CHAPTER 1 BUSINESS FOUNDATIONS

Businesses in Australia Most of the businesses in Australia are owned privately, and are classified as being in the private sector. There are a number of government-owned businesses, which are classified as being in the public sector.

Businesses in Australia There are six types of business in Australia, the most common being sole trader, partnership and company.

Businesses in Australia A sole trader is an individual who wants to run a business. It is the simplest and most inexpensive form of business structure. A sole trader assumes total responsibility for managing the business, and holds unlimited liability for any debts.

Businesses in Australia A partnership can be established between two to 20 people. In a general partnership, all partners are equally responsible for debts and obligations. A limited partner (or passive investor) are not involved in day-to-day operations, and their liability is proportional to the amount invested.

Businesses in Australia A partnership will end when any members leaves. In this event a new partnership agreement must be formed.

Businesses in Australia A company is a separate legal entity to an individual or individuals, and is formed through the process of incorporation. Companies are more expensive and complicated to set up and run than a sole trader or partnership, but have the advantage of existing in perpetuity, as well as holding the same rights as a ‘natural person’.

Businesses in Australia There are two types of company: private limited and publically listed. A private limited company can normally be identified as the name contains ‘Proprietary Limited’ (or Pty Ltd). A private limited company will have between two and 50 shareholders, who can only trade shares with the permission of other shareholders.

Businesses in Australia A company might become publically listed if it wants to expand its operations. A publically listed company does not have a limit on the number of shareholders, and are listed on the Australian Securities Exchange (ASX).

Businesses in Australia A social enterprise is a business which focuses on maximising improvements in human wellbeing or the environment, rather than to maximise 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.

Businesses in Australia A government business enterprise (GBE) is a business established by a government for the provision of goods and services. While the management of a GBE is autonomous, they must meet reporting requirements for their shareholders – a major one being the government. Examples include the NBN and Australia Post.

Business objectives All businesses must establish aims or objectives. These help to guide the business strategy.

Business objectives Specific – the objective is clearly defined Measureable – the outcome of the objective can be measured Achievable – the objective can be met Realistic – the objective is achievable within the time frame Time bound – there is a time limit on achieving the objective. When setting goals and objectives, businesses need to ensure that they are made according to the SMART principle.

Business objectives Business objectives will be influenced by a number of factors, set in a hierarchy. At the top of this hierarchy is the vision statement, which outlines the core values and overall mission of the business.

Business objectives Corporate and strategic objectives set the strategic direction of the business, and are created in order to achieve the business’s overall mission. It is important for businesses to revisit objectives regularly, and look at ways to improve their performance.

Business objectives Businesses have financial, marketing and social objectives. A business needs to also strive to meet shareholder expectations.

Areas of management responsibility All businesses have a range of functions which need management, across all levels of responsibility.

Areas of management responsibility An organisational chart gives a graphic representation of these responsibilities, and who is actually responsible for them.