Business Management SAC Revision PDF

Business Management SAC Revision Chapter 2 Stakeholders: An individual or group who have a direct vested interest in the activities of an organisation. Ex: Owners/Shareholders, Directors or Partners, Managers, Employees, Investors, Leaders, Customers, Suppliers, Government, Local and Internationa...

Business Management SAC Revision Chapter 2 Stakeholders: An individual or group who have a direct vested interest in the activities of an organisation. Ex: Owners/Shareholders, Directors or Partners, Managers, Employees, Investors, Leaders, Customers, Suppliers, Government, Local and International Communities, Trade Unions. Different levels of Stakeholders -​ Macro environment includes the broad operating conditions in which the business has no control over. Examples include: Government, Economic Factors, Social Factors, Political and Legal Factors, and Technological Factors. -​ Operating Environment includes the operating conditions which are immediately external to the business but the business has some control over. Examples include: Competition, Customers, Unions, and Customers. -​ Internal Environment refers to the activities, functions and pressure that occurs within the business where it has full control. Examples Include: Employees, Shareholders, Owners, Management, Structure, and Culture. Corporate Culture -​ Official corporate culture refers to the set of values and beliefs desired by the management of a business. -​ Real/Unofficial corporate culture is the culture that actually exists within the business. How is it communicated? Businesses want to influence their corporate culture in such a way which it positively influences and contributes to their business. This can be done in several ways, such as: Organisational mission, Vision and Values Statements, Form of management structure, The people within the business organisation, stories, narratives and rituals shared, and implementation and designs of policies and the procedures within these. Chapter 3 Management Styles -​ A management style is the manner and approach to provide direction, implement plans, lead, and motivate people. -​ The main types of management styles are Autocratic, Persuasive, Consultative, Participative and Laissez-Faire What is it? Pros/Cons Autocratic An autocratic management style is - Quick Decision Making. very manager oriented as it relies on - Most experienced person typically the manager telling employees what makes the decisions. to do with little to no delegation. - High regard for productivity and Managers are usually focused on efficiency. completing these tasks using - Lack of multiple suggestions or established processes and typically solutions to problems. see money as their main motivator. - Employees can feel unvalued and not seen as people.  - Does not allow for employee feedback, therefore valuable insight is lost. Persuasive A persuasive management style - Quick decision making. refers to the manager making a - Most experienced person generally decision and then informing makes all decisions. employees on why the decision was - Employees are more likely to made in an attempt to persuade support a decision when they know them. This can make employees feel why it’s being made. better about the task they are - Lack of multiple suggestions or completing and improve motivation. solutions to problems. - Employees can feel unvalued and not seen as people. - Does not allow for employee feedback, therefore valuable insight is lost. Consultative A consultative management style - Concise decision making since it consists of the manager taking only involves one person. feedback and opinions from - Gain valuable insight and ideas employees when making decisions, from employee suggestions. though the decision is still ultimately - Motivates employees as they are in the hands of the manager. involved in making decisions in the business. - Employees may not understand the full complexity of the issue. - Takes a long time to consult ideas and suggestions with staff. - Can lead to conflicting ideas from different employees. Participative A participative management style - Employees feel valued and a sense focuses on decentralising the of ownership as they make the decision-making within a business as decisions. it seeks the involvement of staff. - Empowerment and coaching Management and subordinates will encourages opportunities for work together to discuss problems employee development. and come up with solutions, - Many ideas and suggestions put ultimately with management taking forward to problems by accountability and responsibility. knowledgable staff. - Can take a long time to reach a consensus. - Can lead to conflict upon employees if they don’t agree on similar ideas or suggestions. - Not all employees want to be responsible for decision-making. Laissez-Faire This management style is where - Employees feel valued and have a employees make the decisions within sense of ownership as they are the the business with management ones making the decisions. having little to no input. This is a - Encourages high level decentralised type of management communication of ideas. where employees take responsibility - Good environment and fostering a and accountability for their culture of creativity and innovation. decisions. - Lack of guidance can possibly lead to loss of direction for some employees. - Can lead to conflict if employees don’t come to a consensus. - Requires employees to be highly motivated to work autonomously. Contingency Management Theory -​ In a contingency (Situational) management approach, management takes into account a number of factors when deciding what management style to take. Effective managers change their management style depending on what the situation calls for. Example: A crisis (e.g BP Oil Spill) must be dealt with quickly requiring an autocratic management style as it allows for the quickest decisions to be made by the most knowledgable people. Management Skills -​ Management skills are a set of skills that a manager must have to be able to do their job effectively. Regardless of their role in the broader industry, all managers should posses a certain range of skills. Ontop of these skills, a manager should also posses the skills of time and stress management, and posses good analytical and technical skills relevant to their organisation. Example Of Management Skills: Communication, Delegation, Planning, Leading, Decision-Making and Interpersonal. Chapter 1 Classifying A Business Public or Private: Most of the business within Australia are privately owned, and are classified as