Topic 2 Business studies

 classical–bureaucratic approach

should have:

• a strict hierarchical organisational structure

• clear lines of communication and responsibility

• jobs broken down into simple tasks; specialisation

• clearly defined job roles

• rules and procedures

• impersonal evaluation of employee performance to avoid favouritism and bias

The Classical approach

came in response to many complex problems, managers developed and tested solutions finding the best way to performs tasks

Managment as Planning

the preparation of a predetermined course of action

levels of planning

1. Strategic (long term) planning

2. Tactical(medium term) planning

3. Operational(short term) planning

Management as Organising

the structuring of the organisation to translate plans and goals into action

the organisation process

the range of activites that translate the goals of a business into reality

The organisation process steps

1. Determining the work activities.

2. Classifying and grouping activities.

3. Assigning work and delegating authorit

Management as controlling

Controlling is the process management goes through when it attempts to evaluate performance and take corrective action to ensure that objectives are being achieved

Management hierachy

• is the arrangement that provides increasing authority at higher levels of the hierarchy.

management hierarchy means

senior managers have greater accountability, responsibility and power compared to those at lower levels of the pyramid.

The “shape of the classical management hierachy”

• Pyramid shaped

• rigid lines of communication

• specialisation of labour resulting in tasks being divided into separate jobs

• a chain of command

autocratic leadership style

these type of managers make all the decisions, dictate work methods, limits worker knowledge about what needs to be performed

how is the autocratic leadership style effective

its can be very effective in a time of crisis

Autocratic managers can

• Provide clear directives by telling employees what to do, without listening to employee input

• Controls people in the business

• Motivates through disciplinary action

Behavioural APPROACH

stresses that the employees should be the main focus of the way the business is organised

There is a strong belief that successful management depends

largely on the manager’s ability to understand and work with the employee

Management as leading

To become a sufficient leader, the staff must trust you to lead them; this requires the trust of the employees.

leaders under behavioural approach

• Managers should display empathy and acquire good listening skills.

• Leaders must have expectations of employees’ abilities to initiate and implement ideas

• Concentrate on the needs of the employees

Management as motivating

Motivation is determined by effective management

• Aware of the  human factors (Hawthorne Studies) 

  • Recognition

  • Self worth

  • Positive reinforcement

Management as communicating 

• One of the easiest yet difficult management activities.

• two way listening and understanding

• Two-way communication provides managers with feedback and includes workers in the decision making process

Teams

• Involves people regularly interacting with each other (teamwork) 

• Understanding how teams function are vital 

• It's essential that a manager fosters a sense of cohesion between team members- not managing a group of people separately

Adopting a flat hierarchal structure

Teams/managers must adopt a flat hierarchical structure, reducing the levels of management

Participative or democratic leadership STYLE

A leadership style in which the manager consults with employees to ask suggestions and then seriously considers through suggestions when making decisions

The Contingency Approach

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

Adapting to changing circumstances

advocates for managers to extract the most useful information and ideas and practices from a wide range to best suit the businesses current/ present requirements

Interdependence

refers to the mutual dependence that key functions have on each other 

The greater the division

• the more smoothly the business is able to operate

Operations

 refers to the business process that involves transformation or, more generally, production.

Operations management

consists of all the activities in which managers engage to produce goods and services

A manufacturer transforms inputs into

good— tangible products

A services organisation will transform inputs into

services— non tangible products

elements of the production process

inputs, processes and outputs.

Inputs

the resources used in the transformation (production) process- either from the business or a supplier

Transformed resources

 inputs that are changed or converted in the operation process

Transformed resources include

• Materials: basic elements

• Information: knowledge gained from research, investigation and instruction = increased understanding

• Customers: when their choices shape inputs

Transforming resources

Inputs that carry out the transformation process, enabling change or value adding

transforming resources include

• human resources: employees

• facilities: the plant (factory or office) and machinery

Transformation

main concept of operations management, which is the conversion of inputs(resources) into outputs(goods and services)

Outputs

the result of a business’ efforts- the goods and services delivered or provided to the consumer

Quality

the degree of excellence of goods and services and their fitness for a stated purpose

Quality management

strategy which a business uses to make sure that its product meets customer expectations.

Benefits of implementing quality management

• reduced waste and defects

• reduced variance in final output

• strengthened competitive position

• improved reputation and customer satisfaction

• reduced costs

• increased productivity and profits.

