mod 2 - business management

classical Approach

Emphasizes efficiency, productivity, and hierarchical structures within businesses.

key functions of classical approach to management

1. planning

2. organising

3. controlling

Planning

Setting goals for the business and working out the best ways to achieve them in a changing environment.

Operational (short-term) planning

short-term (days, weeks), specific goals to achieve the tactical goals determined by front-line management such as arranging a customer survey

Tactical (medium-term) planning

Emphasises adaptable planning and re-allocating resources accordingly over 1-2 years.

Strategic (long-term) planning

To achieve goals over 3-5 years and assess where in the market the business wants to be.

Organising

The next step of business management that puts into practice the predetermined goals in the planning stage.

1. determine responsibilities

2. classify and allocate groups

3. assign work and delegate authority

Controlling

Management evaluates performance and makes changes if needed to make sure goals are being met.

1. establish standards in line with goals

2. measure business performance against standards

3. make changes where necessary

Autocratic leadership style

High task, low process leadership style, making all orders and decisions without employee input.

Behavioural Approach

Stresses that employees should be the main focus of the way the business is organised and consistent.

Management as leading, motivating and communicating

Management should understand and work with people with diverse backgrounds, hopes, desires and expectations.

Advantages of Participative/democratic leadership style

Increased employee recognition, appreciation and empowerment, improved social and mental health, improved relationships between managers and staff.

Disadvantages of Participative/democratic leadership style

Making decisions can be time consuming, powerful people can disrupt the process, less direct orders leading to confusion.

Contingency Approach

Stresses the need for flexibility and adaptation of management practices and ideas to suit changing circumstances.

Advantages of Contingency Approach

Acknowledges the impact of changes in the business environment and encourages flexibility.

Disadvantages of Contingency Approach

• Adapting to constant changes - constantly shifting business strategy and products, disrupted workflow, lack of focus and control

• Selecting alternative approaches can be costly in terms of time and money

example of classical management structure

Elon Musk

• doesn’t ask for suggestions nor does he accept them easily.

• lacks flexibility and sets exceptionally high standards, such as the intense scrutiny of the products they creates

• concern for productivity is higher than his concern for people.

example of behavioural management structure

Canva

• focuses on culture, teamwork, and open communication

• small, goal-driven teams

• motivates staff through quarterly events, public recognition of achievements, and fun workplace perks

• regular communication (e.g. weekly stand ups and season openers)

example of contingency management structure

Woolworths Case Study

• In 2017, Woolworths announced a nationwide ban on plastic bags

• By mid-2018, the company replaced plastic bags with reusable alternatives and encouraged customers to bring their own shopping bags.

quality control, example

the use of inspections at various points in the production process to check for and minimise problems

• e.g. woolworths sends food samples to labs

quality assurance, example

the use of a system so that a business prevents mistakes during production or service delivery

• e.g. The International Organisation for Standardisation (ISO) provides guidelines on how to establish quality assurance (e.g. developing a quality manual, documentation measures).

types of quality improvement

• total quality management

• continuous improvement (kaizen)

total quality management

all employees take responsibility for the output quality - ongoing, business-wide commitment

continuous improvement

an ongoing commitment to achieving perfection, important to business culture

marketing

the total system of interacting activities designed to plan, price, promote and distribute products to customers

role of marketing

• to provide a link between the business and its customers

• to work independently with the other key business functions to achieve its goals, in particular to maximise sales and profits.

identification of the target market

deciding who will want and buy the business’s products

mass market, example

• not targeting a specific group, products have little variation, appealing and selling to most people 

• e.g. Dettol

market segmentation, example

dividing the mass market into groups based on common characteristic/s - demographic, geographic, psychographic, behavioural

• e.g. Volkswagen Group has different brands

  • skoda - families wanting a safe, reliable car

  • porsche - high-income consumers wanting a luxury experience and premium aesthetic

niche market, example

a really small market segment with very specific needs and wants 

• e.g. Kisa is an easy-to-use phone brand targeting elderly, children, and people with disabilities

marketing mix - seven P’s

product, price, promotion, place, people, physical evidence, process

what does people refer to in marketing?

everyone involved in the product of a business

what does physical evidence refer to in marketing?

everything the customer sees when interacting with a business which helps customers make the best choice

• product features

• physical environment experienced by the customer (e.g. the design and layout of a store/website) 

• use of customer feedback

• providing detailed information

• helping the customer compare different brands 

what does process refer to in marketing?

the flow of activities when there is any interaction between the customer and a business 

• how quickly and safe the delivery is

• how easy it is to order

• whether customer support is helpful

purpose of a cash flow statement

• describe liquidity - whether a business has good or adequate cash flow to pay its short term debts

• helps businesses assess a their ability to sustain operations, invest in growth, and manage obligations

examples of inflows

• cash sales

• money from selling assets

• securing loans

• payments from debtors (accounts recievable)

• dividends

examples of outflows

• expenses

• payments from creditors (accounts payable)

purpose of an income statement

• show amount of income/ and expenses

• show whether a profit or loss has been incurred (cash shortage → action can be taken)

gross profit

revenue - COGS

COGS

opening stock + purchases - closing stock

net profit

gross profit - expenses

why is net profit more effective than gross profit?

