Business Management AOS 1: Business Foundations

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53 Terms

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Sole Trader

Business structure that is owned and operated by one individual

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Partnership

Business structure that is owned by 2-20 owners

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Private Limited Company

Incorporated business structure that has at least one director and a maximum of 50 shareholders

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Public Listed Company

Incorporated business that has an unlimited number of shareholders and lists and sells its shares on the ASX

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Social Enterprise

Type of business that aims to fulfil a community or environmental need by selling goods or services

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Government Business Enterprise

Business that is owned and operated by the government.

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Unlimited Liability

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

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Personal Income Tax

Portion of an individual’s earnings that is paid to the government for public services

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Unincorporated

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

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Incorporated

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

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Shareholders

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

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Shares

Portions of an incorporated business that can be bought and sold as a means for the business to gain revenue

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Dividends

Regular sums of money paid out to shareholders from a company's profit.

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Company Tax

Portion of profits a company pays to the government for public services

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Limited Liability

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

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Capital

Resources that can be used for funding a business, such as cash, machinery, and equipment.

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Australian Securities Exchange (ASX)

Electronic market where Australian public company shares are bought and sold.

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Increase Market Share

Business’s % of total sales in an industry

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Business Objectives

Goals a business intends to achieve - provides direction

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Make A Profit

Businesses create more revenue than expenses

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Meet Shareholder Expectations

Investment can facilitate growth/development of a business - new market opportunities

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Fulfill Market Need

Fill gap in market - addressing unmet/unprecedented customer needs by other businesses in the same industry

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Fulfill Social Need

Improving environment and society through business activities

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Improve Efficiency

Get most out of resources

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Improve Effectiveness

For a business to be competitive

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Stakeholders

Individuals, groups or organisations who have a vested interest in the performance and activities of a business

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Owners

Individuals who establish, invest, and have a share in a business, often with the goal of making a profit

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Managers

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

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Employees

Individuals hired by a business to complete work tasks and support achievement of objectives

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Customers

Individuals or groups that interact with a business by purchasing and utilising goods/services

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Suppliers

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

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General Community

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

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Management Styles

Approach and manner in which employees are directed and motivated within a business

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Autocratic

Involves a manager making decisions and directing employees without any input from them

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Persuasive

Involves a manager making decisions and communicating the reasons for decisions to employees without their input

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Consultative

Manager seeking input from employees on business decisions but making the final decisions themselves

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Participative

Manager sharing information with employees (can participate in decision making)

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Laissez-Faire

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

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Appropriateness Of Management Styles

In relation to the nature of the task, time, experience of employees, manager preference

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Time

Time in which decision should be made for the manager to complete a task

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Experience Of Employees

Untrained and inexperiences to highly skilled and qualified experts

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Nature Of Task

Can be straight-forward and simple in nature to highly complex, technical work

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Managers Preference

Can be highly individualised

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Planning

Process of determining a business’s objectives and establishing strategies to achieve these objectives

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Decision-Making

Skill of selecting a suitable course of action from a range of plausible options

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Communication

Skill of effectively transferring information from one party to another

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Delegation

Skill of assigning work tasks and authority to other employees who are further down in a business’s hierarchical structure

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Interpersonal Skills

Skill of creating positive interactions with other employees to foster beneficial professional relationships

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Leadership

Skill of motivating others in order to achieve a business’s objectives

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Relationship Between Skills And Style

Each management style requires a manager to use a different set of skills - unique balance to manage employees effectively

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Corporate Culture

Shared values and beliefs of a business and its employees

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Official Corporate Culture

Involves shared views and values that a business aims to achieve, often in written format

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Real Corporate Culture

Shared values and beliefs that develop organically within a business, practised on a daily basis by its employees