Business U3 AOS 1 REVISION

Types of businesses (7)

1-       Sole trader

2-       Partnership

3-       Private limited company (pty ltd)

4-       Public listed company

5-       Social enterprise

6-       Government enterprise (GBE)

Business

Lawful, commercial activities o earn profit & is an entity involved in the provision of goods/services to consumers

Sole traders

A business owned & operated by one person, who is responsible for all aspects of the business, both financially and legally.

-              Unlimited liability

-              Simple to set up & operate

-              Full control over decisions

-              Owners keep all profits after taxes

-              Difficult to take time off

-              Personal assets can be seized if debts are unpaid.

Partnerships:

A business structure that involves 2-20 individuals who own a business together

-              Unlimited liability

-              Inexpensive to set-up

-              Each partner can contribute funds

-              Partners. Bring different skills, ideas, experiences, and abilities

-              Shared workload

-              Possible disagreements

Private limited company pty ltd (Propriety Limited)

An incorporation business that is owned by shareholders & not listed on the stock extrange. Ownership is divided into equal parts called shares.

-              Limited liability

-              Limited to 50 shareholders

-              Operations controlled by directors & owned by shareholders

-              Requirements to enclose information & publish reports on what is happening in the company

Incorporated:

Has its own legal identity & can sue/own assets in its own right.

Public listed company

An incorporated business that is owned by shareholders, run by directors and is listed on the stock exchange, available to the general public.

-              limited liability

-              listed on Aus stock extrange ASX

-              50+ shareholders

-              Required to produced yearly report of finances.

Social enterprise

A profit-making business with social objectives, with surpluses that are reinvested towards that social objective, created with the intention of tackling social problems.

-              Led by an economic, social, cultural or environmental mission consistent with public/community benefits.

-              Can be difficult to balance both social & economical aims

Government enterprise GBE

A business owned by the government, but aims to act under general business principles & make a profit.

-              Corporatised

-              The general public cannot buy shares

-              Carries out governmental policies & provides services to the public in areas other companies might not want to invest

-              Less accountability for staff and management.

Business objectives (3)

1-       Making a profit

2-       Increase market share

3-       Improve efficiency

Making a profit

The surplus remaining after total costs are deducted from total revenue.

Increased market share

The proportion of that industry sales you control. A sign of competitive advantage.

Business percentage of total sales within an industry.

Competitive advantage – companies reputation – awareness

Improving efficiency

How well a business uses resources to achieve objectives/goals

-              Raw material

-              Labour

-              Time

-              Machinery

-              Minimal waste

• Productivity

The ratio of outputs produced compared to inputs required.

Increased productivity = increased production = more sales = reduced costs unit

Stakeholder

An individual/group that has a vested interest in the actions of the business

Stakeholders (6)

-              Owners

-              Managers

-              Employees

-              Customers

-              General community

-              Suppliers

Management styles (5)

1-       Autocratic management

2-       Persuasive management

3-       Consultant management

4-       Participation management

5-       Laissez-faire management

Autocratic management

-              Leader dictates what  the objectives are & how they should be achieved

-              Manager decision making & control

-              One way communication

-              Time is used efficiently

-              No discussion/consultation

Persuasive management

-              Leader dictates what the objective are & PERSUADES employees as to how they should be achieved

-              Manager decision making & control

-              Time used efficiently

-              One way communication

-              Maintains better employee morale then autocratic

-              Employees may not feel considered/valued/empowered

Consultive management

-              Leaders ask employees for their opinions before making a decision

-              Manager decision making

-              Two-way communication

-              Asking for suggestions broadens/enhances idea pool

-              Seeking employee input boosts satisfaction/motivation

-              Time is taken to consult, slows down decision making

-              Some employee suggestion smay be ignored = resentment

Participative management

-              Leader shares decision making with their team to create consensus decisions

-              Decisions made by a group

-              Two way communication

-              Recognised skills, abilities of employees/empower decisions

-              Optimal final decision

-              Time consuming

-              Can cause conflict if suggestions are disregarded.

Laissez-faire management

-              Employees are responsible for the decision making & operations of the business

-              Manager has no central role, but can set objectives & has ultimate accountability

-              Decisions made by employees

-              Two-way communication

-              Trusting/empowering employees = freedom/responsibility

-              Creative/high degree of individuality

-              Can lead to misdirection/ staff conflicts

Deciding Appropriate Management Styles (4)

1-       Nature of task

2-       Time

3-       Experience of the employer

4-       Preference of manager

Nature of task

Straightforward/important/vital = management

Creative/benefits from ideas = laissez-faire

Time

Critical/deadline management

Extended = participative style

 

Experience of employees

Inexperience= autocratic

Experienced/ knowledgeable = laissez-faire

Preference of management

In the absence of all other variables, managers commonly revert to management styles that match their personal beliefs, skills and values.

