business topic 2 (chap 5-8.6)) Flashcards
traditional vs contemporary management
primary role of a manager is to achieve the business’s goals in a changing environment by coordinating LIMITED resources while working with others
* traditional definition, by coordinating business resources.
* contemporary definition, management is a process of working with, and through, other people.
o human resources are the focus of management.
management requires (5) NEED TO BALANCE THE E’s
- working with & through others (interpersonal skills)
- communicate well with employees to achieve high staff commitment - achieving goals of the business
-employees have purpose
-measure performance
(EFFECTIVENESS) - getting most from limited resources
-managers need to coordinate resources efficiently
-benefits > costs
(EFFICIENCY) -
balancing efficiency & effectiveness
- competitive position in challenging bus environment - anticipate & adjust with rapidly changing environment
effectiveness
measures degree goal been achieved
efficiency
compares resources needed to achieve goal (costs)
against what actually achieved (benefits)
effective manager needs to be good at (POLC):
-
Planning
-prepare predetermined course of action for bus
-process setting objectives & deciding methods to achieve em -
Organising
-structing org to translate plans & goals to action -
Leading
-motivating ppl to work towards achievement of org’s objectives -
Controlling
-evaluating performance & taking corrective action to ensure set objectives achieved
role of effective management
ensure joint efforts of employees directed towards achieving bus goals
whether goals of business achieved largely depends on
skills & expertise of management team in coordinating bus’ resources
manager skills required to operate effectively FARDPIVS
Interpersonal
Strategic thinking
Vision
Problem Solving
Desicion making
Flexibility
Adaptability to change
Reconciling conflicting interests of stakeholders
interpersonal skills
skills needed to work & communicate with others & understand their needs
-abiliy to build positive relationships with staff
why are interpersonal skills important
through others that managers achieve business objects
-to identify & recognise others perspectives and use them in a logical, understanding manner is effective in achieving objectives
-inspire staff while overcoming conflict, creating workplace of respectand collaboration
5 interpersonal skills most crucial to success of managers/leaders SCSMC
- self-management: the ability to delegate responsibility to staff
- actions affect staff behaviour and modify accordingly
- unlike hierarchical management approach (total responsibility for POLC)
-
communication: the ability to listen to employees and learn from them
-vision, staff expectations, listen to feedback from stakeholders, healthy relations
-long term survival of bus -
supportiveness: the ability to create an atmosphere in which employees know they are supported
-acknowledge efforts * needs , empathy, work wtih staff for common solution during conflict - motivation: the ability to customise interactions with employees to suit each individual’s needs in the hope of finding ways to influence their behaviour
-
conflict resolution: the ability to help parties engaged in disagreement find a resolution.
-view problems in multiple perspectives
-acitve listening, critical thinking, empathise & compromise
methods of communication
ultimately send message to another
-verbal (spoken, written)
-nonverbal (smile, body language {most important})
strategic thinkin
allows manager to see business as whole to take broad, long term view
-complex parts depend & interact with each other
-think of bus’ future direction & goals to achieve
benefits of strategic thinking VUIC
- see business in context of events & trends, identify opp/threats
- help maintain competitive position iwth constantly changing business environment
vision
shared direction allows ppl attain common goal
-provides cooperation & commitment to achieve
-eg. manager communicates goals to employees
leadership
ability to influence ppl to set & achieve specific goals
-inspires, guides & supports employees to achieve
skills of management ICSVPDFAR
interpersonal
communication
strategic thinking
vision
problem solvnig
decision making
flexibility
adaptability to change
reconciling conflicting interests of stakeholders
steps of problem solving process IGDACE
set of activities to search, identify and implement course of action to correct situation
-most vital skill to develop is ability to decide which problem give full attention & which issues priority over others
-identify causes & problem, info for alternatives, analyse them and choose one –> evaluate solution
decision making
identifying options available and choosing course of action to solve problem
-manager evaluates risk involved if decision implemented (& other options)
-part of problem solving process
proactive
management style incorporated DYNAMIC action and forward planning to achieve objectives
- »_space;> reactive
conflicting interests of stakeholders
place competing demands upon business,
-some compatible (quality products at reasonable prices), sales increase, greater profits, rewarded with higher dividends for owners
incompatible
-satisfying 1 = dissatisfying other
eg. employees & unions require safe working conditions & reasonable wages, forced to raise prices but customers want reasonably prices products
major stakeholders and conflicting interests
- customers: pressure bus to satisfy needs, act ethically, socially responsible
- employees:
- interactions with customers influences bus reputation
-motivation & skills influence quality of g&s - shareholders/owners
-demand ^profits affect strategies of bus - society/enviro
-adopt enviro sustainable practices
-conserve use of natural resources (energy, water) –> avoid pollution
-recycle products to reduce waste
-reduce electrical consumption by installing solar panels
conflicting interests between employees & shareholders
employee: safe working conditions & reasonable wages
shareholder: reduce bus profit and dividends to shareholders
conflicting interests of management & customers
management: maintain profit & high dividend to satisfy shareholders by raising prices of products
customers: upset customers who expect reasonable pricesconf
conflict between management & suppliers
management: keep costs down to improve profit
suppliers: higher prices to cover costs of providing ethical materials
triple bottom line
economic, social, enviro performance of business
-shareholder value increases through careful management of stakeholder value ensuring long term growth
-businesses socially responsible rewarded with improved business performance
hardships of being socially responsible
expensive, time consuming
-reduce competitive advantage
how can businesses reconcile conflicting interests between shareholders and employees
ESAS
- employee share acquisition schemes
-opp for eligible employees to purchase shares in bus at (often) reduced price - offer training & proff development to employees
-educated, skilled workforce more efficient –> reduce prod costs –> rising profits –> please shareholders** (high quality product to satisfy customer expectations)**
how can businesses reconcile ocnflicting interestes of various stakeholders
stakeholder engagement (business shares info with & seeks input from stakeholders, involving them in decision making)
problems of mass production
-training employees
-organising managerial structure
-scheduling complex manufacturing processes
-worker dissatisfaction
why managers should focus on triple bottom line
- increased customer loyalty — socially responsible reputation likelier to continue buying from the business.
