Business U3/4 EXAM PREP

types of businesses including sole traders, partnerships, private limited companies, public listed companies, social enterprises and government business enterprises

Sole Trader: A business structure that is owned and operated by only an individual. The owner has (unlimited liability) over the business. The owner and businesses are considered the same legal entity (unincorporated) an example is Jim’s mowing

Advantages:

There is a low risk of disputes as there is only one owner making decisions.

The owner has full control and decision-making power

Disadvantages:

The life of the business dies if the owner dies

Since the owner has unlimited liability their personal assets are at risk, they are also responsible for repaying business debts.

Partnerships: A business structure that is owned by two to 20 owners. It is an unincorporated structure. Owners have unlimited liability. An example is Ben & Jerry’s Ice Cream.

Advantages:

Owners can share the workload and take time off as there are multiple people that can manage the business.

Easy and simple to register and set up

Disadvantages:

Unlimited liability means that the partners’ personal assets are at risk, as they can be seized to pay off business debts.

Conflicts could arise due to shared decision-making and personality clashes amongst partners.

types of businesses including sole traders, partnerships, private limited companies, public listed companies, social enterprises and government business enterprises

Private limited company: A private limited company  is an incorporated business structure that has at least one director and a maximum of 50 shareholders.

Strengths

The business’s existence is not threatened by the removal of a business

Have greater access to capital, banks and are inclined to give loans

Weaknesses

Complex reporting requirements, such as annual reports, need to be published for shareholders.

It is difficult to change structure once a company has been established.

Public Listed Companies: Owned by an unlimited amount of shareholders. Incorporated business structure. Lists and sells of the ASX- (Australian Securities Exchange. Shareholders have limited liability for their shares. Required to share financial reports to the public and pay company tax Example : Commonwealth Bank Ltd

Advantages:

There is greater access to expertise and ideas as more people are involved. •

No permission is needed to trade and sell shares.

Disadvantages:

Conflicts could arise through shared decision-making between directors.

There are complex reporting requirements, such as annual financial reports, that need to be published to the public.

types of businesses including sole traders, partnerships, private limited companies, public listed companies, social enterprises and government business enterprises

Social Enterprise : Owned by a group of people ● A type of business that aims to fulfil a community or environmental need by selling goods or services. ● They are not considered a legal business structure ● Income is derived from trade not from donations or grants ● Example: Thank You Water

Advantages:

The business can develop a positive reputation as they are helping and contributing to society.

Employees have purposeful work so they are more likely to be satisfied with their job.

Disadvantages:

Difficult to balance the achievement of financial objectives with social objectives.

• May be difficult to obtain a bank loan as the business does not solely focus on financial objectives

Government Business enterprise: A business that is owned and operated by the government ● Operates in the public sector ● Fulfils a specific purpose outlined by the government, allows for healthy competition within the industry. ● Example: Australia Post.

Advantages:

Delivers goods and services that help the community and the community’s needs.

• Provides healthy competition to the private sector.

Disadvantages:

Governments and politicians can interfere and change the strategic direction of the business.

GBEs have to follow significant ‘red tape’, which refers to excessive rules and formalities, compromising how quickly GBEs can do things.

business objectives including to make a profit, to increase market share, to improve efficiency, to improve effectiveness, to fulfil a market need, to fulfill a social need and to meet shareholder expectations

To make a profit

● Total revenue earned - expenses incurred within a period

● Constantly seeking to reduce costs

● Increase in profit = Increase in business performance

● Done by earning more revenue or reducing expenses

To increase market share

● business ‘s percentage of total sales within an industry

● Sales increase = market share increase

● Reflection of how competitive the business is.

business objectives including to make a profit, to increase market share, to improve efficiency, to improve effectiveness, to fulfil a market need, to fulfill a social need and to meet shareholder expectations

To meet shareholder expectations

● Meeting the shareholders expectations on a return of their investment through dividends or capital gains

To fulfil a market need

● Fills a gap in the market

● Addressing customer needs that aren't currently met by other businesses

● Also to become competitive

business objectives including to make a profit, to increase market share, to improve efficiency, to improve effectiveness, to fulfil a market need, to fulfill a social need and to meet shareholder expectations

To fulfil a social need

● Improving society and the environment through business activities.

● Fulfilling its targeted social need To improve efficiency and effectiveness

(Efficiency):

How productively a business uses its resources when producing a good or service. (Effectiveness):

The extent to which a business achieves its objectives

stakeholders of businesses including owners, managers, employees, customers, suppliers and the general community

Owners:

● Individuals who establish, invest, and have a share in a business.

● Goal of earning a profit from its operations.

● Public listed and private limited companies, owners are known as shareholders.

Managers:

● Individuals who oversee and coordinate a business’s employees and lead its operations to ultimately achieve the business’s objectives.

● Internal stakeholders are responsible for overseeing work tasks and progressing the business who have specific roles.

● Facilitates the relationship between a business and its employees.

Employees:

● Are individuals hired by the business to complete work tasks

● Support the achievement of its objectives

● Internal stakeholders are responsible for the businesses performance.

stakeholders of businesses including owners, managers, employees, customers, suppliers and the general community

Customers:

● Individuals or groups who interact with a business by purchasing and utilising its goods or services.

● External stakeholders

● Fulfilling customer expectations leads to more customers purchasing the business’s product.

Suppliers:

● Individuals or groups that source raw materials, component parts, and processed materials to sell them to a business for use in the production of goods or services.

● Business often rely on suppliers, they are external stakeholders.

● Positive supplier relationships are crucial to an efficient and effective production system.

General Community:

● Individuals and groups who are impacted by a business’s operations and decisions, often because of close proximity to the business.

● Observe the outcomes of business activities on their environment and wellbeing.

● Positively impact the general community, can strongly influence a business’s reputation and public perception, which may impact business performance.

Stake holder Interests (Bit of Detail)

Owners

• Establishing and fostering positive relationships with other stakeholders to enhance business reputation and performance.

• Receiving a return on their investment, often through business growth, in the form of increases in share price, dividends, or profits.

Managers

• Being recognised for the achievement of business objectives.

• Having opportunities to increase their status and engage in career advancement and promotion.

• Receiving bonuses from business owners for achieving business objectives.

• Receiving appropriate wages and working conditions that reflect their managerial role and responsibility within the business.

Employees

• Provision of long-term job security.

• Receiving fair pay and working conditions.

• Having opportunities to engage in personal and professional development, as well as training to advance their careers and receive promotions.

Stake holder Interests (Bit of detail)

Customers

• Receiving high-quality goods and services at affordable prices.

• Engaging with businesses that are ethical and sustainable.

• Receiving friendly and helpful customer service and assistance.

Suppliers

• Increasing their revenue.

• Earning a profit from the raw materials and resources they supply.

• Having reliable and honest relationships with businesses they supply.

General community

• Observing business activities that lead to improvements in the community and environment.

• Increasing the local employment rate and boosting the local economy

Stakeholder conflicts examples

Owners – want to increase profits by decreasing the salary of managers. VS. Managers – want to receive greater rewards and salaries from the business as recognition for the achievement of objectives.

Owners – want to increase profits by increasing prices or decreasing supply costs, to allow for business growth and to receive a return on their investment. VS. Customers – want the highest quality goods for the lowest prices.

Owners – want to minimise business expenses to generate higher profits. VS. Suppliers – want to increase their profits from sourcing materials for businesses.

management styles including autocratic, persuasive, consultative, participative and laissez-faire

Autocratic management style: A manager making decisions and directing employees without any input from them.

● Centralised control over all business decisions

● One way communication.

Advantages:

● Decision-making power lies solely with management

● Employees have clearly defined roles with reduced responsibility and risk, as they only follow the manager’s instructions.

Disadvantages:

May increase costs associated with replacing employees as staff may leave the business due to low motivation.

● Low employee motivation can lead to increased sick leave due to unfulfillment and detachment from the business and its goals

management styles including autocratic, persuasive, consultative, participative and laissez-faire

Persuasive management style:

● Involves a manager making decisions and communicating the reasons for those decisions to employees without their input.

● Centralised control over all business decisions

● One way communication, communicates reasons for the decisions made after it has been done.

