measurable), Commitment (employee involvement and personal interest), Complexity of the task (achievable and not overwhelming), Feedback (regular monitoring and support), and Challenge (sufficiently difficult to encourage improvement).

What are the five steps involved in the process of implementing the Goal Setting Theory?

1. Employee discusses their personal goals with manager, and manager aligns them with business objectives; 2. Manager and employee set a clear, achievable, challenging, and complex goal together; 3. Manager regularly checks progress and provides support; 4. Manager celebrates and rewards the employee; 5. Manager and employee set a new, more difficult goal together.

What are the strengths and weaknesses of performance-related pay as a motivational strategy?

Strengths include directly aligning employee goals with business objectives, motivating multiple employees quickly, and providing tangible financial rewards. Weaknesses include employees taking harmful shortcuts that compromise quality, developing unhealthy competition, and demanding larger rewards over time.

What is the difference between on-the-job training and off-the-job training?

On-the-job training involves employees learning and improving skills within the workplace (e.g., job shadowing, coaching, mentoring). Off-the-job training involves learning skills in an external setting away from the workplace (e.g., external workshops, university courses, conferences).

What are the four common performance management strategies?

Management by objectives (collaborative goal setting), performance appraisals (manager assessment against criteria with feedback), self-evaluation (employee self-assessment), and employee observation (multi-level peer and supervisor feedback).

What are the two mandatory statutory entitlement considerations owed to an employee upon termination?

Payment of any accrued annual leave or long service leave, and redundancy pay (compensation based on length of service, usually not paid to employees hired for less than $12\text{ months}$).

What is the difference between an industry award and an enterprise agreement?

An award sets the legally binding minimum wages and conditions across an entire industry as determined by the Fair Work Commission (FWC). An agreement applies to a specific business or group of businesses, is developed via collective bargaining, and must pass the 'better off overall test' compared to the relevant award.

How do mediation and arbitration differ in workplace dispute resolution?

In mediation, an impartial third party facilitates discussion, but the disputing parties retain control and the outcome is not legally binding. In arbitration, an independent body hears arguments and makes a final, legally binding decision.

How do manufacturing businesses differ from service businesses regarding tangibility, storability, and customer contact?

Manufacturing businesses produce tangible, standardised outputs that can be stored as inventory, with production and consumption occurring separately and low customer contact. Service businesses produce intangible, tailored outputs that cannot be stored, where production and consumption occur simultaneously with high customer contact.

How do Computer-Aided Design (CAD) and Computer-Aided Manufacturing (CAM) function together in operations?

CAD uses software to generate, modify, and optimize 3D product designs and prototypes. Once the design is finalized, CAM controls and directs the physical production machinery through computer systems to manufacture the final product.

What are the three materials management strategies that operate alongside forecasting?

Master Production Schedule (MPS - details what to produce and when), Materials Requirement Planning (MRP - itemises exact quantities of materials required), and Just in Time (JIT - delivers materials right when needed to minimise idle stock).

Why is quality control considered reactive while quality assurance is proactive?

Quality control is reactive because it inspects products to detect and discard defects after they occur. Quality assurance is proactive because it achieves certified standards through independent assessment of the production system to prevent defects before they occur.

What are the three core principles of Total Quality Management (TQM)?

1. Customer focus (identifying and fulfilling exact customer needs); 2. Continuous improvement (constantly evaluating and refining processes); 3. Employee empowerment (involving workers in developing quality solutions, such as through quality circles).

What are the four principles of lean management?

Pull (producing only in response to customer demand), One-piece flow (processing and passing one unit at a time without bottlenecks), Takt (synchronising operational pace to match customer demand), and Zero defects (ongoing attitude to prevent errors from passing to the next stage).

What is the difference between global sourcing of inputs, overseas manufacture, and global outsourcing?

Global sourcing of inputs involves purchasing raw materials from overseas suppliers for local production. Overseas manufacture involves executing the entire physical manufacturing stage in an overseas country while retaining operational control. Global outsourcing involves transferring specific business tasks (like IT) to an external overseas business with little retained control.

What is the formula used to calculate the percentage of market share?

\text{Percentage of market share} = \frac{\text{A business's total sales } (\)}{\text{Total sales in the business's industry } (\)} \times 100

What is the formula for calculating rates of staff absenteeism?

$$\text{Rates of staff absenteeism} = \frac{\text{Total number of days all staff are absent for a period of time}}{\text{Total number of staff}}$$

What is the formula used to determine the level of staff turnover?

$$\text{Level of staff turnover} = \frac{\text{Total number of staff leaving over a period of time}}{\text{Total number of staff required}} \times 100$$

What are the four sequential steps in Lewin's Force Field Analysis theory?

1. Weighting (scoring and attributing a value to driving and restraining forces); 2. Ranking (arranging forces in order of value and calculating total scores); 3. Implementing a response (strengthening driving forces and reducing/eliminating restraining forces); 4. Evaluating the response (assessing if change was successful using KPIs).

What are the three pricing approaches used to gain a competitive advantage under Porter's lower cost strategy?

1. Charge similar prices to competitors (achieving higher profit margins due to lowest operational costs); 2. Charge slightly lower prices than competitors (maintaining higher margins as price cuts are smaller than per-unit savings); 3. Charge much lower prices than competitors (thin profit margins offset by high sales volumes).

How does Porter's lower cost strategy differ from the differentiation strategy in customer focus?

The lower cost strategy focuses on price-sensitive, cost-conscious customers by minimizing operational costs to offer lower prices or gain higher margins. The differentiation strategy focuses on non-price-sensitive customers by offering unique, high-perceived-value product features sold at premium prices.

What are the five disciplines of Senge's Learning Organisation?

Systems thinking, Mental models, Shared vision, Personal mastery, and Team learning.

What are the four low-risk strategies used to overcome employee resistance to change?

Communication (open two-way transfer of reasons and feedback), Empowerment (granting authority and involvement in change), Support (providing training, counseling, and assistance), and Incentives (offering financial or non-financial rewards).

What are the two high-risk strategies used to overcome resistance to change, and what are their drawbacks?

Manipulation (providing incomplete, deceptive information) and Threat (intimidating employees with dismissal or loss of promotion). Drawbacks include damaged workplace trust, low morale, negative corporate culture, and high staff turnover.

What are the three stages in Lewin's Three-Step Change Model?

1. Unfreeze (preparing the business and challenging existing mindsets to create urgency); 2. Change (transforming practices, providing support and training to reduce anxiety); 3. Refreeze (embedding new practices into daily operations, policies, and culture to sustain change long-term).