Podcast
Questions and Answers
Which of the following characteristics is NOT associated with a private limited company?
Which of the following characteristics is NOT associated with a private limited company?
- Shareholders have limited liability.
- The company can access finance by selling shares to investors.
- Shares are traded on the Australian Securities Exchange (ASX). (correct)
- The company name includes 'PTY LTD'.
A private limited company ceases to exist when its original director resigns or retires.
A private limited company ceases to exist when its original director resigns or retires.
False (B)
What is the primary advantage of the 'limited liability' feature for shareholders in a private limited company?
What is the primary advantage of the 'limited liability' feature for shareholders in a private limited company?
Shareholders are only liable up to the amount of their original investment.
Private limited companies face increased administrative burdens due to greater ______ requirements to ASIC.
Private limited companies face increased administrative burdens due to greater ______ requirements to ASIC.
Match the following terms related to private limited companies with their descriptions:
Match the following terms related to private limited companies with their descriptions:
Which of the following business structures has the disadvantage of unlimited liability, putting the owner's personal assets at risk?
Which of the following business structures has the disadvantage of unlimited liability, putting the owner's personal assets at risk?
A sole trader is required to register with ASIC only if their business name is different from their own name.
A sole trader is required to register with ASIC only if their business name is different from their own name.
What is a key legal document recommended for partnerships to avoid conflicts and outline responsibilities?
What is a key legal document recommended for partnerships to avoid conflicts and outline responsibilities?
In a partnership, a partner who invests money but does not participate in day-to-day operations is known as a ______ partner.
In a partnership, a partner who invests money but does not participate in day-to-day operations is known as a ______ partner.
Match the following business structures with their characteristics:
Match the following business structures with their characteristics:
Which of the following is a key difference between a sole trader and a partnership?
Which of the following is a key difference between a sole trader and a partnership?
Partners in a partnership are only liable for their own actions within the business, not the actions of other partners.
Partners in a partnership are only liable for their own actions within the business, not the actions of other partners.
What is a significant advantage of forming a partnership compared to operating as a sole trader?
What is a significant advantage of forming a partnership compared to operating as a sole trader?
Which stakeholder group is MOST likely to prioritize the long-term financial stability and growth of a business to increase the value of their investment?
Which stakeholder group is MOST likely to prioritize the long-term financial stability and growth of a business to increase the value of their investment?
A business donating to local clubs is an example of a positive effect on the general community.
A business donating to local clubs is an example of a positive effect on the general community.
Which of the following best describes the primary conflict between employees and shareholders in a business?
Which of the following best describes the primary conflict between employees and shareholders in a business?
What is the primary expectation of customers in relation to the goods/services they purchase from a business?
What is the primary expectation of customers in relation to the goods/services they purchase from a business?
In an autocratic management style, communication is typically two-way, with open dialogue between managers and employees.
In an autocratic management style, communication is typically two-way, with open dialogue between managers and employees.
The ______ is an organization that represents the interests of employees.
The ______ is an organization that represents the interests of employees.
List three factors that influence the management style a manager may adopt.
List three factors that influence the management style a manager may adopt.
Match the following stakeholders with their primary interest in the business:
Match the following stakeholders with their primary interest in the business:
In a task-centered management style, the manager primarily focuses on the _______ needing to be performed.
In a task-centered management style, the manager primarily focuses on the _______ needing to be performed.
Which negative effect is a business MOST likely to have on the general community?
Which negative effect is a business MOST likely to have on the general community?
Match the management style with its description:
Match the management style with its description:
Managers are primarily interested in maximizing the profits distributed to the owners of the business.
Managers are primarily interested in maximizing the profits distributed to the owners of the business.
What is the '80:20 effect' in the context of customer relations?
What is the '80:20 effect' in the context of customer relations?
What is a potential negative outcome of using an autocratic management style?
What is a potential negative outcome of using an autocratic management style?
Which situation BEST exemplifies a potential conflict of interest between owners and employees?
Which situation BEST exemplifies a potential conflict of interest between owners and employees?
Managers want to keep _______ down to improve profits, however suppliers want higher prices to cover costs.
Managers want to keep _______ down to improve profits, however suppliers want higher prices to cover costs.
Suppliers are strongly invested in the success of business from a ______ and associated reputation position.
Suppliers are strongly invested in the success of business from a ______ and associated reputation position.
