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Gadget Industries has recently changed its business structure from being a sole trader to a partnership - VCE - SSCE Business Management - Question 1 - 2017 - Paper 1
Question 1
Gadget Industries has recently changed its business structure from being a sole trader to a partnership. The business has also employed a new Human Resource Manager ... show full transcript
Worked Solution & Example Answer:Gadget Industries has recently changed its business structure from being a sole trader to a partnership - VCE - SSCE Business Management - Question 1 - 2017 - Paper 1
Step 1
Define the term 'sole trader'.
Answer
A sole trader is a type of business structure where one person owns and operates the business. The key distinction of a sole trader is the single ownership, wherein the owner has full control over decision-making and profits generated from the business. However, this structure also carries unlimited liability, meaning that the owner is personally responsible for all debts incurred by the business.
Step 2
Outline one reason why a business may choose to operate as a partnership rather than as a sole trader.
Answer
One reason a business may choose to operate as a partnership instead of as a sole trader is the ability to share resources and expertise among partners. A partnership allows for more capital to be pooled, providing greater funding for business activities. Additionally, partners may bring diverse skills and experiences which can improve decision-making and operational efficiency compared to a sole trader, who may lack such breadth of expertise.
Step 3
Describe the impact that this change may have had on one other key performance indicator of Gadget Industries.
Answer
The change in the level of staff turnover can significantly impact employee productivity, which is another key performance indicator. High staff turnover often disrupts the continuity of operations as new employees require time to be onboarded and trained. This can lead to decreased morale and a loss of experienced staff, which ultimately reduces overall productivity levels within the company. Fostering a stable workforce tends to promote enhanced efficiency and better service delivery.
Step 4
Explain how a persuasive management style may assist in reducing the level of staff turnover.
Answer
A persuasive management style involves effectively communicating with employees and incorporating their feedback into decision-making processes. This approach can help in reducing staff turnover by making employees feel valued and respected. When employees perceive that their opinions matter, they are more likely to be engaged and committed to the organization. Additionally, a persuasive style encourages a collaborative environment, which can increase job satisfaction and reduce the desire to leave the organization.