Advantages:

Retains full decision-making control within the business and may gain employee trust and support by explaining the reasons for decisions.

● Employees may feel a greater sense of involvement and engagement in the business when given explanations.

Disadvantages:

May increase costs associated with replacing employees as staff may leave the business due to low motivation.

● Low employee motivation can lead to increase sick leave due to unfulfilment or detachment.

management styles including autocratic, persuasive, consultative, participative and laissez-faire

Consultative management style:

● Involves a manager seeking input from employees on business decisions but making the final decision themselves.

● two way communication, maintain centralised control.

Advantages:

There is potential for increased sales and profit as the quality of decisions may be improved by obtaining multiple perspectives.

● Employees feel more motivated and involved with the business when asked to contribute their ideas, therefore improving their sense of value.

● Disadvantages:

● Employee conflict and resentment could arise if their ideas are ignored or overlooked when the final decision is enacted by the manager.

● The collection and consultation of different perspectives can take a significant amount of time, leading to slower decision-making processes.

management styles including autocratic, persuasive, consultative, participative and laissez-faire

Participative management style:

● Involves a manager sharing information with employees so that employees can participate in decision-making.

● Two way communication and decentralised control.

● Advantages:

● The quality of decisions may improve because various perspectives from managers and employees are used,

● Employees feel empowered and can develop a sense of ownership over decisions to achieve business objectives.

Disadvantages:

● It can be time-consuming to collate ideas and make decisions as a consensus between everyone must be reached.

● Some employees prefer to follow directions and may feel intimidated or uncomfortable contributing ideas.

management styles including autocratic, persuasive, consultative, participative and laissez-faire

Laissez-faire management style:

● Involves a manager communicating business objectives to employees and giving them freedom to make decisions independently.

A laissez-faire management style is characterized by two-way communication whereby a manager communicates the broader business direction and goals to employees while listening to their ideas on how these objectives can be achieved.

Advantages:

Fosters an environment in which creativity and innovation are valued, leading to a broader scope of possible decisions.

Employees may have increased motivation as they feel empowered and trusted in a work environment that fosters creativity

Disadvantages:

Loss of control by management since employees make final business decisions.

• Business objectives may not be met by employees due to a lack of direction from managers

the appropriateness of management styles in relation to the nature of the task, time, experience of employees and manager preference

Nature of task: The more straightforward, important, or vital the task, the more a manager is going to want to control it, thus moving towards a more autocratic management style. More creative tasks that would benefit from idea generation and team input are likely to move towards the laissez-faire side of the continuum.

Time: When time is critical or a deadline is rapidly approaching, management may move towards a more autocratic style, whereas an extended timeframe may see a move to a more participative style.

Experience of employees: When employees are inexperienced, it may not be worth asking their opinion; therefore, a more autocratic management style may be sought to ‘instruct’ them. On the other hand, highly experienced and knowledgeable staff should be trusted for their opinion and in some cases left to their own decision-making via a laissez-faire management style.

Manager Preference: In the absence of other variables, managers will commonly revert back to a management style that matches their personality, beliefs, skills, or values. For example, autocratic for more controlling personalities, or participative for more social, team-focused personalities.

management skills including communication, delegation, planning, leadership, decision-making and interpersonal

Communication

● Involves the transformation of information effectively from one party to another

● Oversees employees and it ensures the achievement of business objectives

Planning

● Ability to define a business’s objectives and in response establishing strategies

● Improves the level of organisation, thereby helping to achieve business objectives

Delegation

● The transfer of authority and assigning work tasks to other employees down in the hierarchical structure

● Gives an employee an opportunity to show initiative and challenging their work capacities in achieving objectives

management skills including communication, delegation, planning, leadership, decision-making and interpersonal

Decision-Making

● Ability to identify the options available in achieving an objective

● It can be centralised or decentralised Interpersonal

Interpersonal

● Used to interact with one another

● Fostering beneficial professional relationships

● Employees may feel more connected with managers who are relatable, supporting and understanding

Leadership

● Ability to influence and motivate others in achieving business objectives

● Involves communication, negotiation, motivation and human capacity to have a vision

● Supports roles to be effective

the relationship between management styles and management skills

skills for autocratic management:

Planning: All business decisions are made by the manager, therefore, they are responsible for assigning resources needed to achieve business objectives.

Decision-making: A manager’s centralised control over business decisions means that they must be able to select a suitable course of action from a range of plausible options.

Communication: A manager’s instructions must be clear and concise so unskilled workers can achieve an adequate understanding of their work tasks

Delegation: Complex tasks and responsibilities are not often handed down to employees, as they are likely to be unskilled. Therefore, a manager rarely uses delegation.

Interpersonal: Managers do not provide reasoning for their decisions, and employees are expected to follow their instructions, reducing the use of a manager’s interpersonal skills.

Leadership: Managers are not as concerned with sharing the business’s vision with inexperienced workers, who are already expected to carry out instructions, and are more likely to be motivated by financial incentives rather than personal connection to the business.

the relationship between management styles and management skills ( Persuasive)

Planning: All business decisions are made by the manager, therefore, they are responsible for assigning resources that are needed to achieve business objectives.

Decision making: A manager’s centralised control over business decisions means that they must be able to select a suitable course of action from a range of plausible options.

Communication: The reasoning given for decision-making should be clear so that all employees can understand why specific actions are being taken.

Delegation: A manager decides which complex tasks can be assigned to employees who possess the necessary skills and knowledge to complete them appropriately

Interpersonal: Managers provide employees with reasoning for the business decisions they make, which can foster trust and promote professional workplace relationships

Leadership: Explanations of the reasoning for business decisions can help employees understand the importance of the work they complete.

the relationship between management styles and management skills ( Consultative)

Planning: All business decisions are made by the manager, therefore, they are responsible for assigning the resources for strategies that are needed to achieve business objectives.

Decision making: Centralised control means that only managers are responsible for considering all possible decision-making options and selecting the most appropriate direction for the business.

Communication: A manager receives feedback from employees during the collaborative process and should strive to interpret these opinions correctly

Delegation: A manager decides which complex tasks can be assigned to employees who possess the necessary skills and knowledge to complete them appropriately.

Interpersonal: Managers engage with employees to gain insights and ideas, promoting professional workplace relationships and placing value on employee involvement in discussions.

Leadership: Managers involving employees in discussions can help motivate them to complete their work tasks and understand the vision of the business.

the relationship between management styles and management skills ( Participative)

Planning: Employees are involved in the planning process and help determine the strategies that are used to achieve business objectives.

Decision making: Decentralised control means that all employees are included in the decision-making process and the manager has reduced responsibility in making business decisions.

Communication: A manager receives feedback from employees when they share their insights during collaborative processes and managers should strive to interpret their opinions correctly.

Delegation: Employees and managers are both responsible for assigning work tasks to employees who are capable of completing them to a high standard.

Interpersonal: A manager must seek to understand how each employee approaches work so that business productivity can be optimised.

Leadership: Managers should share the vision and purpose of the business with employees to motivate them to strive towards achieving objectives.

the relationship between management styles and management skills ( Laissez- Faire)

Planning: As employees determine the strategies used for the business to meet its objectives, a manager rarely utilizes this skill.

Decision making: As most business decisions are made by employees, who are highly skilled and capable of understanding the many conditions in which the business operates, a manager rarely utilizes this skill.

Communication: A manager receives feedback from employees when they share their insights during collaborative processes and managers should strive to interpret their opinions correctly

Delegation: Managers should assign different tasks to employees based on their level of experience and knowledge.

Interpersonal: A manager must seek to understand how each employee approaches work so that business productivity can be optimised, and objectives are met.

Leadership: Managers should share the vision and purpose of the business with employees to motivate them to complete work tasks.

corporate culture, both official and real

Corporate Culture: The shared values, ideas, beliefs and expectations of the individuals in a business.

Official Corporate Culture:

The shared views and values that a business aims to achieve, outlined in a written format

➢ Mission statements

➢ Vision statements

➢ Logos

➢ Symbols

➢ Mottos

➢ Policies

Real Corporate Culture:

The shared views, values and beliefs that a business develops organically and are practised daily within the business

➢ Office Layout

➢ Staff Diversity

➢ Management Styles

➢ Hiring Criteria

➢ Rituals

➢ Celebrations

the relationship between human resource management and business objectives

Human resource management: is the organization of employees’ roles, pay, and working conditions.

