u3 aos 1 busman - types, objectives, styles and skills

Sole Trader

A business owned and operated by one person.

• Simplest and cheapest business structure.

• Owner has full control and decision-making power.

• Owner receives all profits after income tax.

• Unlimited liability: The owner is personally responsible for all business debts and obligations.

Partnership

A business owned and operated by two or more people (partners). Generally, a maximum of 20 partners.

• Partners share profits or losses according to a partnership agreement.

• Easier to raise capital than a sole trader.

• Partnership agreement outlines roles, responsibilities, and profit/loss sharing.

• Unlimited liability: Partners are jointly and severally liable for business debts.

Private Limited Company (Pty Ltd)

An incorporated business with a minimum of one shareholder and a maximum of 50 non-employee shareholders. Shares are offered only to those whom the business wishes to have as part owners.

• Incorporated: Separate legal entity from its owners (shareholders).

• Limited liability for shareholders.

• Shares are not offered to the general public.

• More complex to establish than sole traders or partnerships.

• perpetuity

Public Listed Company (Ltd)

An incorporated business with a minimum of one shareholder and no maximum number of shareholders. Shares are freely traded on the Australian Securities Exchange (ASX).

• Incorporated: Separate legal entity from its owners (shareholders).

• Limited liability for shareholders.

• Shares are offered to the general public through the ASX.

• Subject to strict regulatory requirements.

• Can raise large amounts of capital through share offerings.

• perpetuity

Social Enterprise

A business that produces goods and services for the market but operates with the primary objective of fulfilling a social need.

• Focuses on a social or environmental mission.

• Aims to generate profit, but profits are reinvested into the social mission.

• Accountable to stakeholders (e.g., beneficiaries, community).

• Disadvantages:

  • Difficulty balancing social mission with financial sustainability.

  • Attracting investors can be challenging.

  • Measuring social impact can be complex.

Government Business Enterprise (GBE)

A type of business that is government-owned and operated.

• Owned and operated by the government (Commonwealth or State).

• Aims to make a profit while carrying out government policies and delivering community services.

• Accountable to the government and the public.

• Examples: Australia Post, VicRoads.

• Disadvantages:

  • Can be less efficient than private businesses.

  • Subject to political interference.

  • Lack of competition can lead to complacency.

objective - make a profit

Profit is the surplus remaining after total costs are deducted from total revenue.

• Importance:

  • Provides a return on investment for owners/shareholders.

  • Allows for business growth and expansion.

  • Attracts investment and secures funding.

objective -  increase market share

Market share represents a business’s proportion of total sales in a specific market or industry, expressed as a percentage.

• Importance:

  • Indicates competitive strength.

  • Leads to greater brand recognition and customer loyalty.

  • Can result in increased profitability due to economies of scale.

objective - improve efficiency

Efficiency refers to how well a business uses its resources to achieve its objectives. It focuses on minimising waste and costs while maximising output.

• Importance:

  • Reduces operational costs.

  • Increases productivity and output.

  • Enhances competitiveness.

objective - improve effectiveness

Effectiveness refers to the degree to which a business achieves its stated objectives. It focuses on doing the right things to meet goals.

• Importance:

  • Ensures the business is aligned with its strategic goals.

  • Enhances customer satisfaction and loyalty.

  • Improves overall business performance.

objective - fulfil a market need

Identifying and satisfying unmet needs or demands in the market.

• Importance:

  • Creates a loyal customer base.

  • Provides a competitive advantage.

  • Drives innovation and growth.

objective - fulfil a social need

Addressing a specific social problem or contributing to the well-being of the community.

• Importance:

  • Enhances the business’s reputation and brand image.

  • Attracts socially conscious customers and investors.

  • Creates a positive impact on society.

objective - meet shareholder expectations

Shareholders are the owners of a company, and they expect a return on their investment.

• Importance:

  • Attracts and retains investors.

  • Ensures the long-term financial stability of the business.

  • Maintains a positive relationship with shareholders.

Stakeholders are…

individuals or groups who have a vested interest in the activities of a business and can be affected by its actions, decisions, and performance.

• internal (e.g., employees, managers, owners)

• external (e.g., customers, suppliers, the community).

Stakeholders - Owners/Shareholders

Individuals or entities that own a portion of the business, either as sole traders, partners, or shareholders.

• Interests:

  • Profitability

  • Return on investment

  • Growth and sustainability of the business.

