Business studies grade 11

Environmental scanning

Can be defined as the process of obtaining information about possible current and future events that may have an impact on the performance of the business

Purpose of environmental scanning

Environmental scanning is done to identify possible challenges but also possible opportunities for the business in a constantly changing environment that the business operates in

Continuous environmental scanning

vision mission

formulate a strategy

implement a strategy

evaluation and control

Strengths

Those factors(tangible and intangible) within the business which add value to the performance of the business and/or which give the business a competitive advantage within the market place, when compared to competitors

Examples of strengths in a business

Competitive price

Location

Unique product: Patents (know how)

Work skills

Business culture

Good marketing and a strong brand

Access to financing and other resources

Operational efficiency(good quality)

Weakness

Has the exact opposite effect on the success of the business to strengths. If not addressed the effects may prove to be debilitating for the business, the strengths of the business can turn into weaknesses of not managed properly

Opportunities

Are those external factors which present the business with the chance to outperform competitors, especially if the competitor is weak in a particular area

Threats

Are those external factors that could hamper the success or growth of the business and therefore the business has to put contingency plans in place to deal with these factors

Porters model

Threat of new entrants

Current competitors

Threat of substitute products

Power of suppliers

Power of the buyer

Impact of complementary products

Threat of new entrants to the market

This aspect assesses how easy or difficult it is for a new competitor to enter the current market, based on the number of entry barriers to the market

Rivalry amongst competitors

The number of current competitors in the market is an important factor to consider when assessing the competitiveness of profitability of a particular market place

Threat of Substitutes

A business may feel threatened when a buyer is easily able to find a substitute product at a better price or better quality

Bargaining power of suppliers

When the bargaining power of the supplier is high, it allows the supplier to sell products or raw materials for higher prices or to offer lower quality products/materials to the business

Complementary products

Complements look at the potential within the market place to increase the demand for the original product, by introducing a complementary product

Pestle

Political, Economic, Social, Technological, Legal, Environmental

CSR

The relationship between the business and society and the degree to which the business impacts on society

Corporate Social Responsibility

Means that the business is managed in a way that ensures its commercial sustainability(profitability) while acting in a manner that will meet society's expectations of the business by contributing to society and the environment

What talks about the business and CSR

The king code

Two types of responsibility the business has

Primary responsibility and secondary/broader responsibility

Primary responsibility

Is the businesses obligation to look after the interest of stakeholders which are directly affected by the success of the business

Secondary/Broader responsibility

Is towards stakeholders who are indirectly affected by the business's activities, the community, government and the environment

CSR issues

Crime

Poverty

Lack of education

Unemployment

Environmental concerns

Poor health services

Inequality

Poor housing

Blowfield & Murray Pyramid

Discretionary responsibility

Ethical responsibility

Legal responsibility

Economic responsibility

Discretionary responsibility

Higher level of responsibility than simply not harming others, the business should consider how or what and to whom or what the business will give back. It is about building a brand with values ensuring that these values are being practised by the business in all its business activities internally and externally

Ethical responsibility

At this level the business has to ensure it is making ethically sound business decisions that will not have a negative impact on stakeholders and the sustainable future or society and the environment

Legal responsibility

All the businesses have the responsibility to ensure it is respecting the laws of the country in which it operates. By obeying the laws of the country the business is a responsible citizen in the broader society o

economic responsibility

At the most basic level, a business is responsible to ensure that it is economically active, it produces goods and services that can be sold at a profit and from which employees and shareholders will benefit

Sustainable business

Making operations environmentally sustainable

Making operations socially sustainable

Making society sustainable

Influencing suppliers

Making operations environmentally stable

With greater global awareness and the concern regarding the impact of pollution, the depletion of natural resources and the destruction of ecosystems increasing, the business has to ensure it acts in a responsible manner

Make its own operations socially sustainable

This means that business will take responsibility for ensuring that important issues are addressed in the workplace

Social sustainable workplace

BEE/BBBEE

HIV/AIDS and health issues

Empowerment/skills development

Occupational health and safety

Trade union involvement

Influence suppliers

To ensure that business operations do nit have negative consequences for the environment and society , it is important that the business monitors the supply/value chain. This means the business will be actively aware of any possible negative effect that its suppliers may have on society and the environment

Possible stakeholders of a business

Staff

Clients

Shareholders

Regulators

Government

Media

Communities

Suppliers

Unions

Designing a CSR programme

1) Management must communicate the need for CSR across the business.

2) Management should create a CSR policy.

3) Management must communicate the CSR policy throughout the business and ensure buy-in at all levels.

4) Management should link CSR to business success factors (make it part of performance appraisals).

5) All employees should brainstorm initiatives for CSR.

6) An inventory of skills and resources needed to implement the programme is drawn up.

7) Implement the CSR projects.

8) Monitor CSR initiatives.

9) Make necessary changes or go back to brainstorming.