When employees have increased job satisfaction, the number of employees leaving the business is likely to decrease. The costs associated with recruiting and training replacement employees for leaving staff are reduced achieving the business objective to make a profit.

When employees have increased job satisfaction, the quality of the goods and services manufactured and delivered is likely to also increase. A higher quality of goods and services can lead to increased customer satisfaction and sales, achieving the business objective to increase market share.

When employees have increased job satisfaction, they are motivated to work harder and to a higher standard. Highly motivated employees can enable a business to increase its sales and profit, allowing higher dividends to be paid to shareholders, achieving the business objective to meet shareholder expectations.

the relationship between human resource management and business objectives

When employees have increased job satisfaction, they are more likely to contribute innovative ideas. A business that produces unique goods and services may be able to better meet customer needs achieving the objective to fulfil a market need.

When employees have increased job satisfaction, their support of business initiatives is also likely to increase. Business initiatives that aid the community and reduce waste are more likely to be successful achieving the business objective to fulfil a social need.

When employees have increased job satisfaction, they are more motivated and determined to complete work tasks, doing so in a focused, error-free, and productive manner. A business is able to produce goods and services at a faster pace and to a higher quality, with fewer errors and discarded materials achieving the business objective to improve efficiency.

When employees have high job satisfaction, they are more motivated to achieve business objectives and have greater resilience when doing so. A business can more readily achieve its objectives and continue improving its performance achieving the business objective to improve effectiveness.

key principles of the following theories of motivation: Hierarchy of Needs (Maslow), Goal Setting Theory (Locke and Latham) and the Four Drive Theory (Lawrence and Nohria)

Maslow’s Hierarchy of Needs is a motivational theory that suggests people have five fundamental needs, and their sequential attainment of each need acts as a source of motivation.

1. Physiological needs are the basic requirements for human survival, such as food, water, and shelter

2. Safety and security needs  are the desires for protection from dangerous or threatening environments

3. Social needs are the desires for a sense of belonging and friendship among groups, both inside and outside the workplace.

4. Esteem needs are an individual’s desires to feel important, valuable, and respected.

5. Self-actualisation needs  are the desires of an individual to reach their full potential through creativity and personal growth.

Employees can work in an engaging environment that allows them to reach their full potential. (Advantage)

• Not all employees will be motivated by the same needs at once ( disadvantage)

• Assumes that there are no other fundamental needs that can motivate employees.

• Motivation can occur quickly when employees progress through the lower levels of the hierarchy (Disadvantage)

key principles of the following theories of motivation: Hierarchy of Needs (Maslow), Goal Setting Theory (Locke and Latham) and the Four Drive Theory (Lawrence and Nohria)

The Four Drive Theory is a motivational theory that suggests that people strive to balance four fundamental desires:

1. The drive to acquire is the desire to achieve rewards and high status.

2. The drive to bond is the desire to participate in social interactions and feel a sense of belonging.

3. The drive to learn is the desire to gain knowledge, skills, and experience.

4. The drive to defend is the desire to protect personal security as well as the values of the business.

Advantages:

• The model provides a simple approach for motivating employees and is easy for managers to implement.

• All four drives can be attained simultaneously, and are not restricted to sequential orders, therefore increasing motivation efficiently for the business

Disadvantages:

Some drives can be overlooked and therefore, an employee’s full potential may not be achieved.

• Employees may not value all drives equally and therefore, a balance between drives cannot be achieved

key principles of the following theories of motivation: Hierarchy of Needs (Maslow), Goal Setting Theory (Locke and Latham) and the Four Drive Theory (Lawrence and Nohria)

The Goal Setting Theory is a motivation theory that states that employees are motivated by clearly defined goals that fulfil five key principles.

Clarity

• Goals should be specific and easy to measure.

• Employees should be able to clearly understand what is expected of them.

Commitment

• Employees should be involved in setting their goals.

• Goals should incorporate the personal interests of employees.

Challenge

• The goal should be difficult enough to encourage employees to improve in order to achieve it

Task complexity

• The goal should not overwhelm employees and should be achievable.

• Employees should receive adequate training and time to achieve their goals.

Feedback

• Managers should provide regular support to employees and adjust goals as needed.

• Managers should constantly monitor the progress of employees to keep them on track, clarify misunderstandings, and encourage them to achieve their goals.

strengths and weaknesses of LOCKE and LATHAM

Advantages:

Goals that align employee goals with achieving business objectives are likely to improve business performance.

• The process of managers setting goals with employees can improve levels of trust and the relationship between employees and management

Disadvantages:

Employees may become stressed and demotivated if they have too many goals at once.

• Failure to meet a goal may result in an employee losing confidence and feeling less motivated to contribute to business objectives

MASLOW VS LOCKE AND LATHAM

Similarities

● Both highlight the importance of job satisfaction as a key motivator. Personal gain is what employees fulfil with commitment.

● Both acknowledge employee efforts increasing their potential

Differences:

Maslow’s theory can be applied by a manager alone, while Locke & Latham requires employee input to create goals

● Maslow focuses on both intrinsic and extrinsic factors, while Locke & Latham solely focus on intrinsic factors

LOCKE AND LATHAM VS LAWRENCE AND NOHRIA

Similarities

● Both recognise that employees are motivated to achieve success (via the drive to acquire or responsibility)

● Both suggest that multiple factors motivate an employee at any given time

Differences:

Locke & Latham involves employee input, however, Lawrence & Nohria is applied by the manager alone

● Locke & Latham requires a manager to address each employee individually, which is unnecessary for Lawrence & Nohria

LAWRENCE AND NOHRIA VS MASLOW

Similarities

● Both focus on motivating employees holistically, through addressing their physical and social mental desires

● Both think employees are motivated by the desire to feel a sense of belonging within social needs and the drive to bond

Differences:

Maslow suggests that the needs should be met in sequential order, while Lawrence & Nohria suggests any drive may be relevant to employees in any order

● Maslow suggests employees are motivated to fulfil one at a time, while Lawrence and Nohria is achieved simultaneously

motivation strategies including performance-related pay, career advancement, investment in training, support strategies and sanction strategies

Performance related pay is a financial reward to employees whose work is considered to have reached or gone beyond a certain standard.

Strengths:

Employee goals can be directly and indirectly aligned with business objectives through remuneration.

• Can be used to motivate many employees at once, which can improve overall business performance.

Weaknesses:

Over time, employees may require increases in the value of financial rewards to remain motivated.

• May create conflict if incentives or rewards are unequal between employees

Short term effect:

When there is a history of rewards and recognition for high performing employees within a business, employees are more likely to be motivated with the experience of receiving awards in the future

Long term Effect:

May become demotivated if they continually have to compete their peers over rewards.

May become demotivated if the reward becomes continuously low in value.

motivation strategies including performance-related pay, career advancement, investment in training, support strategies and sanction strategies

Career advancement is the prospect and opportunity of developing careers through being promoted or taking on new roles.

Strengths:

Provides employees with the opportunity to increase their contribution to the business and achieve personal goals.

• Employees may feel more valued by the business when promoted, improving their overall morale.

Weaknesses:

Some employees may not desire increased responsibility, so motivation may not increase through a promotion.

• Employees may be demotivated if they are overlooked for a promotion.

Short- term effect:

Employees may be motivated by ongoing opportunities to be promoted or take additional responsibilities

Long- term effect:

May be a limited number of responsibilities an employee can absorb into their role within a business, thus lessening opportunities which limits employee motivation.

motivation strategies including performance-related pay, career advancement, investment in training, support strategies and sanction strategies

Investment in training is the business paying for training programs to develop individual employees, skills and knowledge to make them more efficient and effective.

Strengths:

Employees build strong interpersonal relationships Feeling more valued as the business wants to advance skills

Skills and knowledge gained assists employees

Weaknesses:

Some employees may not value improving their skills and knowledge.

Training employees is time consuming and can delay the completion of work tasks.