What best describes the main interest of managers relating to the success of a business?
What best describes the main interest of managers relating to the success of a business?
Which of the following is a primary advantage of a public listed company compared to a private limited company?
Which of the following is a primary advantage of a public listed company compared to a private limited company?
Which of the following strategies would NOT directly contribute to increasing a business's profits?
Which of the following strategies would NOT directly contribute to increasing a business's profits?
A social enterprise's primary objective is to maximize profit for shareholders, similar to traditional for-profit businesses.
A social enterprise's primary objective is to maximize profit for shareholders, similar to traditional for-profit businesses.
What is the purpose of 'LTD' after a company name?
What is the purpose of 'LTD' after a company name?
A business with a smaller market share is unable to compete with businesses that compete on a national scale.
A business with a smaller market share is unable to compete with businesses that compete on a national scale.
An increase in the value of a share is known as capital ______.
An increase in the value of a share is known as capital ______.
Define 'efficiency' in the context of business operations.
Define 'efficiency' in the context of business operations.
The degree to which a business achieves its stated objectives is known as ______.
The degree to which a business achieves its stated objectives is known as ______.
Match the following business types with their defining characteristics:
Match the following business types with their defining characteristics:
Which of the following is NOT a typical feature of a public listed company?
Which of the following is NOT a typical feature of a public listed company?
Match the following business objectives with their descriptions:
Match the following business objectives with their descriptions:
Social enterprises primarily rely on donations and government funding for their financial sustainability.
Social enterprises primarily rely on donations and government funding for their financial sustainability.
Which of the following best describes a 'social enterprise'?
Which of the following best describes a 'social enterprise'?
What is the main role of a board of directors in a public listed company?
What is the main role of a board of directors in a public listed company?
Shareholders are only interested in receiving dividends from a company's profits.
Shareholders are only interested in receiving dividends from a company's profits.
Why is it important for a business to meet shareholder expectations?
Why is it important for a business to meet shareholder expectations?
Payments made regularly to investors based on their share ownership in a public listed company are called ______.
Payments made regularly to investors based on their share ownership in a public listed company are called ______.
A ______ is an individual or group that has a vested interest in the actions of a business.
A ______ is an individual or group that has a vested interest in the actions of a business.
What is a primary limitation of Social Enterprises?
What is a primary limitation of Social Enterprises?
Which stakeholder group is typically MOST concerned with job security and career development opportunities?
Which stakeholder group is typically MOST concerned with job security and career development opportunities?
Government Business Enterprises (GBEs) always outperform private sector businesses in terms of efficiency and productivity because of government backing.
Government Business Enterprises (GBEs) always outperform private sector businesses in terms of efficiency and productivity because of government backing.
What is the definition of a business objective?
What is the definition of a business objective?
Managers and owners always have the same interests and motivations within a business.
Managers and owners always have the same interests and motivations within a business.
What is 'ROI' and why is it important to business owners?
What is 'ROI' and why is it important to business owners?
A statement that outlines the future aspirations and values of a business is known as a ______ statement.
A statement that outlines the future aspirations and values of a business is known as a ______ statement.
Unlike owners who invest in a business, ______ are employed to run the business on a day-to-day level.
Unlike owners who invest in a business, ______ are employed to run the business on a day-to-day level.
Which of the following is a potential limitation of GBEs?
Which of the following is a potential limitation of GBEs?
Which statement best describes the relationship between a mission statement and a business objective?
Which statement best describes the relationship between a mission statement and a business objective?
Which of the following actions would contribute MOST to improving a business's efficiency?
Which of the following actions would contribute MOST to improving a business's efficiency?
Meeting a market need always guarantees increased profits for a business.
Meeting a market need always guarantees increased profits for a business.
Which leadership style is characterized by the manager making decisions without employee input?
Which leadership style is characterized by the manager making decisions without employee input?
In a persuasive leadership style, managers never explain the reasoning behind their decisions to employees.
In a persuasive leadership style, managers never explain the reasoning behind their decisions to employees.
Which management style is characterized by the leader dictating objectives but persuading employees on how to achieve them?
Which management style is characterized by the leader dictating objectives but persuading employees on how to achieve them?
What is the first step in the DODDSE decision-making process?
What is the first step in the DODDSE decision-making process?
In a consultative management style, the manager retains the decision-making power but incorporates employee opinions.