- new customers, since existing customers refer the business
- increased sales and profits.
- lower staff turnover reducing costs of replacing staff and increasing productivity.
- competitive advantage.
goal
desired outcome bus intends to achieve within time frame
industrial revolution generated 2 perspectives of approaches
-
scientific approach
-how best to organise workers & production methods in factory -
classical bureaucratic approach
-business organisation /structure
factories ^ prod –> hire & coordinate ppl to maintain prod lvls
classical appraoch to management
how to best manage and organise workers to improve productivity (output)
scientific management (frederick taylor
studies job in great detail to discover best way to perform it (max efficiency)
-strict hierarchical structure outline responsibilities of each management lvl
-clear lines of communication, procedures, rules
-specialisation of work/force,
-impersonal evalusation
industrialised countries in early 70s Frederick Taylor management approach 4 principles
scientific management approach
1. scientifically examine each part of task to determine most efficient method for performing task
2. select suitable workers and train them to use scientifically developed work methods
3. cooperate with workers to guarantee they use scientific methods
4. divide work and responsibility so management responsible for planning, organising, controlling scientific work methods & workers responsible for carrying planned work
what did frederick taylor believe (scientific from classical approach)
to improve efficiency, systemise way job completed
-poorly skilled workforce can train to perform simple repetitive tasks effectively (divide task to smaller specific activities improve productivity)
employees follow self-interest and display natural desire to avoid work
-tight control by supervisors & managers
-management to control workers and ensure followed instructions by rigid rules & regulations based on hierarchy & authority
what dod frederick taylor use to analyse performance of certain task
TIME and MOTION STUDIES to reduce task to effective minimum standard
-reduce tasks to most simple format
-examining each step in production procedure and time taken to perform them
according to WEBER, BUREAUCRACY organisation should have 5
- strict hierarchical organisational structure
- clear lines of communication & responsibility
- specialisation (jobs break down to simple tasks)
- rules & procedures
- impersonal evaluation of employee performance toavoid favouritism & bias
Fayol 5 principles to assist managers
- discipline as feature of leadership
- org’s goals should take precedence over employee’s omdovodial interests
- rewards for effort should be fair
- security for employment is essential
- teamwork should be encouraged
3 adv of classical approach to management
- shorter decision making time
- increased productivity
- clear chain of command
4 disadv of classical appraoch to management
- specialisation & repetitive tasks –> employee boredom
- less job satsifaction –> increased staff turnover
- discourage innovation, creativity
- inflexible organisation, lower ability to adapt to changing conditions
planning organising and controlling
preparation of predetermined course of action for business
-short & long term success of business
1. vision & goalsfor bus
2. methods to achieve
3. anticipate future changes
-set goals and decide methods to achieve
ORGANISING
-determines whats done, who does, how completed
-coordinates financial, human, material resources to achieve goals
CONTROLLING
evaluate and modify tasks to ensure goals achieved
-what’s intended to happen with what occurred
3 steps of organisation process
- determine work to complete
-
group similar activities to smaller steps
improve efficiency by enabling appropriate allocation of resources - assign work, delegate authority (who does, who ensures done)
similarities betw taylor (scientific) and fayol (bureaucratic)
managers responsible for planning organising controlling
3 lvls of planning STO
- strategic (long term) planning (top management)
- tactical (medium-term) planning (middle management)
- operational (short term planning)
(frontline management)
strategic (long term) planning
-plan following 3-5 yrs
-determine where in market business wants to be
-what business wants to achieve in relation to competitors
tactical (medium term) planning
-flexible, adaptable 1-2 yrs
-implement strategic plan to respond quickly to changes
-how goals achieved through ALLOCATION of resources
operational (short term) planning
-specific details wy business operates short term
-daily management controls of operations for short term goals
-eg. daily/weekly production schedules
controlling
management attempts to evaluate performance & take corrective action to ensure objectives achieved
-compares what intended to happen with what occurred
-management check progress, make improvements to achieve goals
control process 3 steps EMC
- ESTABLISH standards with firm’s goals & influences from employees, management, industry & GVT
- MEASURE performance and determine how comparisons will be made against standards
- take CORRECTIVE ACTION
-change activities, processes & personnel to ensure goals of business met
management hierarchy
arrangement provides increasing authority at higher levels of hierarchy
-senior managers have greater accountability, responsibility & authority compared to lower lvls of pyramid
- senior management team (CEO)
- MID MANAGEMENT TEAM (department head)
- frontline management team (team supervisor)
-taller hierarchy –> more lvls management –> LONG CHAIN OF COMMAND,
characteristics of pyramid organisational structure
group ppl according to specialised functions they perform
-rigid lines of communication
-numerous lvls of management (up –> down)
-distinguished organisational positions and responsibilities
-hierarchical flows of info directed downwards
-SPECIALISATION OF LABOUR (tasks divided into separate jobs)
-CHAIN OF COMMAND shows who responsible to whom
-centralised control with all strategic decisions made by senior management
autocratic leadership style
decisions made by management, where staff have no input in decision-making process
-high task/low process
-dictates work methods
-frequently checks employee performance
-motivate through disciplinary action for compliance & obedience, negative feedback
democratic leadership style
manager consults with employees to ask suggestions and considers them when decision making
-presents problems, asks for suggestions & works together to make decision
-share decisionmaking authority
-flatter management structures & diverse groups
whatleadership stylel would managers with a strict classical-scientific approach display?
