BUSINESS MANAGEMENT

BUSINESS TYPES:

SOLE TRADERS –business owned and operated by one individual
Full decision-making power, low risk of disputes as there is only one owner making decision Unlimited liability- legally responsible for all aspects of the business, including debs, knowledge and skills limited to owner (may not have appropriate expertise), life of business ends
easy to register and set up, owners do not need to be consulted when making decisions so its quick may be difficult to take time off for holidays or when sick least expensive type, owner retains all profit difficult to raise money to expand business due to owners personal savings
PARTNERSHIPS – business structure owned by two to 20 owners
greater range of expertise and ideas amongst numerous partners, financial and legal risks are shared unlimited liability means partners personal assets are at risk as they can be seized to pay off debts, conflict could arise due to shared decision making owners can share the workload, easy and simple to register and set up, fewer reporting requirements and minimal government regulation if one partner leaves it could be time-consuming to restructure the partnership greater access to finances as there are more involved, minimal start up costs profit needs to be shared between the partners, liability for debts incurred by other partner is held by all of the partners
PRIVATE LIMITED COMPANIES –incorporated business, at least 1 director, shares not sold to public, can have up to 50 selected shareholders (e.g. Cotton On Group)
there is limited liability for shareholders, greater variety of expertise and ideas, business existence is not threatened by the removal of one director complex reporting requirements (annual reports need to be published for shareholders), it is difficult to change structure once a company has been established. It is complex to establish (set up requires more time), increased reporting requirements and government regulations since incorporated businesses have greater access to capital, banks are more inclined to provide them with loans it is expensive to set up and operate as there are high seti up and ongoing administration costs
PUBLIC LISTED COMPANIES – incorporated business, minimum 1 shareholder 3 directors, listed on the ASX – shares sold to public.
 Social enterprise is a type of business that aims to fulfil a community or environmental need by selling goods or services – not considered legal business, various forms (sole trader etc), make profit still b.o, earns most revenue through sales rather than donations
the community benefits from the businesses activities, the business can develop a positive rep. as they’re contributing to society. Employees have purposeful work so they are more likely to be satisfied with their job. Likely to receive financial support from other businesses and te government as they have a positive social mission difficult to balance the achievement of financial objectives with social objectives, may be difficult to obtain a bank loan as the business does not solely focus on financial objectives
GOVERNMENT BUSINESS ENTERPRISES – owned by the government, but managed separately and run as a profit organisation. (e.g. Auspost)Shareholders: specifically selected and approved by the board of directors. Shares can only be sold to people approved by the business expect a return on their original investment by receiving dividends (portion of profits) and share values to increase over time. have private ownership and limited liability over the business’s debts. company’s profits are subject to company tax
delivers goods and services that help the community and the communitys needs, provides healthy competition to the private sector, can operate with some independence from the gov, provide services that the private sector would hesitate to invest in government and politicians can interfere and change the strategic direction of the business. Have to follow significant ‘red tape’ which refers to excessive rules and formalities compromising how quickly they can do things. Productivity may be lower than private-sector businesses as there tends to be a lack of accountability in the public sector. Can rely on the government for the initial investment.

BUSINESS OBJECTIVES

To make a profit - Profit is what is left after business expenses have been deducted from money earned from sales (revenue).
 A major indicator of a business’s success is the size of its profit, so many businesses want to maximise their profit. Profits can be reinvested into the business or distributed to shareholders.  Profit = Revenue – Expenses.
To increase market share - Market share is a business’s proportion of total sales in an industry. Reflection of how competitive they are amongst competitors.
Strategies to increase market share, include:
- use new technology to increase the efficiency of production
- increasing customer loyalty to encourage repeat sales from customers
- hiring skilled employees that produce goods and services of desired quality
- implementing advertising which attracts more customers and sales
- offering lower prices to generate more sales. increase sales and attract more customers (through word-of-mouth recs).  they may receive discounted prices from suppliers.
To improve efficiency - Efficiency is how productively a business uses its resources when producing a good or service.
Process focused. maximising the use of their time, money, effort, employees, and materials.. production costs can be minimised, levels of waste may decline, and the time taken to produce goods or services can be reduced.
To improve effectiveness - Effectiveness is the extent to which a business achieves its stated objectives
must continuously set targets to achieve. it focuses on the end result on whether an objective has been met. putting in place strategies that directly impact those objectives, improving performance in the process, and reviewing key performance indicators to assess whether objectives have been achieved
To fulfil a market need - improving society and the environment through business activities. a business may exist to meet customer expectations or provide a good or service that is not otherwise available to a market. including objectives related to the function of the product as well as quality, price and convenience
To fulfil a social need This objective involves the production and/or selling of goods and services for the purpose of making the world a better place. A business may focus on addressing social/environmental issues. A business with such a focus may generate an income, but its primary purpose is the common good, including 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 - Making strong profits is the primary objective of many businesses, and particularly important for shareholders. Shareholders expect to make a return on their investment. They expect the business that they have invested in to make a profit as they receive a proportion of the profits (called dividends). They also make a capital gain if the value of a company’s shares increases.