In a consultative management style, the manager retains the decision-making power but incorporates employee opinions.
The ability to interact, communicate, and build relationships with employees and stakeholders effectively is known as ______ skills.
The ability to interact, communicate, and build relationships with employees and stakeholders effectively is known as ______ skills.
Match the following leadership styles with their decision-making approach:
Match the following leadership styles with their decision-making approach:
Which management style is most suitable when a task is straightforward, important, or vital, requiring a high level of control?
Which management style is most suitable when a task is straightforward, important, or vital, requiring a high level of control?
Which of the following management skills is least emphasized in an autocratic management style?
Which of the following management skills is least emphasized in an autocratic management style?
A management style where employees are completely responsible for decision making is known as ___________.
A management style where employees are completely responsible for decision making is known as ___________.
Match the following management styles with their primary characteristic:
Match the following management styles with their primary characteristic:
Delegation is typically high in a participative management style.
Delegation is typically high in a participative management style.
In the context of management, what does 'DODDSE' stand for?
In the context of management, what does 'DODDSE' stand for?
What is a primary disadvantage of the participative management style?
What is a primary disadvantage of the participative management style?
A manager showing empathy towards an employee facing personal challenges is an example of strong ______ skills.
A manager showing empathy towards an employee facing personal challenges is an example of strong ______ skills.
The persuasive management style always leads to higher employee morale due to the manager's convincing communication.
The persuasive management style always leads to higher employee morale due to the manager's convincing communication.
Which leadership style involves convincing employees why decisions are necessary?
Which leadership style involves convincing employees why decisions are necessary?
Which management style would likely be most effective in a crisis situation with a rapidly approaching deadline?
Which management style would likely be most effective in a crisis situation with a rapidly approaching deadline?
When employees are highly experienced and knowledgeable, a manager may choose a ____________ style.
When employees are highly experienced and knowledgeable, a manager may choose a ____________ style.
In a laissez-faire management style, the manager retains significant control over decision-making.
In a laissez-faire management style, the manager retains significant control over decision-making.
Which of the following best describes delegation in management?
Which of the following best describes delegation in management?
What is the primary goal of effective decision-making in management?
What is the primary goal of effective decision-making in management?
Seeking employee input before making a final decision is characteristic of a ______ leadership style.
Seeking employee input before making a final decision is characteristic of a ______ leadership style.
Strategic planning involves short-term, day-to-day activities, such as creating a weekly roster.
Strategic planning involves short-term, day-to-day activities, such as creating a weekly roster.
What type of planning focuses on medium-term, department-specific objectives?
What type of planning focuses on medium-term, department-specific objectives?
Which of the following is NOT a typical benefit of strong interpersonal skills in management?
Which of the following is NOT a typical benefit of strong interpersonal skills in management?
A team leader motivating staff during a difficult period is an example of:
A team leader motivating staff during a difficult period is an example of:
The management skill involving the process of transferring information from one person to another to ensure understanding is known as ________________ .
The management skill involving the process of transferring information from one person to another to ensure understanding is known as ________________ .
Which of the following is a key consideration when delegating tasks?
Which of the following is a key consideration when delegating tasks?
In the absence of other variables, managers will consistently adopt a management style contrary to their personality, beliefs, skills, or values.
In the absence of other variables, managers will consistently adopt a management style contrary to their personality, beliefs, skills, or values.
Which of the following BEST describes the primary difference between official culture and real culture within a business?
Which of the following BEST describes the primary difference between official culture and real culture within a business?
A strong official culture automatically guarantees a strong real culture within a business.
A strong official culture automatically guarantees a strong real culture within a business.
Explain how misalignment between official culture and real culture can negatively impact a business. Provide one specific example.
Explain how misalignment between official culture and real culture can negatively impact a business. Provide one specific example.
The effectiveness of a business's culture, whether official or real, can be gauged through employee ______, surveys, and direct observations of workplace interactions.
The effectiveness of a business's culture, whether official or real, can be gauged through employee ______, surveys, and direct observations of workplace interactions.
Match each statement with whether it primarily describes the Official Culture or the Real Culture of a business:
Match each statement with whether it primarily describes the Official Culture or the Real Culture of a business:
In a company that officially values 'innovation and teamwork,' what might indicate a disconnect between the official and real corporate culture?
In a company that officially values 'innovation and teamwork,' what might indicate a disconnect between the official and real corporate culture?
