Business Management Flashcards
Define management
process of coordinating and integrating business activities and resources to achieve the goals of a business.
3 roles of management
interpersonal, informational & decisional
6 skills of management
interpersonal, dispute resolution, strategic thinking, vision, flexibility & adaptability to change, problem-solving + decision making
6 steps to achieving business goals
profit maximisation, market share, growth, share price, social, environmental
3 management approaches
classical, behavioural, contingency
Principles of classical approach
- Specialisation
- Tight supervision/control by management
- Financial incentives to increase output
- People aren’t important, task is important
Principles of behavioural approach
- Focused on people (employees)
- Success = employee’s behaviour
- Managers need to understand, work collaboratively and value employees so they work harder
Principles of contingency approach
- Flexible and uses strategies that suit the business
- Accepts that there is not one best way to manage a business
4 key business functions
operations, marketing, finance, HR
Managers are responsible for…
Inputs - Transformation - Outputs
Examples of transformed resources
Raw materials, information, customers, unfinished goods
Examples of transforming resources
Machinery, facilities and labour
What is quality management?
Involves activities to plan, organise and control operations activities to ensure outputs produced meet customer expectations
3 features of quality
durability, functionality, efficiency
What is quality control?
Inspections to check for problems and then fix them
Positives of quality control
- Being able to hand over a flawless product
- Check for faults and defects
Limitations of quality control
- Time
- Cost of testing goods and inspectors
- Requires staff training
What is quality assurance?
Implementing a system to ensure standards are achieved in production.
Positives of quality assurance
- Certified individual system
- Positive reputation
- Ensures product isn’t faulty
Limitations of quality assurance
- Training staff (cost and time)
- Cost of certification
What is total quality management?
A commitment to excellence and continual improvement.
What is marketing?
activities to communicate with consumers and turn potential sales into actual sales
Approaches to marketing
mass and niche
4 common characteristics of target market
- Demographic features
- Geographical location
- Use of product
- Social status
7 key areas of the marketing mix
- Product
- Price
- Promotion
- Place
- People
- Process
- Physical evidence
Ways of positioning
- Premium/high-end
- Affordable/accessible
- Specialist
- Cutting edge
What is positioning?
the place the brand occupies in the minds of customers.
Examples of branding.
logos, colour scheme, business name
4 pricing strategies
cost based, market based, competition based, value based.
Cost based strategy
Setting prices in relation to how much it costs to make the product
Market based strategy
Setting prices using the market forces of supply + demand
Competition based strategy
Using the price of competitors as a guide
Value based strategy
Setting a price based on customer perception rather than costs level of service, environmental + social credentials or status.
Penetration pricing
Start with a low price which is raised overtime
Market skimming
Start with a high initial price which is then reduced overtime.
Loss leaders
Selling a product at a loss in order to attract people into the shop to buy other products.
Price points
Selling a range of products at fixed price levels to appeal to multiple target markets.
Types of discounts
- Cash
- Bulk
- End of season/financial year
Objectives of promotional strategies
- Creating brand and business awareness
- Informing and reminding customers about the business
- Persuading customers to buy products
4 types of promotion
personal selling, advertising, sales promotion, PR + publicity
3 types of distribution
direct, indirect, multiple channel
Direct distribution
The business sells directly to the consumer either through their own shop or via the internet.
Indirect distribution
The use of intermediaries to sell + distribute products to consumers.
Multiple channel distribution
Business sells directly to consumers but also uses intermediary.
3 types of distribution intensity
exclusive (one outlet), selective (limited outlets), intensive (all outlets)
Physical issues in distribution
- method of transport used to deliver products to customers
- location, size and management of warehouse facilities for stock and levels of stock to hold
Role of HR
To provide a highly skilled workforce who are motivated and working towards achievement of business goals.
4 steps in HR cycle
acquisition, induction, training, performance appraisal
Role of acquisition
- Bringing new employees into the business
- Identify staffing needs
- Recruitment
- Selection
Strategies of acquisition
- Outsourcing recruitment activities to a specialist service/source
- Embracing new technologies in selection activities
Induction
Activities to introduce new employees to business including its processes, culture and expectations.
Types of training
On the job: develop skills whilst actually on the job (supervision in operations).
Off the job: employers encourage employees to develop skills by attending a course (first aid)
Performance Appraisal
Process of analysing and evaluating employee performance for strengths, weaknesses and opportunities for further development.