autocratic
when can autocratic leadership style be effective
time of crisis when immediate compliance with procedure needed/meeting unexpected deadline where speed important
individuals lack skills and knowledge, but doesn’t encourage best performance from employees
4 advantages of autocratic leadership style
- directions & procedures clearly defined, less chance of uncertainty
- employee roles & expectations plainly set so management can monitor performance
- hierarchical structure provides stable & consistent enviro, outcomes always match management objectives
- centralised control at top-lvl management so time used efficiently & problems dealt with quickly bc no discussion/consultation
4 disadvantages of autocratic leadership style
-
no employee input allowed,, ideas arent encouraged/shared
-employees don’t get chance to develop skills/feel valued - ignores importance of employee morale & motivation
-if no responsibility given to lower staff, job satisfaction decreases –> absenteeism & staff turnver - potential for conflict increases
-workers often competing for approval of managers, tension between employees - lack of employee input, resentment
main features of classical scientific & bureaucratic management approaches
time & motion studies to reduce inefficiencies
-production line methods/procedures
-hierarchical organisational structure
-chain of command
-autocratic leadership style
behavioural management approach
stresses employees should be main focus of way business organised
-successful management depended largely on manager’s ability to understand & work with diverse ppl
-Mayo ‘Hawthorne effect’ 1. worker satisfaction, employees social AND eco needs, positive supportive supervision and the impact of teamwork. 2. team participation ^ job satisfaction & output
-managers needed skills in communication, motivation & democratic leadership
3 advantages of behavioural approach
- increased empowerment of employees as they can take ownership of their work
- worker recognition & appreciation –> increased motivation
- improved relationships betw managers & staff
3 disadvantages of behavioural approach
- lack control
- communication confusion may arise
- difficult to accurately predict employee behaviour
qualities of a successful leader
-open mind, seeks new ideas & freely shares info
-confidence in others, shares credit & recognition
-builds & communicates clear vision to workers & motivate them
-demonstrates flexibility in dealing with conflict
ppl interact regularly & coordinate their work towards common goal
importance of teamwork
vital for managers
working separately** with no common purpose/sense of belonging to org
-flatter organisational structures, eliminating 1/+ management levels, greater responsibility to individuals in business
how can managers foster teamwork
balancing needs of team with thoseo f business
-understand views of others
-handling disagreements honestly & directly
-persuading others to adopt new ideas
-TRUST to develop common goal
-democratic leadership style
when is participative/democratic leadership style most effective
diverse groups , when business operating in environment undergoing rapid change
-business more responsive to change through improved decision making
5 advantages of participative/democratic leadership style
most important is involvement of team members in the decision-making process.
-employer & ee relations positive, reduced likelihood of industrial disputes (employees more likely to accept management decisions)
-motivation & job satisfaction optimal (employees active role allocating tasks to meet objectives)
-greater opp to acquire more skills for employees
-development of work teams with high lvls commitment
-high lvl** trust** –> high performance
5 disadvantages of participative/democratic leadership style
-reaching decisions time consuming, differing views to consider
-control of manager weakened & undermined
-internal conflict as opinions shared, disagreement
-informal system may collapse management
main features of behvioural management style
-humanistic appraoch (employees are business’ most important resource)
-employee participation in decision making
-team based structure
-managers need interpersonal skills
-participative/democratic leadership style
for behavioural management approach, main management functions are LMC
LEADING
MOTIVATING
COMMUNICATING
self-directed work teams destructuring traditional heirarchical structure
- mix ppl and functions; teams take some roles and responsibility of managers (problem solving issues)
- manager’s role from controller to facilitator
- away from an autocratic leadership style to participative democratic system.
flatter organisational structures vs traditional hierarchy
* A flat structure has fewer levels of management.
* A hierarchical structure has a long chain of command (lots of managerial levels) and a narrow span of control (the lower you are in the management levels, the less responsibility you have).
* The flat organisational structure has a shorter chain of command (fewer levels of management) and wider span of control (managers are responsible for a larger number of employees).
* The hierarchical pyramid implies that employees have very little say in how the business is run, as communication travels down the chain of command with little to no feedback from employees.
* A flat organisational structure is for teams. Everyone is responsiblefor completing the business’s objectives and is included in decision making by making suggestions/implementing changes.
contingency for managers 4
-managers borrow wide range of management approaches and practices
-managers need adaptable and flexible techniques to problem solving
-extract most useful ideas & practices from range to suit bus requirements
-appropriate management response to one set of circumstances inappropriate to another
3 advantages of contingency appraoch
- acknowledge changes in bus environment, enabling bus flexibility in reacting to change
- recognises multiple approaches to management, not one best
- diff situations demand diff approaches
disadvantages of contingency approach
- adapting to constant changes challenging for management
- selecting alternative courses of action depending on situation costly in time and money
managers using ocntingency approach need to adopt 10 commandments for the modern manager, which are
- share vision with stakeholders
- manage relationships not employees
- manage emotions & help others maintain emotional balance
- thrive on diversity, not conformity
- lead than simply managing, by inspiring trust & motivation
- cultivate ability to adapt to changing circumstances
- be aware how tech developments can improve effectiveness & efficiency
- recognise and use experiences & expertise of all employees
- encourage ethical behaviour to promote commitment in employees
interdependence
mutual dependence key bus functions (OMFH), rely on others to perform effectively, work best when overlapping and employees work towards common goals.
-each function area to performance depends on support of others
-unified approach to achieve objectives
-depends on bus goals and size
why do large businesses separate OMFH in diff divisions by separate managers?
require diff skills & knowledge for each
-as bus grows, needs more complicated, require more ppl to perform each function with specialists for each
-separate departments enables specialisation but coordination more challenging
for small businesses, does OMFH overlap or separate?
overlap
business functions should 2
- work towards fulfilling bus goals
- coordinated to have common purpose
operations
-applies manufacturin and services sector
business’s processes that involve transformation (production).
how will operations management directly affect bus’ comp adv
- quality of g&s
- prod costs
- determining if sufficient products available to satisfy customer demand.
operations management
-creating, operating, controlling transformational process takes inputs from variety of resources & produces outputs of g&s needed by consumers
-shaped by range and type of g&s produced
-differ for businesses producing goods opposed to services
-influence quality ,cost, availability of bus’ g/s for goals
how do businesses cope with enormous costs in operations processes
COST LEADERSHIP: establishing a competitive advantage by having the lowest cost of operation in the market (minimsie)
why does operations management directly affect bus’ competitive position?