Implementation of a CSR strategy

- concept of citizenship

- strategic intent

- leadership

- structure of management

- stakeholder relationships

- transparency

Concept of citizenship

The business has to understand its position within the community and its responsibilities towards the different stakeholders

Strategic intent

It is important ti understand how CSR forms part of the core values of the businesses, in order to do this the business has to define what the purpose of the CSR initiative it is going to be I.e what is it that the business aims to achieve

Leadership

Top management has to to ensure that their vision of the business as a corporate citizen becomes part of everyday life in the business, CSR initiatives could be either offensive or defensive

Offensive CSR

Will proactively tackle social and environmental issues

Defensive CSR

Is about looking after the reputation of the business ensure all activities fall within the law

Structure of CSR strategy

Management has to ensure all resources are aligned with the ultimate CSR goals of the business. This means all CSR activities must be planned, organised, driven and controlled to ensure CSR goals are met

Stakeholders relationships in CSR

The business has to maintain sound relationships with both internal and external stakeholders, this is done by ensuring communication channels are open so that the correct information will reach the correct stakeholders on time

Transparency in CSR

All relevant information about CSR initiatives has to be communicated to stake holders, even if it is negative. The challenge for the business is then to have contingency plans in place to overcome these negative events or failures. The business must disclose information regarding its performance

What must be included in a CSR report

Business profile

Board commitment

Environmental and social business policy

Management systems

Business profile CSR report

- Vision and mission of the business

- The size and operations of the business

- The markets in which the business operates

- The overall brand of the business

- The areas of impact - both internally and externally

Board commitment

statements from the CEO, key board members and employees at management levels have to commit to CSR and business sustainabilitye

Environmental and social business policy

These are statements from the business about its areas of impact, businesses must indicate how performance will be measured

Management systems

the business will discuss its audit procedures for both internal and external auditing

Management

Is the process of accepting accountability for the innovative application of resources in order to achieve business goals

Levels of Mangement

Top middle lower

Top level management

Is responsible for the strategic decision of the business (i.e planning for the future of the business to ensure the business has a sustainable future). Top management looks at integrating demands of the different interest groups, while taking responsibility for the overall business results and performance within the market place

Middle management

Is responsible for tactical decisions (ie medium term decisions). They interpret top level managements decisions in terms of the demands and impact on each business function/department. The overall business plan is then implemented by each department while ensuring there is synergy between the different functional areas in the business

Lower management

Is responsible for the day to day decisions of the business, they are managing the operations of the business on a daily basis within the parameters described by the policies and procedures of the different business functions

Management tasks

- Vision/Mission

- Plan

- Organise

- Lead

- Control

Planning

In the businesses is seen as the first function of management where a combination of creative and logical thinking is used to improve the future performance of the business

Principles effective planning

Planning is a rational process aimed at the future,

the future is anticipated in order to identify and bridge the gap between the current status of the business and the projections for the future plans of the business

during the planning phase decision makers will debate, discuss and formulate the businesses vision mission and objectives policies and procedures, management has to plan where and how to obtain the resources

Plans have to flexible

Flexibility means that the business may, in certain instances, need to adapt to internal or external pressures

Planning takes place at all levels in the business

Management at top u should clearly communicate the long term direction of the business to ensure an understanding and thus the buy in from lower levels of management

Importance of planning

Planning ensure attention is focused on business objectives, it is important that decisions in the business are made are in line which achieving the overall business vision and mission, without sufficient and effective planning random business decisions would be made and this will have a negative impact on the performance of the business

What does planning entail

Entails the integration of the different business functions in order to ensure there is coordination to achieve the overall vision/mission of the business. Planning facilitates control because if there is a plan it will be used as a bench mark to measure performance. Control can only be executed if sound planning has taken place

Steps in the Planning Process

Establishing objectives

Deciding on the planning period

Considering alternatives

Implementing the plan

Controlling process

Establishing objectives

Top management will set the overall direction for the business. In doing so the vision mission and long term objectives will be developed, keeping external factors(economic conditions, market trends, competitor and consumer behaviour) and internal resources in mind. Once these objectives have been clearly defined it is important that management communicates these objectives to the different functional managers

Deciding on the planning period

Some plans will be aimed at achieving long term objectives while others may have a short time period. The rule of the thumb is that the business will usually plan for a period that is reasonably anticipated

Considering alternatives

The business will also identify several alternative loans to evaluate which objectives are achievable. The business will assess each alternative from a feasibility and viability point of view to identify the plan with the best cost benefit ratio. It is always important to have a contingency plan in cause the original plan doesn't yield desired results

Implementing the plan

The business will need to allocate the necessary resources to support the plan

Controlling process

The business will need to put the necessary controlling mechanism in place to ensure at the objectives that were set are achieved according to the benchmark set and in the time period decided upon

Organising

Involves identifying activities that should be understated in order to ensure the business objectives are achieved

Organising also entails grouping these activities and then dividing them amongst teams or individuals who will work towards the accomplishment of the business objectives. It is critical to ensure people have the necessary authority to carry out their responsibilities

