Questions and Answers
Which of the following are roles of a business? (Select all that apply)
How can businesses be classified by size?
What are the classifications of business by geographical spread?
Which of the following are internal influences in a business environment? (Select all that apply)
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What is a sole trader?
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What are the stages of the business lifecycle?
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Which of the following are considered external influences in the business environment? (Select all that apply)
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The primary classification of business is by geographical spread.
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Name two skills of effective management.
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What is the primary focus of tactical planning?
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Organising involves breaking down work activities into smaller steps.
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What is the main goal of management controlling?
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The short-term planning that addresses day-to-day operations is called __________ planning.
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Match the management functions with their descriptions:
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What is a key advantage of a participative leadership style?
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Managers have less responsibility in a team approach compared to a traditional hierarchy.
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What should a manager develop to ensure team cohesion?
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In the contingency approach, the management style is influenced by the business ______.
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Match the following key business functions with their descriptions:
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Study Notes
Nature of Business
- Businesses produce goods and services to satisfy customer needs.
- Key roles of business include generating profit, employment, incomes, choice, innovation, entrepreneurship, and risk.
- Businesses contribute to wealth and quality of life.
Types of Businesses
- Classification by size:
- Small to medium enterprise (SMEs)
- Large
- Classification by geographical spread:
- Local
- National
- Global
- Classification by industry:
- Primary (extracting raw materials)
- Secondary (manufacturing)
- Tertiary (service-based)
- Quaternary (information-based)
- Quinary (high-level decision-making)
- Classification by legal structure:
- Sole trader
- Partnership
- Private company
- Public company
- Government enterprises
Factors Influencing Choice of Legal Structure
- Size: larger businesses often require more complex structures
- Ownership: sole traders have full ownership, while partnerships and companies have shared ownership
- Finance: businesses require funding, which can influence the choice of legal structure
Influences in the Business Environment
External Influences
- Economic: changes in interest rates, inflation, and economic growth
- Financial: access to funding and financial markets
- Geographic: location and climate
- Social: demographic changes and social trends
- Legal: laws and regulations affecting business
- Political: government policies and stability
- Institutional: trade unions and business associations
- Technological: advancements in technology
- Competitive situation: market competition and rivalry
- Markets: changes in supply and demand
Internal Influences
- Products: goods and services offered by the business
- Location: physical location and accessibility
- Resources: human, physical, and financial resources
- Management: leadership style and decision-making
- Business culture: values and beliefs within the organization
Stakeholders
- Owners/shareholders: individuals with a financial interest in the business
- Managers: responsible for day-to-day operations
- Employees: individuals working for the business
- Customers: individuals or organizations purchasing goods and services
- Society: the broader community affected by the business
- Environment: the natural environment impacted by business operations
Business Growth and Decline
- Stages of the business lifecycle:
- Establishment
- Growth
- Maturity
- Post-maturity
- Factors contributing to business decline:
- Poor management
- Lack of innovation
- Increased competition
- Voluntary and involuntary cessation:
- Liquidation: the process of closing a business and distributing assets
Nature of Management
- Features of effective management:
- Planning
- Organizing
- Controlling
- Skills of management:
- Interpersonal skills
- Strategic thinking
- Vision
- Problem-solving
- Decision-making
- Flexibility
- Adaptability to change
- Reconciling conflicting interests of stakeholders
Achieving Business Goals
- Types of business goals:
- Profits
- Market share
- Growth
- Share price
- Social goals
- Environmental goals
- Achieving a mix of business goals:
- Balancing competing objectives
- Staff involvement:
- Innovation
- Motivation
- Mentoring and training
Management Approaches
Classical Approach
- Management as planning, organizing, and controlling
- Hierarchical organizational structure
- Autocratic leadership style
Behavioural Approach
- Management as leading, motivating, and communicating
- Teams
- Participative/democratic leadership style
Contingency Approach
- Adapting to changing circumstances
Levels of Planning
- Strategic Planning: Long-term planning spanning 3-5 years.
- Tactical Planning: Medium-term, flexible planning lasting 1-2 years.
- Operational Planning: Focuses on daily operations and activities.
Management as Organising
- Organising involves arranging business resources to meet objectives, enhancing productivity and efficiency.
- Old Fashion School employs a strict hierarchical structure for control.
-
Key Steps in Organising:
- Determining Work Activities: Breaking down tasks into smaller, manageable steps.
- Classifying and Grouping Activities: Similar tasks are clustered for efficiency.
- Assigning Work and Delegating Authority: Clearly defining who performs each task.
Management as Controlling
- Controlling evaluates and adjusts tasks to meet set goals, modifying procedures if necessary.
- Emphasizes team cohesion and unity among members.
- A transition from hierarchical to team-oriented structure promotes greater responsibility for individuals.
- Managers act as facilitators, balancing team needs with business goals, fostering trust, and creating a common vision.
Participative/Democratic Leadership Style
- Involves consulting employees, valuing their input in decision-making.
-
Advantages:
- Increased employee empowerment and recognition.
- Strengthened relationships between staff and management.
-
Disadvantages:
- Potential for lack of control.
- Risk of decreased employee behavior.
Contingency Approach
- Focuses on adaptability to changing circumstances and flexibility in management styles based on business needs.
- Organisational structures can shift from flat to hierarchical depending on requirements.
Key Business Functions
- Coordination of core functions is essential in management.
- Four key functions:
- Operations: Strategies for improving production processes.
-
Leading: Influencing and motivating employees to achieve goals.
- Good leaders communicate goals, empower workers, demonstrate flexibility, and have confidence in their teams.
- Motivating: Targeting motivation through fair policies, training, and safe environments.
- Communicating: Open communication ensures information flow regarding goals, plans, and financial results.
Teams and Flat Organisational Structure
- Teamwork involves regular interaction and collaboration towards shared objectives, supported by a flat organisational structure.
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Description
This quiz explores the fundamental aspects of businesses, including their nature, types, and roles in society. It covers classifications by size, geographical spread, industry, and legal structure. Additionally, factors influencing the choice of legal structure are discussed.