Short term effect:

Employees maybe constantly motivated as they feel valued by the business when they are provided with opportunities to develop their skills

Employees may feel consistently motivated by a working environment that promotes learning.

Long- term effect:

Employees may become demotivated by the consistent workflow interruptions caused by training programs.

motivation strategies including performance-related pay, career advancement, investment in training, support strategies and sanction strategies

Support is management meeting with the employee and verbally instilling belief and aspiration by mentoring.

Strengths:

Employees may feel more valued by managers, as their wellbeing is being considered.

Problems can be dealt with efficiently before they escalate, saving time.

Weaknesses:

It can be time-consuming for a manager to maintain relationships with staff.

• May not motivate employees quickly if they do not see the benefits of support in the short term.

Short term effect:

Employees may be motivated for a long period of time when they feel valued by management and are able to resolve issues efficiently.

motivation strategies including performance-related pay, career advancement, investment in training, support strategies and sanction strategies

Sanction is the punishment for employees who fail to achieve objectives by breaching rules and going against morals and values.

Advantages:
Can pressure employees to act in accordance with management instructions.

Can motivate employees immediately as they will improve performance quickly to avoid punishment.

Disadvantages:

Can create a negative corporate culture as tasks are completed out of fear.

• Prolonged use can lead to employees leaving the business.

Long term effect:

Over time, employees can become desensitised to the threat of punishment and demotivated

Contributes to a negative workplace environment thereby declining employee satisfaction and motivation

training options including on-the-job and off-the-job training, and the advantages and disadvantages of each

ON-THE-JOB TRAINING: Involves employees improving their knowledge and skills internally or within the business on how to perform their job more efficiently and effectively than before.

Strengths:

Employees can perform their role while training, thus being more productive

● Those who train staff improve interpersonal skills and relationships

Weaknesses:

Employees who are not being trained may be disrupted by training processes which decrease productivity

Senior staff get taken away from their current duties to train new comers, which wastes more time

training options including on-the-job and off-the-job training, and the advantages and disadvantages of each

OFF-THE-JOB TRAINING: Involves employees improving their knowledge and skills in a location outside or externally away from the business on on how to perform their job more efficiently and effectively than before.

Strengths:

Receiving training from professionals can enable employees to gain new perspectives on how to perform their roles to a higher standard

● Those who would perform training into a distraction-free environment, enhance the quality of training received

Weaknesses:

Business’s workflow may be disrupted if employees are away from training, which disrupts productivity

● Employees may try to find a job elsewhere with the external qualifications they gain as investment in training may become redundant

performance management strategies to achieve both business and employee objectives, including management by objectives, appraisals, self-evaluation and employee observation

Management by Objectives: Involves both managers and employees collaboratively setting individual employee goals that contribute to the achievement of broader business objectives

Strengths:

Aligning employee objectives with the business’s overall objectives means that employees are always working towards business goals, leading to improvements in business performance.

• Collaboration between managers and employees when setting objectives can foster positive workplace relationships.

Weaknesses:

Employees may become demotivated if they do not receive compensation or recognition after achieving objectives.

• If too many goals are set, employees may become stressed and overwhelmed, leading to a decrease in motivation and employee productivity.

performance management strategies to achieve both business and employee objectives, including management by objectives, appraisals, self-evaluation and employee observation

Performance Appraisals A standardised approach that measures how well an employee has performed their job, provides feedback to the employee and establishes plans to improve performance.

Strengths:

managers and employees during one-on-one reviews which can improve workplace relationships

● The results outline where employees are struggling and training implementation to resolve issues

Weaknesses:

This process can be time-consuming as managers individually review each one’s performance

● Catering for employees too much means increased financial incentives which can see a rise in expenses

performance management strategies to achieve both business and employee objectives, including management by objectives, appraisals, self-evaluation and employee observation

Self-evaluation involves an employee assessing their individual performance against a set of criteria. As a performance management strategy, self-evaluation enables a manager to gain insight into an employee’s perception of their own ability.

Strengths:

Employees can increase their employability, as they highlight their own weaknesses to managers, which can lead to training opportunities and skill development.

• Employees may be empowered to improve performance, as they are directly involved in their own performance management.

Weaknesses:

Criteria for the self-evaluation process need to be developed, and this can be time consuming for managers.

• If employees are dishonest, the self-evaluation process can be a waste of time.

performance management strategies to achieve both business and employee objectives, including management by objectives, appraisals, self-evaluation and employee observation

Employee observation involves a range of employees from different levels of authority assessing another employee’s performance against a set of criteria.

Strengths:

The involvement of a group of employees can improve the interconnectedness of the business and its corporate culture.

• The manager can gain multiple different perspectives about an employee.

Weakness:

Results may be misleading if employees are aware they are being evaluated, as they may only work harder in the presence of an observer.

• Friends of employees may provide inaccurate feedback due to their relationship with the employee and therefore, a manager may receive unreliable information.

termination management including retirement, redundancy, resignation and dismissal, entitlement considerations and transition considerations

Termination is the process whereby a business ends its employment contract with an employee.

Forms of Termination:

Retirement (VOLUNTARY): The employee voluntarily leaves workplace as well as the workforce permanently

Resignation (VOLUNTARY): Also known as quitting is a voluntary ending of the employment relationship usually to take another job position elsewhere

Redundancy (INVOLUNTARY): The employee no longer working for a business because there is insufficient work of their job or it no longer exists

Dismissal (INVOLUNTARY): Are for employees who fail to meet required work standards or displays unacceptable or unlawful behaviour

termination management including retirement, redundancy, resignation and dismissal, entitlement considerations and transition considerations

Entitlement considerations

These are the legal obligations an employer owns to its employees following the termination of their employee contract.

These include:

★ Annual or long service leave payments

★ Receiving any outstanding wages

★ Accrued vacation

★ Severance

★ Termination pay

Transition issues / considerations These are the social and ethical practices that a manager can consider implementing when terminating employment so they feel reassured and thus promoting positive corporate culture even before they leave the business they have worked for. This is so they can successfully move and embrace onto the next journey of their life positively and feel valued and supported.

These include:

★ Offering resume writing / interview training

★ Providing networking support through the format of contracts

★ Providing flexible working hours

★ Introducing counselling and financial services

★ Holding celebrations and providing recognition for their achievements

★ Slowly reducing work hours off from retiring employees

the roles of participants in the workplace including human resource managers, employees, employer associations, unions and the Fair Work Commission

Human Resource Management

➢ Are the coordinators that build the relationship between employees and managers

➢ Their roles are to:

● Recruit, hire, train and terminate employees

● Negotiate with employees and their representatives

● Act as a mediating party

● Ensure that minimum legal requirements are met

Employees:

Are the individuals who are hired by a business to complete work tasks and support the achievement of objectives

➢ Their roles are to:

● Follow and understand workplace safety procedures

● Complete tasks with proper care and diligence

● Obey terms in their contract

● Avoid misusing confidential information

● Report illegal or unethical behaviours

the roles of participants in the workplace including human resource managers, employees, employer associations, unions and the Fair Work Commission

Employee associations

➢ Are advisory bodies that assist employees in understanding legal obligations

➢ Their roles are to:

● Share information

● Provide advice

● Represent employers during negotiations with employees

● Provide support

Unions:

Are the organisations who represent and speak on behalf of employees in an industry to protect and improve working conditions

➢ Their roles are to:

● Represent employees and negotiate new working conditions on behalf of their members

● Seek better wages and work conditions on behalf of employees

Protect job security and integrity of employee contracts

Fair Work Commission (FWC)

➢ Is Australia’s independent workplace relations tribunal

➢ Their roles are to:

● Set national minimum working standards

● Establish awards

● Approve and monitor enterprise agreements

● Act as an arbitrator

● Act as a mediator

● Responds to serious workplace issues

• awards and agreements as methods of determining wages and conditions of work

Awards

➢ Legal docs which outline the minimum wages + conditions of work for employees across an industry

➢ Acts as a safety net for employees, as employees are legally obligated to provide them with the minimum working conditions relevant to the industry

➢ Businesses which rely on awards as their method of determining wages and conditions which provide their employees at least the national minimum standard

Strengths:

Transparency and equality between employees is maintained, as they all receive the same wages and conditions as set out by their award.

