9.2 BUSINESS MANAGEMENT - Achieving business goals

Question 1

Difference between management and manager

Answer 1

MANAGEMENT: Process of coordinating a businesses resources to achieve its goals.

MANAGER: Someone who coordinates the businesses limited resources in order to achieve specific goals.

Question 2

Features of business management

Answer 2

• Ability to analyse information, attend meetings and communicate with internal and external people of the business.
• Manage change effectively.
• Having visions
• Providing leadership through desire to motivate, encourage, guide employees.
• Understanding roles and responsibilities.

Question 3

Contemporary definition of management

Answer 3

Views management as the process of working with and through other people to achieve business goals in a changing environment

Crucial to this process is the effective and efficient use of limited resources

Question 4

Management requires

Answer 4

• Working with and through others
• Getting the most from the limited resources
• Balancing efficiency and effectiveness
• Coping with a rapidly changing environment

Question 5

Features of effective management

Answer 5

• Planning
• Organising
• Leading
• Controlling

Question 6

Achieving business goals

Definition
Importance
Method

Answer 6

DEF: Desired outcomes a business hopes to achieve within a certain time period; goals can be;

• Short term
• Mid term
• Long term

IMPORTANCE:
Serving as targets: Setting goals for yourself at a certain level.
Measuring sticks: Benchmark against business performance.
Motivation: Goal being something to aim for
Commitment: Getting employees to agree/participate in goal-setting process.

METHOD:
Specific
Measurable 
Achievable 
Realistic
Timebound

Question 7

Profits

Answer 7

Providing a return on investments; helps benefit a bus.
TOTAL REVENUE – TOTAL COSTS = PROFIT

Profit maximisation: maximum difference between the total revenue and total cost being paid out.

MAXIMISE PROFITS;

• Increase sales
• Reduce expenses
• Find cheap supplies

GOAL: increase profits by 5% over 5 years

Question 8

Market share

Answer 8

DEF: Business share of the total industry sales for a particular product.
DESCRIPTION: The more market share a business has, the more potential it has to increase production and future sales.
E.G. Coles may have 60% of cola markets

BUSINESS INCREASE MARKET SHARE BY:

• Promotion
• Expanding business

GOAL: to establish a business in the market

Question 9

Growth

Answer 9

DEF: Growth in revenue
DESCRIPTION: Positive increase in sales, distribution, staff etc.

GROWTH CAN BE ACHIEVED:

• Increased sales
• Opening new outlets (expansion)
• Merging businesses/takeovers
• Marketing/promotion
• Diversification (introduction of new products).

GOAL: to open a new outlet in a different geographic area

Question 10

Share price

Answer 10

DEF: Vale of shareholder equity measured of the ASX.
DES: To maintain share price in a fluctuating market.

STRONG SHARE PRICE -> INVESTORS WANT TO INVEST DUE TO BIG PROFIT MADE. (Reputation increases)
WEAK SHARE PRICE -> INVESTORS DON’T WANT TO INVEST (Reputation decreases)

SHARE PRICE IS MAXIMISED;

• Keeping share price rising
• Constantly improving share price
• Paying back healthy dividends

GOAL: maintain share price in a fluctuating market

Question 11

Social

Answer 11

DEF: Business takes responsibility for the impact it has on stakeholders.

MAIN SOCIAL GOALS;

• COMMUNITY SERVICE: business sponsorship of a wide range of community events, promotions and programs.
• EMPLOYMENT: many small business owners employ family members who otherwise might be unemployed.
• SOCIAL JUSTICE: businesses may adopt a set of policies to ensure employees and/or other community members are treated equally and fairly.

GOAL: to promote a positive work-life balance for employees

Question 12

Environmental

Answer 12

DEF:

• Business takes responsibility for the impact it has on the environment.
• Has to be balance between economic and environmental concerns (SUSTAINABLE DEVELOPMENT)

ENVIRONMENTAL GOALS;

• Recycle, renew, regenerate
• Adopting ‘green’ attitude
• Developing products/creating ideas that are environmentally friendly

GOAL: minimise ‘carbon footprint’ through ecologically sustainable practices

Question 13

Achieving a mix of the above goals

Answer 13

• Managers try to ensure their business continues to operate profitably, however, stakeholders will be adversely affected by unfavourable business conditions and decisions.
• Business managers must consider stakeholders needs as they consider the business goals.
• Management has responsibility to ensure that the stakeholders are not adversely affected by the pursuit of its goals.

However, some business goals may benefit one group of stakeholders at the expense of another; this is when the management has to reconcile conflicts of interest.

Question 14

Staff involvement - innovation

Answer 14

Referred to as ‘entrepreneurship within the business’; employees who take on entrepreneurial roles within business are called ‘intrapreneurs’

If a business is to grow and to maintain its competitive advantage, then staff must be encouraged and given the opportunity to be innovative

Question 15

Staff involvement - Motivation

Answer 15

Refers to the individual, internal process that directs, energises and sustains a person’s behaviour.

motivation includes:

• Provide a safe work environment
• Encourage suggestions
• Make clear expectations
• Lead by example

Question 16

Staff involvement - Mentoring

Answer 16

Process of an experienced employee helping a younger employee gain knowledge of the business.

This helps make sure all employees are exposed to values the business believes are important

Question 17

Staff involvement - Training

Answer 17

Refers to the process of teaching staff how to perform their job more efficiently and effectively by boosting their knowledge and skills.

Informal - Training on the job
Formal - Off-the-job training; when you receive a formal qualification at the end of a training.