Internal business stakeholders
Owners - The owners who manage or operate the business on a day-to-day basis, and depend on the success of the business for their income or wealth. Owners have a very vested interest in the business - ability to make a profit. performance and conduct of the business can affect the reputation of the owner. failure of a small business might leave a sole trader or partner in debt.
Shareholders - purchase shares in a company, so they are partial owners of businesses. They also make a capital gain if the value of a business’s shares increases.
Management -  expect to be fairly remunerated, including through a salary and other benefits. socially responsible activities should lead to increased sales. introducing new socially responsible policies and procedures can be expensive and time consuming. Management could introduce new technology to reduce waste and improve productivity, so that the business remains competitive, helping to boost sales and profit - could mean that employees lose their jobs. Management could offer employees higher wages and better working conditions, but they may be forced to raise the price of products to cover this cost, leading to a fall in sales.
Managers are those who have the responsibility of running different areas of a business and ensure that the business achieves it objectives.
Directors - directors of a company are the people who have overall responsibility for managing the company’s business activities. Small companies must have at least one director. Larger companies may have many directors who are collectively known as the ‘board of directors’. The board’s role is to develop and oversee the strategic direction of the company.

Employees - Employees expect to earn fair pay and have good working conditions and ongoing employment. should be valued as members of the business by being paid fairly, trained properly, and treated ethically. need to know that their job is secure in the long term. If businesses can provide for their needs, employees will be more inclined to put effort into work tasks and will be motivated to meet customer expectations
Employees are individuals who are hired by a business to complete work tasks and support the achievement of its objectives.

External business stakeholders
Customers - buys good and services from businesses and expect to purchase quality products at reasonable prices with high levels of service. more aware of socially responsible businesses and this is one of the factors they consider when making purchasing decisions. A business needs to be aware of changes in customer preferences and tastes, and respond to these so that it can continue to satisfy their needs
Suppliers - essential for the business to develop good relationships with suppliers to ensure the timely delivery of quality resources. In return, suppliers expect to be paid promptly and in full. Most businesses will have a number of suppliers to ensure a constant supply of resources and expect their suppliers to behave in a socially responsible manner
Suppliers provide resources to a business that will be used in its production process. Resources can include raw materials, equipment, machinery, finance and information
General community - the general community is the individuals and groups who are impacted by a business’s operations and decisions, often because they are located in close proximity to the business.

Corporate culture and its development Corporate culture —is the shared values and beliefs of a business and its employees. It is determined by the behaviour of individuals within a business, as well as the business’s intentions when making decisions. Corporate culture can be a strong determinant of a business’s ability to achieve its objectives, since a positive corporate culture can lead to more motivated employees, and the widespread expectation of high standards, leading to improved performance overall. Conversely, a negative corporate culture and acceptance of low standards can negatively impact the achievement of objectives. A business’s overall corporate culture consists of both official and real elements that reflect different aspects of the business, its operations, and the actions of its employees Official corporate culture Official corporate culture involves the shared views and values that a business aims to achieve, often outlined in a written format. These can include formal documents such as a business’s mission statements, vision statements, and policies. Real corporate culture Real corporate culture involves the shared values and beliefs that develop organically within a business and practised daily by its employees.