• The FWC ensures that all employees receive appropriate wages and conditions of work.

Weaknesses:

Generalised industry awards offer limited flexibility for different business models and therefore, impact a business’s ability to meet its objectives.

• Businesses lack the opportunity to develop a relationship with their employees, as awards are based upon predetermined standards

• awards and agreements as methods of determining wages and conditions of work

Enterprise Agreements

➢ Legally binding agreements made between employers and employees on their representatives

➢ Outline the T & C’s of employment (wages, working hours, leave entitlements, and other workplace conditions)

➢ Also provide a platform for employees to have a say in their working conditions

➢ Ensures the interest and needs of employees are considered and addressed in the agreement

Strengths:

Promote fairness by ensuring that employees have a say in their working conditions

● Help foster a positive relationship between employers and employees

Weaknesses:

Time-consuming process

● Some employees may feel that their individual needs and preferences are not met

• awards and agreements as methods of determining wages and conditions of work

Agreements:

Legal documents that outline the wages and conditions of employees and are applicable to a particular group or group of businesses

➢ The process of establishing an agreement for a group of employees = negotiation

➢ Known as “collective bargaining”

➢ Have certain conditions that must be approved by the FWC

Strengths:

Positive relationships between employees and employers may develop in the negotiation process.

• Businesses have greater flexibility when setting wages and conditions, allowing the business to better meet employee needs and objectives.

Weaknesses:

Inequality in wages and conditions may increase, as employees of a certain business may be receiving less than employees at a similar business that is operating under a different agreement.

• Employees who cannot gain representation from unions may be exploited by employers, as there may be a power imbalance between the employee and the business.

• an overview of the dispute resolution process including mediation and arbitration

Dispute resolution: Effective Dispute resolution helps employers and employees maintain a good relationship by dealing with certain disputes or conflicts. Maybe resolved by negotiation, Mediation or arbitration.

Mediation

➢ Involves an impartial 3rd party facilitating discussions between two disputing parties, by helping them come to a resolution

➢ Does not offer their opinions, advice or inputs, but rather encourages to resolute

➢ DOES NOT result in a legally binding decision

➢ May be a rep from the a government agency, external business or the FWC

➢ Set in the business, between employee and employer

Arbitration:

Involves an independent 3rd party hearing arguments from both parties and making a legally binding decision to resolve the conflict

➢ IS the last resort of any dispute resolution

➢ A tribunal member (FWC) to hear both sides

➢ In court, at the FWC, between employee and employer

• the relationship between operations management and business objectives

Operations Management:

● Involves coordinating and organising the activities involved in producing the goods or services that a business sells to customers.

To make a profit:

● Implementing technology into the production line. Reduces the number of employees required in the operations system, which can reduce expenses associated with labour and therefore increase profit.

● To increase market share:

● Checking that products produced are not faulty. Can improve the quality of a business’s product, increasing customer satisfaction and the business’s proportion of sales within the industry.

● To meet shareholder expectations:

● Creating a website for customers to purchase goods and services online. Increases online sales, which can lead to higher levels of profit and increase dividends for shareholders.

To fulfil a market need:

● Using technology to design new products. Can design innovative products to fulfil customer needs that are currently unmet or underserved in the market.

● To fulfil a social need:

● Ensuring that any new waste is recycled in the production process. Reduces the amount of waste produced by a business, allowing it to meet the social need of environmental preservation.

● To improve efficiency:

● Using technology to automate the production process. Can increase a business’s productivity in terms of production speed, as well as reducing the amount of resources discarded in the production process.

● To improve effectiveness:

● Implement strategies that improve the quality of the business’s product. Can improve levels of customer satisfaction, which may increase the business’s sales and revenue. Increased financial performance can assist the business in achieving its objectives.

key elements of an operations system: inputs, processes and outputs

Inputs are the resources used by a business to produce goods and services. All businesses will require a variety of inputs to produce the goods or services that they provide to customers.

Processes are the actions performed by a business to transform inputs into outputs. The type of processes performed will differ for each business depending on what the business is producing.

Outputs are the final goods or services produced as a result of a business’s operations system, that are delivered or provided to customers. The quality of outputs produced by a business is influenced by the inputs used and the processes performed within its operations system

• characteristics of operations management within both manufacturing and service businesses

Manufacturing businesses 

use resources and raw materials to produce a finished physical good.

Service businesses

provide intangible products, usually with the use of specialised expertise.

Manufacturing Businesses

Production process: manufacturing businesses tend to have highly automated processes that are capital intensive

● Occurrence of production and consumption: manufacturing businesses often have a low degree of customer contact during production, as the production stage is separated from consumption.

Customer contact: manufacturing businesses often have a low degree of customer contact during production, as the production stage is separated from consumption.

Tangibility: the outputs produced by a manufacturing business are tangible.

Storability: the outputs produced by a manufacturing business can be stored as inventory.

Consistency: manufacturing businesses produce standardised goods through mass production.

Service Businesses

Production process: service businesses tend to have production processes that are labour intensive

Occurrence of production and consumption: at service businesses, production and consumption of the service occur simultaneously.

Customer contact: service businesses tend to have a high degree of customer contact during production as it occurs simultaneously with consumption.

Tangibility: the outputs produced by a service business are intangible.

Storability: outputs produced by a service business cannot be stored as inventory.

Consistency: services are usually not standardised and instead tailored specifically to fulfil individual customers’ needs.

Manufacturing and service business similarities

Both service and manufacturing businesses aim to optimise their operations to produce high-quality outputs at a low cost of production.

• Both service and manufacturing businesses have to deal with suppliers during the process of managing operations.

• Both service and manufacturing businesses can utilise forms of technology in their operations systems.

strategies to improve both the efficiency and effectiveness of operations related to technological developments, including the use of automated production lines, robotics, computer-aided design, computer-aided manufacturing techniques, artificial intelligence and online services

Automated production lines:

➢ Involve machinery and equipment that are arranged in a sequence, and the product is developed as it proceeds through each step

Efficiency:

can perform at speeds much faster than humans, reducing the amount of time taken to produce outputs, thus improving productivity.

Effectiveness:

perform tasks with a high degree of accuracy, which can decrease the number of errors in production. Reducing errors in production can enhance the overall quality of the final product, which can increase customer satisfaction, sales, and market share.

Advantages:

Performing tasks precisely and accurately can ensure products are consistently produced at a high standard, which can improve the business’s reputation.

• Improving accuracy can reduce errors and the number of resources wasted in production. This can enable a business to reduce its environmental impact and improve its reputation.

Disadvantages:

It can be expensive for a business to repair and update automated production lines.

• There may be expenses associated with training employees to use automated production lines.

strategies to improve both the efficiency and effectiveness of operations related to technological developments, including the use of automated production lines, robotics, computer-aided design, computer-aided manufacturing techniques, artificial intelligence and online services

Robotics:

➢ Are programmable machines that are capable of performing specific tasks

Efficiency:

can perform specific tasks quickly and with high levels of accuracy. This can reduce the amount of time and resources wasted in production, therefore resources are used more optimally, improving productivity.

Effectiveness:

can perform specific tasks quickly with high levels of precision, which can minimise the number of errors that occur during production. This can enhance the overall quality of the final product and increase customer satisfaction, sales, and market share.

Advantages:

The number of employees needed for production can be minimised, which can reduce a business’s wage expenses.

• Increased precision when completing tasks can enhance the overall quality of the product and allow a business to generate more sales revenue.

Disadvantages:

There are high initial setup costs associated with purchasing, programming, and installing robotics.

• It can be expensive for a business to repair and update robotic technologies.

strategies to improve both the efficiency and effectiveness of operations related to technological developments, including the use of automated production lines, robotics, computer-aided design, computer-aided manufacturing techniques, artificial intelligence and online services

Computer-aided design (CAD):

➢ Is digital design software that aids the creation, modification, and optimisation of a design and the design process.

Efficiency:

CAD can reduce the time and labour needed to design a product, allowing resources to be used more optimally and productively.

Effectiveness:

a business can use CAD to develop various prototypes and choose the best design to produce. Choosing the best option enables the business to manufacture the highest quality design, which can increase customer satisfaction, sales, and market share.

