Business Foundations PDF

Business Foundations 1A Types of Businesses -A sole trader is the person who owns the business, and is the sole person legally responsible for all aspects of the business. These types of businesses are simple to set up, give owners full control of assets and decisions,...

Business Foundations 1A Types of Businesses -A sole trader is the person who owns the business, and is the sole person legally responsible for all aspects of the business. These types of businesses are simple to set up, give owners full control of assets and decisions, less reporting requirements, but have unlimited liability meaning all personal assets are at risk if things go wrong. -Partnerships are business structures that are owned by between 2-20 people, they are easy to set up. They are not a separate entity and have unlimited liability, they have a shared control and management but profits must be shared. -Private limited companies are incorporated businesses owned by shareholders and shares are not freely listed on the stock exchange. They are a separate legal entity with limited liability, limited to 50 shareholders and are more complex to set up. -Public listed companies have shareholders who own the company and directors who run it, the company is listed on the stock exchange and shares can be freely traded. They are separate legal entities with limited liability. -Social enterprises are profit making businesses whose objectives are to address or improve a social or community cause, they operate commercially to make a profit and the profits are reinvested and put towards a social issue. These businesses rely on government grants or donations. Eg. Thankyou -Government business enterprises are owned by the commonwealth and operate commercially to make a profit carrying out government policies. They are controlled by a board of directors and 2 shareholder ministers. Eg. Australia Post 1B Business Objectives -Making a profit - The surplus remaining after total costs are deducted -Increasing market share - A business's percentage of total sales within an industry. It is a sign of competitive advantage. Market share can be increased by lowering costs and prices, increasing quality, boosting reputation, and increasing advertising. -Improving efficiency - Efficacy is how well a business uses resources to achieve objectives. Improving efficiency may allow a business to produce higher quality products, improving customer satisfaction and loyalty. If you aren’t efficient business costs go up, less competitive and sell less. -Improving effectiveness - Effectiveness means to improve the use of resources in business so that resources are used more effectively, in an attempt to reduce waste and improve sustainability. Improve effectiveness allows products to get to market quicker and reduces costs. -Fulfilling market needs - To fulfill a market need is to meet the demands of customers -Fulfilling a social need - A business fulfills a social need by producing goods or services for the purpose of making society a better place. -Meeting shareholder expectations - Shareholders as owners of the business have an interest in the performance of the company and are commonly looking for a return on investment. If a business makes a profit it can reinvest or share it with owners. 1C Stakeholders -A stakeholder is a person or group with a vested interest in the activities of a business. -Owners - Owners are interested in the success of a business from a financial and personal reputation position. They are likely to be deeply invested. Commonly concerned on return of investment. Involved in decision making and potentially daily operations, and want to see business growth. -Managers - They are interested in the success of a business from a job security, financial and personal reputation position. They make decisions and lead others to achieve goals, are responsible for daily operations, and want to receive fair pay. -Employees - They are interested in the success of a business from a job security, financial, career development, and personal reputation position. They perform tasks for wage and to achieve goals, train to improve skill, and are interested in receiving fair pay, work conditions, etc. -Customers - Interested in the success of a business from a consumption perspective. They want the products to be high quality, well priced and meet market needs. They can have different levels of loyalty or investment. Needs and wants will change overtime, businesses must adapt to attract more customers. -Suppliers - Interested in the success of a business from a financial and associated reputation perspective. They provide resources to a business to produce products. Suppliers come from all over the world and want to be paid and maintain positive relationships. -General Community - Interested in a business from an indirect effect position. They are less likely to be involved in business, they are those living in the area the business operates in. Businesses can contribute to the community by supporting local, being ethical, and considering community in their decisions. 1D Management Styles -Autocratic - Involves the leader dictating the objectives to be achieved and how to achieve them. Managers make decisions and tell employees of decisions. Centralised one way communication and decision making. Good for quick decisions, communication is clear, and effective when lacking motivation. Though there are less ideas, no input, undervalued, and reduced creativity. -Persuasive - Where managers make decisions themselves and aim to convince employees their decision is best. Centralised decision making, one way communication, best for urgent tasks, when employees have skill but lack confidence, aims to persuade employees but still maintain control. No employee input. -Consultative - Manager seeks feedback from employees before decision making, and manager uses feedback to make decisions. Two way communication, manager still makes decisions, discussion encouraged. Best when there is time, when employees have experience. Helps to make more informed decisions, larger pool of ideas, employees more likely to buy in. Though it can be time consuming, some decisions might be overlooked. -Participative - Manager is involved and joins in with staff to make decisions and authority is shared. Involves two way communication, decentralised, and information is shared. Best when tasks are complex, more time, experience, and need for motivation. Good as there are more ideas, strong relationships, high motivation, though it can take time, there can be disagreements. -Laissez Faire - Managers give employees full responsibility for operations. Managers have no central role but still set objectives but employees run business. Two way communication, decentralised, best when there are high skilled employees and high creativity. Need high motivation, team work but there can be loss of control, conflict and objectives could be lost.  1E The Appropriateness of Management Styles -Nature of the task - The more straightforward, important or vital the task is, the more the manager is going to want to control it, leaning towards an autocratic style. More creative tasks would benefit from ideas and team input, leaning towards the laissez faire style. -Time - When time is critical or a deadline is rapidly approaching the autocratic style will be more appropriate. Whereas an extended timeframe may use the participative style. -Experience of employees - When employees are inexperienced it may not be worth asking their opinion and use an autocratic style to instruct them. Highly experienced and knowledgeable staff should be trusted with their opinion and left to make decisions using laissez faire. -Preference of the manager - If there are variables the manager will revert back to a style that matches their beliefs, values and personality. Autocratic for controlling types and participative for social types. 1F Management Skills -Communication - The transfer of information from one person to another. Managers need to communicate to stakeholders and come in different forms. It can be one way or two ways. Can be verbal or non verbal. -Delegation - Where a manager passes on authority and responsibility to an employee to carry out tasks. Gives managers time and employees feel valued. -Planning - Ability to set objectives and outline the strategies to achieve them. Provides direction and helps to stay organized. Could be SWOT analysis, setting objectives, etc. -Leadership - Ability of manager to motivate and inspire employees towards the achievement of goals. Helps build trust, lead by example, support others and build a positive environment. -Decision Making - Choosing the best course of action from a range of alternatives, ensuring the best decision is implemented to achieve objectives. Analyzing facts, pros and cons, using planning. -Interpersonal skills - Ability of a manager to interact with others and build positive relationships. Allows for better communication, better work environment, and getting employees to buy in. 1G Management Skills for Management Styles -Autocratic managers need to use the skills communication, delegation, planning, and decision making -Persuasive manager need to use the skills communication, leadership, and interpersonal skills -Consultative managers need to use the skills communication, leadership and interpersonal skills -Participative managers need the skills communication, leadership, decision making and interpersonal skills -Laissez faire managers need the skills communication, delegation and planning 1H Corporate Culture -Corporate culture can be defined as the shared values, beliefs, and practices of a business. This may be determined by slogans, rituals, policies, employee relations, etc. -Official culture is the shared values and beliefs the business wants its people to display. Seen in official documents such as mission statements, slogans and policies. Used to attract employees, and create a positive image and reputation. -Real culture is the actual values and beliefs that are displayed by the people in the business. Can be seen in how employees treat each other, relationships with employee and manager, and how employees behave. Ideally real culture would align with official culture but is not always the case.