Management skills (6)

1-       Communication

2-       Delegation

3-       Planning

4-       Leadership

5-       Decision making

6-       Interpersonal

Communication skills

Transfer information from sender to receiver

-              Verbal/nonverbal

-              Takes place between the owner/manager/employees/supplier

Delegation skills

Transfer of authority & responsibility from a manager to an employee to carry out specific activities although the manager remains accountable for the work

NOTE: not all mangers are good at delegation, this maybe because of inseuirty/fear/threat/lack of trust/faith in others

Planning skills

Process of thinking about the strategies & tasks required to best achieve a business objective

-              Strategic, tactical, operational

-              SOSAIM

Set

Objectives

SWOT

Alternative

Implements

Monitor

Leadership skills

Guiding the business and employees towards achieving business objectives

-              Establishing a clear vision

-              Sharing vision with others

-              Coordinating and balancing conflicting stakeholder interests

Decision-making skills

Process of purposely choosing a course of action from a set of alternatives to achieve business objectives

-              Analysing facts

-              Pros/cons

-              Act/feel

-              Planning process

Interpersonal skills

Skills used by a person to interact with others properly.

Employees’ ability to build positive relationships with others while getting the job done.

Corporate culture

The shared values, beliefs & practices of a business group. Determined from things like employee dress & behaviour to company policies and procedures and taught to new comers as the ‘correct’ way of thinking, feeling & doing

 

Corporate culture is determined by:

-              Employee dress/behaviour

-              Employee language/communication/treatment of one another/customers

-              Slogans/logo

-              Rituals & how they celebrate events

-              Polices, procedures & heroes

Official culture/surface culture (observable)

Values & beliefs that a company is trying to convey to the public.

Usually observed in mission statements, logos, slogans and symbols.

Real culture/deeper culture (non-observable)

The ACTUAL values & beliefs present in a company, observable via dress, behaviour & the way employees/managers relate to each other.

Developing a corporate culture

Employ strategies to achieve their corporate culture, due to it being a crucial determinant of efficiency, effectiveness and, therefore, productivity.

Modern changes to corporate culture

Many businesses are moving away from traditional hierarchical structure in an attempt to become more dynamic & responsive to change.

• greater employee involvement in decisions

• decentralisation of power

• improved communication, flow & transparency

• less status distinction

• adopting consultive & participative management styles

• the values represented in corporate culture eg) caring, sharing

Forms of communication (3)

1- Personal communication

2- internal organisational communication

3- external operational communication

personal communication

sharing information/ understanding between the manager and the work team.

It is extremely important that they are effective in their interpersonal communication.

Clear and directional

internal organisational communication

where systems are used to inform and share information with employees (internal stakeholders) of the business.

eg) Policy and procedure manuals are used to inform employees about the way that the business conducts itself.

external operational communication

occurs when managers need to communicate with stakeholders external to the business.

involves transmitting information to customers, suppliers, investors, shareholders, and the community.

Means of communication

• reading - data, reports, emails, documents, contracts etc

• writing - ideas, information, emails, manuals

• speaking - disseminate info, gain feedback, listening

Planning - SWOT analysis

management tool used to determine the current state of a business.

Identifying the current internal strengths and weaknesses of the business, together with the opportunities and threats from its external environment

Planning levels (3)

1- strategic

2- tactical

3- operational

Strategic planning

is the formal, long-term (2-5y) planning process that establishes the overall direction of the business.

undertaken by the owner of a small business or the senior management team of a larger company.

will impact on the type of structure the business adopts, and its values, business philosophies, strategic direction and objectives.

Tactical planning

Taformal, medium-term (1-2y) planning undertaken by middle management to implement the strategic plan of the business.

This level of planning occurs within each department or functional area of a business and its aim is to bring the objectives of the business into reality.

Operational planning

lowest level of planning and relates to setting goals and creating and implementing plans for small groups, teams or individual employees of a business.

It involves the planning of operations on a daily, monthly or up to one-year basis by front-line managers or supervisors within the business.

plans to achieve goals: efficiency, reducing mistakes and reorganising or improving the work processes of people within their work team.

relating to activities such as staffing rosters, ordering of supplies and production output schedules.