Business Ownership and Legal Structures

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Questions and Answers

What is the main difference between a sole trader and a partnership?

The location of the business

The type of products or services they offer

The number of owners involved in the business (correct)

The number of employees they can hire

What is a characteristic of a private limited company?

It is owned by the government

It has an unlimited number of shareholders

Its shares are not available to the public and are limited to a maximum number of shareholders (correct)

Its shares are traded publicly on the stock exchange

What is the primary objective of a social enterprise?

To increase market share

To pursue social and/or environmental goals (correct)

To maximize profits for shareholders

To fulfill a government contract

What does the 'M' in SMART stand for in setting business objectives?

Measurable Signup and view all the answers

What is the purpose of a mission statement?

To define the purpose and primary objectives of the business Signup and view all the answers

What is a common objective of a private sector business?

To make a profit Signup and view all the answers

What is a characteristic of a government business enterprise?

It is owned by the government and operates using a corporate model Signup and view all the answers

What is the main difference between a public sector business and a private sector business?

The ownership structure of the business Signup and view all the answers

What is the primary purpose of a values statement in a business?

To reflect the company's shared values and cultural priorities Signup and view all the answers

Why is it important to regularly revisit business objectives?

To ensure they remain relevant and aligned with current market conditions Signup and view all the answers

Who are stakeholders in a business?

Owners, managers, employees, customers, suppliers, and the general community Signup and view all the answers

What can arise due to differing interests between stakeholders?

Conflicts between stakeholders Signup and view all the answers

How can businesses address the concerns of stakeholders regarding ethical and socially responsible operations?

By engaging in transparent communication and implementing ethical practices Signup and view all the answers

What is the characteristic of an autocratic management style?

Centralized decision-making with little input from employees Signup and view all the answers

What does the contingency approach assess in determining the appropriate management style?

The task's nature, time frame, and organizational culture Signup and view all the answers

What is the characteristic of a laissez-faire management style?

Minimal managerial control, employees have high autonomy Signup and view all the answers

Study Notes

Types of Businesses and Legal Structures

Types of business ownership and legal structures: sole traders, partnerships, private limited companies, public listed companies, social enterprises, and government business enterprises
Sole trader: owned and operated by one individual
Partnership: involves two or more individuals who share ownership and responsibilities
Private limited companies: shares are not available to the public, limited to a maximum number of shareholders
Public listed companies: shares are traded publicly on the stock exchange
Social enterprises: pursue social and/or environmental goals
Government business enterprises: government-owned entities operating using a corporate model to achieve commercial objectives

Business Objectives

Common business objectives: make a profit, increase market share, improve efficiency, fulfill a market need, fulfill a social need, and meet shareholder expectations
SMART principle in setting business objectives: Specific, Measurable, Achievable, Relevant, and Time-bound
Vision statements: outline long-term aspirations of the business
Mission statements: define the purpose and primary objectives of the business
Values statement: reflects the business's shared values and cultural priorities, guiding behavior and decision-making
Importance of revisiting business objectives regularly: ensure relevance and alignment with current market conditions and internal capabilities

Stakeholders

Stakeholders in a business: owners, managers, employees, customers, suppliers, and the general community
Potential conflicts between stakeholders: differing interests, such as profit maximization vs. job security, cost reduction vs. quality, and environmental impact vs. operational efficiency
Addressing stakeholder concerns: transparent communication, ethical practices, community and environmental initiatives, and fair treatment of all stakeholders

Management Styles

Autocratic: centralized decision-making with little input from employees
Persuasive: manager makes decisions and persuades employees to accept them
Consultative: manager consults employees before making decisions
Participative: employees are actively involved in decision-making
Laissez-faire: minimal managerial control, employees have high autonomy
Contingency or situational management approach: assesses variables such as task nature, time frame, and employee skills to determine the appropriate management style

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Description

Explore the different types of business ownership and legal structures, including sole traders, partnerships, and companies. Learn how they differ and what defines each type.