Business Operations Flashcards
Act
An Act is a bill which has passed through the steps required for it and has become law
Capital
Money/assets you use to start a business
Fixed assets
Assets purchased for long term use
Liaise
To assist communication between groups
Overdraft
An extension of credit for when you take out more money than you have
Pre requisite
Something that is required as a prior condition for something else to happen/ exist
Requisition
A purchase request for someone in the purchasing function
The PURPOSE of the eight business functions
• work together to achieve one goal.
• carry out closely linked tasks to achieve the same goal.
• Roles and tasks change depending on the stage of growth of the business.
• ensure survival of the business.
What type of plans does top management form
Strategic plans
Middle management forms ? Plans
Tactical
Lower management forms ? Plans
Operational
Describe management tasks
• Planning with the objectives of the company in mind.
• setting goals and developing strategies.
• getting all info for planning.
• Analyse info and set long term goals.
• Considering different plans to achieve the goals.
• Choosing the best plan and decide on the action to be taken.
• Implementing the chosen plan.
• Follow up to make sure the plan is successful, adjust it or change to the backup plan
GENERAL MANAGEMENT FUNCTION
• Sets the overall direction or strategy for the business.
• This function leads, organises and controls all the other functions.
• There are also decisions taken in each level.
• Management has three different levels, each with its own roles and responsibilities.
• Ensures that there is co-ordination among the seven different functions of the business.
ORGANISING
• It is the mechanism used to execute the plan.
• Ensures successful execution of the plan by using relevant
organisational structure.
• It looks at what needs to be done and organizing resources need to
achieve goals and objectives.
• Organising the jobs within specific functions or depart
LEADING
• guide, motivate and inspire
• inspiring employees to carry out their tasks to the best of their abilities.
• est. a productive working climate.
• Motivating employees to achieve the goals set.
CONTROLLING
• Ensures that the business achieve its goals.
• Ensures that standards are met.
• Ensures activities are carried out as planned.
• Enables the business to take corrective measures if the objectives are
not achieved.
• Risk can be identified during control.
• Involves comparing actual results with goals set by management
• Corrective measures must be taken if there is a difference between
actual results and the goals the business set out to achieve.
RISK MANAGEMENT
• Identifies possible risk by finding risk-bearing activities (i.e. activities which could go wrong) within the organisation.
• Assists businesses to analyse each possible risk to assess how likely it is that the risk will happen.
• Evaluates the potential impact of risk in terms of financial liability.
• Controls/Monitors the risk by studying reports and trends in the
environment so that measures can be taken to prevent it from
happening.
• Handles the risk by determining what actions to take should the event
happen using available resources and contingency plan and communication with stakeholders.
TOP LEVEL MANAGEMENT
for example: CEOs, Directors, Owner of sole trader, Partners in partnership
- Reports to board of directors
- LONG TERM STRATEGIC DECISIONS.
- directs, controls and manages risks.
- Determines the vision/mission/objectives/strategy of the business.
- Act of getting people together to accomplish certain goals.
- Oversees the activities of the other functions so that the business
can achieve its objectives
MIDDLE LEVEL MANAGEMENT
for example: Departmental managers. e.g. marketing manager. financial manager etc.
- Responsible for specific departments
- MEDIUM TERM TACTICAL DECISIONS.
- achieves goals / objectives set for specific department.
- implements top level management plans
- Implements vision of top management.
- works with managers in other departments and acquires resources needed in their departments.
LOWER LEVEL MANAGEMENT for example: Foreman, Supervisor, Team leaders.
- high level of productivity
technical assistance
motivating employees. - SHORT TERM / TACTICAL DECISIONS.
- Carry out instructions from middle management
- first management level, first promotion
Explain the meaning of a business ORGANISATIONAL STRUCTURE
- a system outlining how certain activities are directed in order to achieve the goals of the organisation.
- It identifies each JOB, its FUNCTION and where it REPORTS to in the organisation.
- Example of an organisational structure
MARKETING MANAGER
FACTORS that influence the organisation structure
• size of company
• technology
• resources
• strategic goals
TYPES of organisational structures
- FUNCTIONAL
• instructions from more than one manager
• The plan to be carried out determines who will give instructions
• confuses employees as they report to more than one manager. - PROJECT
• structured around project teams
•temporary structure because employees drawn from diff departments
• Employees grouped together to form a project team which carries out a
particular project. - MATRIX
• structured around projects but employees stay in their departments.
• project completed up to a certain point
• The project is passed on to the next team, which carries out next phase of the
project.
ADMINISTRATION FUNCTION:
• Handling info / data.
• collects info.
•Imp that this info is stored / distributed.
• Information interpreted, analysed and communicated
• Imp info communicated to necessary managers / employees.