- establish lvl quality of g/s
- influence overall cost of production (operations function responsible for largest part of bus’ capital and human expenses)
- determines if sufficient products available to satisfy consumer demand
characteristics of operations management in manufacturing businesses
- produce tangible goods
- manufactured goods can be stored for later use, durable
-** little customer involvement in production**
-manufactured goods usually homogenous/standardised
characteristics of operations management in service businesses
- produce intangible services
- customer involved in production, present during
-
PP and consumption occur same time
-services differentiated/tailored to individual customers
3 key elements of PP in businesses
inputs
processes
outputs
differ betw manufacturing & service businesses
-operations management determines how efficiently business produces g/s to meet needs of customers
inputs
**resources used in PP(transformation)
-from suppliers or already owned
-can divide into transformed & transforming resources
3 transformed resources MIC
Materials
-basic elements used in PP
Information
-knowledge gained from research, investigation for increased understanding
Customers
-transformed resources when choices shape inputs
2 transforming resources
HUMAN RESOURCES (employees)
FACILITIES (factory/office and machinery used in PP
transformation
conversion of inputs (resources) to outputs (g/s)
2 reasons why transformation processes by service businesses differ from manufacturing
- outputs of service cannot be physically in stock (not durable)
- service bus rely on interaction w/ customer in determining output
5 difference betw manufacturing & service operations
tangible vs intangible (& customised) outputs
-standardised, mass produced
- customised to suit customer requirements
located close to suppliers of raw materials (transport costs) vs close to markets (proximity to customers)
high capital costs in operations vs high training/edu costs
- achieve economies of scale
-operate with low capital costs
more risk vs less risk
-manufacturer makes product and awaits sale, risking unsold stock
-server acts once demand identified less risk
durable vs non-durable
-goods last beyond time paid for
-actual work may have lasting effects tho
outputs
result of business’ efforts (g/s provided to customer)
-responsive to consumer demands (quality, efficiency, flexibility balanced against resources & strategic plan of bus)
subtle outputs
customer service (how well business meets customer expectations)
warranties (Promises made by business to correct defects in g/s)
quality
product: reliable, easy use, durable, well designed, delivered on time, after-sales services
high deg of excellence and achieve stated purpose
quality management
-understanding and exceeding customer expectations
-making sure that products comply with regulations.
-quality product has high degree of excellence and achieve stated purpose.
CAM quality approaches
quality CONTROL
quality ASSURANCE
total quality MANAGEMENT
use IOS (international org for standardisation guidelines for quality assurance
quality control
use inspections at various points in PP to reduce defects
-minimise waste and errors
-performance compared to established criteria to meet consumer expectations (more competitive)
quality assurance
use system where business achieves set standards in production
-PROactive approach to quality management
-aims to prevent problems occurring
-assures customers products fit for purpose, safe, reliable by achieving standards THROUGHOUT PP
IOS
total quality management + 3 approaches
ongoing, business-wide commitment to excellence applied to every aspect of operations
-improve price competitiveness and product qualityto attain competitive advantage
- employee empowerment. Quality circles teams of employees that meet regularly to solve problems for process, design or quality.
- continuous improvement. constant evaluation
-
customer focus.
Quality is the responsibility of every employee, realise they are servicing a customer — both internal and external.
what 2 aspects does quality improvement focus on?
- total quality management
- continuous improvement
marketing
system of interacting activities designed to plan, price, promote & distribute products to potential customers
-if poor at marketing, fail despite revolutionary product
successful marketing involves
bringing buyer & seller together and make a sale
-finding what consumers want and satisfying needs (utility)
-need to undertake some form of marketing regardless of bus size otherwise customers not informed of bus’ products
BUT selling just getting rid of existing stock
contemporary marketing/
strategies that stress importance of customer orientation
puts the needs of the customer over the needs of the business. Customer-oriented companies understand that the business won’t thrive unless it consistently improves customer focus. It’s a way of thinking that aligns your business goals with your customers’ goals.
how do businesses with customer-oriented(market concept) approach base their marketing decisions & practices?
needs and wants of customers
relationship marketing
develop long term, cost-effective relationships with customers
-continuously strive to exceed customer expectations
-establish positive relationships with customers for customer satisfaction
3 approaches when selecting target market MSN
- MASS MARKETING appraoch
- MARGET SEGEMENTATION approach
- NICHE MARKET appraoch
market segmentation
total market subdivided into groups of ppl share 1/+ common characteristics based on 4 elements DGPB (demo, geo, psycho, behavioural)
-better direct marketing strategies to specific groups of customers
-AIM: increase sales & profits by understanding & responding to desires of target customers
marketing mix (main marketing strats) 4 P’S
PRODUCE
PRICE
PROMOTION
PLACE (distribution)
3 Ps added after service sector grown (extended marketing mix)
PEOPLE
PROCESSES
PHYSICAL EVIDENCE
function of packaging PIPP
PRESERVE
INFORM
PROTECT
PROMOT product
3 methods bus can use for calculating price CMC
COST based
-calculate total prod costs + profit
MARKET based
- according to price mechanism (lvl of supply & demand)
COMPETITION based pricing
-below, equal or above competitors
mark-up
difference between the selling price of a g/s and its cost.