Steps involved in organising

-considering objectives

-identifying and grouping activities

-assigning of duties

-delegating authority

Considering objectives

The manager needs to ensure that everybody clearly understands what the objectives are and why it us important to achieve these objectives

Identifying grouping activities

It is important that the business identifies the various activities that need to be performed to achieve the objectives. Clearly identifying activities assist in avoiding unnecessary duplication and wastage of resources

Assigning of duties

Once the activities have been defined tasks will be identified and described to ensure the workforce understands what is expected of them. These tasks will then be assigned to the different individuals and teams within the different functional areas of the business with clearly specified division of duties. The resources(tangible and or intangible) needed by each team and/or individual are then allocated to empower people to do their jobs

Delegating authority

The required responsibility and authority are delegated to subordinates to ensure that activities are performed in line with achieving objectives

Advantages of proper organisation

- Patterns of communication

- Authority and responsibility

- Create proper balance

- Stimulate creativity

- Encourage growth

Benefits of successful organisation

Organising people in a logical and easy to understand manner provides the business with a communication structure, this helps the business to facilitate the necessary communication between different levels of management, departments and with teams w

What does organising help with

Helps the business identify the key internal stakeholders to which responsibility and authority should be allocate, assists the workforce to understand which person/department is responsible and accountable for various activities, in short organising helps each employee to understand different roles within the business

Leading or activating staff members

Leadership is what encourages the workforce to perform accordingly. In order to implement plans and organize resources, the manager has to provide direction to subordinates

What are the principles of leading

1. Harmony of objectives

2. Effective communication

3. Unity of direction

4. Direct supervision

5. Follow up

Harmony of objectives

The manager has to ensure that the business objectives are achieved, while the employees feel they are also able to achieve their personal goals

Clear communication

The manager of each department has the responsibility to ensure all employees understand the plan, policies and procedures including their respective responsibilities

Direct supervision

A manager who really knows their employees will have a personal touch style of managing staff. The concept of direct supervision does not require the manager to know all the personal details of their employee but it helps when they can relate on a personal level.

Following up

The manager has to be aware of the challenges and difficulties which employees face. They must be able to make necessary adjustments to the task or an employee's skills(send him/her for training) to ensure objectives are achieved. This process of following up on tasks delegated should not turn into a process of micromanaging staff but rather to provide a support structure to assist where necessary.

Differences between a manager and a leader

a manager is appointed in a particular position within the business, while a leader influences people.

a manager has formal power, while a leader has informal power

Sound Leadership

Guide people

Encourage others

Take initiative

Mediator and arbitrator

Planner

Able to make decisions

Leadership/management styles

autocratic, democratic, laissez-faire

Autocratic leader

commands or instructs his /her subordinates when directing activities. This type of leader formulates all objectives, policies and procedures without asking for input from anyone, positive is that it saves time and get quick results

Democratic leadership

is also known as a participative leadership style, this type of leader encourages joint decision making and allows the team to get involved in the setting of objectives and the development of policies and procedures to achieve said objectives. The democratic leader will help to grow the confidence and collective performance of the workforce, down side is that it takes a while to make decisions

Laissez faire leadership

is also known as free rein leadership, the leader does not exercise control over the workforce, but simply supplies employees with the necessary info and resources to set and achieve objectives. This leadership style is effective if the workforce is comprised of independent thinkers who are creative, intrapreneurial an

Control

is about checking the current performance against the predetermined standards that were set in the planning phase to ensure there is progress in achieving the business' objectives.

Steps in the controlling process

- establish standards

- measuring actual performance

- corrective action

establishing standards

setting a standard for the level of work expected from the workforce

measuring the actual performance

refers to the process of evaluating the different activities against the required standards or benchmarks. These evaluations should be an integrated and continuous practice in any given business process

components of a good control system

- suitable

- flexible

- motivate staff

- aimed at future

- economical

communication

is the process of exchanging information, opinion, views and ideas between staff members and management, the aim of clear top-down communication is to help employees to understand what, why and how they should be doing to help the business to achieve its objectives.

Coordination

is vital for any business to succeed, as management is dealing with a variety of different perceptions, opinions, interests and attitudes of both internal and external stake holders. It is important that the manager is able to coordinate all these variables by ensuring the stakeholders will all contribute towards achieving the same objective. In order to do this, management has to coordinate the use of both tangible and intangible resources optimally

Principles of coordination

- clear objectives

- comprehensive policies

- induction

- chain of command

- liaison between departments

delegation

the process of delegation refers to the allocation of responsibility and authority to subordinates. Its is important for a manager to delegate to ensure a more meaningful distribution of work. Continuous monitoring by the manager of the process is required to assess its effectiveness, because at the end of the day the manager remains responsible

Discipline

the process of worker discipline is guided by the Labor Relations act. The purpose of disciplinary action is to improve the future behavior of the employee.

decision-making

in order to solve problems, the manager has to make decisions about the most appropriate course of action, based on Pestle

Motivation

if a manager pushes employees to perform according to certain expectations, it is vital that the employees are motivated to achieve their goals

motivation equation

ability + willingness = performance