• net profit includes all costs/expenses

  • considers not just COGS, but also operating expenses, rent, wages, interest, taxes and depreciation (items decreasing in value)

• true reflection of how efficiently the business is being run and how much actual profit is left

balance sheet

represents a business’ net worth at a particular point in time

purpose of a balance sheet

• to help a business owner monitor the debt and equity levels of the business,

• to evaluate the business’ overall financial positionagainst previous periods to assist in decision making

examples of current assets

• cash

• debtors (accounts recievables)

• stock (inventory)

examples of non-current assets

• buildings

• land

• machinery

• vehicles

• furniture

• fittings and fixtures

examples of current liabilities

• overdrafts

• credit card debts

• accounts payable (creditors)

bank overdraft

an extension of credit that lets you borrow money through your current account by taking out more more than you have in it

examples of non-current liabilities

• mortgages

• leases

• debentures

human resources cycle

a series of stages outlining an employee’s journey with a company, from initial attraction to exit

recruitment/acquisition

 the process of attracting and hiring the right staff for roles in a business

job analysis

a systematic study of each employee’s duties, tasks and work environment before it can recruit the right person to do it. 

what does a job analysis allow a business to create?

• job description

• job specification

job description

a written statement describing the employee’s duties, tasks and responsibilities associated with the job

job specification

a list of the key qualifications needed to perform a particular job in terms of education, skills, knowledge and level of experience

what do businesses use to recruit the right people

• advertisements

• employment agencies

• word of mouth

internal recruitment

a business appoints someone already within the business to a role and take on different duties

internal recruitment advantages

• Opportunity for promotion

• Employees already known to employer = easier choice 

• Familiar with the business’s objectives, culture and processes 

• Reduced costs of advertising

internal recruitment disadvantages

• Might be no one suitable 

• More than one applicant → conflict/jealousy between the employees 

• Applicants may be set and not open to new ideas

external recruitment

finding suitable applicants outside the business, because of the need of a new position or the existing employee resigned/retired/promoted

external recruitment advantages

• Wider range of applicants 

• Different qualifications/experiences → new ideas and fresh approaches to tasks

• Increase in actual staff numbers → rapid business growth

external recruitment disadvantages

• Applicants are unknown → difficulty choosing 

• Costs needed for advertising

• Large field of applicants → time consuming

example of recruitment

Mcdonalds launched Snaplications in 2017

• gave Australians the chance to apply for a job through a Snapchat lens.

• users can select a lens which shows them in the uniform and then send a 10 second video outlining why they want to work at Mcdonalds.

training

teaching staff to perform their job more efficiently and effectively by boosting their knowledge and skills

development

the process of preparing employees to take on more responsibilities in the future by acquiring better knowledge and skills and gaining more experience in an area

example of training and development

Qantas

• ordered more than 100 new aircraft, supported by a new flight training centre

• created opportunities for its employees to gain expertise in aircraft and aviation

maintenence

motivating employees to remain with the business 

maintenence: how do businesses motivate employees to remain with the business?

provide monetary and non-monetary benefits

monetary benefits

rewarding employees’ efforts through financial compensation (e.g. salary, promotion, bonuses) 

non-monetary benefits

non-cash forms of compensation, perks and recognition (e.g. flexible work arrangements, awards, subscriptions)

separation

the ending of an employment relationship either by the employer or employee

types of separation

• voluntary cessation

• involuntary cessation

types of voluntary cessation

• resignation

• retirement

• voluntary redundancy

types of involuntary cessation

• involuntary redundancy

• dismissal

• summary dismissal

• dismissal after warnings

• unfair dismissal

resignation

an employee decides to no longer work for the business - offered another position somewhere else 

retirement

an employee decides to give up working

voluntary redundancy

an employee volunteers to leave the business when their job is no longer required.  

example of involuntary cessation

in 2023, Mcdonald’s announced a major restructure plan and dismissed hundreds of staff

involuntary redundancy

the employer terminates an employee’s position because their job is no longer needed and is not given the option to move to another role within the business

dismissal

employer immediately terminates an employee’s position due to unacceptable behaviour

summary dismissal

 immediate termination of the employment contract without notice due to serious breach of the employment contract and/or code of conduct

dismissal after warnings

employer terminates contract usually after three warnings either because of poor performance, or the employee failed to improve after training opportunities

unfair dismissal

an employee is dismissed by the employer and believes that the action was harsh, unreasonable or unjust

Kurt Lewin’s three step change model

1. unfreeze

2. change

3. refreeze

unfreeze stage - three step change model

1. Determine what needs to change

2. Ensure that there is strong support from upper management

3. Create the need for change

4. Manage and understand the doubts and concerns

change stage - three step change model

1. Communicate often

2. Dispel rumours

3. Empower action

4. Involve people in the process

refreeze stage - three step change model

1. Anchor changes into the culture 

2. Develop ways to sustain the change

3. Provide support and training

4. Celebrate success!

reasons for resistance to change

• poor management - lack of trust, poor communication

• fear of job loss

• fear of economic uncertainty

• disruption to routine

• financial costs - purchasing new equipment, retraining

• inertia - unenthusiastic responses to change as people don’t want to step out their comfort zone