• Admin is responsible for collecting, processing and distributing info
used for decision making by management.
• Stores/Records info using recent technology.
• general office work such e.g filing and storing info
Outline the ACTIVITIES of the administration function.
- COLLECTION OF INFORMATION
• Info collected from outside / inside business
• Correct and reliable information available - HANDLING OF INFORMATION
• handle info correctly to avoid making
wrong decisions
responsible for dealing with:
o ACCOUNTING RECORDS: used to draw up financial statements and reports.
o COST ACCOUNTING: Determines if product can be sold at a competitive price considering manufacturing or production costs
o BUDGETS: estimated expenses and income for specific period STATISTICS: collected and classified numerical data. - (IT)
• use of electronic equipment to help get stuff done
•tech used to communicate and handle information, referred to as ICT
(information and communication technology). - OFFICE PRACTICE
• how the administrative staff should handle their duties
• dress code / proper filing of documents/
telephone etiquette/internet usage
The DIFFERENCES between data and information
Data
Unprocessed facts
Found in tables/graphs/statistics etc
Can be collected from other business functions
Processed manually/w tech
Information
Analyses/processed data
Stored manually
Mostly used memory sticks/CDs to store info
Financial function
plans and manages all funds and assets of business
Outline the PURPOSE of the financial function.
• determines how much capital is needed
• Establishes sources to get capital.
• Decides how to invest/capital
• Ensures business can generate enough income to cover the cost of raising capital.
• Prepare financial statements to show investors that business is financially healthy
Why does a business need finances
• find the best investments
• source funding.
• control spending
• Plan that finances are spent in best way
• Allocate necessary funds to diff departments
Types of financing.
- BANK LOANS
- Bank overdraft
- Asset-based loan
- Grants
- Recievable finance
- Angel funding
- Venture capital
Bank loans
• money borrowed from the bank & repaid over time.
• repaid with interest.
• whoever borrowed the money will attach their fixed asset
as surety to the value of the loan.
• Bank loans used for long-term financing.
- BANK OVERDRAFT
short -term loan added onto the account of entrepreneur.
repaid with interest
ASSET-BASED LOAN
• money lent to successful businesses wanting to expand.
•loan used to purchase an asset which belongs to the lender
until fully paid off.
• If money is not paid back, the lender will take that asset
Grants
• money provided by government to small developing businesses.
• money doesn’t have to be paid back if it benefits the community.
Receivable finance
• loan provided to businesses while waiting for payment of the goods /service provided to avoid a cash flow shortage.
• loan equal to outstanding invoices due.
. ANGEL FUNDING
• money offered by rich ppl to other businesses for a share.
• used at the start of a business, high risk for investor.
VENTURE CAPITAL
• money offered by individuals/ organisations to expand the business.
• done in exchange of a share in the business.
• investor requires a management position or to be a board
member in business
Types of capital
Fixed
Working
Own
Borrowed
Fixed capital
pays for fixed assets
Finance long - term needs of business
Working capital
Pays for day - to - day activity (trading stock/raw materials)
Finances short term capital
Own capital
Money provided by owners
Could come from own savings or the sale of their assets/investors
Borrowed capital
Money borrowed from banks
Paid back w interest
E.g bank loan/overdraft
Fixed vs working capital
Fixed
Pays for fixed assets
Long term needs
E.g capital market/selling shares/mortgage bonds
Working capital
Pays for day to day activity
Finances short term capital
E.g credit allowed by suppliers, short term loans
Owned vs borrowed capital
Owned
Owner provides capital
Permanent Bc company doesn’t have to pay it back
Not a liability
Return on capital is profit
Borrowed
Get from banks
Temporary bc paid back
Liability
Paid w interest
PURCHASING FUNCTION
-buys quality raw materials and services
-looks for new, better suppliers
- places orders with suppliers, follows up to ensure ordered products delivered on time.
- ensures ordered goods delivered at the agreed price,right quantities & quality.
PURPOSE of the purchasing function.
• Manages to ensure sufficient levels of stock to carry out business operations.
• looking for the best suppliers.
• Regular contact with other business departments to determine needs.
• Send back damaged goods to supplier
• confirm all goods are according to specifications and the price invoiced as the quoted price.
• Negotiate the best possible term of payment with suppliers.
ACTIVITIES of the purchasing function
•expert knowledge of product and market
• Find out needs of other business departments
• Look for new, better suppliers.
• Ensure enough stock available for production and sales.
• Place orders with suppliers
• Ensure ordered products delivered on time.
• Send damaged products back to the suppliers
• Buy the right amount of stock.
• Buy goods from the best supplier
• Get the best price for the quality required
• Keep the correct levels of stock on hand.
• Record the cost and selling prices of stock .