A strong corporate culture always guarantees increased profitability for a business.
A strong corporate culture always guarantees increased profitability for a business.
What is the primary role of employees in shaping the 'real' corporate culture of an organization?
What is the primary role of employees in shaping the 'real' corporate culture of an organization?
In a Laissez-Faire management style, managers heavily rely on ______ in their employees to ensure productivity and quality.
In a Laissez-Faire management style, managers heavily rely on ______ in their employees to ensure productivity and quality.
Match each management style with its corresponding level of employee involvement in decision-making:
Match each management style with its corresponding level of employee involvement in decision-making:
Which strategy is most directly aimed at bridging the gap between official corporate culture and real corporate culture?
Which strategy is most directly aimed at bridging the gap between official corporate culture and real corporate culture?
Corporate culture primarily affects external stakeholders, such as customers and shareholders, and has little impact on internal employee morale.
Corporate culture primarily affects external stakeholders, such as customers and shareholders, and has little impact on internal employee morale.
How might a business use its physical work environment to reinforce its corporate culture?
How might a business use its physical work environment to reinforce its corporate culture?
A company that promotes open communication and trust is most likely trying to prevent a ______ corporate culture.
A company that promotes open communication and trust is most likely trying to prevent a ______ corporate culture.
Which of the following management skills is LEAST critical for a manager operating under a Laissez-Faire style?
Which of the following management skills is LEAST critical for a manager operating under a Laissez-Faire style?
Flashcards
Private Limited Company
Private Limited Company
An incorporated business with up to 50 selected shareholders.
Shareholders
Shareholders
Part-owners of an incorporated company, who acquire the amount of shares.
Director (of a Company)
Director (of a Company)
Senior managers making decisions on behalf of shareholders.
Limited Liability
Limited Liability
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Company Perpetuity
Company Perpetuity
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Sole Trader
Sole Trader
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Partnership
Partnership
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Silent Partner
Silent Partner
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Partnership Agreement
Partnership Agreement
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Sole Trader Control
Sole Trader Control
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Profit Distribution
Profit Distribution
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Public Listed Company
Public Listed Company
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Dividends
Dividends
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Capital Appreciation
Capital Appreciation
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Social Enterprise
Social Enterprise
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Social Enterprise Activities
Social Enterprise Activities
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Government Business Enterprise (GBE)
Government Business Enterprise (GBE)
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GBE Ownership
GBE Ownership
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Benefit of GBEs
Benefit of GBEs
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Business Objective
Business Objective
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Vision Statement
Vision Statement
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Mission Statement
Mission Statement
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Profit
Profit
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Incorporation
Incorporation
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Union (Stakeholder)
Union (Stakeholder)
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Suppliers' Interest
Suppliers' Interest
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General Community's Interest
General Community's Interest
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Customers' Interest
Customers' Interest
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Owners
Owners
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Managers
Managers
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Employees
Employees
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Customers
Customers
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Suppliers
Suppliers
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General Community
General Community
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Impact of Wage Reduction
Impact of Wage Reduction
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Revenue
Revenue
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Manager's Business Interest
Manager's Business Interest
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Customer's Influence
Customer's Influence
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Expenses
Expenses
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Employee vs Shareholder
Employee vs Shareholder
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Market Share
Market Share
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Manager vs Supplier
Manager vs Supplier
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Management Style Definition
Management Style Definition
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Efficiency
Efficiency
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Resources
Resources
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Autocratic Management
Autocratic Management
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Autocratic Summary
Autocratic Summary
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Productivity
Productivity
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Effectiveness
Effectiveness
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Fulfilling Market Need
Fulfilling Market Need
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Fulfilling Social Need
Fulfilling Social Need
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Stakeholder
Stakeholder
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Return on Investment (ROI)
Return on Investment (ROI)
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Real Culture
Real Culture
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Official Culture
Official Culture
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Culture's Influence
Culture's Influence
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Culture's Purpose
Culture's Purpose
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Culture Misalignment
Culture Misalignment
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Laissez-Faire Management
Laissez-Faire Management
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Laissez-Faire Decision-Making