Advantages:

Greater accuracy in the product design process can result in consistent levels of quality which can improve the business’s reputation.

• Customers have the flexibility to modify a design to suit their needs. This customisation can attract more customers to the business.

Disadvantages:

There are high initial setup costs associated with purchasing and installing CAD software.

• It may be costly to continuously update or repair CAD software.

strategies to improve both the efficiency and effectiveness of operations related to technological developments, including the use of automated production lines, robotics, computer-aided design, computer-aided manufacturing techniques, artificial intelligence and online services

Computer-aided manufacturing (CAM):

➢ Involve the use of software that controls and directs production processes by coordinating machinery and equipment through a computer

Efficiency:

CAM does not require machinery to be manually reset by humans which reduces the amount of time and labour resources used in the production process, thus improving productivity.

Effectiveness:

CAM software is able to coordinate tasks so they are performed with a high degree of accuracy, enabling the business to achieve a consistent level of quality, which can increase customer satisfaction, sales, and market share.

Advantages:

Improved accuracy can enhance product quality and increase customer satisfaction, which can increase sales revenue.

• Many employee roles can be removed, which reduces labour expenses.

Disadvantages:

There are high initial setup costs associated with purchasing and installing CAM software.

• It may be costly to continuously update or repair CAM software.

strategies to improve both the efficiency and effectiveness of operations related to technological developments, including the use of automated production lines, robotics, computer-aided design, computer-aided manufacturing techniques, artificial intelligence and online services

Artificial intelligence:

➢ Involves using computerised systems to stimulate human intelligence and mimic human behaviour

Efficiency:

AI can reduce the time and labour used to complete complex tasks that would usually require human intelligence. This can allow resources to be used more optimally and improve productivity.

Effectiveness:

AI can perform complex tasks, such as providing timely and high-quality customer assistance. This can improve customer satisfaction levels, and allow for increases in sales and market share.

Advantages:

Artificial intelligence has the ability to provide prompt customer service 24/7, which can improve customer satisfaction and the business’s reputation.

• Artificial intelligence can perform complex functions, such as analysing data, with greater levels of precision.

Disadvantages:

There are high initial setup costs associated with purchasing and installing artificial intelligence.

• It may be costly to recalibrate and maintain artificial intelligence.

strategies to improve both the efficiency and effectiveness of operations related to technological developments, including the use of automated production lines, robotics, computer-aided design, computer-aided manufacturing techniques, artificial intelligence and online services

Online services:

➢ Are services that are provided via the internet

Efficiency:

Online services can remove the need for employees to perform certain tasks and enable labour resources to be used more efficiently.

Effectiveness:

implementing online services within an operations system can improve convenience for customers, increasing levels of customer satisfaction, sales, and market share.

Advantages:

Online services, such as food ordering platforms, can process orders accurately and provide increased customer convenience, which may improve a business’s reputation.

• Online services, such as price comparison platforms, may be useful for a business to showcase competitive prices or distinguish its product’s features.

Disadvantages:

If the platform providing the online service experiences technical difficulties it may disrupt the business’s operations.

• If the business only allows access to its services online it may deter customers who lack technological skills.

strategies to improve both the efficiency and effectiveness of operations related to materials, including forecasting, master production schedule, materials requirement planning and Just in Time

Forecasting:

➢ Is a materials planning tool that predicts customer demand for an upcoming period using past data and market trends.

Efficiency:

Having enough materials minimises halts in the production process which improves productivity.

Effectiveness:

Forecasting improves a business’s ability to meet customer demand which can contribute to increased customer satisfaction, sales, and market share

Advantages:

Informed decisions about the quantity of materials required can improve a business’s ability to meet customer demand.

• Forecasting prevents the excessive ordering of materials that may go to waste if unneeded. This can help minimise the business’s impact on the environment and improve its reputation.

Disadvantages:

If a business is too reliant on forecasting, it may be unable to meet unexpected increases in customer demand.

• The quantity of materials ordered may be incorrect as historical data and market trends may not reflect future demand

strategies to improve both the efficiency and effectiveness of operations related to materials, including forecasting, master production schedule, materials requirement planning and Just in Time

Master production schedule (MPS):

➢ Is a plan that outlines what a business intends to produce, in specific quantities, within a set period of time

Efficiency:

Prevents a business from producing an excessive amount of products, which optimises the use of resources by reducing wastage

Effectiveness:

A business is more likely to produce the correct quantity of products to meet customer demand, which can improve customer satisfaction and increase sales and market share.

Advantages:

Can provide employees with a clear schedule of operations that includes the timeline and quantity of production targets.

• Clear rostering can allow employees to develop a positive work-life balance.

Disadvantages:

Businesses that are constantly changing details of their operations system may find a master production schedule unhelpful as it is not a flexible program.

Implementing and maintaining this plan can be expensive.

strategies to improve both the efficiency and effectiveness of operations related to materials, including forecasting, master production schedule, materials requirement planning and Just in Time

Materials requirement planning (MRP):

➢ Is a process that itemises the types and quantities of materials required to meet production targets set out in the master production schedule.

Efficiency:

Having the exact materials required reduces avoidable halts in production which enhances productivity by allowing operations to flow smoothly.

Effectiveness:

Ensures there are sufficient materials to meet customer demand. Meeting customer demand helps meet the objective of increasing customer satisfaction and sales.

Advantages:

By determining the exact materials required, it is less likely that production will halt due to insufficient materials or organisational errors.

Accurate ordering of the quantities of materials required avoids excess storage and therefore reduces associated expenses.

Disadvantages:

It can be time consuming to constantly update the materials plan.

Implementing and maintaining the materials plan can incur additional administrative and training costs.

strategies to improve both the efficiency and effectiveness of operations related to materials, including forecasting, master production schedule, materials requirement planning and Just in Time

Just in Time (JIT):

● Is an inventory control approach that delivers the correct type of quantity of materials as soon as they are needed for production.

Efficiency:

➢ Holding minimal stock can free up areas in the workspace that can be utilised to increase production.

Effectiveness:

A reduction in idle stock can reduce expenses associated with waste which can meet the objective of increased profits.

Advantages:

JIT eliminates idle stock, therefore limiting the amount of stock wasted from expiry or damage in storage. This can help minimise the business’s impact on the environment and improve its reputation.

• Allows a business to switch to the production of a different product without wasting resources as there are minimal materials on hand to go through.

Disadvantages:

A business may fail to meet customer demand from a lack of reserves stock which may cause damage to a business’s reputation.

• There may be less time to check the quality of stock as it must be used as soon as it arrives, which could result in errors in products.

strategies to improve both the efficiency and effectiveness of operations related to quality, including quality control, quality assurance and Total Quality Management

Quality: a good or service’s ability to satisfy a customer’s need

Quality control (QC):

➢ Involves inspecting a product at various stages to ensure it meets designated standards, and discarding those that are unsatisfactory

➢ Requires the following steps:

➢ Standards of quality are established.

➢ Inspections are regularly conducted.

➢ A good or service is compared against set standards.

➢ A good or service is removed if it does not meet the set standards.

➢ The cause of the error is fixed to prevent further errors

Efficiency:

Identifying and fixing the cause of an error prevents the error from recurring, which results in less waste being created during production. Reducing waste allows a business to optimise its use of resources.

Effectiveness:

Removing defective products prevents customers from receiving faulty goods or services. This can allow a business to meet the objectives of increasing sales and market share.

Advantages:

Reducing the number of faulty goods or services that are sold to customers can minimise the number of refunds the business is required to complete.

• The strategy is relatively inexpensive to implement, as it is controlled internally by the business and no external parties are required to carry out the quality checks.

Disadvantages:

This strategy does not actively attempt to reduce the level of wastage produced in the operations system, which can negatively impact a business’s reputation as it may be associated with harming the environment.

• Unless every product is inspected, defective goods may still reach a customer, potentially causing the business to develop a reputation for selling poor-quality products.

strategies to improve both the efficiency and effectiveness of operations related to quality, including quality control, quality assurance and Total Quality Management

Quality assurance (QA):

➢ Involves a business achieving a certified standard of quality in its production after an independent body assesses its operations system

➢ Certified by an external body the ISO 9001

Efficiency:

Preventing errors before they occur reduces the number of faulty products produced, reducing a business’s waste. This can allow a business to optimise its use of resources.