Purchasing procedure (simple)
Requisition
Price
Supplier
Order
Collect
Pay
Distribute
Purchasing procedure (detailed)
Requisition
-est. budget
-determine needs
Price
-determine best price
Choose supplier
-choose best supplier based on quality, price, reputation and reliability
order
-place order in writing to compare to goods received
-confirm price
Collect order
-ensure right order received and recorded
-quality & quantity checked against order
Pay supplier
-pay after delivery
-suppliers provide requisition form to purchasing dept.
-purch. Dept. provide delivery note to financial dept.
-supplier sends invoice to financial dept.
Distribute stock
-ensure proper distribution of stock to relevant dept.
-distr. of stock must be in line w pre requisite orders from each dept. to avoid stock loss
Complete the order
- ensure all documentation is where it should be
Cash vs credit payment
Cash
-all cash/Cheque payments
-enable businesses to budget for stock purchases
-qualify for cash discounts
Credit payment
-payments by credit card
-buy stock & pay in future
-can pay for more goods
Adv vs disadvantages of credit payment
Adv
-no discrimination
-decr in interest helps consumers have more cash to pay off debts
-consumers have disposable income to buy stuff when interest rates are low
-low income customers can buy products w affordable repayment as per credit agreement
-damaged goods easily replaced
Disadvantages
-unsettled debts
-debtors
-less investment money
-credit can be refused based on a credit risk evaluation
-consumers have less money to spend
-consumer pays more bc of interest
Imp of stock control
-Determines amnt/ value of stock
- record/check cost/selling price of products
-ensure enough stock to meet demand
-keep correct lvls of stock
-identify theft
National credit act
Provides credit applicants and providers w clear rights and responsibilities
Explain the PURPOSE of the National Credit Act.
- Promotes development of an accessible credit market
- Encourages responsible buying
- Avoids debt and encourages full payment back to loaners
- Discourages reckless credit granting
- Educates on safe application for credit
CONSUMER rights outlined in the NCA: Consumers have a right to…
-Apply for credit.
-Get information in one’s language.
-protected against discrimination
-given reasons for credit refusal
-told about interest rate and any other costs of the credit transaction.
-receive a copy of a credit contract
-apply for debt counselling
Responsibilities of CREDIT PROVIDERS
• conduct a credit assessment on the consumers’ affordability.
• ensure the consumer has an income.
• Check the consumer’s monthly debt-repayment obligations.
• check other expenses of the consumer.
• Consider debt-repayment history
REMEDIES of the NCA
(Simple)
REMEDIES of the NCA
1. The Consumer Tribunal
2. National Consumer Commission
3. Ombudsman
The consumer tribunal
Reviews decisions made by NCR (national credit regulator) and NCC (national credit commission)
NCC (national consumer commission)
Protects economic welfare of customers
Ombudsman
Receives complaints
IMPACT OF NCA ON BUSINESS ADV VS DISADV
Adv.
Lower bad debts resulting in better cash flow.
• Protects business against non-paying consumers.
• Increases cash sales as credit can only be granted to qualifying customers.
• Prevents reckless lending
• Ensures that businesses settle debts on time so they can obtain good credit scores.
DISADV.
• Confidential business info may become available to competitors.
• Penalties for non-compliance = very high.
• unnecessarily burdened by legal processes.
• have to disclose more information about products and services
• Staff need to be trained
Legal experts need to be consulted, increasing costs
PUPLIC RELATIONS FUNCTION
• keep stakeholders happy.
• ensures good communication between business and stakeholders
Discuss the IMPORTANCE of public relations
• publicity for promotional events and through media
• sponsor community events.
• Produce annual reports reviewing business activities and achievements.
• Brochures used to distribute information.
• Attend network events to talk about the business product.
External vs internal public relations
External
-communications outside organisation, press releases
- good company image to THOSE OUTSIDE
Internal
- e.g employees, management and their family members.
• Creates a good company image and awareness to EMPLOYEES IN the company.
Methods of public relations
Media
Direct contact
Brochures
Exhibitions
Social responsibility
Telephonic
The INTERRELATION between the business functions
• The functions depend on each other, INTERRELATED.
• work together for success of the business
• GENERAL MANAGEMENT = directly linked to all seven functions
• The FINANCIAL and ADMINISTRATION functions are responsible for gathering, storing and
processing information and financial records.
• The purchasing, production and marketing functions are responsible for delivery of goods.
• The PURCHASING function buy raw material for the PRODUCTION function to process into finished goods.
The MARKETING function sells the product which the production
function has produced
• The MARKETING function promote the product while PUBLIC RELATIONS function promotes the
business and ensures a good relationship between the business and the public.
• All the staff with the right skills and qualifications are appointed by HUMAN RESOURCES
.