Laissez-Faire Decision-Making
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Corporate Culture
Corporate Culture
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Official Corporate Culture
Official Corporate Culture
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Real Corporate Culture
Real Corporate Culture
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Leadership Influence on Culture
Leadership Influence on Culture
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Company Policies and Culture
Company Policies and Culture
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Training and Culture
Training and Culture
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Recognition and Culture
Recognition and Culture
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Physical Work Environment
Physical Work Environment
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Leadership
Leadership
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Persuasive Management Style
Persuasive Management Style
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Decision-Making
Decision-Making
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Consultative Management Style
Consultative Management Style
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Participative Management Style
Participative Management Style
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Interpersonal Skills
Interpersonal Skills
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Autocratic Style
Autocratic Style
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Laissez-Faire Management Style
Laissez-Faire Management Style
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Nature of the Task
Nature of the Task
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Persuasive Style
Persuasive Style
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Time
Time
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Consultative Style
Consultative Style
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Participative Style
Participative Style
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Employee Experience
Employee Experience
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Communication (Autocratic)
Communication (Autocratic)
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Manager Preference
Manager Preference
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Management Skills
Management Skills
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Planning (Autocratic)
Planning (Autocratic)
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Communication (Persuasive)
Communication (Persuasive)
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Communication
Communication
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Planning (Persuasive)
Planning (Persuasive)
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Delegation
Delegation
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Communication (Consultative)
Communication (Consultative)
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Planning
Planning
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Strategic Planning
Strategic Planning
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Planning (Consultative)
Planning (Consultative)
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Tactical Planning
Tactical Planning
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Communication (Participative)
Communication (Participative)
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Planning (Participative)
Planning (Participative)
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Operational Planning
Operational Planning
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Study Notes
Sole Trader
- An unincorporated business owned and operated by one person.
- The owner provides the capital and makes all business decisions.
- This is the most common type of business structure.
- An Australian Business Number (ABN) is needed.
- Registration with the Australian Securities & Investments Commission(ASIC) is required if the business name differs from the owner's name.
- The business and owner share the same legal identity.
- The owner has unlimited liability and is responsible for all business debts.
- Personal assets may be sold to cover business debts.
Advantages of a Sole Trader
- Setting up is inexpensive.
- The owner retains all profits.
- Absence of partner conflict.
- The owner has complete control.
Disadvantages of a Sole Trader
- Unlimited liability places personal assets at risk.
- Difficulty in maintaining a balanced work/life schedule.
- The owner bears the financial risk of providing capital.
- Raising capital can be challenging.
Partnerships
- Owned by 2-20 people, although some professions can have more.
- The business and owners have the same legal entity, resulting in unlimited liability.
- Partners share profits according to their ownership percentage.
- Silent partners have a financial stake but no role in daily operations.
- A partnership agreement is legally binding and outlines responsibilities and profit distribution.
Advantages of a Partnership
- Shared workload.
- Diverse skills and experience.
- Easier to raise capital compared to sole traders as funds are pooled.
- Easier to take time off.
- Low start-up costs.
Disadvantages of a Partnership
- Unlimited liability for all partners.
- Shared profits.
- Each partner is fully liable for the actions of others.
Similarities Between Sole Traders and Partnerships
- Both aim to generate profit and fulfill business objectives.
- Both are relatively simple and inexpensive to establish.
- Both have unlimited liability as the owners and the business are the same legal entity.
Differences Between Sole Traders and Partnerships
- A sole trader has one owner, while a partnership has 2-20 people.
- Profit and management responsibilities are shared in a partnership, while a sole trader keeps all profit and has full decision-making responsibility.
Private Limited Companies
- Incorporated businesses with up to 50 shareholders.
- Shareholders are part-owners who purchase shares in the company.
- There must be at least one director to make decisions for the shareholders.
- Many start as small, family-owned businesses.
- Shareholders have limited liability, restricted to their initial investment.
- "PTY LTD" appears after the company name.
- Shares are not listed on the Australian Securities Exchange (ASX).
- Restrictions on who can purchase shares, ownership is usually within a closed group.
Benefits of Private Limited Companies
- Limited liability protects personal assets.
- Greater access to finance through the sale of more shares.
- The company has perpetuity and can continue after changes in ownership or leadership.
Limitations of Private Limited Companies
- More complex structure due to incorporation and ASIC registration.
- Greater reporting requirements to ASIC.
- Limited access to additional finance compared to public companies because of restrictions on the number of shareholders.
Examples of Private Limited Companies
- Cotton On
- Lorna Jane
Public Listed Companies
- An incorporated business that can sell shares to the public on the ASX with no limit to the number of shareholders.
