Business Management Unit 3 & 4

Sole trader

An individual who runs and owns a business on their own 

Partnership

business with between 2 to 20 individuals/owners

Private limited company (PTY LTD)

Business in a private ownership limited between 1 to 50 people

Public limited company (LTD)

Business listed on the share market, managed by directors and owned by shareholders (ownership is unlimited)

Example: Commonwealth Bank

Social enterprise

Business that aims to fulfil a community or environmental need.

Example: STREAT

GBE: Government business enterprise

Businesses who don't pay taxes and the profit is reinvested into business or given to the government

Business objectives

The goals a business intends to achieve

Profit

Total revenue earned minus total expenses incurred 

Revenue

Money a business earns from operating.

Market shares

Businesses percentage of total sales within a industry

To fulfil a market need

When a business fills a gap in the market, which involves addressing customer needs that are currently unmet  

To fulfil a social need

Improving society and the environment through business activities

Efficiency

how productive a business uses its resources while producing a goods or service, whereas effectiveness is about producing the desired results.

Financial year

Period of 12 months that is used by the government, businesses and other entities to calculator budgets and report profits and losses

Dividend

Regular sums of money paid out to shareholders from a businesses profit 

Stakeholders

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

Shareholders

those who have partial ownership of a company because they have bought stock in it

Are all shareholders stakeholders?

All shareholders are stakeholders, but not all stakeholders are shareholders.

Internal stakeholders

Individuals, groups or organisations who are employed by or have a financial share in the business

External stakeholders

Outside the business and are impacted by or interested in a businesses activities 

Stakeholders: owners

establishing positive relationships with other stakeholders

Stakeholders: managers

they want to be recognised for their achievement and having oppurtunities to increase their status.

Stakeholders: employees

long term security and fair pay and working conditions

Stakeholders: customers

receiving high quality good and services and a good price as well as receiving friendly and helpful customer service.

Autocratic management styles

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

Persuasive management style

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

Consultative management style

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

Participative management style

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

 Laissez-faire management style

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

Autocratic management style: pro and con

Pro: decisions are made very quickly

Con: creativity can be oppressed

Persuasive management style: pro and con

Pro: enhances employee creativity and motivation

Con: can slow down decision making process

Consultative management style: pro and con

Pro: higher employee engagement, stronger problem-solving

Con: can slow down decision making process

Participative management style: pro and con

Pro: more ideas are being shared therefore enhances creativity

Con: higher risk of internal conflict

Laissez-faire management style: pro and con

Pro: boosts job satisfaction and employee engagement

Con: lack of direction and guidance

Time available for task - management styles

Experience of employees - management styles

Nature of task - management styles

Manager preference - management styles

Planning - management skills

process of determining a business’ objectives and establishing strategies to achieve them

Operational planning

Involves the short-term actions a business takes on a daily basis

Tactical planning

Involves the long-term strategies a business intends to use

Strategic planning

Involves the broadest scope of what a business aims to achieve in the next two to five years

Decision making

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

Communication

effectively transferring information from one party to another

Delegation

assigning work tasks and authority to other employees

Interpersonal

creating personal interactions with other employees

Leadership

motivating others in order to achieve a business’ objectives

Corporate culture

shared values and beliefs of a business and its employees

Official corporate culture

involves the shares values that a business aims to achieve in a written format

Mission statement

written descriptions of a business’ objectives and its chosen approach to achieving them

Vision statement

written descriptions of the future that the business hopes to achieve

Real corporate culture

involves the shared values that develop within a business, and practiced on a daily basis by its employees

Human resource management

organization of employees roles, pay and working conditions

Maslow’s hierarchy of needs

motivation theory that suggests that people have five fundamental needs that they want to attain and acts as their source of motivation

What are in Maslow’s hierarchy of needs?

physiological needs - survival: water, food

safety - protection from danger

social needs - sense of belonging

esteem needs - desire to feel valued

self actualization - desire to reach their full potential through personal growth

