VCE 3/4 Business management: Chapter 1

Stakeholder

Stakeholder

someone who has a vested interest in a business.

•can come from within the business (internal environment) or from outside of the business (external environment).

Shareholder

someone who has bought a percentage of your business. 

want a return on their investment through capital gains (increase in value of the business) and improved profits (though dividends).

Soletraders

• Sole proprietorship: owned and operated by one individual

• Cheapest and simplest business structure

• Unincorporated: owner and business are the same legal entity

• Unlimited liability: full legal and financial responsibility

• Entitled to all profits after personal income tax

• Liable for any business debts.

Company tax

the portion of profits a company pays to the government for public services.

Dividends

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

Partnership

• Business structure for 2 to 20 owners

• Easy and cost-effective establishment

• Typically involves a partnership agreement

• Agreement outlines partner details, profit distribution, responsibilities, and financial contributions.

Private Limited Company

• incorporated structure with 1 director and up to 50 shareholders

• Incorporation establishes the company as a separate legal entity

• Obligations include paying dividends and company tax

• Limited liability for shareholders, responsible only for their initial investment

Public Listed Company

• Incorporated business with unlimited shareholders, shares traded on ASX

• Listed on the Australian Securities Exchange (ASX)

• Shares available to the public, contrasted with private limited companies where shareholders are selected by the board.

Social Enterprise

• Business that aims to fulfill community or environmental needs through goods or services

• Profitability is a core objective to sustain support for social causes

• Required to contribute at least 50% of profits to social or environmental causes

• Differs from charities by relying on revenue from sales rather than donations.

Government Business Enterprise (GBE)

• Owned and operated by the government

• Operates in the public sector of the economy with a specific purpose outlined by the government

• Serves essential public needs through large-scale services like transport, housing, or communication.

Mission statement

states why an organisation exists, its purpose and how it will operate.

Vision statement

states what the organisation aspires to be.

Objective

a desired goal that an organisation intends to achieve.

•It gives the organisation direction.

Strategies

the actions taken to achieve a specific objective.

Corporate Social Responsibility

• Ongoing commitment for sustainable business operations

• Encompasses economic, social, and environmental sustainability, known as the 'triple bottom line'

• Vital for businesses to address CSR issues when engaging with stakeholders.

Directors

• Individuals with overall responsibility for managing the company’s business activities

• Develop strategies and make key decisions for the business direction

• Expect remuneration through directors' fees and share options.

Management

•The people who have the responsibility for successfully achieving the objectives of the business.

•ensure that the overall strategy of the business is implemented. 

•They expect to be involved in decision making and renumerated fairly.

Employees

• Individuals working for the business, seeking fair pay, ethical treatment, and proper training

• Instrumental in achieving business objectives

• Expect fair compensation, favorable working conditions, and job security.

Interest groups

•organisations who attempt to directly influence or persuade a business to adopt or change particular activities, processes or policies.

Examples:

•Trade unions

•Consumer groups

•Specific issue groups

Management styles

Autocratic style

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

Persuasive style

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

Consultative style

Involves a manager seeking input from employees on business decisions but making the final decision themselves.

Participative style

Involves a manager sharing information with employees so that employees can participate in decision-making.

The laissez-faire management style

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

Centralized management style

Top to bottom, the manager tells what to do

De-centralized management style

bottom to top, employees are involved and then the manager is consulted

Management skills

• abilities used by managers for achieving business objectives

• Effective managers possess a range of specific skills applicable in various situations

• Common skills include communication, delegation, planning, leadership, decision-making, and interpersonal skills.

Communication

• Fundamental aspect of business operations

• Clear, articulate, and concise [...] is vital

• Effective managers resolve conflicts through [...]

• Excessive [...] may lead to reduced productivity

• Involves creating and exchanging information for desired response

• Includes verbal (oral, written) and non-verbal (body language, visual) methods

• Choice of [...] method depends on the audience

Delegating

• Passing authority down hierarchy for tasks or decisions

• Responsibility stays with delegator

• Delegator remains accountable for outcome

• Clear communication crucial for instructions

Planning

A Formalised decision-making process that is future oriented.

Once business objectives have been determined, decisions about how they will be achieved must be made. This requires detailed plans for activities at all levels of the business.

Strategic planning

• Long-term (2-5 years),

• determines market position and goals,

• led by senior management

Tactical planning

• Medium-term (1-2 years), flexible,

• supports the implementation of strategic planning,

• how business objectives will be achieved through resource allocation,

• led by middle management

Operational planning

• Short-term,

• details day-to-day operations,

• achieves short-term objectives,

• led by front line management

Leading

• Occurs when managers attempt to influence and motivate people to achieve objectives

• Effective leadership crucial for business success

• Leadership style depends on manager's attitudes towards employees

• Good managers lead by example, encourage good performance

• Effective leaders actively listen, welcome new ideas, remain calm in conflict, delegate tasks

Transactional Leader

• Offers rewards for staff compliance

• Rewards include pay rises or promotions

• Rewards given based on meeting performance goals

Transformational Leader

• Inspires staff with a vision

• Fosters commitment to business objectives

• Considers each staff member unique

• Encourages individual judgement on decisions

Leadership

• Leads to motivated employees and high staff morale

• Motivated employees work harder and more efficiently

• Results in high productivity and attainment of business objectives

• Teamwork fosters shared vision and objectives

• Encourages open communication, improves morale, cooperation, and productivity

Decision making

• involves identifying available options and then choosing one course of action from the alternatives.

Effective decision making

• Involves being able to make decisions within a particular time frame.

• It also requires a manager to adequately assess the risk involved if the decision is implemented.

Group decision making

• Takes longer due to discussion and reach consensus (a general agreement)

• Collects more ideas and knowledge for better decisions and implementation

• Not suitable for emergencies requiring immediate action

• Individual decision-making necessary in crisis situations

Interpersonal skills

• Management's ability to interact and build positive relationships

• Crucial for achieving business objectives through others

• Effective managers understand and utilize different perspectives

• Enhance staff morale and productivity

Corporate culture

• A pattern of basic shared assumptions within a business.

• Developed and shared by the group.

• Representative of things that have worked well in the past and are considered valid within the business.

• Taught to newcomers as the ‘correct’ way of thinking, feeling and doing.

• An internal factor that management can try to influence in order to optimize business performance.

• It is a system of values and beliefs shared by the people within the business

Official corporate culture

• refers to the set of values and beliefs desired by management of a business. This is what is presented to the public. It is visible through business documents. Slogans, logos etc.

Real/unofficial corporate culture

• is the culture that actually exists in the business. What is observable through observations and what the real relationship are.