  • Effective management

• Influence:

  • Voting rights (shareholders).

  • Decision-making power (sole traders, partners).

  • Ability to appoint/remove directors and managers.

Stakeholders - Managers

Individuals responsible for planning, organizing, leading, and controlling the activities of the business.

• Interests:

  • Job security and career advancement.

  • Salary and benefits.

  • Power and influence within the organization.

  • Successful performance of their departments or teams.

  • Business profitability and growth.

• Influence:

  • Decision-making within their area of responsibility.

  • Implementation of business strategies.

  • Management of employees.

Stakeholders - Employees

Individuals who work for the business in exchange for wages or salaries.

• Interests:

  • Job security.

  • Fair wages and benefits.

  • Safe and healthy working conditions.

  • Opportunities for training and development.

  • Positive and supportive work environment.

• Influence:

  • Productivity and quality of work.

  • Customer service.

  • Participation in workplace decisions (through unions or employee representatives).

Stakeholders - Customers

Individuals or organizations that purchase goods or services from the business.

• Interests:

  • High-quality products or services.

  • Fair prices.

  • Excellent customer service.

  • Reliability and trustworthiness of the business.

  • Ethical and sustainable business practices.

• Influence:

  • Purchasing decisions.

  • Feedback and complaints.

  • Brand loyalty and advocacy.

Stakeholders - Suppliers

Businesses or individuals that provide resources and materials to the business.

• Interests:

  • Reliable and consistent orders.

  • Fair prices and payment terms.

  • Long-term relationships.

  • Financial stability of the business.

• Influence:

  • Quality and availability of resources.

  • Pricing of resources.

  • Delivery schedules.

Stakeholders - Community

The individuals who live in the same area as the business operates.

• Interests:

  • Job creation and economic development.

  • Environmental protection.

  • Social responsibility and ethical behavior.

  • Support for local initiatives.

  • Minimization of negative externalities (e.g., pollution, noise).

• Influence:

  • Reputation of the business.

  • Community support or opposition.

  • Lobbying and advocacy.

  • Purchasing decisions based on ethical considerations.

Potential stakeholder Conflicts - Owners vs. Employees

Owners may want to maximize profits, potentially leading to cost-cutting measures such as wage freezes or redundancies, which negatively impact employees.

Potential stakeholder Conflicts - Community vs. Owners:

A business expanding its operations may create jobs but also increase traffic and pollution, negatively impacting the local community.

Potential stakeholder Conflicts - Customers vs. Environment

Customers may demand cheaper products, leading businesses to adopt less environmentally friendly production methods.

5 ways of Balancing Stakeholder Interests

• communication

• compromise

• prioritisation

• ethical decision-making

• triple bottom line = consider profit, people, planet

Autocratic Management Style

Manager makes all decisions and tells staff what to do, with no employee input.

• Decision-making: Centralized; manager makes all decisions.

• Control: Manager controls processes.

• Staff Input: No staff input.

• Communication: One-way; top-down.

• Motivation: Relies on threats and disciplinary action.

• Feedback: Negative and personalized.

Persuasive Management Style

Manager makes decisions and then persuades employees that the decisions are in their best interests.

• Decision-making: Centralized; manager makes all decisions.

• Control: Manager controls processes.

• Staff Input: No staff input in the decision-making stage, but manager attempts to sell the decision.

• Communication: One-way, but manager explains reasons for decisions.

Consultative Management Style

Manager consults with employees before making decisions but ultimately retains the final decision-making authority.

• Decision-making: Manager makes decisions after consulting staff.

• Control: Centralized; manager controls the processes.

• Staff Input: Staff input is valued.

• Communication: Two-way; manager seeks input and provides explanations.

Participative Management Style

Manager shares decision-making authority with employees.

• Decision-making: Decentralized; manager works with employees to make decisions.

• Control: Decentralized; shared between manager and employees.

• Staff Input: Staff input is actively sought and used.

• Communication: Two-way; open communication and collaboration.

Laissez-faire Management Style

Manager provides minimal direction or supervision, giving employees maximum autonomy.

• Decision-making: Decentralized; employees make their own decisions.

• Control: Minimal control from management; employees are responsible.

• Staff Input: Employees have complete autonomy.

• Communication: One-way (from employees to each other and occasionally to the manager).

Factor Influencing Management Style Selection - Nature of the Task

• Complex and novel tasks: participative/consultative style to leverage diverse expertise and encourage innovation.