-profit maxing for marketing
-‘cost plus margin’ method, margin (%) maxed for largest profit
promotion + 3 aims
methods to inform, persuade, remind customers abt its products
- attract new customers by raising awareness of product
- increase brand loyalty by reinforcing product image
- encourage existing customers to purchase more of product
main forms of promotion RSPA
personal selling and RELATIONSHIP marketing
-activities sales representatives direct to customer to make sale
-time consuming/expensive
-develop long term, cost-effective relations with customers
SALES promotion
-activities/materials to attract interest for g/s (free samples, coupons)
PUBLICITY & PUBLIC RELATIONS
-publicity: free news story abt business’ products
-public relations: activities to create & maintain favourable relations betw bus & customers
-enhance image, highlight features
ADVERTISING
-mass media (print/electronic) to communicate message abt product
-ads to attract potential customers, create demand for product & reveal essential info
PLACE (distribution channels)
way of delivering product to customer
-no. intermediaries eg wholesaler/retailer
4 traditional distribution channels + 2 new ones
producer –> retailer
producer –> retailer –> consumer
producer –> wholesaler –> retailer –> consumer
e-commerce
-buying & selling g&S via internet
m-commerce
-buying & selling g&s via WIRELESS HANDHELD DEVICES eg. mobile phones
6 tips for marketing driven custoemr-oriented business
- place customers NOT products centre of actions
- communicate with customers, for feedback (with present and potential customers)
- build loyalty with em
-
DIFFERENTIATE product
-unique brand reflects special qualities of bus - always deliver whats promised
mass market
seller mass-produces, mass distributes and mass promotes 1 product to all buyers
mass marketing
large range of customers
-develops single marketing mix and directs entire market for product
* same product, price, promotion and distribution system to appeal whole market
DGPB elements of market segmentation
DEMOGRAPHIC
pop characteristics
-income
-age
-occupation
GEOEGRAPHIC
-urban/suburban/rural
PSYCHOGRAPHIC (personality characteristics)
-lifestyle
-socioeconomic group
BEHAVIOURAL (loyalty to product)
price sensitivity
how does market segmentation bestter satisfy targeted group of business? 4
- use marketing resources more efficiently
- understand CONSUMER BUYING BEHAVIOUR of target market
- refine marketing starts to influence consumer choice
primary target market
market segment most of marketing resources directed
steps of marketing plan
- establish goals bus expects to achieve through marketing)
- select target market
- develop market strats to achieve goals (examine 4 Ps depending on product life cycle)
product life cycle
life of product over 4 stages
introduction
growth
maturity
decline
product in 4 P’s
determine product’s
-quality, packaging, design,name, exclusive features
-warranty & guarantee
-differentiate!
-intangible benefits (prestige, satisfaction)
product branding & brand logo
name, symbol or design that identifies product and diifferentiates from competitors.
-helps businesses increase market share through reputation.
- easier to introduce new products with the same brand name , readily available consumer market.
A ‘brand logo’ is a graphic representation that **identifies **a business or product.
for MARKETING
-reflect (intangible) aspect of product
-develop with target market in mind
product price (4 p’s)
too low: ‘low quality’
too high: lose sales unless superior customer service
3 main advantages of social media advertising/digital marketing
- inexpensive compared to traditional marketing methods
- easy to use & monitor
- brand awareness (grow online presence)
deliver specific messages to target markets, small businesses opp for promotional activities
PLACE of distribution (4 p’s)
where the product should be available—and how it will be displayed
in front of the consumers who are the most likely to buythem
3 common channels of distribution
- PRODUCER to CUSTOMER
-simplest channel, involved no intermediaries
-virtually all services use this method - PRODUCER to RETAILER to CUSTOMER
-bulky/perishable products eg fruit, furniture - PRODUCER to WHOLESALER to RETAILER to CUSTOMER
-producers use wholesaler when large no. retailers sell product and finds diff to deal with all of it
retailer
intermediary who buys from producer and resells to customers
wholesaler
intermediary who buys in BULK from producer –> sells in smaller quantities to RETAILERs
processes
flow of activities/mechanisms take place with any **interaction betw customer & business
-delivery of product
-how customer finds out abt product, selects and makes purchase
-purchasing experience** important for customer satsifaction
accounting
financial management tool involved with recording business’ financial transactions so a summary of what happened to business money can be traced
-provides valuable info (financial status, financing info, cash flows, profitability & ROI, trends in earnings, borrowings, sales for risks)
finance
where business sources its funding
-management knowledge of lenders, costs, risks, benefits of diff types borrowings
3 factors affecting types of borrowing should a business manage
types that match its earning stream & capital/asset structure
-manage cost and risk of finance for successful financial management
-good CREDIT RATING (assess capacity of bus to repay debt & manage finances) so lenders readily pro**vide funds
who are the 6 stakeholders interested in the financial situation of bus
INTERNAL and EXTERNAL
INTERNAL
1. owners/shareholders
-profits, sales, liquidity, solvency of bus
2. employees
-prod costs, profit margins, how much bus worth (gain % of profit)
EXTERNAL
1. suppliers
-credit rating (bus liquid, can pay debts)
-lenders: banks, credit rating (if bus solvent)
2. GVT: tax
3. competitors:
-market share, profits
4. public:
-ethical, responsbile
process of accounting 3 steps
- each financial transaction recorded
- records entered into accs (computer/manual)
- info in accs summarised into financial reports & statements that provide valuable info abt trading period
manager knows financial status!
management of cash flow involved + main reasons of small bus have neg cash flow
anticipating cash expenditure & ensuring enough income earned comes in form of money for CONTINGENCIES needs to be set aside
-main reasons neg for small bus is LATE PAYMENTS from CUSTOMERS, have to take out loans/use credit to pay own expenses if not paid on time.
contingency
unanticipated event can lead to financial difficulty, bus needs to save money for this prepare for unexpected financial pressure
financial transactions are summarised into ___ ____. 3 main ones are CIB
financial statements
CASH FLOW statement
INCOME statement
(aka revenue/profit & loss statement
-financial performance)
BALANCE SHEET
-aka statement of financial position
balance sheet
business’ assets & liabilities at PIT (in money), represent bus’ NET WORTH
-watch debt & equity lvls
-compare financial position with previous periods
-LHS assets =(balance) RHS liabilities & owner’s equity (T-FORMAT)
cash flow statement
shows movement of CASH RECEIPTS (INFLOWS) and CASH PAYMENTS(OUTFLOWS) over PIT
-3 categories OIF
effect of recession on bus financial management
infleunces price charged to custoemrs
-banks stricter on lending policies, bus diff to borrow funds
-suppliers shorten timeframe of accs as cash flows slows
-new bus diff developing credit policy, most ask for immediate pay rather than establish acc
-less sales
-retain profits > reinvest/pay as dividends so positivce cash flow in contingency
effects on bus carrying too little cash, problems if too much
TOO LITTLE
-not capable paying current liabilities/short term debts
-paid on regular basis to suppliers
-if not, bus penalised, credit rating affected & reputation damaged
TOO MUCH
-money sit in bank ACC not generating more, should use to pay long-term debt/invested into short term deposits to access when needed
delays in receipt & payment of cash on bus cash flow
accs payable: money that your business owes to suppliers,
accs receivable: money owed to your business by customers.
