Business AT2 (HR, Finance, Marketing)

SWOT

Strengths, weaknesses, opportunities and threats

Product life cycle

Introduction, growth, maturity, decline

Purpose of situational analysis

To identify the position of the business in the market before making decisions

Market research

The process of collecting, analysing and interpreting information or data about customers, target market, competitiors and market trends

Purpose of market research

To help businesses understand customer needs and if there are any market opportunities the business needs to explore

Steps of market research

Determine information needs, data collection (primary and secondary sources), analyse and interpret data

Marketing objectives

Increase market share, expand product range, maximise customer service

Primary market

The market segment at which most marketing resources are directed

Secondary market

A smaller and less important market segment

Mass marketing

Targets the entire market with one product and strategy e.g. coca cola markets the same drink to everyone

Market segmentation

Dividing the total market into smaller groups with similar needs e.g. demographic, geographic, psychographic, behavioural

Niche marketing

Targets the specific needs of the target market e.g. vegan bakery targeting plant-based consumers

Product

Branding, packaging

Pricing methods

Cost based, market based, competitor based

Pricing strategies

Price skimming, penetration, loss leader, price points

Place

Intensive, selective, exclusive

Promotion

Relationship marketing, advertising, public relations, opinion leaders

Implementation

Putting marketing strategies into action

Monitoring

Comparing actual and planned results

Controlling

Adjusting/revising marketing strategies

Cash flow statements

Ensures the business has enough cash to meet their day to day expenses -> tracks cash inflows and outflows

Distribution of payments

Businesses may delay payments to suppliers within agreed terms to keep your cash longer

Discounts for early payments

Offer discounts for early payment to customers e.g. early bird prices

Factoring

Selling of accounts receivable for a quick cash injection at a discounted price to a factoring company

Working capital management

Management of short-term finances to ensure the business can meet financial obligations

control of current assets

cash, receivables, inventories

Cash

Fund available for operations

Receivables

Money owed by customers

Inventories

Stock held for sale (JIT)

Control of current liabilities

Payables, loans, overdrafts

Payables

Money owed to suppliers

Loans

Borrowed from financial institutions

Overdrafts

Overdrawn from your account

Working capital management strategies

Leasing and sale and lease back

Leasing

Using assets without ownership to save

Sale and lease back

Selling assets then leasing them back

Cost controls

Fixed and variable, cost centres, expense minimisation

Fixed costs

Do not change without output e.g. rent

Variable costs

Change with production

Cost centres

Areas or departments where costs are monitored separately, e.g. a factory divided into production, packaging, and distribution departments, each department is responsible for tracking its own costs

Expense minimisation

Reducing unnecessary spending

Revenue controls

setting marketing objectives to increase sales, and improve, pricing, promotion and product strategies

Global Financial Management

Managing finances in an international business environment

Exchange rates

affects the cost of imports/exports

Interest rates

Affects a business's borrowing costs

Methods of international payment

Payment in advance, letter of credit, clean payment, bill of exchange

payment in advance

Buyer pays before goods are sent -> reduces rick for seller

Letter of credit

A financial document from a bank guaranteeing that the business will recieve its goods and the seller will receive payment

Clean payment

Payment is made after goods are received or shipped

Bill of exchange

Legally binding, formal written agreement ordering payment at a future date

Hedging

A strategy used to reduce the risk of currency changes, helps businesses lock in an exchange rate

Derivatives

Helps a business protect against price or currency changes (form of hedging)

Forward exchange contract

A contract to buy or sell an asset at a set price at a future date

Options contract

Gives the right but not the obligation to buy or sell an asset at a fixed price

Swap contract

An agreement to exchange currency in the spot market with an agreement to reverse the transaction in the future

Strategic role of HR

Hire staff to maximise productivity, training to monitor staff, support employee needs, create competitive advantage

Outsourcing

The process by which an external business completes an activity for another business

Benefits of outsourcing

Cheap labour, specialised people, business can focus more on their core activites

