UNIT 3 AOS 1 - BUSINESS MANAGEMENT

• Business


  An organisation where goods and services are exchanged for money.
• What are the 6 types of Businesses?

  - Sole Trader

  - Partnership

  - Private Limited Company

  - Public Limited Company

  - Social Enterprise

  - Government Enterprise
• Sole Trader


  An individual who owns and runs the operations of a business.

  They trades under their own name or under a registered business name and is entitled to keep all the profits after tax but also has unlimited liability.
• Sole Trader:

  Advantages

  - Simple & Inexpensive to establish

  - Owner has total control over business

  - Simple to wind up the business

  - Minimal government regulation
• Sole Trader:

  Disadvantages

  - Unlimited Liability

  - Harder to obtain finance

  - Highly reliant on the owners knowledge and skills which may be limited

  - Often difficult to expand with limited capital
• Partnership


  A legal form of business ownership which two or more partners work together to manage and operate a business and each partner is jointly liable for business debts incurred, as unlimited liability applies to each partner.

  There are 2 types of Partnerships - General and Limited.
• General Partnerships


  All partners are deemed equally responsible for management of the business.
• Limited Partnerships


  The Liability of one or more partners is limited.
• Partnerships:

  Advantages

  - Inexpensive and Simple

  - Risk is shared between partners

  - Workload may be shared

  - Offers broader access to capital, knowledge, skills & experience
• Partnerships:

  Disadvantages

  - Unlimited Liability

  - Liability for debts incurred by partners

  - Business could be threatened by one partner leaving - no perpetuity

  - Potential for diputes
• Private Limited Company


  A business owned by private shareholders which are not available to the public. It can be owned by up to 50 shareholders and has limited liability.
• Private Limited Company: Advantages

  - Limited Liability

  - Extra Capital

  - Company is sperate legal entity

  - It has perpetuity
• Private Limited Company: Disadvantages

  - More complex

  - Higher establishment costs

  - Higher degree of government control & reporting requirements

  - Additional compliance costs
• Public Companies


  As a business grows in terms of their size of operation, they may look to the option of becoming a public company, as a means of having much greater access to raising capital.
• Public Companies: Advantages

  - Limited Liability

  - Ability to raise capital

  - Company not threatened by debt
• Public Companies: Disadvantages

  - Highly complex structure

  - Higher establishment costs

  - Greater accountablity & Compliance paperwork

  - Additional compliance costs
• Social Enterprise


  A type of business that uses strategies to maximise improvements to the community, rather than to maximise profits for owners or stakeholders
• Social Enterprise: Advantages

  - Benefits the community

  - Donors can claim their donations as being tax deductable
• Social Enterprise: Disadvantages

  - Owners do not get to keep all the profits

  - It may be more difficult to expand as profits are not neccessarily invested back into the enterprise/market
• Government Business Enterprise


  A government owned, provides an essential community service, but aims to make a profit and is run in a way similar to company, where it seeks to provide a return to its shareholders.
• Governnent Business Enterprise: Advantages


  - Provides an essential service to the public that otherwise may not be provided by the private sector

  - Retains a certain level of autonomy and control over its operations

  - It is run to be financially efficient to generate a profit
• Government Business Enterprise: Disadvantages

  - Regular reporting requirememts to relevant minister

  - Ultimately accountablr for its performance to parliament and the public
• Business Objective

  A desired goal that an organisation intends to achieve
• Government


  Group of people with the authority to govern a community.

  3 levels = Fed, State, Local
• S.M.A.R.T


  S pecific

  M easureable

  A chievable

  R elevant

  T imely
• (S.M.A.R.T)

  Specific


  Objective needs to be specific and explicit.

  Clear.

  E.g. "Open your new store by July and increase sales by 20% within 2 years"
• (S.M.A.R.T)

  Measureable


  Objectives should be measureable.

  E.g. "We can accomplish this by..."
• (S.M.A.R.T)

  Achievable


  Objectives need to be attainable and reachable.
• (S.M.A.R.T)

  Relevant


  Objectives must be relevant to the business' over all mission.
• (S.M.A.R.T)

  Timely


  Objectives need to be reached within a certain time frame.
• Vision Statement


  What the business wants to become in the future.
• Mission Statement


  What the business stands for, its purpose and how it intends to get there.
• 3 Basic Levels of Objectives

  Strategic Objectives

  Tactical Objectives

  Operational Objectives
• Strategic Objectives

  Establish long term goals for the business - usually 2-5 years.

  Determined by executive.

  E.g. Director..

  E.g. Less water usage, less waste...
• Tactical Objectives

  Generally set for a medium term - usually 1-2 years.

  Determined by development department.

  E.g. Creation of new image for product
• Operational Objectives

  Tend to be short term in nature and often relate to very specific goals over coming days, weeks or months - possibly a year.

  E.g. Team is trained adequately.
• Types of Business Objectives

  - Financial Objectives

  - Social Objectives

  - Environmental Objectives

  - Marketing Objectives

  - Human Resources Objectives

  - Health and Saftey Objectives

  - Operations Objectives
• Financial Objectives e.g.

  - Maximising profit

  - Increasing market share
• Social Objectives e.g.


  - Meeting a community need
• Environmental Objectives e.g.


  - Reducing a business' carbon footprint/energy use