3 types of employment contracts
awards, enterprise agreements, individual contracts
What is an award?
Sets out minimum terms and conditions that apply to a particular employment role, profession or industry.
Advantages of an award
set a minimum for pay + conditions, cover + protect all employees from exploitation.
Disadvantages of an award
inflexible - may not suit all employees, prevent recognition of individual initiative.
What is an enterprise agreement?
A negotiated arrangement between an employer and group of employees.
Advantages of enterprise agreement
involvement of employees, possibility of improved pay + conditions, flexibility.
Disadvantages of enterprise agreement
inequity in wage rates between employees, disadvantage employees with poor bargaining skills.
What is an individual contract?
Cover workers specific to them and contracts are signed individually and in secret. Common among managers or high income earners.
Advantages of individual contract
right to sue for compensation, flexibility, individual initiative awarded.
Disadvantages of individual contract
no union representation, exploitation of employees due to bargaining skills, expense of court case if you sue.
What is maintenance?
Refers to the activities of the business to ensure staff remain with the business and complete tasks to best of ability.
Two types of awards
monetary (money based) and non-monetary (privileges + opportunities)
2 types of separation
- Voluntary - person decides to leave
2. Involuntary - forced to leave
Examples of voluntary separation
- Promotion at another business
- Start own business
- Change of lifestyle
- Retirement
Examples of involuntary separation
dismissal, retrenchment, redundancy
What is a cash flow statement?
Shows a summary of cash transactions which have occurred over a period of time
Examples of inflows
- Initial capital
- Sales revenue
- Money received from loans
- Sale of land, machinery etc.
Examples of outflows
- Wages + salaries
- Stock
- Repayment of interest on loan
- Purchase of assets
Closing balance calculation
Closing balance = opening balance + net cash increase + decrease
Income statement
Determine the business operating outcome for a stated period.
By matching revenue with the expenses incurred in earning the revenue.
3 categories of expenses
- Admin: expenses associated with running the business
- Selling: expenses associated with selling + delivering products to customers
- Finance: expenses related to borrowing money
Profit calculation
Profit = revenue – expenses
Gross profit calculation
Gross profit = sales – cogs (cost of goods)
Net profit calculation
Net profit = gross profit – other expenses
COGS calculation
COGS = opening stock + purchases – closing stock
What is a balance sheet?
Show us the financial position of a business at a point in time. Provide a snapshot of what the business owns and how they paid for it.
Accounting equation
Assets = liabilities + owners equity
Assets
What the business owns or directly controls items of financial value.
Examples of current assets
Easily converted into cash (within 1 year)
e.g. stocks, accounts receivable (money owed by customers), cash
Examples of non-current assets
Unlikely or harder to convert to cash within 1 year.
e.g. buildings, machinery, vehicles
Liabilities
Debts owed by business and will need to be repaid.
Examples of current liabilities
Short-term debts must be repaid within 1 year.
e.g. overdrafts, accounts payable (money owed to suppliers)
Examples of non-current liabilities
Long-term debts repaid over a longer period than 1 year.
e.g. mortgage, business loan or debentures (fixed interest loan)
Owners Equity
Owners claim in business. Amount of capital they have put into business.
- Capital (money put in by owners)
- Retained profits (previous profits reinvested in business)
Advantages of ethics
- Develops good reputation
- Improved sales and profits
Ethics in operations
honour commitments
Ethics in marketing
truthful in communication with stakeholders
Ethics in HR
being honest, fair and truthful in communication with stakeholders
Ethics in finance
avoiding conflicts of interest, being honest and accurate in accounting
Triple bottom line
people, planet, profit
Two types of change
Transformational change = complete restructure throughout whole organisation
Incremental change = minor changes, usually involving only a few employees
3 steps of change management
- identify need for change
- formulate appropriate, timely responses
- reduce resistance to changes
Signals of need for change
o loss of sales
o decreasing market share
o negative financial performance/position
o employee dissatisfaction
3 steps of Kurt Lewin Model
Unfreeze = break down support of existing system Change = explanation, modelling + practice Refreeze = reinforce change behaviour
4 sources of resistance
financial costs, inertia of owners + managers, cultural compatibility, staffing considerations
Who helps overcome resistance
Management consultants – help businesses improve performance by investigating existing problems and developing plans for improvement.