Lawrence and Nohria’s four drive theory

motivational theory that suggests that people strive to balance four fundamental desires

What is in Lawrence and Nohria’s four drive theory

drive to acquire: to achieve rewards and high status

drive and bond: participate in social interactions and feel a sense of belonging

drive to learn: to gin knowledge, skills and experience

drive to defend: protect personal security as well as the values of the business

Locke and Latham’s goal setting theory

a motivation theory that states that employees are motivated by clearly defined goals that fulfill five key principals

Performance related pay

financial reward that employees get for reaching or exceeding a set business goal

Commission

payment provided to an employee for selling a good or service

Career advancement

upwards progression of an employees job position

Job enlargement

combining various duties within an existing role

Job enrichment

increase in the level of responsibility in an existing role

Investment in training

allocating resources to improve employee skills and knowledge

Sanction strategies

penalizing employees for poor performance or breaching business policies

short term employee motivation

boosts employee performance over a short period of time

long term employee motivation

high level of job satisfaction that acts as a source of motivation over a sustained period of time

On-the-job training

involves employees improving their knowledge and skills within the workplace.

Job shadowing

following and observing an experienced employee for a period of time to understand how they perform their role

off the job training

involves employees improving their knowledge and skills in a location external to the business

Management by objectives

involves both managers and employees collaboratively setting individual employee goals

Performance appraisals

involve a manager assessing the performance of an employee against a range of criteria, providing feedback, and establishing plans for future improvements.

Self evaluation

involves an employee assessing their individual performance against a set of criteria.

Employee observation

involves a range of employees from different levels of authority assessing another employee’s performance

Termination

is the process whereby a business ends its employment contract with an employee.

Retirement

involves an individual deciding to leave the workforce permanently

Entitlement

employees are entitled to any bonuses

Transition issues

CSR practices (things that businesses do that their not obligated to) 

• Allow employees to gradually transition into retirement (eg. gradually reduce work hours) 

• Provide advice or counselling (lifestyle and financial)

Resignation

Is where the employee voluntarily leaves the business

Exit interviews

can be conducted to determine the reasons for an employee's departure.

Redundancy

Occurs when an employee leaves the business because their job no longer exists

Dismissal

when an employee is terminated due to an unacceptable behavior or performance

Summary dismissal

when an employee commits a serious breach of their employee contract and can be dismissed on the spot

On-notice dismissal

when an employee is not performing satisfactorily they must be given notice and an opportunity to improve their performance

Employer associations

are advisory bodies that assist employers in understanding and upholding their legal business obligations.

Unions

organisations composed of individuals who represent and speak on behalf of employees

The Fair Work Commission (FWC)

Australia’s independent workplace relations tribunal that has a range of responsibilities outlined by the Fair Work Act.

• setting the national minimum wage

• regulations in a business

Awards

legal documents that outline the minimum wages and conditions of work for employees across an entire industry

National Employment Standards

the minimum entitlements an employer owes its employees, which are set out by the Fair Work Commission (FWC).

Agreements

legal documents that outline the wages and conditions of employees and are applicable to a particular business or group of businesses.

Mediation

involves an impartial third party facilitating discussions between disputing parties to help each side of the conflict reach a resolution themselves

• They don’t give their opinion/advice

• HR manager can take on the role of mediator

Arbitration

involves an independent third party hearing arguments from both disputing parties and making a legally binding decision to resolve the conflict.

• Fair work commission takes on the role of arbitration

Operations management

involves coordinating and organizing the activities involved in producing the goods or services that a business sells

Operations management requires oversight of a number of areas, including _______

• inventory management

• manufacturing

• quality

• maintenance

Efficiency

is how productively a business uses its resources when producing a good of service (allocation of resources)

Effectiveness

is the extent to which a business achieves its stated objectives (achievement of business objectives)

Inputs

the resources used by a business to produce goods and services

Examples of inputs

• labour resources

• raw material

• capital resources

Processes

are the actions performed by a business to transform inputs into outputs

Examples of processes

• mixing

• designing

• baking

• assembling