BIS MAN U3O1

• types of businesses including sole traders, partnerships, private limited companies, public listed companies, social enterprises and government business enterprises • business objectives including to make a profit, to increase market share, to improve efficiency, to improve effectiveness, to fulfil a market need, to fulfill a social need and to meet shareholder expectations • stakeholders of businesses including owners, managers, employees, customers, suppliers and the general community • characteristics of stakeholders of businesses including their interests and potential conflicts between stakeholders • management styles including autocratic, persuasive, consultative, participative and laissez-faire • the appropriateness of management styles in relation to the nature of the task, time, experience of employees and manager preference • management skills including communication, delegation, planning, leadership, decision-making and interpersonal • the relationship between management styles and management skills • corporate culture, both official and real

Types of businesses

* Sole traders
* Partnerships
* Private limited companies
* Public listed companies
* Social enterprises
* Government business enterprises

Sole traders

a business that is owned and operated by one person

factors of sole traders

* must register business name with ASIC if it is different to the owner's name
* can have employees
* individual and the business have the same legal entity
* have unlimited liability

The Australian securities and Investments Commission Act 2001 (ASIC)

carry out most of our work under the corporation's act

Australian Securities Exchange (ASX)

* offering listings, trading, clearing
* acts as a market operator, cleaning house and payments system facilitator

unlimited liability

requirement that an owner is personally and fully responsible for all losses and debts of a business

advantages of a sole trader

* simple and inexpensive to set up
* Owner has complete control
* no disputes with partners
* minimal government regulation
* owners keep all the net profits

disadvantages of a sole trader

* have unlimited liability (personally responsible for all debts)
* more difficult to gain finance
* burden of managing entire business
* often required to perform many different tasks (heavy reliance on owner's skills)

example of a sole trader

self employed painters, family owned business at a farmers market; Green Grocer

Partnerships

a business that is owned by between two to twenty people

* have the same legal entity as the owners'- two types of business partnerships: General, Limited
* to help avoid disputes, a partnership agreement can be created

Types of Partnerships: General Partnerships

Partners have unlimited liability

Types of Partnerships: Limited Partnerships

Liability of one or more partners is limited to the proportion of their investment

Advantages of a partnership

* simple and inexpensive to set up
* work load can be shared among partners
* may be easier to take time off or take holidays
* may be easier to take time off or take holidays
* different skills and expertise brought into the business
* different skills and expertise brought into the business

Disadvantages of a partnership

* unlimited liability
* potential for disagreements over key decisions
* liability for debts incured by other partners 'need to share the profits amongst partners

example of partnership

* law firms: Sharrock Pitman Legal
* real-estate establishments: Harcourt

Private Limited Company (Pty Ltd)

An incorporated business that is owned to up to 50 private shareholders

Factors of private limited companies

* controlled by director (s)
* shares are not freely available to the public
* has limited liability
* have 'propriety limited' or 'Pty Ltd' after its name

Advantages of a private limited company

* limited liability
* pay company tax rate
* life of the company can live longer than the directors (perpetuity)
* can be easier to attract more capital than sole trader and partnerships

Disadvantages of private limited company

* more complex and expensive to establish
* more reporting requirements to the owners and the government
* shares cannot be freely traded

example of private limited company

Cotton On Group Pty Ltd, 7-Eleven Inc.

Public Listed Company (Ltd)

One that is owned by shareholders where the shares of the business can be purchased or sold on an open market such as Australian Securities Exchange (ASX)

Factors of public listed company

* have limited liability
* when a business lists on an exchange it is called initial public offering (IPO)
* shares can be purchased by the public
* Public companies have 'Limited' or 'Ltd' after the name

advantages of public listed companies

* limited liability
* easier to raise capital (money) by selling more shares to the public
* life of the company can live longer than the directors (perpetuity)
* pay the company tax rate

disadvantages of public listed companies

* highly complex & time consuming to establish
* high costs in establishment
* more accountability and compliance
* possible loss of control

Examples of public listed companies

Telstra Limited, Apple Inc.

Social enterprises

a business that exists primarily to fulfil a vision that benefits the company or social need rather than shareholders.

factors of social enterprises

* they are usually commercially liable business that makes a profit
* some social enterprises rely heavily on grants and funding support while others are self-substaining
* the profit is used towards a social cause sustaining

advantages of social enterprises

* meeting a social need can encourage community support, increasing profits
* improved morale within the business as employees value the work they are doing
* easy marketingb

disadvantages of social enterprises

* difficult to obtain finance to begin the business
* difficult to focus on financial and social objectives
* having to compete with commercial

example of social enterprises

strEAT__, Credit Union

Government Business Enterprise (GBE)

a business that is owned by the government but operated independently.