- Shareholders receive dividends from company profits.
- "LTD" indicates limited liability.
- Operations are managed by a board of directors (minimum of 3) and a company secretary.
- Annual financial reports must be published.
- The company has a separate legal identity and limited liability.
- Capital appreciation occurs when the value of shares increases.
- Dividends are regular payments to investors based on their shareholding.
Benefits of Public Listed Companies
- Limited liability for shareholders.
- Greater ability to raise capital through public share offerings.
- Company perpetuity.
- An experienced board of directors providing experienced leadership.
Limitations of Public Listed Companies
- Complex structure to establish due to incorporation.
- Expensive establishment and compliance costs.
- Significant reporting and compliance requirements.
Examples of Public Listed Companies
- Coles
- Woolworths
- ANZ
Social Enterprises
- Businesses focused on fulfilling a vision that benefits the community rather than shareholders.
- They sell goods and services primarily to create a positive social impact.
- The primary purpose is to benefit the community.
- Objectives include making a profit, but this is not the main aim.
- Funding comes mainly from commercial operations, supplemented by donations and government funding.
- Social enterprises can adopt any business structure.
- In Victoria, there are approximately 3,500 social enterprises employing about 60,000 people.
- At least 50% of profits go to a social cause.
- These businesses aim to sell good products and are not reliant on charity
Examples of Social Enterprises
- Thankyou Soap
- Who Gives a Crap
Advantages of Social Enterprises
- Can attract government funding and community donations.
- The social cause attracts customers.
Disadvantages of Social Enterprises
- Attracting investors can be difficult due to lower profit distribution.
- Growth may be limited by the allocation of funds to social causes.
Causes Addressed by Social Enterprises
- Businesses that benefit the community or a social cause.
- Businesses that employ people with disabilities.
- Businesses that benefit their local community.
Government Business Enterprises (GBEs)
- Government-owned businesses managed separately, aiming to make a profit while providing a service to the community.
Examples of GBEs
- Australia Post
- VicRoads
- National Broadband Network (NBN)
Features of GBEs
- The government is the sole shareholder.
- Engage in commercial activities to generate profit while delivering a specific service.
- Carry out government policies while delivering community services.
- Managed by a CEO and board of directors.
Services Provided by GBEs
- Communication
- Postal services
- Energy security
Advantages of GBEs
- Deliver community services where the private sector is reluctant.
- Provides competition in the private sector, improving services or reducing prices.
Limitations of GBEs
- Inefficiencies from government interference or regulations.
- Reduced accountability, potentially leading to lower productivity.
Business Objectives
- A business objective is a desired goal or specific result that a business aims to achieve over time.
- Businesses implement strategies to achieve their objectives.
- Objectives and strategies depend on the nature of the business
- Businesses pursue multiple objectives simultaneously.
- Achieving one objective can aid the achievement of others.
- Objectives provide direction to stakeholders.
- Performance is managed via Key Performance Indicators (KPIs).
- Objectives should be measurable.
- Objectives help identify and prioritize resources.
- A vision statement outlines future aspirations and values.
- A mission statement outlines the business's purpose and how it will be achieved.
Objective 1: To Make a Profit
- Profit is the money remaining after expenses are deducted from revenue.
- Revenue is the income from business activities/sales.
- Expenses ar the costs associated with running the business.
- To increase profits, businesses must increase revenue or decrease expenses.
- Profits are essential for growth and are a measure of business success.
- Profit can be reinvested for expansion or distributed to owners and shareholders.
Objective 2: To Increase Market Share
- Market share is the percentage of sales a business has compared to its competitors.
- Businesses increase competitiveness to maximize profits.
- Businesses consider quality, features, and price to attract customers and increase market share.
Objective 3: To Improve Efficiency
- Efficiency is using resources effectively to produce goods and services.
- Resources include materials, employees, machinery, information, and time.
- Improving efficiency requires more output for each unit of input.
- Productivity is the measure of inputs required to produce output.
Objective 4: To Improve Effectiveness
- Effectiveness is the degree to which a business has achieved its objectives.
- If strategies lead to increased market share, the business has been effective.
Objective 5: To Fulfill a Market Need
- Fulfills a market need by providing goods/services to meet customer needs.
- A market is made up of actual or potential customers of a good or service.
- Customer satisfaction results in loyalty, improves reputation, increases sales revenue and profits.
