CHAPTER 1 - Business Foundations

types of businesses

sole trader, partnership, private limited company, public listed company, social enterprise, government business enterprise

sole trader

business structure that is owned and operated by one individual

partnership

business struture that is owned by 2-20 owners

private limited company

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

• owners referred to as shareholders

public listed company

incorporated business that has an unlimited number of shareholders and lists

social enterprise

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

government business enterpris (GBE)

business that is owned and operated by the government to provide services or goods for the public benefit.

business objectives

the goals a business intends to achieve

to make a profit

the total revenue earned minus total expenses incurred

to increase market share

business’s percentage of sales within an industry

to meet shareholders expectations

the obligation of a business to provide returns and maintain value for its shareholders

capital gains

when an individual sells a company’s shares at a higher price than they initially purchased them for

dividends

payments made to shareholders from a company's profits

to fulfil a market need

when a business fills up a gap in the market, addressing customer needs that are currently unmet by other businesses in the same industry

to fulfil a social need

improving society and the environment through business activities

to improve efficiency

how productively a business uses its resources when producing a good or service

to improve effectiveness

the extent to which a business achieves its stated objectives

stakeholders

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

owners

individuals who establish, invest, and have a share in a business, often with with the goal of earning a profile 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

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

management style

the approach and manner in which employees are directed and motivated within a business

autocratic

manager making decisions and directing employees without any input from them - oneway

persuasive

manager making decisions and communicating the reasons for those decisions to employees without their input - oneway

consultative

manager seeking input from employees on business decisions but making the final decision themselves - twoway

participative

manager sharing information with employees so that employees can participate in decision making - twoway

laissez-faire

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

management skills

skills used to complete tasks for the business to meet its objectives

planning

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

decision-making

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

communication

skill of effectively transferring information from one party to another

delegation

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

interpersonal

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

leadership

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

corporate culture

shared values and beliefs of a business and its employees

official corporate culture

the shared views and values that a business aims to achieve, often outlined in a written formate

real corporate culture

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