MANAGEMENT SKILLS:

1. Communication Communicating is the skill of creating and exchanging information between people that produces the required response. It can be non-verbal (body language, visual) or through the use of words (verbal — in written form or orally). Effective managers use communication to:  explain a vision, outline possible changes, or let staff know what is expected of them.  answer questions from staff, or listen to feedback.  use communication to resolve conflict • form positive relationships

2. Delegating Delegating is the skill of passing of authority down the hierarchy to perform tasks or make decisions, with responsibility remaining with person delegating Strengths:  manage time effectively and enable staff to learn new skills.  lead to fresh ideas and an improvement in employee motivation.  build trust and a feeling of mutual understanding between the subordinate employee and manager. Weaknesses  risk of the delegated assignment not being completed adequately.  employee may misuse their new power.

3. Planning Planning is the process of determining a business’s objectives and establishing strategies to achieve these aims. A manager must outline the goals of the business before strategies can be implemented to achieve them. The process of planning can improve a business’s level of organisation, and therefore help it to achieve its objectives as efficiently as possible. Failing to develop a plan when approaching business decisions may render them unsuccessful, and consequently, the business may fail to meet its objectives. There are 3 levels of planning: Strategic planning – long term plan by senior management Tactical planning- medium term plan by middle management Operational planning- day to day planning by front-line management Five stages of planning 1. Set goals 2. Analyse present situation and future opportunities (e.g. using SWOT) 3. Develop and evaluate alternatives 4. Implement plan 5. Monitor and review result

4. Leadership Leadership is the ability of a manager to positively influence and motivate employees towards achieving business objectives. Effective leadership is vital to business success, as it results in motivated employees and high staff morale, which in turn leads to high productivity and the attainment of business objectives. Effective leaders model good practice, praise good performance, listen to what employees say and welcome new ideas, remain calm in the face of conflict and stressful situations, and delegate tasks so that work and responsibilities are shared with employees who have the capacity to handle them.

5. Decision making Decision-making is the skill of selecting a suitable course of action from a range of plausible options. Managers play a central role in a business’s decision-making process. 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. Decision-making can be centralised, and therefore is the responsibility of management, or decentralised, which means that decision-making responsibility is shared between managers and employees. To ensure they are making informed decisions, a manager should consider the environment in which the business operates, evaluate the advantages and disadvantages of all options available, and determine the most appropriate alternative that aligns with the business’s objectives.

6. Interpersonal skills Interpersonal skills refer to skills used everyday to communicate and interact with people, both individually and in groups. This skill is very important because it is through other people that managers achieve business objectives. A manager using interpersonal skills is sensitive to their needs, not threatening. Interpersonal skills can be used to inspire and influence staff while overcoming conflict, creating a positive workplace.

MANAGEMENT STYLES:

Autocratic management style
An autocratic management style involves a manager making decisions and directing employees without any input from them. Characteristics: 1. Manager makes the decisions 2. Centralised control (i.e management has control) 3. No employee input 4. Communication is one-way, top-down Effective in: 1. time of crisis (e.g. speed is important) 2. individuals lack skills and knowledge. (e.g. new young staff)

Persuasive management style involves a manager making decisions and communicating the reasons for those decisions to employees without their input. The persuasive style is often appropriate in similar conditions to those suiting the autocratic style. However, by communicating the benefits and reasoning for a business decision in a oneway, top-down manner, the manager can establish trust and credibility among employees because employees feel considered. Characteristics 1. Manager makes the decision and attempts to convince employees that the decisions are right. 2. Authority and control are centralised with senior management, 3. Communication is one-way, and workers are not given the opportunity to share ideas or provide feedback

Consultative management style A consultative management style involves a manager seeking input from employees on business decisions but making the final decision themselves. The manager actively considers employee feedback, ideas, and opinions, which leads to employees feeling valued. However, consultative managers maintain centralised control as they have full authority over the final business decisions. Characteristics: 1. good staff relationships, with staff input for decisions 2. two-way communication process (employees shares and manager listens). 3. the final decision remains with the manager

Participative management style A participative management style involves a manager sharing information with employees so that employees can participate in decision-making. Characteristics: Management ‘JOINS’ staff to make decisions Joint decision-making responsibility between staff and management Staff participation- high level of motivation

Laissez-faire management style A laissez-faire management style involves a manager communicating business objectives to employees and giving them freedom to make decisions independently. Management control is decentralised but the manager can provide additional support when required. A laissez-faire management style empowers employees to have a high level of responsibility and take ownership of business tasks and decisions. Characteristics: Management ‘EMPOWERS’ staff by giving control of decision-making to them Staff is responsible for all decisions. Staff participation- all input from staff. two way communication