Business Unit 3 AOS1 - Business Foundations

types of businesses

sole trader, partnership, companies, social enterprise, GBE

sole trader

a business owned and operated by 1 person who takes full responsibility of providing the finance and making decisions - unincorporated, unlimited liability

advantages of sole trader

easy and low cost to set up, full control of decision making and keeping all profits

disadvantages of sole trader

lack of perpetuity, difficult to take holidays, burden of management

partnership

a business owned by 2-20 people who have a shared responsibility and workload- unincorporated, unlimited liability

advantages of partnership

easy and low cost to set up, shared workload/responsibility, business can keep going if partner dies

disadvantages of partnership

possibility of disputes, difficult decision making, divided profits

private limited company Pty Ltd.

an incorporated business that has a minimum of 1 shareholder and a maximum of 50 non-employee shareholders, whose shares are only offered to those the business wants as part owners

advantages of company

seperate legal entity, limited liability, long life/perpetuity,

disadvantages of company

expensive startup costs, company tax, public disclosure

public listed company Ltd.

an incorporated business that has a minimum of 1 shareholder and no maximum, whos shares are openly traded on the Australian Securities Exchange

social enterprise

a business that sells goods and services for the market to make a profit, with the primary objective of fulfilling a community or environmental need.

government business enterprise

a business owned and operated by the government that typically provides essential services or infrastructure to Australian residents

objective

a desired outcome or specific result a business intends to achieve.

business objectives

to make a profit, increase market share, improve efficiency/effectiveness, fulfil a social/market need, meet shareholder expectations.

to make a profit

BO - revenue minus expenses, helps provide owners an income, return on investment, expand, use for research/development, training, technology

to increase market share

BO - the proportion of total sales in a given market or industry that is held by a business, calculated for a specific period of time, businesses want to expand their market share and have a competitive advantage

to improve efficiency

BO - how well a business uses its resources to achieve its objectives - wastage decreases

to improve effectiveness

BO - the degree to which a business has achieved its stated objective

to fulfil a market need

BO - provide a good or service that is not otherwise available to a market, gap in the market, eg. samsung and apple phones

to fulfil a social need

BO - supporting community helps business reputation CSR, attracts more customer sales and supports environment

to meet shareholder expectations

BO - return on investment/dividend, growth, reputation

stakeholders

groups/individuals who interact with a business and have a vested interest in its activities- owners, managers, employees, customers, suppliers, general community

autocratic management style

centralised, with one way communication, where the manager makes the decisions, and tells staff what to do, who are expected to comply without input

persuasive management style

centralised, with one way communication, where the manager makes decisions and then attempts to ‘sell’ the decision to staff, rather than simply ordering compliance.

consultative management style

centralised, with two-way communication, where the manager seeks input and feedback from employees before making decisions, encouraging contribution from the team.

participative management style

decentralised, with two-way communication, where managers and employees collectively make the decision, fostering a sense of ownership among employees.

laissez-faire management style

decentralised, with open communication where employees have total responsibility for workplace operations and decision making

corporate culture

the shared values, ideas, beliefs and expectations held by members of a business

real CC

what one actually sees or experiences within the business’ internal environement, revealed through unwritten/ informal rules that guide how people behave eg. how people dress, language they use, how they treat each other and customers

official CC

what the business tries to portray to the external environment, usually revealed through business objectives, policies, slogans or logos

conflict

not a disagree, caused by stakeholder’s varying vested interest

communication

ability to transfer information from a sender to a receiver and listen to feedback, can be verbal or non verbal

delegation

ability to transfer authority and responsibility from a manager to an employee to carry out specific tasks

planning

ability to define business objectives and decide on the methods and strategies to achieve them.

leadership

ability to influence or motivate people towards the achievement of business objectives

decision making

ability to identify options available and then choose a specific course of action from the alternatives.

interpersonal skills

ability to deal or liaise with people and build positive relationships with staff

owner

an individual/entity who owns a business in attempt to profit from its successful operation

manager

a person with responsibility for achieving business objectives

employees

work for the business in exchange for money

customers

purchase goods/services expecting reasonable prices and high quality

suppliers

business that supplies resources

general community

population of surrounding areas