-creditors/accs payable need paid on time otherwise bus charged interest/penalised
-^ expenses, reduce profits
should spread repayments throughout month & check credit policies of suppliers, pay when due
-debtors (accs receivable) collected on regular basis to convert into cash, pay debts
-failure to collect –> bus deficit, unable to pay short term debts
liquidity
amt cash bus has access to and how readily can convert assets to cash to pay debt
why are cash flow reports vital?
**for info they give on timing payments & receipts of income
-help predict future cash flows & make provision for payments
-control finances and plan starts for financial benefit
-CF statements vital to assess whether money inflows can match money outflows
3 examples of cash inflows
cash receipts from sales,
effect of short vs long term bank loan on bus cash flow
depends on amt of loan & **length time of loan
-short term allows access to funds, repaid quickly
-long term repaid on regular basis, bus needs sufficient funds to cover r**epayments when due
3 examples of cash outflows
payments for stock
payments for expenses (Wages, insurance)
payments for NON-OPERATING expenses
(unrelated to core operations) eg. investment payments on debt
3 categories of cash flow statements for large businesses & public companies OIF, main diff
- cash flows from OPERATING activities
-main trading operations - cash flows from INVESTING activities
-purchase & sale of non-current assets & investments - cash flows from FINANCING activities
-acquisition and repayment of debt & equity finance
main diff is where generated. cash through sales from operations, money from dividends for investment
income statement
summary of incoem earned & expenses incurred over trading period with resultant profit/loss
-helps see how much money came into bus as revenue and how much gone as expenditure and how much derived as profit
shows
-amt of revenue earned
-expenses incurred
-profit/loss incurred in period
-how effective funds contributed by owners been generating profit
-before balance sheet bc details net profit earned
important features of an income statement
- heading stating PIT (usually 1 yr)
- 5 main categories (revenue, COGS, gross profit, expenses, net profit)
- revenue stated at TOP
-service businesses don’t calculate cost of goods sold, so doesn’t show gross profit
to deduct expenses from revenue on income statement 4
- calculat total revenue
- calculate COGS and gross profit
- itemise other expenses (admin, selling, financial)
- calculate net profit
net sales
amt revenue bus earned from sales after sales returns deducted
service businesses
gross profit = ? why is it important
(ADD PRICE TO MAKE MONEY)gross profit = revenue - COGS (cost of goods sold)
-
exclude fixed/indirect costs eg. marketing
how much its mark-up is on the cost price of goods sold ~50-100% (enormous 800-1000%, would attract other bus to compete in market)
-COGS is expense not grouped with others bc mark-up on COGS determines lvl overall income
-service based bus, no markup bc no stock so income & gross profit SAME
COGS = ?
COGS = operning stock + purchases - closing stock
opening stock
closing stock
value of stock that business has at start of financial year
value of stock on hand at end of financial yr
COGS meaning
value of stock business sold to customers
finance expenses
costs from borrowing money from lenders & minimising business risk
expenses + 3 categories
costs incurred in process of manufacturing/acquiring g/s to sell and direct/indirect costs of managing all sales of that g/s
SELLING
-selling g/s, directly trace to need for sales (ads)
ADMIN
-direct to running bus (rent)
FINANCIAL
-borrow money & minimise risk (interest)
net profit = ?
net profit = gross profit - expenses
difference betw gross profit and NON OPERATING expenses
net profit > gross profit cause gross just measures mark-up
assets
items of monetary value owned by business (corrent/non current/intainglbe)
CURRENT
-value expected to turn over within 12 months (cash)
NON-CURRENT
-expected life 3-5 yrs or longer
-large physical items ( land, machinery)
liabilities
debt owed to other orgs/bus borrowing (current/non-current)
CURRENT
-debt expect repaid 12 months/less (credit card debts)
NON-CURRENT
-long term debts (mortgage,)
owner’s equity(capital)
funds contributed by owner/s to establish & build business, liability from POV of business (eventually pay back)
-owner’s claim increase as success increases, reward for risking money
-owner’s investment is money for bus by owner (internal debt)
-ROI debt bc owner receive compensation for investment
balance sheet equation
assets = liabilities + owner’s equity
A = L + OE
LHS = RHS
3 types of assets
CURRENT
-assets bus excpet to use up/turn over within 12 months
-stock, cash
NONCURRENT
-assets expected life >12months
-large physical items (buildings, machinery, land, tech)
INTANGIBLE
-worth but no physical substance
-trademarks, copyright, reputation
current and non-current liabilities
CURRENT
-debt expected to be repaid in ≤ 12 months
-credit card debts, creditors, accrued expenses
NON CURRENT
-long term debt items up to 30 yrs
-mortgages, leases,
analysis of balance sheet indicates if: 4
- business has enough assets to cover debts & maximise profits
- any money borrowed can be repaid
- owners of business making good ROI
- ability to meet short & long term financial commitments
- compare to competitors
main functions of staffing to achieve bus goals. what is this called?
-attract & acquire
-train & develop
-reward
-maintain & separate ppl needed to achieve GOALS
HUMAN RESOURCE CYCLE
4 main elements of the human resource cycle (staffing process) ADMS
- ACQUISITION
-planning (job analysis), recruiting & selecting ppl to work for bus - DEVELOPMENT
-train & develop employees skills - MAINTENANCE
-monetary & non-monetary benefits
-motivate employees - SEPARATION
-voluntarily (retirement/resignation, own accord)
-involuntarily (dismissal, restrenchemnt - organisational structure changes)
ACQUISITION 1(HIRING NEW EMPLOYEES)
human resource cycle
PLANNING
-job analysis (determine natureo f position to be filled)
RECRUITMENT
-attract ppl to apply for position
-internal & external **
**
SELECTION
-hiring most qualified ppl
-interviewing
-* Written application.
