Economic Systems, Management, and Business Ownership Lecture Notes

Comprehensive flashcards covering economic systems, management functions, leadership styles, and legal forms of business ownership based on the lecture notes.

Economic system

A country’s plan for its services, goods produced, and the exact way in which its economic plan is carried out.

Command economy

Also known as planned economy; a system where the government decides what to produce, how much, and at what price, with central planning for resource allocation.

Market economy

Also known as free market economy; features private ownership of resources and a price mechanism that determines resource allocation based on consumer and producer choices.

Mixed economy

An economic system where the private sector operates alongside the public sector, combining market forces with government regulation and social safety nets.

Market Socialism

An economic system that blends elements of a free-market economy with socialist principles, typically involving state or collective ownership and redistributive policies.

Traditional economic system

An economy based on a group’s culture, geographic location, and traditional beliefs where goods/services are made based on people's occupations and money is not used.

Management

An organizational function concerned with personnel who manage a business enterprise, similar to sales, marketing, or finance.

Planning

The core function of management involving setting objectives and determining courses of action, including strategic ($long-term$) and operational ($short-term$) planning.

Organizing

Creating departments and teams, allocating resources effectively, and defining roles, responsibilities, and reporting relationships.

Staffing

Ensuring the right people are in the right positions by recruiting, selecting, training employees, and managing performance.

Leading / Directing

Communicating vision, inspiring employees, making decisions, solving problems, and managing conflicts.

Controlling

Implementing quality control measures and monitoring performance against plans and goals using metrics and key performance indicators (KPIs).

Top level management

Consists of board directors, managing directors, or executive committee members who set key objectives and make appointments to top positions.

Middle level management

Consists of managers (personnel, production, sales, etc.) who lead functions within departments and issue instructions laid by top management.

Low / lower level management

Consists of foreman, supervisors, and daily labourers who maintain discipline and increase the spirit of work among workers.

Autocratic leadership

A leadership style where all decision-making powers are centralized in the leader, similar to a dictatorship.

Democratic leadership

A leadership style that favours decision-making in which employees participate to increase motivation and teamwork.

Partnership

An agreement where two or more persons contribute money, labour, and skill; it has no legal personality and no continuity.

Sleeping partners

Partners who only contribute to the capital of the business and are not strictly known as business partners.

Partner an commandite

A partner whose liability to the debts of the business is limited and who does not play an active role in management.

Limited partner

A partner whose liability is limited and who does not play any role in the management of the partnership.

Partnership articles

A written contract for a partnership drawn up by an attorney.

Sole trader / Sole proprietorship

A business entity owned and run by one individual with unlimited liability and no legal personality.

Close corporation

A limited liability entity easier to incorporate than a company, consisting of $1$ to $10$ members and governed by the Act on Close corporations.

Founding statement

A document for a Close corporation that contains details such as the members' contributions, the name ending in "CC", and the financial year-end date.

Private company

A company owned by $1$ to $50$ shareholders that is not traded publicly; its name must end in "(Pvt) Ltd" or "Inc".

Memorandum of Association

An official document for a company containing the Name Clause, Objectives Clause, Limited Liability Clause, and Share Capital Clause.

Article of Association

An official document for a company containing rules regarding directors, meetings, dividends, reserves, and shares.

Public company

A company that has permission to offer securities like stocks or bonds for sale to the general public, typically through a stock exchange.

Prospectus

A document containing the main objectives of the company, details of share capitals, and details of directors that must be registered.

Scarce Resources

The four essential resources in an economy: Land, Labour, Capital, and Entrepreneurship.

Maslow’s Hierarchy of needs

A five-stage model of human needs: Physiological, Safety, Belongingness, Esteem, and Self-actualisation.