Business SAC 1 Revsion

Types of Businesses

1. Sole Traders

   • Owned and operated by a single individual.

   • Simple to set up and run; owner retains all profits.

   • Unlimited liability means personal assets are at risk.

2. Partnerships

   • Owned by two or more individuals.

   • Shared responsibility and profits.

   • Typically governed by a partnership agreement.

   • Can have unlimited or limited liability depending on the partnership type.

3. Private Limited Companies (Ltd)

   • Owned by private shareholders, with shares not available to the general public.

   • Limited liability protects personal assets.

   • Profits are reinvested or distributed as dividends.

4. Public Listed Companies (PLC)

   • Shares are sold to the public on a stock exchange.

   • Must comply with strict regulatory requirements.

   • Has limited liability; shareholders are not personally liable for debts.

   • Aims to maximize shareholder value.

5. Social Enterprises

   • Focus on social objectives rather than profit maximization.

   • Any profits generated are reinvested into the community or social causes.

   • Can operate as non-profits but may also have income-generating activities.

6. Government Business Enterprises (GBE)

   • Owned by the government, providing services to the public.

   • Operates similarly to a corporation but serves a public purpose.

   • May be partially funded by public taxes but aims for efficiency like a business.

Business Objectives

1. To Make a Profit

   • Essential for sustainability and growth of the business.

2. To Increase Market Share

   • Gaining a larger percentage of the market can lead to greater economies of scale and competitive advantage.

3. To Fulfil a Market and/or Social Need

   • Aims to address specific problems in the community or market gaps, contributing to social welfare.

4. To Meet Shareholder Expectations

   • Ensuring that the interests and financial returns expected by shareholders are satisfied.

Stakeholder Characteristics

1. Interests

   • Different stakeholders (e.g., employees, customers, suppliers, investors) have varying interests such as profit, sustainability, work conditions, or product quality.

2. Potential Conflicts

   • Conflicts may arise when the interests of different stakeholders clash, such as when cost-cutting measures affect employees.

3. Corporate Social Responsibility (CSR)

   • Businesses are increasingly considering CSR in their decision-making, balancing profit-making with ethical practices and social welfare.

Management Responsibility Areas

1. Operations

   • Manages day-to-day activities; efficiency contributes to profitability.

2. Finance

   • Controls the company’s financial health; objective is to manage assets and liabilities effectively.

3. Human Resources

   • Focuses on staffing, training, and employee relations; impacts productivity and morale.

4. Sales and Marketing

   • Responsible for market presence and revenue generation; aims to attract and retain customers.

5. Technology Support

   • Ensures technological tools are efficient and effective; aids in improving processes and communication.

Management Styles

1. Autocratic

   • Manager makes decisions unilaterally; effective in crises.

2. Persuasive

   • Manager convinces employees of a decision; improves acceptance.

3. Consultative

   • Manager seeks input but ultimately makes the decision; fosters employee engagement.

4. Participative

   • Employees are involved in decision-making; promotes creativity and ownership.

5. Laissez-faire

   • Hands-off approach; suitable for experienced teams needing autonomy.

Appropriateness of Management Styles

• Depends on task nature, time constraints, employee experience, and manager preference.

Management Skills

1. Communicating

   • Clear messaging critical for effective leadership and team operations.

2. Delegating

   • Empowering others to enhance productivity and build trust.

3. Planning

   • Setting objectives and outlining steps to achieve them.

4. Leading

   • Guiding teams toward achieving goals.

5. Decision-Making

   • Evaluating options and reaching conclusions effectively.

6. Interpersonal Skills

   • Relating to others effectively is key for teamwork and collaboration.

Management Styles and Skills Relationship

• Different management styles require different skills; for instance, consultative styles need strong communication skills, while autocratic styles may rely more on decision-making authority.

Corporate Culture

1. Official Culture

   • Expressed through policies and procedures; sets expectations.

2. Real Culture

   • How things actually operate within the business; can differ from official culture.

3. Strategies for Development

   • Leadership involvement, employee involvement in culture-setting, continuous evaluation, and alignment with business objectives.

Management Styles with Strengths, Weaknesses, and Appropriate Situations

1. Autocratic

• Strengths:

  • Quick decision-making; useful in crises.

  • Clear direction and expectations.

• Weaknesses:

  • May lead to low employee morale and resentment.

  • Lack of input from team can result in poor decisions.

• Appropriate for:

  • Crisis situations or when quick, decisive actions are necessary.

2. Persuasive

• Strengths:

  • Employees may accept decisions better when they understand the reasoning behind them.

  • Balances leadership control with some employee input.

• Weaknesses:

  • Can still limit employee engagement due to managerial control.

  • Time-consuming to convince everyone.

• Appropriate for:

  • Situations where buy-in is necessary but decisions need to be made relatively quickly.

3. Consultative

• Strengths:

  • Encourages employee engagement and diverse viewpoints.

  • Can lead to better decision-making with team input.

• Weaknesses:

  • May slow down decision-making due to consultations.

  • Can create confusion if not managed well.

• Appropriate for:

  • Situations where team consensus is valuable but time constraints exist.

4. Participative

• Strengths:

  • Fosters creativity and ownership among employees.

  • Higher employee morale and satisfaction.

• Weaknesses:

  • Time-consuming decision-making process.

  • Potential for conflicts and disagreements.

• Appropriate for:

  • Projects that benefit from team collaboration and diverse ideas.

5. Laissez-faire

• Strengths:

  • Empowers skilled employees; fosters creativity and initiative.

  • Low management overhead; employees have freedom to innovate.

• Weaknesses:

  • Can lead to lack of direction and coherence if employees are inexperienced.

  • Potential for underperformance without sufficient oversight.

• Appropriate for:

  • Highly skilled teams working on creative or specialized projects, where autonomy is crucial.