Quality control

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

Quality assurance

 the use of a system so that a business achieves set standards in production

Quality improvement

focuses on two aspects: total quality management and continuous improvement

Total quality management

•  a commitment to excellence that emphasises continuous improvement

• aim is to create a defect free production process, and maintain a customer focus in operations

Continuous improvement

process that involves a constant evaluation of, and improvement in the way things are done.

Benefits of quality management practices

• Reduced waste and defects

• Reduced variance in final output

• Reduced costs

• Increased productivity and products

Identifying the target market

businesses must select specific groups of customers on which to concentrate their marketing efforts

mass market

the seller mass-produces, mass distributes and mass-promotes one product to all buyers

Mass market purpose

Mass marketing approach seeks a large range of customers→ developing a single marketing mix

Once the market has been segmented

the business selects one of these segments to become the target market

Why is market segmentation tactful

• It uses its marketing resources effectively

• better understand the consumer buying behaviour of the target market

• collect data more effectively and make comparisons within the target market over time

• refine marketing strategies used to influence consumer choice.

niche markets

 a narrowly selected target market segment

Marketing strategies

actions undertaken to achieve the businesses marketing goals through the marketing mix

THE FOUR MARKETING P’S

1. Price

2. Produce

3. Promotion 

4. Place(Distribution)

pricing methods

1. Cost based pricing

2. Market based pricing

3. Competition based pricing

product

Customers will buy products that not only satisfy their needs but also provide intangible benefits such as a feeling of security, prestige, satisfaction or influence.

Promotion

to inform, persuade or remind consumers of the business’ products

The 4 elements of the promotion mix

1. Personal selling and relationship marketing.

2. Sales promotion.

3. Publicity and public relations.

4. Advertising.

Place

activities that make the products available to customers when and where they want to purchase them

Distribution channel

a way of getting the product to the customer, involves a number of intermediaries or ‘go betweens’, such as the wholesaler or retailer

Cash flow statement

 a financial statement that indicates the movement of cash and cash payments over a period of time

“Ideally cash inflows =

cash outflows

Liquidity

used to describe whether a business has a good or adequate cash flow

What do cash flow statements summarise

 summarise past information, in order to predict future cash flows

Income statement

a summary of income earned and the expenses incurred over a period of trading

Income statement catergories

1. Revenue or income: Revenue means income from sales.

2. Cost of Goods Sold (COGS)

3. Gross profit Revenue less of COGS

4. Expenses 

5. Net Profit

Gross profit=

Revenue- cost of goods sold

COGS =

 Opening Stock + Purchases- Closing Stock

Net profit =

Gross Profit- Expenses 

Balance sheets

 provides a picture of what a business owns (assets) and its liabilities (owing) and the owner’s

The purpose of a balance sheet

help a business monitor its debt and equity levels of the business

Assets

the items of value owned by a business that can be given for monetary

Liabilities

items of debt owed to outside parties or banks i.e loans, mortages, credit card debt

What are assets divided into

 Current and Non current Liabilities

Current liabilities

debts expected to be paid within less than 12 months(credit card)

Non curent liabilites

long-term debt items such as mortgages and leases

Owners equity

the funds contributed by the owners to establish and build the business.

Balance sheet equation

A = L + OE

assets = liabilities + owners equity

Human resources management

effective management of the formal relationship between employees and employers

 successful business relies on……to achieve their goals

the quality of their employees

the human resources cycle

Recruitment

 process of finding and attracting the right quantity and quality of staff to apply for employment vacancies or anticipated vacancies

Internal recruitment

• Filling jobs vacancies with present employees

• An opportunity to take on greater responsibility

• Is popular and involves less risk

External requirement

• vacancies with people from outside the business

• Different qualifications or experience from those already within the business

Training

process of teaching staff to performs their jobs effectively and efficiently by enhancing their skills and knowledge

Development

the process of preparing employees to take on more responsibilities in the future through acquiring better skills and knowledge in a particular area

The aim of training and development

to seek long term change in the employees skills and knowledge

Ongoing training for all employees is becoming critical due to

rapid technological change and global competition

Types of training

1. Off-the-job training (TAFE)

2. On-the-job training 

3. Action learning(NAB and IBM use this form of training)

4. Competency-based training (medical education uses this form of training).

5. Corporate Universities: Coles and Qantas implement these

6. Online training 

Business ethics

the application of moral standard into business behaviour