Types of Businesses
What is the simplest form of business ownership, where one person is responsible for all operations and liabilities?
Sole trader
What is the primary objective of most businesses?
To make a profit
Who owns a business and has the most financial risk?
Owners/shareholders
What management style gives employees the least decision-making power?
Autocratic
What is corporate culture?
The shared values, beliefs, and behaviors of an organization
What is a business that aims to meet a social objective rather than maximize profit?
Social enterprise
What business objective focuses on reducing waste and maximizing resources?
Improving efficiency
Why might suppliers be considered key stakeholders in a business?
They provide materials needed for operations and rely on consistent orders
What is the difference between delegation and decision-making as management skills?
Delegation is assigning tasks to others; decision-making is choosing the best course of action
What is the difference between official and real corporate culture?
Official is what the company promotes; real is what actually happens in the workplace
A sole trader wants to expand but is concerned about financial risk. What business structure would be a better option, and why?
A private limited company (Pty Ltd) would be better because it provides limited liability, meaning the owner's personal assets are protected if the business incurs debt.
A business that aims to produce a unique product that fills a gap in the market is trying to fulfil what?
A market need
Give one example of a stakeholder conflict and explain why it occurs (excluding owner/customer conflict).
Employees wanting higher wages vs. shareholders wanting higher profits—pay raises reduce short-term profits
Why might a participative management style be ineffective in a fast-paced, high-risk industry?
Slow decision-making, potential for conflict, inefficiency in urgent situations
Why is corporate culture important for a company’s long-term success?
It influences employee retention, customer satisfaction, and overall performance
A partnership is considering whether to incorporate into a private limited company. What are two benefits and two drawbacks of this transition?
Benefits—limited liability, easier to attract investors; Drawbacks—higher setup costs, stricter legal requirements
How can a business meet shareholder expectations?
By increasing profits, paying dividends, and ensuring company growth.
What is an example of a stakeholder conflict involving the general community?
A business polluting a local area may cause conflict with residents
A business is struggling with employee motivation. Which two management skills should the manager improve, and why?
Leadership (to inspire employees), communication (to ensure clear expectations and feedback).
Give an example of how real corporate culture might differ from official corporate culture.
A business promotes teamwork but has a competitive and toxic work environment
A social enterprise and a government business enterprise (GBE) both aim to serve the public. What is one key difference in how they operate, and why might a social enterprise have more flexibility in decision-making?
A social enterprise is privately owned and can make independent business decisions, while a GBE is government-controlled and may face political influence. A social enterprise has more flexibility because it does not rely on government policies or approvals for strategic changes
Explain how a business can increase market share without lowering prices.
By improving product quality, increasing marketing efforts, expanding distribution, or offering better customer service
A business wants to increase profits by cutting costs, but employees demand higher wages. Propose a solution that benefits both stakeholders.
Implementing performance-based incentives, increasing efficiency to reduce waste, or investing in technology to lower long-term costs
A company is undergoing major changes. Which management style and two skills are most important to ensure success?
Participative or consultative style; key skills—communication (to reduce uncertainty), decision-making (to implement change effectively)
How does corporate culture affect the success of different management styles? Give one example.
A collaborative culture supports a participative style, such as in a tech startup. A strict, hierarchical culture suits an autocratic style, like in the military