Effectiveness:

Customers are more inclined to purchase from a business with certified quality standards. This can allow a business to increase its sales and meet the objectives of increasing profit and market share.

Advantages:

Quality assurance can reduce the number of defective products produced, which can reduce the amount of waste generated in production. This can enhance a business’s reputation as it is perceived to be environmentally friendly.

• Receiving external certification from an independent body can improve a business’s competitiveness as customers are likely to have increased confidence in the business and its products.

Disadvantages:

Completing documentation required for the external body to check the operations system can be time consuming

It can be expensive to organise an external body to assess the operations system of a business.

strategies to improve both the efficiency and effectiveness of operations related to quality, including quality control, quality assurance and Total Quality Management

Total Quality Management (TQM):

➢ Is a holistic approach whereby all employees are committed to continuously improving the business’s operations system to enhance quality for customers.

➢ Key features:

➢ Customer focus involves identifying and fulfilling the customers’ exact needs and wants through a business’s goods or services.

➢ Continuous improvement involves engaging in the process of constantly evaluating business processes and identifying methods to achieve a higher standard.

➢ Employee empowerment involves fostering teamwork and employee participation within the business environment to ensure employees are involved in developing solutions to improve quality.

This can be achieved using quality circles where employees initiate and share ideas to improve quality.

Efficiency:

Continuously improving the quality of the production system can prevent errors from occurring and reduce the number of discarded products. This can allow a business to optimise its use of resources.

Effectiveness:

By determining the needs of a customer, TQM can improve levels of customer satisfaction and allow a business to meet the objectives of increasing sales and profit.

Advantages:

A business can adapt TQM to suit its specific business requirements.

• A business engaging in TQM can minimise the amount of waste generated, improving its reputation, as customers perceive the business as having a positive environmental impact.

Disadvantages:

Employees may feel confused about their role in improving quality if managers fail to communicate the TQM strategy clearly.

It may take time for a business to enjoy the benefits of TQM as it requires a shift in culture.

strategies to improve the efficiency and effectiveness of operations through waste minimisation in the production process, including reduce, reuse, recycle

Waste Minimisation: Is the process of reducing the amount of unused material, time, or labour within a business

Reduce:

➢ Is a waste minimisation strategy that aims to decrease the amount of resources, labour, or time discarded during production.

Example: Organise the number of employees required for each day based on how much work needs to be completed: scheduling the appropriate number of employees to work prevents labour resources from being wasted.

Efficiency:

By reducing the number of materials discarded, a business optimises its use of resources and increases efficiency.

Effectiveness:

Reducing waste lowers operational costs which can allow for a business to offer lower prices to customers. This can increase the number of sales and meet the objective of increasing market share. The increase in sales will also increase revenue, which can assist in the achievement of making a profit.

strategies to improve the efficiency and effectiveness of operations through waste minimisation in the production process, including reduce, reuse, recycle

Reuse:

➢ Is a waste minimisation strategy that aims to make use of items which would have otherwise been discarded

Example: Reusing storage items: reusing storage items can reduce the need for a business to repurchase these items.

Efficiency:

By reusing the number of materials discarded, a business optimises its use of resources and increases efficiency.

Effectiveness:

Reusing waste lowers operational costs which can allow for a business to offer lower prices to customers. This can increase the number of sales and meet the objective of increasing market share. The increase in sales will also increase revenue, which can assist in the achievement of making a profit

strategies to improve the efficiency and effectiveness of operations through waste minimisation in the production process, including reduce, reuse, recycle

Recycle:

● Is a waste minimisation strategy that aims to transform items which would have otherwise been discarded.

● Involves transforming discarded resources and turning them into new products or materials that can be utilised.

Efficiency:

By recycling the number of materials discarded, a business optimises its use of resources and increases efficiency.

Effectiveness:

Recycling waste lowers operational costs which can allow for a business to offer lower prices to customers. This can increase the number of sales and meet the objective of increasing market share. The increase in sales will also increase revenue, which can assist in the achievement of making a profit

the pull, one-piece flow, takt, zero defects strategy to improve the efficiency and effectiveness of operations related to lean management

Lean management:

● Is the process of systematically reducing waste in all areas of a business’s operations system whilst simultaneously improving customer value

● There are 4 stages: pull, one-piece flow, takt, and zero defects

Pull:

➢ Is a lean management strategy that involves customers determining the number of products a business should produce for sale

Efficiency:

The pull strategy can reduce overproduction and minimise the number of wasted materials, time, and labour generated by a business’s production process, increasing productivity.

Effectiveness:

The pull strategy can enable a business to minimise the amount of discarded materials and resources in its production process, allowing it to reduce its expenses. This allows a business to better achieve its objective of making a profit

the pull, one-piece flow, takt, zero defects strategy to improve the efficiency and effectiveness of operations related to lean management

One-piece-flow:

Is a lean management strategy that involves processing a product individually through a stage of production before processing the next product, continuing this process throughout all stages of production.

Efficiency:

➢ the one-piece flow strategy can reduce the number of errors in a business’s operations process by only producing one unit at a time, increasing productivity

Effectiveness:

the one-piece flow strategy can allow a business to produce higher quality products at a faster rate, improving customer satisfaction. This can enable a business to achieve the objectives of fulfilling a market need and increasing market share.

the pull, one-piece flow, takt, zero defects strategy to improve the efficiency and effectiveness of operations related to lean management

Takt:

Is a lean management strategy that involves synchronising the steps of a business’s operations system to meet customer demand.

● Efficiency:

the takt strategy can allow a business to optimise its flow of materials between the stages of the production process, reducing wasted time and increasing productivity.

● Effectiveness:

the takt strategy can improve the flow of processes and optimise the speed at which products are delivered to customers, improving their satisfaction. This can enhance a business’s ability to increase sales and make a profit.

the pull, one-piece flow, takt, zero defects strategy to improve the efficiency and effectiveness of operations related to lean management

Zero defects:

● Is a lean management strategy that involves a business preventing errors from occuring in the operations system be ensuring there is an ongoing attitude of maintaining a high standard of quality for the final output.

● Efficiency:

the zero defects strategy involves continuously aiming to minimise errors and, therefore, can reduce the number of materials that are discarded during the production process, increasing productivity.

● Effectiveness:

the zero defects strategy aims for continuous improvement and may lead to customers receiving high-quality products that have no defects, improving their satisfaction and increasing the business’s sales. This can consequently allow a business to better fulfill a market need.

Strengths and Weaknesses of Lean Management

Strengths

● A business can improve its reputation as it is actively reducing and managing waste, which benefits the environment

● A business can reduce the amount of time that is wasted between tasks

Weaknesses:

● It may be overwhelming for employees to implement lean management as there is a goal for constant improvement

● It may be time-consuming to train inexperienced employees and provide then with the knowledge to commit to lean production methods.

corporate social responsibility considerations for an operations system, including the environmental sustainability of inputs and the amount of waste generated from processes and production of outputs

CSR considerations in operations:

● Is the ethical conduct of a business beyond legal obligations, and the consideration of social, economic, and environmental impacts when making business decisions.

CSR considerations for inputs:

● When sourcing materials and resources for a business’s operations system, a manager should consider how the business can improve environmental sustainability of its inputs.

● Examples:

● Purchasing energy-efficient machinery for production.

● Installing reusable, renewable, and/or clean energy sources in the business.

corporate social responsibility considerations for an operations system, including the environmental sustainability of inputs and the amount of waste generated from processes and production of outputs

CSR considerations for processes:

● A business should always aim to be as efficient and effective as possible when performing its operations process.

● Examples:

● Training employees on how to minimise waste when executing production tasks.

● Disposing of any harmful waste that cannot be treated, in a responsible and safe manner.

corporate social responsibility considerations for an operations system, including the environmental sustainability of inputs and the amount of waste generated from processes and production of outputs

CSR considerations for outputs:

● Businesses should ensure that the goods and services they produce generate customer value without causing harm to the wider community.

● Examples:

● Providing clear labelling on a product about appropriate methods of disposal.

