U3 AOS 1 BUSINESS FOUNDATIONS

Sole trader

is suitable for a small business with one owner.

Partnerships

are suitable for two to 20 owners of small to medium businesses.

Private limited companies

are suitable to raise funds and grow the business while

maintaining control.

Public listed companies 

are suitable to raise large amount of funds publicly.

Social enterprises

are suitable for businesses that focus on improving a community or

environmental cause.

GBE’s

are a unique type of business that can only be designated by the government.

Business objectives 

 •Make a profit

• Increase market share

• Meet shareholder expectations

• Fulfil a market need

• Fulfil a social need

Areas of management

• Operations creates the goods or services.

• Human resources manage employees.

• Sales and marketing sell the product to customers.

• Finance manages the money of a business.

• Technology support provides technical assistance to other areas of management.

Corporate culture

• Corporate culture is the shared values and behaviours of owners, managers, and

employees in a business.

• Official corporate culture is the formal guidelines determined by the owners and

managers.

• Real corporate culture is the actual practices and behaviours that occur within a business.

Autocratic 

Involves the leader dictating the objectives to be achieved, and how to achieve them.

• Communication is one way.

• Decision making is retained by the manager

GOOD: The manager retains all the control. + Time is used very efficiently as there is no discussion/consultation.

BAD: The manager retains all the control. – Time is used very efficiently as there is no discussion/consultation

Persuasive

involves the leader dictating the objectives to be achieved and persuading the employees as to how to achieve them.

• Communication is one way.

• Decision making is retained by the manager

GOOD: The manager retains all the control. + Time is used very efficiently as there is no discussion/consultation. + May maintain employee morale better than an autocratic style.

BAD: No employee input could lead to less considered/informed decisions. – Employees may not feel empowered.

Consultative

involves the leader asking their employees for their opinions before ultimately making the decision themselves.

• Communication is two way.

• Decision making is retained by the manager.

GOOD: Asking for suggestions broadens the pool of ideas so decision making can be enhanced. + Seeking employee input boosts their satisfaction and motivation levels 

BAD: – The time taken to consult can slow down the decision making process. – Some employee suggestions may be ignored, which could cause resentment

Participative 

management involves the leader sharing the decision-making responsibility with their employees to create a consensus decision.

• Communication is two way.

• Decisions are made by the group

GOOD: This management style recognises the skills and abilities of employees and empowers them to make decisions. + Teamwork and group decision-making should lead to the optimum final decision.

BAD: – Can be very time consuming to take in and discuss everyone's views. – May cause conflict if suggestions are disregarded

Laissez-Faire

 involves employees being totally responsible for the decision making and operations of the business. In this management style, the manager has no central role or power.

They may still set objectives and have ultimate accountability, but it is the employees who effectively run the business. • Communication is two way.

• Decisions are made by the employees.

GOOD: Very trusting and empowering for employees, given complete freedom and responsibility. + Can be very creative, with high degree of individual responsibility.

BAD: Can potentially lead to a loss of control, or conflicts between staff over direction