Factors of Government Business Enterprise (GBE)

* individual in commercial activities and aims to make a profit along with carrying out government policies
* aims to increase their values and returns for shareholders (the government like other businesses stakeholders do)
* normally controlled by a board of directors

advantages of Government Business Enterprise (GBE)

* may be invest in areas that the private sector be invested may hesitate to invest
* provides healthy competition to private sectors
* rely on the government for the initial investment

disadvantages of Government Business Enterprise (GBE)

* strategic directions can change with changing government
* can be political interference
* may not be as productive as private sectors businesses (possible lack of accountability)

example of Government Business Enterprise (GBE)

* Australia Post
* NBN Co
* Defence Housing Australia

CSR (Corporate Social Responsibility)

a business's obligation to pursue policies, decisions, and actions that align with the objectives and values of society

Types of Management Styles

autocratic, persuasive, consultative, participative, laissez-faire

Autocratic management style

* leadership style that involves making managerial decisions without consulting others
* communication is one-way
* centralised controlled with manager

advantages of autocratic management

* clear defined direction & procedures
* precise roles & expectations of employees
* centralised control at top management level
* Precise directions→ manager having set objectives → to be done is done
* fast achieved

disadvantages of autocratic mangement

* no employee input is allowed
* job satisfaction decreases, hence high absenteeism and staff turnorturnoverver
* potential for conflict increases
* an ‘us’ and ‘them’ mentality

Persuasive management style

manager make the decision

advantages of persuasive management

* managers gain trust & support through persuasion
* workers believe their feelings are being considered and may be more positive
* acceptance of negative situations

disadvantages of persuasive management

* attitudes and trust can be negative
* communication is one-way system
* employees denied full participation in the decision-making process

Consultative management style

* recognises the importance of good personal relationships among employees and consults with staff on issues before making a final decision
* two-way communication
* effective when new operating procedure is to be enforced or some business change implemented
* final decision is still with manager
* decentralised control & decision making

advantages of consultative management

* greater variety of ideas improves the quality of management decision
* employees gain ownership, increased motivation and commitment
* tasks are completed more efficiently and with better results

disadvantages of consultative management

* consultation can slow the entire process
* if process is not consistent with each decision made, stuff can become uncertain and confused about their roles
* some ideas may be ignored or overlooked this may cause conflict por resentment

participative management style

* decentralised management style
* two-way communication (provides ideas & feedback)
* degree of sharing; ranges outlining a solution, possibly changes being suggested, allow the team to initiate, implement and monitor its own solution

advantages participative management

* positives relations between employer & employee
* motivation and job satisfaction is optimal
* employees have greater opportunity to acquire more skills
* power-sharing approach encourages development of work teams, and employees display high level commitment
* high level trust- improved employee performance

disadvantages of participative management

* time-consuming when differing views have to be considered
* role of management, and the control of the manager, may be weakened and undermined
* internal conflict
* not all employees may want to contribute

laissez-faire management style

* complete decentralised management style
* employees- responsible for workplace operations
* management- no central role or decision making power
* management- set objectives & accountable for overall performance of the department
* effective for creative work or research

Advantages of laissez-faire leadership

* Employees are highly empowered to make decisions and only seek assistance when they need help, motivating them
* Can create a very relaxed working environment
* open communication
* creativity is encouraged '
* conducive to a dynamic working environment

disadvantages of laissez-faire leadership

* Lack of direction can lead to objectives not being met
* Only works in highly professional environments where workers are self-motivated (e.g. in technology companies and creative industries)
* complete loss of control by management
* potential for minimise of the business’s resources
* can breed personal conflicts

Contingency Management Theory/ Situational Management

stresses the need for flexibility and the adoption of management styles to suit the situation

objective

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

business objectives

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

to make a profit

* profit is the amount of money remaining after expenses have been deducted from revenue
* profits are important for business so they are are able to survive and even grow
* businesses can look to increase revenue or minimising their expenses

to increase market share

* market share is the portion of the total shares the business has in an industry for a particular good or service, expressed as a percentage
* to increase market share, a business is taking market share away from another business

efficiency

a measure of how well we do things; e.g. if we are able to produce more outputs from the same input, we have become more efficient at using these inputs

to improve efficiency

* minimising the resources used and to maximise the outputs generated from those inputs

\-can be achieved by using up-to-date technology & innovative process, having highly skilled employees or using the best quality components for the products so waste & inefficiencies are reduced
* therefore reduces costs of the business

staff turnover rate/ staff attrition rate

a metric that represents the percentage of employees who leave an organisation over a specific period, either voluntarily or involuntarily

effectiveness

how successful a business has been in terms of achieving its stated objectives

to improve effectiveness

* setting a target for itself of increasing net profit by 10% in the coming
* therefore, they should be able to consider its effective in relation to all the objectives that is set, either short or long-term & should always be looking to improve

to fulfil a market need

* a market is a specific group that have similar characteristics that a business focuses selling its goods and services
* a need is this group’s desires for a particular product or specific benefit
* market research can help find what the needs of different consumers groups are and the business can aim to satisfy that need

to fulfil a social need

* social needs are more focused on the community and how the business can look to improve the lives of others
* e.g. providing opportunities for local unemployed people or assisting disadvantaged people in the community or focusing on the environment, such as minimising waste and recycling

to meet shareholder expectations

* share holders are those that own the business
* they expect to have a return on their investment through capitals gain and income