● Creating products that have recyclable or biodegradable elements at the end of their lifecycle.

global considerations for operations management including global sourcing of inputs, overseas manufacture and global outsourcing

Global sourcing of inputs:

● Involves a business acquiring raw materials and resources from overseas suppliers.

● Consider several factors:

● How the price of materials and resources differ in each country.

● How the delivery costs vary when supplies are travelling different distances between countries.

● How the environment is impacted by different methods used by suppliers to extract inputs.

● How suppliers treat and pay their workers and whether they operate in an ethical and socially-responsible manner.

● How the government regulates the import and export of materials and resources, including the use of tariffs and quotas.

Advantages:

A business is able to source materials that may not be readily available in its country of operation.

• Higher quality materials can be sourced by a business, allowing a product to better meet customer expectations.

Disadvantages:

Imports may be affected by government-imposed quotas, limiting the number of supplies a business can import.

• It may be difficult to communicate with suppliers due to language barriers, potentially leading to miscommunications.

global considerations for operations management including global sourcing of inputs, overseas manufacture and global outsourcing

Overseas manufacture

involves a business producing goods outside of the country where its headquarters are located. A business may utilise overseas manufacturing to produce goods in greater quantities for a lower price, as the cost of natural, labour, and capital resources are often significantly cheaper.

Advantages:

• There is greater access to highly skilled employees who have expertise in production.

• Cheaper labour costs can allow a business to lower its product prices, increasing customer satisfaction and sales.

Disadvantages:

Manufactured goods may be damaged during the transport process back to the country of distribution.

• Poor corporate social responsibility practices in the country may reflect badly on the business

global considerations for operations management including global sourcing of inputs, overseas manufacture and global outsourcing

Global outsourcing:

● Involves transferring specific business activities to an external business in an overseas country. A business may choose to outsource its activities to improve the efficiency of its operations system and gain specific expertise.

Advantages:

Productivity may increase as the external business has the expertise to complete specified tasks more efficiently.

• The business has more time available to focus on its own areas of expertise, increasing its productivity

Disadvantages:

The quality of the business’s outsourced activity may decline if the external business is completing the activities of multiple businesses at once.

• Poor corporate social responsibility practices performed by the external business may reflect badly on the business’s reputation.

The concept of business change

Business change is the alteration of behaviours, policies, and practices of a business. Businesses are constantly evolving and adapting to improve their performance in certain areas. Reasons for change is their pursuit for profit, market growth, and meeting KPIs.

E.g.: changing products to better suit customer needs.

• moving production overseas to take advantage of cheaper labour rates.

• a new manager coming in and changing the management style.

• automating production lines.

proactive and reactive approaches to change including two differences

A proactive approach is when a business changes to avoid future problems or take advantage of an opportunity to gain a competitive advantage.

GYG EXAMPLE: GYG’s decision to list on the ASX could be considered a proactive approach to change because the decision was carefully planned across several years and supported the business’s expansion ambitions

A reactive approach  is when a business undertakes change in response to a situation or crisis.

e.g.: competitor introducing a new product that is taking a large portion of market share, A controversial problem is headlined in the media. In all of these cases, businesses must quickly respond to remain competitive and viable.

Difference:

• Proactive change occurs when a business takes advantage of an opportunity and avoids future problems. Reactive change occurs in response to a situation or crisis that is essentially forcing the business to change.

Proactive change often involves the use of low-risk strategies. Reactive change usually involves the use of high-risk strategies.

key performance indicators as sources of data to analyze the performance of businesses, percentage of market share, net profit figures, rate of productivity growth, number of sales, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits and number of workplace accidents

Key performance indicators (KPIs) are criteria that measure a business’s efficiency and effectiveness in achieving its different objectives.

Percentage of market share measures the proportion of a business’s total sales, compared to the total sales in the industry, expressed as a percentage figure. Driven by the external environment. A high percentage of market share indicates a large share of total industry sales.

key performance indicators as sources of data to analyze the performance of businesses, percentage of market share, net profit figures, rate of productivity growth, number of sales, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits and number of workplace accidents

Net profit figures are calculated by subtracting total expenses incurred from total business revenue earned, over a specific period of time. A manager could analyse a business’s net profit figures to assess whether expenses are too high or revenue is too low. Driven by changes in internal environment: calculating profits.

key performance indicators as sources of data to analyze the performance of businesses, percentage of market share, net profit figures, rate of productivity growth, number of sales, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits and number of workplace accidents

Rate of productivity growth is the change in the total output produced from a given level of inputs over time, expressed as a percentage figure. High rates of productivity growth indicate that a business has become more efficient over time, as it is able to better utilise its resources in its production process. A positive rate of productivity growth occurs when the business’s productivity increases from one period to the next. Driven by internal changes- producing goods using minimum inputs.

key performance indicators as sources of data to analyze the performance of businesses, percentage of market share, net profit figures, rate of productivity growth, number of sales, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits and number of workplace accidents

Number of sales is the total quantity of goods and services sold by a business over a specific period of time. A business’s financial performance can be measured using number of sales as a KPI, as it indicates how well goods and services are received by customers. A high number of sales indicates a high level of customer satisfaction. driven by external: customers.

FROM 2020 to 2023 GYG had a Sales increase by more than 300%. This is one reason why the company was interested in listing on the ASX – it is growing quickly and it interested in achieving further growth. Management at GYG isn’t all concerned about low profit/small losses. Instead, it is more focused on growth – positioning the business for the future

key performance indicators as sources of data to analyze the performance of businesses, percentage of market share, net profit figures, rate of productivity growth, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits and number of workplace accidents

Number of customer complaints is the number of customers who notified the business of their dissatisfaction over a specific period of time. The number of customer complaints indicates the level of customer satisfaction and engagement with the goods and services they purchase. A high level of customer complaints suggests customer dissatisfaction. external dissatisfaction.

key performance indicators as sources of data to analyze the performance of businesses, percentage of market share, net profit figures, rate of productivity growth, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits and number of workplace accidents

Rates of staff absenteeism are the average number of days employees are not present when scheduled to be at work, for a specific period of time. Staff absenteeism may be due to illness, personal leave, or applying for work elsewhere, which can cost a business in terms of its productivity, time, and finances. A human resource manager would examine the rates of staff absenteeism as an indicator of staff morale. A high rate of staff absenteeism may indicate that employees are unmotivated, dissatisfied with their working conditions, and/or have poor relations with management. Internal- staff

key performance indicators as sources of data to analyze the performance of businesses, percentage of market share, net profit figures, rate of productivity growth, number of sales, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits and number of workplace accidents

Level of staff turnover is the percentage of employees that leave a business over a specific period of time and must be replaced. A human resource manager can analyse the level of staff turnover to examine staff morale, employee satisfaction, and the strength of interpersonal relationships within the business. From the business’s perspective, the loss of experienced and qualified employees can have a direct impact on productivity as time and money must be spent on recruiting and training new employees. internal- staff.

key performance indicators as sources of data to analyze the performance of businesses, percentage of market share, net profit figures, rate of productivity growth, number of sales, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits and number of workplace accidents

Number of workplace accidents measures the amount of injuries and unsafe incidents that occur at a work location over a specific period of time. A high number of workplace accidents reflects an unsafe working environment and is a particular concern for human resource managers, as it is their responsibility to ensure the safety and wellbeing of employees. A high number of workplace accidents can also halt production, decreasing efficiency and effectiveness whilst also damaging the business’s public reputation.

internal- work safety.

Workplace accidents can occur due to:

• old or faulty equipment

• poorly trained employees

• dangerous nature of work tasks

• unsafe working practices.

key performance indicators as sources of data to analyze the performance of businesses, percentage of market share, net profit figures, rate of productivity growth, number of sales, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits and number of workplace accidents

Level of wastage is the amount of inputs and outputs that are discarded during the production process. High levels of wastage at any stage of the production process is a concern to a business, particularly an operations manager, as it often increases the raw materials, cost, and time required to produce a good or service. This may increase the expenses of the business and consequently reduce profits. Additionally, high levels of wastage can reflect poorly on a business in terms of environmental sustainability and corporate social responsibility (CSR), which may negatively affect its reputation and overall performance. internal- controlled wastage