• Routine and straightforward tasks: autocratic/persuasive style, ensuring quick and consistent execution.

• Crisis situations: autocratic style for swift decision-making and clear direction.

Factor Influencing Management Style Selection - Time Available

• Tight deadlines: an autocratic style to ensure rapid decision-making and efficient task completion.

• Ample time: participative/consultative style, fostering collaboration and employee development.

Factor Influencing Management Style Selection - Experience of Employees

• Highly experienced employees: Thrive under a participative or laissez-faire style, where they have autonomy and contribute significantly to decision-making.

• Inexperienced employees: Benefit from an autocratic or persuasive style, providing clear guidance, training, and close supervision.

Factor Influencing Management Style Selection - Manager Preference

• A manager comfortable with delegating authority might prefer a participative or laissez-faire style.

• A manager who values control and efficiency might lean towards an autocratic or persuasive style.

The Situational Approach to Management..

involves adapting the management style to fit the specific circumstances of the business and its environment.

• Flexibility: Being able to adjust the management style as needed.

• Assessment: Regularly evaluating the task, time, employee experience, and other relevant factors.

• Responsiveness: Implementing the most appropriate style based on the assessment.

Management Skill - Communication

The ability to transfer information from a sender to a receiver and to listen to feedback.

• non/verbal, written

= clarity, informed and aligned w BO

Management Skill - Delegation

ability to transfer authority and responsibility from a manager to an employee to carry out specific activities. This empowers employees, develops their skills, and frees up the manager to focus on other tasks.

Management Skill - Planning

the ability to define business objectives and determine methods or strategies that will be used to achieve those objectives.

It involves setting goals, identifying resources, and creating a roadmap for success.

Management Skill - Leadership

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

Effective leaders inspire trust, foster collaboration, and create a positive work environment.

Management Skill - Decision-Making

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

PROCESS:

1. Identify the problem or opportunity.

2. Gather information and data.

3. Develop alternative solutions.

4. Evaluate the alternatives.

5. Choose the best alternative.

6. Implement the decision.

7. Evaluate the outcome.

Management Skill - Interpersonal Skills

management’s ability to deal or liaise with people and build positive relationships with staff. These skills are essential for creating a harmonious and productive work environment.

• Active listening, Empathy, Conflict resolution, Teamwork, Negotiation, Communication

Levels of Planning: Strategic Planning:

Long-term (3-5 years), focuses on overall business direction.

Levels of Planning: Tactical Planning:

Medium-term (1-2 years), implements strategic plans in specific areas.

Levels of Planning:Operational Planning:

Short-term (day-to-day), focuses on specific tasks and activities

The Planning Process:

1. Define the objectives.

2. Analyze the environment (SWOT analysis).

3. Develop alternative strategies.

4. Evaluate and select the best strategy.

5. Implement the plan.

6. Monitor and evaluate the results.

Corporate culture refers to the…

shared values, ideas, expectations, and beliefs of the employees and managers within a business.

• It shapes the way people interact, the attitudes they hold, and the standards they maintain.

• A strong corporate culture can lead to increased employee motivation, productivity, and loyalty.

Official corporate culture represents the…

Desired culture a business wants to project.

• Mission statements: A formal declaration of the company’s purpose.

• Vision statements: Aspirational descriptions of what the company hopes to achieve in the future.

• Values statements: Outlines the core principles that guide the business’s operations.

• Policies and procedures: Formal guidelines for employee behavior and decision-making.

• Slogans and branding: Public-facing messages reflecting the desired image.

Real corporate culture is the…

Aactual culture that exists within the business, which may or may not align with the official culture.

• Unwritten rules: Informal norms that govern behavior.

• Employee interactions: How employees communicate and collaborate.

• Management styles: The leadership approaches used within the business.

• Staff treatment of customers: The level of service and care provided.

• Employee language: The jargon and tone used within the workplace.

• Work ethic: The general attitude towards work and productivity.

Impact of Corporate Culture on Business Success

• Positive Culture:

  • Increased employee motivation and engagement.

  • Improved productivity and efficiency.

  • Reduced staff turnover.

  • Enhanced customer satisfaction.

  • Stronger brand reputation.

  • Attracts top talent.

• Negative Culture:

  • Decreased employee morale.

  • Poor communication and collaboration.

  • Increased absenteeism and turnover.

  • Damaged brand reputation.

  • Difficulty attracting and retaining employees.