being part of the private sector. There are also a number of government-owned businesses, which are being classified as being in the public sector (usually known as GBE’s Government Enterprises). By Industry Sector: Primary - farming, mining, forestry. Secondary - where raw materials are given added value by processing manufacturing or construction. Tertiary - Involves provision of services eg. retail and transport. Sole Trader -​ An individual owner of a business, entitled to keep all profits after tax has been deducted but liable for all costs. -​ The businesses name must be registered under the Australian Securities and Investments Commission (ASIC) if the business name is different from the owner. -​ Sole traders must have registered business names (RBN), which is a trading name in which sole traders or business conduct their trades ir business under. -​ Sole traders are not regarded as separate legal entities - the business and the owner are the same. -​ Sole traders have unlimited liability, owners will have to sell personal assets to cover any debts acquired. Advantages Disadvantages -​ Simple and inexpensive to establish: -​ Reliant on owner’s own knowledge and personal bank account and TFN (Tak Files skills: marketing, public relations (PR), Number) daily operations. -​ RBN (Registered Business Name) is -​ Harder for owner to get finance for the required. business: OWNER. -​ Owner has total control over the business. -​ Unlimited liability for owner: full liability -​ Simple to wind up: personal decision. (responsibility) of owner to the extent of -​ Minimal government regulation: their personal assets. employee’s rights, such as superannuation. Partnership -​ A partnership is a legal form of business ownership in which 2 to 20 people work together, together under a partnership agreement which outlines their duties and responsibilities. -​ A partnership does not have an ongoing life - if one partner leaves, a new partnership must be formed and the previous partnership is terminated. -​ There are two different types of partnerships: General partnership - All partners are equally responsible for management of the business. Unlimited liability. Limited partnership - These partners are not involved in day-to-day operation. They are only liable for the proportion that they invested in the business. -​ If a formal partnership agreement isn’t created than all partners have equal legal liability. Advantages Disadvantages -​ Inexpensive and simple to set up: -​ Unlimited liability: general partnership. Partnership agreement is recommended. -​ Liability for debts incurred by other -​ Risk is shared between partners. partners. -​ Workload may be shared. -​ Business could be threatened by one -​ Offers broader access to capital, partner leaving (no perpetuity). knowledge, skills and experience: -​ Potential for disputes and personality marketing, professional manager. clashes. Private Companies -​ Pty Ltd (Private Limited Company) -​ Shareholders: 2-50 -​ Shares: Only can be traded with the permission of other shareholders. -​ Suit to sole trader/partnerships that would like to expand and gain the financial protection. -​ Preferred option to many family businesses. Advantages Disadvantages -​ Limited Liability: Shareholders are only -​ Higher degree of complexity in personally liable to the level of their establishing. original investment in the company. -​ Higher establishment costs. -​ Extra capital can be obtained by issuing -​ Higher degree of government control and more shares. reporting requirements. (Final year report, -​ Separate legal entity. 7 years records.) -​ Existence is not threatened by a death or -​ Additional compliance costs: ATO, ASIC. removal of one of the directors or shareholders Public Companies -​ As businesses grow in size, they may consider becoming a public company in part to access more capital. -​ Needs to issue a prospectus, which is a formal document inviting the public to purchase its shares. -​ Listed on the Australian Securities Exchange (ASX). -​ Unlimited Shareholders. -​ Is openly traded with the value of each share determined by the market. -​ These companies can be recognised by the world Limited (LTD) after their name. Advantages Disadvantages -​ Limited Liability. -​ Highly complex structure. -​ Able to gain extra capital by selling extra -​ High establishment costs. shares. -​ Needs more accountability and -​ Separate legal identity. compliance paperwork. -​ Existence is not threatened by death or -​ Additional compliance costs. removal of a director (ie: has perpetuity). Social Enterprise -​ A social enterprise is a business which focuses on maximising improvements in human wellbeing or the environment, rather than maximising profit for owners or shareholders. -​ They can be for-profit or non-for-profit organisations, and are generally run in the same manner as a business. Government Business Enterprise (GBE) -​ A government business enterprise is a business that is government owned and operated. GBE’s seek to run profitably by controlling costs and selling their goods and services at a price to cover costs. -​ While the management of a GBE is autonomous, they must meet reporting requirements for their shareholders. -​ Three Characteristics - The government controls the business, The business is principally engaged in commercial activities, the business has a legal personality separate to a department of government and it is incorporated. Business Objectives -​ Business objectives are statements of desired achievement that provide direction for the business. -​ The desired objectives provide an organisation with direction. -​ Strategies are the actions taken to achieve a specific objective. -​ Eg. An objective to increase market share, would have some of the following strategies: targeting new customers, promotional campaigns, and improving quality of product. SMART GOALS Specific Measurable Achievable Realistic Time Bound Type of Business Objecives -​ Financial Objectives: making a profit, growing sales, improving market share, and increased productivity. -​ Marketing Objectives: demand or need for the product or service is vital to a successful business, businesses strive to maximise the appeal of their product or service and to increase market share. -​ Social Objectives: Social objectives relate to the role of a business in the community. Ex. The provision of community causes at the local, state, national or world level. Businesses can also support social social objectives through the policies and practices within the wokplace, such as anti-bullying policies, equal opportunity policies.