VCE Business Management 3/4

business

an organization that aims to produce goods or services to satisfy the needs and wants of consumers

sole trader

a business owned and operated by one person

unincorporated

a legal status of a business whereby the business owner and the business are viewed as the same legal entity

unlimited liability

the personal legal responsibility a business owner has for an unincorporated business’s debts

partnership

a business owned by a minimum of two people and a maximum of 20 people

private limited company

an incorporated business structure with a minimum of one and a maximum of 50 private shareholders, who’s shares are offered only to those people whom the business wishes to have as part owners

incorporated

a legal status of a company whereby the company is established as a separate legal entity to the shareholder/s

shareholders

the individuals or organisations who have purchased shares of a company and therefore are part-owners of the company

limited liability

shareholders are only liable to the extent of their original investment, meaning they are not personally responsible for the business debts

public listed company

an incorporated business whose shares are freely traded on the Australian Securities Exchange (ASX)

social enterprise

a business with the objective of fulfilling a social need

government business enterprise

a type of business that is government owned and operated with the objective of making a profit through commercial activities

profit

occurs when a business creates more revenue than expenses

market share

a business’s proportion of total sales in a market or industry expressed as a percentage

to fulfil a market need

a business fills a gap in the market, which involves addressing customer needs that are currently unmet or underrepresented by other businesses in the same industry

to fulfil a social need

improving society and the environment through business activities

efficiency

how well a business uses resources to achieve objectives

effectiveness

the degree to which a business has achieved its stated objectives

shareholders

the individuals or organisations who have purchased shares of a company and therefore are part-owners of the company

owners

individuals who establish, invest, and have a share in a business, often with the goal of earning a profit from its operations

managers

individuals who oversee and coordinate a business’s employees and lead its operations to ultimately achieve the business’s objectives

employees

individuals who are hired by a business to complete work tasks and support the achievement of its objectives

customers

individuals or groups who interact with a business by purchasing and utilising its goods and services

suppliers

individuals or groups that source raw materials, component parts, and processed materials and sell them to a business for use in the production of its goods and services

general community

the individuals and groups who are impacted by a business’s operations and decisions, often because they are located in close proximity to the business

autocratic management style

the manager makes all the decisions, dictates work methods, limits employee input, and continually checks employee performance

persuasive management style

management making decisions and then convinces employees that it is the right decision

consultative management style

management recognising the importance of good personal relationships among employees and consults with them on certain issues before making a decision

participative management style

a manager sharing decision-making responsibilities with employees and decisions are made together

laissez-faire management style

a manager communicating business objectives to employees and giving them freedom to make decisions independently

planning

(management skills) the ability to define business objectives and decide on the methods or strategies to achieve them

decision-making

(management skills) making decisions within a particular time frame as well as management addressing the level of risk involved with their decision

communication

(management skills) the transfer of information from a sender to a receiver and the ability to listen to feedback

delegation

(management skills) the ability to transfer authority and responsibility from a manager to an employee to carry out specific activities

interpersonal skills

(management skills) the ability to deal or liaise with people and build positive relationships

leadership

(management skills) the ability to influence or motivate people to work towards the achievement of business objectives

corporate culture

the shared values of beliefs of the people within a business, that unites it and keeps it together

official corporate culture

the desired culture a business wants to establish and convey to the public through their company documents, objectives, slogans/logos, and mission statement

real corporate culture

the actual values and beliefs within the business that are usually unwritten/informal rules that guide how people in the business behave

human resource management

the effective management of the formal relationship between the employer and employees

human resource manager

coordinates all activities involved in acquiring, developing, maintaining, and terminating employees from a business’s human resources

maslow’s hierarchy of needs

a motivational theory that suggests people have five fundamental needs, and their sequential attainment of each need acts as a source of motivation

physiological needs

(maslow) the basic requirements for human survival, such as food, water, and shelter

safety and security needs

(maslow) the desires for protection from dangerous or threatening environments

social needs

(maslow) the desires for a sense of belonging and friendship among groups, both inside and outside the workplace

esteem needs

(maslow) an individual’s desires to feel important, valuable, and respected

self-actualisation

(maslow) the desires of an individual to reach their full potential through creativity and personal growth

lawrence and nohria’s four drive theory

a motivational theory that suggests that people strive to balance four fundamental desires

drive to acquire

the desire to own material goods, and encompasses the desire for status, power, and influence

drive to bond

the strong need to form relationships with other individuals and groups

drive to learn

our desire to satisfy our curiosity, to learn new skills and to explore the world around us

drive to defend

the desire to remove threats to our safety and security and to protect what we regard as ‘ours’

locke and latham’s goal setting theory

a motivation theory that states that employees are motivated by clearly defined goals that fulfil five key principles