-filling out job application with information regarding their skills and experience,
- presenting their résumé
DEVELOPMENT 2 (improving employee skills & abilities)
human resource cycle
INDUCTION & TRAINING
-teaching employees new skills
-help learn tasks for job
SKILLS INVENTORY
-improving skills, abilities, knowledge of staff
MAINTENANCE 3 (motivating employees to remain with business)
human resource cycle
MONETARY BENEFITS
-reward employees efforts through financial compensation
-pay rates
NON-MONETARY BENEFITS
-rewards (fringe benefits)
SEPARATION 4 (employees leaving business)
VOLUNTARY
-employees leave on own accord
-retirement(old), resignation (quit)
INVOLUNTARY
-employees leave against will (ask)
-retrenchment, dismissal
must accommodate working parents with childcare needs, diverse backgrounds, etc
human resource management HRM
management of formal relationship between employer & ees
how can a business make best use of employees to achieve goals and improve profit, growth and market share
- selectively hire workers
- develop cooperative working relationships
3.** motivate** staff - provide employees with opps for training & development
why are human resources so important?
achieve bus goals and improve profit & growth, increase market share
need dedicated, trained and motivated employees, for **long term success **
face of business & living representatives of bus’ brand
-differentiate brand from competitors to project right image
job analysis
systematic study of employee’s tasks & work enviro (nature of position)
1. job description
written statement describe employee’s tasks at specific times, responsibilities of job
-tasks can be specialised/general
-responsibilities can have diff lvls control depending on seniority lvl of position
2. job specification
-identify tpe of person to carry duties
-lvl edu & training completed & knowledge, skills, exp gained through training/previous employment
recruitment
attract qualified job applicants, select most appropriate ppl for jobs
-promote through ads (SMEs), employment agencies expensive but effective
-recruitment method (internal/external) depends on SIZE of bus, TYPE of position, NATURE of labour force in bus’ area
INTERNAL
-fill job vacancies with existing employees
-find ppl from outside company
-less risk
EXTERNAL
-use internet to advertise vacant positions
-outsource
how will bus recruitment and selection affected by position filled
-based on amt experience & knowledge required for each role
-higher position in hierarchy, more detailed job description and more specific qualifications for complicated roles
-sales assistant only minimal advertising but CEO ads in newspapers, internet, extensive reference checks and at least 2 interviews
how to correct problems of HR having high staff turnover and low morale through recruitment and selection procedures
- identify capable employees
-conduct skills inventory to determine skills & exp of current employees
-conduct job analysis to determine tasks, work enviro for position
-ads for new staff with required job skills
-attract interested and knowledgable finds -
screening process
-thoroughly read resume
-interveiws
-check references
advantages of internal recruitment
- applicants familiar with business & objectives, processes, culture
- managerial position, career path to reward valued employees within business
- recruitment costs reduced,
disadvantages of internal recruitment
- may no one suitable within bus
- conflict between employees
advantages of external recruitment
-
wider range of applicants to choose
-allows rapid growth of bus (increase staff members)
disadvantages of external recruitment
-choice diff cause applicants unknown
- costs for advertising position
- selection process time-consuming (larger field)
4 steps employee selection
gather info abt each applicant for position, using to choose most appropriate one
1. WRITTEN APPLICATIONS
-1st step
-read it (resume) and cover letter
-qualifications, experience, suitability for job
-
TESTING
-test
-psychological, personality, aptitude, knowledge -
INTERVIEWS!!!!!!
-questions, suitability assessed, consistency -
BACKGROUND CHECKS
-referees contacted to verify accuracy of applicant’s experience
sources of employee recruitment available for a bus and effective
- Advertisements in the media.
-
accessible to a wide range of people;
-receive a large number of applications to choose from. -
Private recruitment agencies. **
agency does preliminary screening of candidates,
-checks experience and references.** - only the people that are suitable for the position.
- very effective but expensive.
-
TAFE colleges or universities.
-train method of conducting business.
-New graduates motivated and eager to learn.
aim of training and development
long term change in employee skills, knowledge, behaviour to improve work performance in bus
-maintain bus sustainable competitive advantage
-benefits for both parties
-critical due to rapid tech change and global competition (promote LEARNING ORGANISATION!)
development
activities prepare staff to take greater responsibility in future by acquiring better knowledge, skills, gaining more experience in certain area
-often training
training & development benefits for employee
- opp for promotion & self improvement
-
^ job satisfaction (better job performance)
-greater ability to adapt & cope with changes
benefits for employer (training and development)
-higher productivity, more efficient use of human resources
-reduced costs (less turnover, absenteeism, accidents)
-mobile, workforce
training
teaching staff how to perform their job mroe efficiently by boosting knowledge and skills
-personal & business growth
common training methods 6
(FORMAL) OFF-the job training
-outside the workplace;
-conducted by people outside the business, but related to the industry of bus
(INFORMAL) ON the job training
-while the person is working
-conducted by experienced workers through coaching or mentoring
-learning new skills.
COMPETENCY based training
CORPORATE universities
ONLINE training
off the job training
**employees trained AWAY from workplace
-send employees to specialised training institution/specialist provider (uni, tafe) for qualification to perform efficiently
on the job training
employees learn specific skills to perform certain tasks in workplace
-within work environment using its equipment, documents present in workplace
-while employee performing regular duties at regular workstation/special setting eg. conference room
-by experienced coworker/manager with specific expertise/external provider
common law contracts governed by provisions of
Fair Work Act 2009 (Cwlth)
employment/common law contract
legally binding, formal agreement between employer & ee covering pay & conditions
-under common law, both have basic rights & obligations
-employee to adhere to policies & procedures of business
- hrs work, rates of pay, leave & super arrangements
-NES and conform to conditions for relevant award/enterprise agreement
-cover employees who are not under any award or enterprise agreements.