- Businesses aim to satisfy customer needs and wants.
Objective 6: To Fulfill a Social Need
- Achieving social objectives through the production of goods and services.
- Focus is on strategies that benefit social causes.
- Improving reputation can increase sales, revenue, profits, and market share.
- Using sustainable resources can reduce costs and improve profits.
- Social enterprise main objective is to fulfill a social need via the sale of products.
Objective 7: Meet Shareholder Expectations
- Shareholders expect the business to be successful and profitable.
- Shareholders as part owners expect:
- Dividends (a share of profits).
- Share value to increase (capital gains).
- A profitable business is more likely to increase its share price and provide attractive dividends.
Stakeholders
- A stakeholder is anyone with a vested interest in the actions of a business.
Owners
- Owners are interested in the financial success and reputation of the business.
- Owners differ between the different types of businesses, and their interests vary
- Owners are concerned with return on investment (ROI).
- ROI is what the owner gains financially compared to the sum they invested.
- Owners are deeply invested in the business.
Managers
- Managers are interested in job security, financial rewards, and reputation.
- Managers run the business on a day-to-day level.
- In public companies the managers and owners are generally different
Employees
- Employees are interested in job security, financial earnings career development and personal reputation.
- Not all employees have the same interests or motivations.
- Unions represent the interests of employees.
Suppliers
- Suppliers are interested in financial success and reputation.
- Suppliers are likely to be strongly invested in the business.
General Community
- The general community is indirectly interested its success.
- The community is likely to be less invested unless bad consequences occur
- Positive impacts include sponsoring local events,
- Negative impacts include Environmental damage & unemployment
Customers
- Customers are interested in the quality and price of goods/services.
- Different levels of investment and loyalty occur.
- 80% of sales come from 20% of customers.
Stakeholder Interests
- Owners: return on investment and capital gains
- Managers: setting and achieving business objectives, and fair pay.
- Employees: fair pay, good working conditions, and ongoing employment.
- Customers: good quality products at a fair price.
- Suppliers: increased sales and long-term relationships.
- General community: employment and contribution to the community.
Potential Conflicts
- Owners vs. employees: reducing wages for higher profits upsets employees.
- Managers Vs customers: Customers determine the positions of managers.
- Employees vs. shareholders: higher wages reduce profits, damaging dividends and share prices.
- Managers vs. suppliers: lower costs reduce supplier profits.
Management Styles
- Management styles are the way a manager makes decisions, leads, and communicates with employees.
- The five styles are autocratic, persuasive, consultative, participative, and laissez-faire.
- The choice of style depends on factors such as the manager's personality, skills, and experience of employees, the nature of the tasks, and time constraints.
- Styles range from task-centered to employee-centered.
Autocratic Style
- The leader dictates objectives and how to achieve them.
- Communication is one-way.
- The manager retains all control.
- Decisions are made quickly.
Advantages of Autocratic Style
- Time is used efficiently
- Decisions made quickly.
Disadvantages of Autocratic Style
- Employees may feel undervalued resulting in poor morale.
Persuasive Style
- The leader dictates objectives and persuades employees on how to achieve them.
- Communication is one-way.
- Decision-making is retained by the manager.
Advantages of Persuasive Style
- The Manager retains all the control
- Efficient use of time
- Maintains employee morale better than an autocratic style
Disadvantages of Persuasive Style
- Employees may not feel empowered
- Employee input and idea pool is reduced
Consultative Style
- The leader asks employees for opinions before making a decision.
- Communication is two-way.
- Decision-making is retained by the manager.
Advantages of Consultative Style
- Broader pool of ideas enhanced decision making due to more informed opinions.
Disadvantages of Consultative Style
- Some employee suggestions may be ignored.
- Time taken to consult can slow down the decision making process.
Participative Style
- The leader shares decision-making responsibility with their team.
- Communication is two-way.
- Decisions are made by the group.
Advantages of Participative Style
- Recognizes skills and abilities of employees and empowers them to make decisions.
- Optimum decisions can be made via Teamwork and group decision making
Disadvantages of Participative Style
- Very time consuming
Laissez-Faire Style
- Employees are totally responsible for decision-making and the operation of the business.
- Communication is two-way.
- Decisions are made by the employees.