goal setting theory principles

• clarity

• commitment

• challenge

• task complexity

• feedback

motivation strategies

• performance-related pay

• career advancement

• investment in training

• support strategies

• sanction strategies

performance-related pay

a financial reward to employees whose work has reached or exceeded a set standard

career advancement

the prospect and opportunity of developing your career through being promoted or taking on new roles

training

where an employee learns and improves their skills so is able to perform their job at a higher level

support

the manager meeting with the employee and verbally instilling belief and aspiration in the employee and mentoring them to help overcome problems and seize opportunities

sanction

punishments for failure to meet or comply with a business objective

on the job training

occurs when employees need to learn a specific set of skills to perform particular tasks in the workplace

off the job training

training away from the workplace that involves sending individuals or groups of employees to a particular specialised training institution or professional instructor

performance management

an assessment of employees’ present work performance and how this can be directed in the future to achieve both business and employee objectives

performance management strategies

• management by objectives

• performance appraisals

• self-evaluation

• employee observation

management by objectives

a strategy that aims to improve performance of a business by clearly defining objectives that are agreed to by both management and employees and are in line with business objectives

appraisal

the formal assessment of how efficiently and effectively an employee is performing their role in the business

self-evaluation

employees carrying out a process of self-assessment, based on a set of pre-determined objectives

employee observation

a range of employees from different levels of authority assessing another employee’s performance against a set of criteria

termination

when an employee leaves a particular workplace, ending the employment contract

types of termination

• retirement

• redundancy

• resignation

• dismissal

retirement

occurs when an employee decides to give up full-time or part-time work and no longer be part of the labour force

redundancy

occurs when a person’s job no longer exists, usually due to technological changes, an organisational restructure, a merger, or acquisition

resignation

involves an employee voluntarily terminating their own employment, usually to take another job position elsewhere

dismissal

occurs when the behaviour of an employee is unacceptable, and a business terminates their employment

entitlement considerations

legal obligations an employer owes to its employees following the termination of their employment contract

examples of entitlement considerations

• annual/long service leave pay out

• redundancy pay

• notice of termination

• justifiable reasons for employment termination

transition considerations

social and ethical practices that a manager can consider implementing when terminating employment

examples of transition considerations

• offering employees resume writing or interview training

• providing networking support for employee

• introducing counselling and financial services to ease the uncertainty of leaving the business

workplace relations

the relationship and communications shared between employees (and/or their representatives), and their employers (and/or their representatives)

role of human resource managers

• recruit, hire, train, and terminate employees

• negotiate with employees and their representatives

• act as a mediating party

• ensure that minimum legal requirements are met

role of employees

• follow and understand workplace safety procedures

• complete tasks with proper care and diligence

• obey terms in their contract

• avoid misusing confidential information

• report illegal or unethical behaviour

employer associations

advisory bodies that assist employers in understanding and upholding their legal business obligations

role of employer associations

• share information

• provide advice

• represent employers during negotiations with employees

• provide support

unions

organisations composed of individuals who represent and speak on behalf of employees in a particular industry to protect and improve their wages and working conditions

role of unions

• represent employees and negotiate new wages and conditions on behalf of their members

• seek better wages and work conditions on behalf of employees

• protect job security and integrity of employee contracts

fair work commission

Australia’s independent workplace relations tribunal that has a range of responsibilities outlined by the Fair Work Act

role of the FWC

• set national minimum working standards

• establish awards

• approve and monitor enterprise agreements

• act as an arbitrator

• act as a mediator

• respond to serious workplace issues

awards

legally binding minimum requirements for wages and conditions applying to specific industries

agreement

legal documents that outline the wages and conditions of employees and are applicable to a particular business or group of businesses

dispute resolution process

a series of steps that disputing parties follow in order to resolve a disagreement and reach a resolution

mediation

occurs when a third party facilitates discussion between employees and employers in order to find solutions to disputes with regards to workplace issues

arbitration

involves an independent third-party hearing arguments from both disputing parties and making a legally binding decision to resolve the conflict

operations management

the management of resources and functions within a business to achieve efficient output of finished goods or services in a way that adds value to customers and creates a profit margin for the business

inputs

the sources necessary to make a product

processes

the actions performed on the inputs to transform them into the finished product

outputs

the final product presented to the customer either as goods (tangible) or services (intangible)

manufacturing business

use resources and raw materials to produce a finished physical/tangible good

manufacturing business characteristics

• capital intensive

• production and consumption occur separately

• low degree of customer contact during production

• tangible output

• outputs can be stored

• standardised production

service business

intangible products, usually with the use of specialised expertise

service business characteristics

• labour intensive

• production and consumption occur simultaneously

• high degree of customer contact during production

• intangible output

• outputs cannot be stored

• tailored production