Downsides of outsourcing

Too expensive, may lack understanding of the business culture

Domestic contractors

A contractor who comes from the same country in which the business is operating in

Global contractors

When an activity is outsourced to a global business in another country

Stakeholders

Employers, employees, employer associations, unions, government organisations, society (EEE AUS GO)

Employers

Recruiting, training and motivating staff to increase productivity

Employees

Skilled employees can create a competitive advantage for the business - higher wages and better conditions can motivate staff

Employer assiociations

Influence employment laws e.g. contracts, workplace safety, redundancy, and dismissal processes

Unions

Influence employment laws such as pay rise, and represent staff during workplace disputes

Government organisations

Create and enforce employment laws and administer industrial policies

Society

Pressures businesses to provide work-life balance and flexible working hours or arrangements

The current legal framework

Government sets laws that regulate relationships between employers and employees

Employment contract

A legally binding agreement between an employer and employee, outlines job role, responsibilities, pay, hours, and conditions

Common law

Judge-made laws based on court decisions Employer: must provide safe workplaces and fair treatment Employee: must follow lawful instructions and perform duties competently

Minimum employment standards

Set of basic entitlements for all employees e.g. leave, hours, termination rights

Minumum wage rates

$24.94/hr or $948/week for a 38-hour full time week (determines by fair work commission)

Awards

Legal documents that set minimum pay and conditions for specific industries or jobs (pay rates, hours, overtime)

Enterprise agreements

Negotiated between employers and employees or unions, tailored to specific workplaces, must meet awards and minimum legal standards

Work health and safety

Laws that ensure workplace safety (Work Health and Safety Act 2011)

Workers' compensation

Benefits an employee/employees family get from work related injuries. Administered by the State Insurance Regulatory Authority (SIRA) and Insurance & Care NSW (icare)

Anti-discrimination and EEO

Protects employees from direct and indirect discrimination, employers must pay particular attention to groups that have been disadvantaged.

Structural economic change

A change in the nature and pattern of production of goods and services within an economy (Increase in demand for services, ageing population)

Globalisation

HR focuses on hiring and training staff to increase productivity and gain a competitive advantage

Strong economy

More demand, production, and labour, higher wages

Impact on HRM of a strong ecomony

HRM focuses on the recruitment process

Weak economy

Less demand, production, and labour, lower wages.

Impact on HRM of a weak economy

HRM focuses on reducing labour costs, the size of the workforce, and improving efficiency.

Work life balance

Technology enables work to be more flexible, allowing employees to telecommute around the world

Benefits of technology

Improves employee work-life balance → motivates staff performance, and enables the business to gain access to skilled employees

Technological influence on recruitment and training

New jobs may be created with demand for workers competent in technology, but HR may have to train existing employees in new technologies

Redundancies

New technologies can do some employees’ jobs more efficiently and less costly

Changing work patterns

Demand for work-life balance, rise in job mobility, increase in the female workforce, increase in older workers

Demand for work-life balance

HR needs to provide flexible options for working (part-time/casual work/working from home) to improve productivity

Rise in job mobility

HR must offer incentives like rewards to keep staff working longer

Increase in the female workforce

Anti-discrimination laws ensure employers recruit men and women and pay them equally

Increase in older workers

Businesses need to provide options for part-time work or job sharing, opportunities for skill development, and targeted health and safety programs

Living standards

Aus has high living standards, which can be compromised when businesses outsource too much → employers must analyse their social responsibility

Ethics and corporate social responsibility

Positive working conditions, a safe environment

Positive working conditions

Motivating employees, flexible working conditions, work-life balance

Safe environement

Complying with social justice and industrial legislation, developing codes of conduct

Impact of positive workplace

Higher staff morale, staff turnover and absenteeism falls, reduces recruitment and training costs, positive business image

Unethical workplace

Leads to heavy legal costs and industrial disputes, and can damage the business’s image