-more common at the professional and managerial level
common law is developed by
courts and tribunals
-judges make deisions based on facts of case, guided by precedent (decisions from past)
employee & er obligations under common law for employment relationship 4,3
EMPLOYER
-provide work
-payment of income
-provide reasonable care for safety of employees
-meet requirements of industrial relations legislation
EMPLOYEE
-obey lawful commands
-use care & skill
-act in good faith in interests of employer
NES intro and summary
legislated by federal gvt 2010 for ALL FULL and PART time employees, permanent/fixed term (not casual)
1. HRS OF WORK
-full: 35-38 hrs/week
-need special provision for penalty rates if working longer hrs
2. PARENTAL LEAVE
-employees entitled 12 months unpaid parental leave
3. FLEXIBLE WORK FOR PARENTS
-caring responsibilities for child school age entitled to request flexible working arrangements after working for employer >12 months
-reduced hrs, diff start/finish times, home-working arrangements
4. ANNUAL LEAVEA
-4 weeks
-part time pro rata amount
-casual no entitlement
5. PERSONAL, CARERS AND COMPASSIONATE LEAVE
-full time 10 days paid personal & carers leave for every yr of service with org
-part time pro rata amt
6. COMMUNITY SERVICE LEAVE
-jury service & emergency service duties (volunteer work)
-entitled to absence to provide community service
-unpaid leave
7. PUBIC HOLIDAYS
-if employer request to work on public holiday, entitled to pentaly rate/other compensation
8. INFO IN WORKPLACE
-supply ‘fair work info statement’
-gvt doc with info of NES
9. NOTICE OF TERMINATION & REDUNDANCY
-min periods of notice of termination of employment based on period of continuous service
-fixed & casual not included
10.LONG SERVICE LEAVE
-permanent (full/part) entitled after qualifying period varies betw diff occupations & industries
award advantages
-set min for pay & conditions
-cover all employees performing similar job
2
award disadvantages
-inflexible, not suit all employees/businesses
-prevent recognition of individual initiative bc all employees guaranteed min pay & conditions regardless of productivity
modern awards have a ‘flexibility term’ which allows
employers & ees to negotiate changes to some conditions in MA called Individual Flexibility Arrangements (IFA)
-allow employer & ee to agreement varies MA/Enterprise A to address individual circumstances
aim of offering above-award payments
bus wanna attract more workers o firm/hold to existing staff
10 matters covered by awards
- minimum wages (disability & training inc)
- types of employment (full,part)
- arrangements for hrs of work
- overtime rates where applicable
- penalty rates
- annualised wages & salaries
- allowances
- details of leave (eg leave loading)
- superannuation arrangements
- procedures for consultation, representation & dispute settlement
award
legally binding agreement sets minimum wages & conditions for group of employees
enterprise agreements (awards for industry, enterprise for ind firm)
collective agreements made at workplace lvl betw employer & UNION on behalf of its employees/employer and group of employees abt terms and conditions of employment
-opp to negotiate set of conditions to improve standards in award
what must enterprise agreements include 4
10 NES
-nominal expiry date (~2-3 yrs after agreement)
- procedures for settling disputes arising from agreement
-terms allow individual flexibility so arrangements can be made betw employer & ees
-provisions of consultation with employees on workplace change
steps for negotiation with enterprise agreements
- agreement submitted to FWC for approval before commencing
- FWC examines to ensure no unlawful content included and employees better off entering agreement than covered by relevant award
enterprise agreement advantages
- consultation & involvement of employees if conducted successfully, greater employee empowerment
-possible improved pay & conditions –> workplace performance
-greater flexibility, agree conditions satisfy employer & ee
enterprise agreement disadvantages
-time consuming from need to conduct agreement meetings at individual workplace
-administratively onerous, as agreement must comply with existing laws regarding employee rights & entitlements
retirement
employee decides to give p full/part time work, no longer part of labour force
-trend to retire mid to late 50s
-consider whether they repaid mortgage, amassed enough super, and if retirement savings fund intended lifestyle
bus may lose firm-specific knowledge, damage to productivity & workforce morale
-cost of replacing uniquely skilled worker ~1.5-2x employees annual salary
resignation & 4 reasons why ppl resign
voluntary quit employment relaionship
-needs sufficient notice for employer, according to employee’s award/common law contract/enterprise agreement
- offered promotion with another bus
- start own bus
- boredom with present job
- desire for changed lifestyle
volunatry redundancy
one’s job no longer exists due to tech changes, org restructure, merger/acquisition
-unless retrained for another job, retrenched (employee lose job, not offered another)
VOLUNATRY: informed of situation and given opp to nominate themselves for voluntary redundancy
final stage in employment cycle
SEPARATION stage
-employees leave workplace on VOLUNTARY/INVOLUNTARY basis
voluntary separation
employee decides to give up full/part time work
includes
1. retirement
-decides give up full/part time work
2. resignation
-‘quit’, give notice
3. (voluntary) redundancy
-volunteer for redundancy
-offered redundancy package (payout of sum of money)
involuntary separation
employee ASKED to leave business AGAINST WILL
includes
1. dismissal
-terminate contract due to behaviour
2. redundancy(involuntary)
-employers decide who made redundant, no longer needs job to be done by anyone.
3. retrench
-remove from job to reduce costs
unfair dismissal
employee dismissed by employer & believe action harsh, unjust, unreasonable
-can lodge unfair dismissal claim wit industrial tribunal (FWC)
-FWC takes account procedures followed, whether grounds unreasonable, circumstances of business, if human resources expertise available, whether employee were provided opp to respond/support
dismissal
behaviour of employee unacceptable, necessary for bus to terminate employment contract
ON NOTICE depend on award, age, length of employment
most serious form of dismissal
SUMMARY DISMISSAL
-employee commits serious breach of employment contract (eg criminal drunk at work)
-no notice required
why is selecting staff for dismissal risky
awareness** industrial legislation to avoid industrial action**
-employees need proper notice
-employers must comply with procedures established (fair work act 2009 unfair dismissal laws)
avoid misunderstandings & lengthy unfair dismissal case by
-writing notice
-written confirmation of resignation > verbal statements