Advantages of Laissez-Faire Style
- Trusting and empowering for employees, given complete freedom and responsibility
- Can be very creative, with high degree of individual responsibility
Disadvantages of Laissez-Faire Style
- Can potentially lead to a loss of control, or conflicts between staff over direction of business and objectives
Appropriateness of Management Styles
- Nature of task: Straightforward tasks benefit from autocratic styles, while creative tasks benefit from laissez-faire styles.
- Time: Critical deadlines may require autocratic styles, while longer timeframes allow for participative styles..
- Experience of employees: Inexperienced employees benefit from autocratic instruction, experienced employees should be trusted.
- Manager preference: Managers commonly revert back to a management style that matches their personality, beliefs, or values.
Management Skills
- Management skills are abilities that enable a manager to effectively achieve business objectives.
- Skills include communication, delegation, planning, leadership, decision-making, and interpersonal skills.
Communication Skill
- Communication is the process of transferring information to ensure understanding
- It can be verbal, non-verbal, written, or electronic
Importance of Communication
- Ensures clear expectations for employees.
- Helps to resolve conflicts and build relationships.
- Facilitates effective delegation and teamwork.
Delegation Skill
- Delegation is the process of assigning responsibility for specific tasks to employees while maintaining accountability
Importance of Delegation
- Frees up time for managers to focus on strategic tasks.
- Empowers employees and enhances job satisfaction.
Planning Skill
- Planning is the process of setting objectives and deciding the best way to achieve them.
Importance of Planning
- Provides direction and sets priorities.
- Helps businesses anticipate challenges and find solutions.
Examples of Planning
- Strategic Planning – Long-term, high-level planning
- Tactical Planning – Medium-term, department-specific planning
- Operational Planning – Short-term, day-to-day planning
Leadership Skill
- Leadership is the ability to influence, motivate, and guide employees to achieve business goals.
Importance of Leadership
- Helps employees stay engaged and productive.
- Encourages innovation and problem-solving.
- Builds a positive workplace culture.
Examples of Leadership Styles
- Autocratic – Manager makes decisions without employee input.
- Persuasive – Manager convinces but still has full control.
- Consultative – Manager seeks input but makes the final decision.
- Participative – Manager and employees make decisions together.
- Laissez-Faire – Employees make decisions with little involvement.
Decision Making Skill
- Decision-making is selecting the best course of action from alternatives.
Importance of Decision Making
- Ensures problems are solved effectively and increases efficiency and productivity.
Decision-Making Process (DODDSE)
- Define the objective
- Outline the facts
- Determine the alternatives
- Decide on the best option
- Start implementing the decision
- Evaluate the effectiveness
Interpersonal Skills
- Interpersonal skills refer to the ability to interact, communicate, and build relationships effectively.
Importance of Interpersonal Skills
- Helps create a positive, supportive workplace and encourages teamwork.
Management Styles and Management Skills
- The application of each management skill will depend on the type of management style used.
- Autocratic & Persuasive: Managers retain control, requiring strong decision-making and communication skills.
- Consultative & Participative: Involve employee input, needing strong interpersonal and delegation skills.
- Laissez-Faire: Employees have full control, managers rely on trust and minimal supervision.
Corporate Culture
- Corporate culture refers to the shared values, beliefs, and behaviours within a business that influence how employees interact and work together.
Key Features of Corporate Culture
- Represents the internal business environment
- Influences employee behaviour and decision-making
- Shapes the way the business interacts with stakeholders
Official Corporate Culture
- Defined by the business through mission statements, policies, slogans, and branding.
Real Corporate Culture
- The actual culture based on day-to-day behaviours and workplace atmosphere.
Comparison of Official vs. Real Corporate Culture
- Official culture is what the business claims, real culture is what exists in daily operations.
- Official culture is set by management, real culture is shaped by employees.
- Official culture focuses on aspirations, real culture reflects experiences.
Importance of Corporate Culture
- A strong culture leads to higher motivation, productivity, and customer relationships.
- A negative culture causes low morale, high turnover, and poor reputation.
Strategies to Develop Corporate Culture
- Leadership:Model desired behaviours and encourage open communication.
- Policies:Establish codes of conduct.
- Training:Introduce employees to the culture.
- Rewards:Recognize employees who demonstrate company values.
- Environment:Layout, dress code, and facilities contribute to culture.
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Description
Questions about private limited companies, sole traders, and partnerships. Test your knowledge of business structures, liability, and legal requirements. Ideal for business students.