\-capital

business stakeholders

* owners
* managers
* employees
* customers
* suppliers
* general community

stakeholders

groups and individuals who interact with the business and have a vested interest in its activities

manager

the person who has the responsibility for successfully achieving the objectives of the business

employees

the people who work for the business and who expect to be paid fairly trained properly, and treated ethically in return for their contribution to production

customers

the people who purchase goods and services from the business, expecting high quality at competitive prices

suppliers

businesses or individuals who supply materials and other resources to a business so that it can conduct its operations

owners interests

* want the business to make profit-- they may depend on the success of the business for their income or wealth
* shareholders want the business that they have invested in to make profit as this affects the value of their shares and the amount of dividends they receive
* will typically want the business to conduct itself in a socially responsible manner

dividends

the distribution of a company's earnings to its shareholders

manager interests

* want the business to perform financially and, in return, expect to be fairly remunerated
* will typically want the business to be socially responsible as this is likely to lead to increase sales
* need to satisfy as many stakeholder expectations as possible while making sure that their position in the business is secure

suppliers interests

* must provide quality materials that are delivered reliably (in the right quantities at the right times) to ensure that the business makes a profit
* Expect to be paid promptly and in full

employees interests

* expect to be paid fairly, trained properly and treated ethically in return for their contribution to production
* Need to know that their job is secure in the long term

customers interests

* Expect to purchase quality products at reasonable prices and to receive high levels of service
* Are becoming increasingly aware of socially responsible businesses, and many will purchase products from businesses they know have acted in a socially responsible manner

suppliers interests

* Must provide quality materials that are delivered reliably (in the right quantities at the right times) to ensure that the business makes a profit
* Expect to be paid promptly and in full

the general community interests

* Expect that a business will give back to society something of what they take out in generating profit
* Expect businesses to show concern for their future welfare through their own employment within businesses
* Expect the business to show concern for the environment

conflicting interests between employees and owners/shareholders

Employees require safe working conditions and reasonable wages, but this may reduce the business’s profit and dividends to owners/shareholders

conflicting interests between management and customers

Management could attempt to maintain profit and a high dividend to satisfy shareholders by raising the prices of products, but this will upset customers, who expect reasonably priced products

conflicting interests between management and the general community

management might decide to cut costs by neglecting maintenance, which could possibly put members of the community in danger.

conflicting interests between suppliers and the general community

suppliers expect to be paid fairly and promptly, but they might reduce costs by using unethical or socially irresponsible practices, which can upset members of the community.

conflicting interests between management and suppliers

management wishes to keep costs down to improve profit but suppliers providing ethical materials require higher prices to cover their costs.

corporate social responsibility

the obligations a business has over and above its legal responsibilities to the wellbeing of employees and customers, shareholders and the community, as well as the environment

appropriateness of management styles

* nature of the task
* time
* experience of employees
* manager preference

nature of the task

For example, when a business undergoes change, the manager may need to make decisions quickly and so may adopt an autocratic style. Alternatively, if there are experienced employees, a manager might be more consultative as the experience of employees may be able to assist in navigating change

time

For example, an impending deadline might mean that an autocratic style is appropriate. On the other hand, an extended timeframe, with access to ample resources, might lend itself to a manager making use of a more participative style.

the experience of employees

For example, a workplace with inexperienced staff might necessitate the use of an autocratic style, whereas a team of experienced staff would indicate that a consultative or participative style would be appropriate.

the preference of the manager

For example, a manager’s personality, experience, values, beliefs and skills might mean that they prefer to use a particular management style.

management skills

* the abilities or competencies that managers use to achieve business objectives abilities
* the type of management style that a manager selects will determine the range and degree of skills they use

types of management skills

* communication
* delegation
* planning
* leadership
* decision-making
* interpersonal-skills

communication

* the transfer of information from a sender or receiver. can occur both within & outside the business
* non-verbal
* verbal

how is communication effective with managers?

* it is fundamental, effective___-__ clear, articulate and concise-- helps maintain good relationships
* MAY lead to conflict- employees communicate their disagreements
* resentment and tension
* HOWEVER communication can resolve conflict
* positive relationships-- can be a distraction and can also reduce productivity

how is communication not effective?

* time-consuming
* resulting in information overload
* may lead to conflicts HOWEVER can be resolved with further communication

delegation

occurs when the authority and responsibility to carry out specific activities is transferred from a manager to an employee

how is delegation effective with managers?

* delegates the tasks remain accountable for the outcome
* clear communication
* manage time efficiently
* enable staff to learn new skills
* improvement in employee motivation
* build trust and mutual understanding between the subordinate employee and manager
* providing support to employee, setting deadlines, and evaluating the task when completed ensures delegated assignment is completed adequately
* HOWEVER subordinate employee may misuse their new power

planning

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

types of planning

* strategic
* tactical
* operational

strategic (long-term) planning

* 2 to 5 years.
* Determines where the business wants to be in the market, and what it wants to achieve in relation to its competitors.