BUSINESS: Topic 2 - Business Management

manager

Someone who coordinates a business's limited resources in order to achieve specific goals.

management

The process of working with and through other people to achieve the goals of the business in a rapidly changing environment.

efficiency

Compares the resources needed to achieve a goal (the costs) against what was actually achieved (the benefits).

effectiveness

Measures the degree to which a goal has been achieved.

interpersonal skills

The ability to work effectively with others, understand their needs, and build positive working relationships.

communication

The ability to effectively exchange information with others.

strategic thinking

The ability to take a broad, long-term view of the business and make informed decisions about future direction.

vision

The ability to develop and communicate a clear sense of direction for the business, helping to guide and motivate staff toward shared goals.

problem-solving

The ability to identify issues in the business and develop effective solutions to overcome them.

decision-making

The process of evaluating options and choosing the most appropriate course of action to solve problems or achieve goals.

flexibility / adaptability to change

The ability to adjust plans, strategies, or behaviours in response to changes in the business environment.

reconciling the conflicting interests of stakeholders

Involves identifying the different (and sometimes opposing) goals of various stakeholders and making decisions that aim to balance these interests.

goal

A goal is a desired outcome (target) that an individual or business intends to achieve within a certain time frame.

Goals

Give a business direction, provide a measure to assess performance, and may increase motivation and commitment if they are carefully prepared.

what is profit?

total income (revenue) minus total costs (expenses).

market share

Market share is a business's total share of industry (i.e. market) sales over a specified time period.

growth

the ability of the business to increase its size in the longer term.

share price

The price of buying one share in a company, which shareholders generally want to increase for profit.

social goal

relates to the business making a positive contribution to society.

environmental (goal)

relates to the business reducing its negative impact on the natural environment.

classical approach

approach that stresses how best to manage and organise workers to improve productivity.

classical - scientific approach to management

Pioneered by Frederick Taylor, studies a job in great detail to discover the best way to perform it.

classical - bureaucratic approach

Pioneered by Max Weber and Henri Fayol, advocated that a bureaucracy is the most efficient form of organisation.

planning

The process of setting goals and deciding on the methods to achieve them.

organising

The process of coordinating resources to translate plans and goals into action.

controlling

The process of comparing actual performance to planned goals, and taking corrective action when needed.

hierarchical organisational structure

A system where authority and responsibility are clearly arranged in levels, with each level having more authority than the one below it.

Characteristics of a hierarchical organisational structure

Multiple levels of management, clear chain of command, top-down communication, defined roles and specialised tasks.

autocratic leadership style

A management style where the manager makes decisions without significant input from subordinates. The manager controls all decisions, dictates work methods, and closely monitors employee performance.

behavioural approach

The behavioural approach to management stresses that people (employees) should be the main focus of the way in which the business is organised.

Elton Mayo

A leader in the behavioural approach to management known for his findings that workplaces are social environments and employees are motivated by more than financial self-interest.

leading

The process of influencing or motivating people to work towards the achievement of the business's objectives.

motivating

Energising and encouraging employees to achieve the business goals.

communicating

Exchanging information with others.

teams

Teamwork involves people who interact regularly and coordinate their work towards a common goal.

Effective managers implementing a behavioural approach

Foster a sense of trust and common purpose between team members, negotiate consensus decisions, implement a flatter organisational structure.

democratic leadership style

A management style where the manager asks subordinates for their suggestions and then seriously considers those suggestions when making decisions.

strategic role of operations

Manage the transformation process effectively in order to create a competitive advantage through cost leadership and/or product differentiation.

cost leadership

Involves aiming to have the lowest costs in order to be price-competitive in the market.

product differentiation

Involves distinguishing products in some way (features, service, quality, speed) from competitors.

transformation process

Conversion of inputs into outputs.

inputs

Resources used in the transformation process.

what is an output

the end result of business efforts - the good or service that is provided or delivered.

transformed Resources

inputs that are changed or converted during the transformation process - Materials, Information, Customers (MIC).

materials

Physical raw ingredients, parts and supplies used in production.

information

Information (both internal and external) which is used during the production process and information which is transformed during the production of a service.

customers

Where the business provides services for customers, often the customer is an input and is transformed or moved in some way.

transforming resources

inputs that carry out the transformation process, such as human resources and facilities

facilities

Refer to the plant (factory or office) and the machinery used in the operations process.

human resources

Includes employees' skills, experience, and efforts.

quality management

Refers to those processes a business undertakes to ensure consistency, reliability, safety and fitness of purpose of product.

quality control

Involves the use of inspections (checkpoints) at various stages in the production process to check for problems and defects that may occur and to ensure the process is meeting specified standards.

quality assurance

Involves the use of a quality management system to ensure that production meets a predetermined set of minimum quality standards. QA is a proactive approach which prevents products having problems before they occur.

Quality Management System

A system that includes documented processes which form the basis for staff training and external audits.

Quality Improvement

A focus on continuous and ongoing improvement throughout the operations process to ensure poor quality products never reach the customer, also referred to as total quality management (TQM).

Human Resources Role

The strategic role of human resources is to effectively manage the total relationship between an employer and employee to achieve the strategic goals of the business.

Acquisition

The process of attracting and recruiting the right staff for roles in a business.

Job Description

A written statement describing the duties, tasks and responsibilities associated with the job.

Job Specification

The key qualifications needed to perform the job in terms of education, skills and experience.

Recruitment

The process of locating and attracting the right quantity and quality of staff to apply for employment vacancies or anticipated vacancies at the right cost.

Selection

Involves gathering information about each applicant and using that information to choose the most appropriate applicant.

Development (Process)

Refers to enhancing the skills of the employee in line with the changing and future needs of the organisation.

Induction

A program to introduce new employees to the job, their co-workers, the business and its culture.

Maintenance

Processes designed and administered by human resources to maintain employees at the business, including compensation and benefits.

Separation

The process of employees leaving a business, which may occur voluntarily or involuntarily.

Voluntary Separation

When the employee decides to end the employment relationship as a result of retirement, resignation or voluntary redundancy.

Retirement

An employee voluntarily leaves and exits the labour force (no longer intends to work).

Resignation

Where an employee voluntarily leaves their job (i.e. quits) but intends to continue working (e.g. for another employer).

Voluntary Redundancy

Where some employees' roles have become redundant, and that employer offers a voluntary redundancy scheme whereby workers can nominate themselves to leave the business in return for specified benefits.

Involuntary Separation

When the employer ends the employment relationship as a result of contract expiry, involuntary redundancy or dismissal.

Contract Expiry

Occurs when an employer decides not to renew a fixed-term employment contract.

Involuntary Redundancy

Refers to a situation where some employees' roles have become redundant, resulting in those employees being retrenched.

Dismissal

The termination of an employee's contract by the employer, usually due to unsatisfactory performance or misconduct.

Summary Dismissal

Immediate dismissal without prior notice, typically invoked in cases of serious misconduct or gross negligence that breaches the terms of employment.

Unfair Dismissal

Where an employee is dismissed by their employer and they believe the action is harsh, unreasonable or unjust.

Training and Development

process which aims to develop employee skills, knowledge and attitudes that lead to superior work performance in their current role.

Rewards

Refers to both the monetary and non-monetary benefits that employees receive in return for their work effort.

Monetary Rewards

Rewards reflected in pay or having financial value.

Non-Monetary Rewards

Rewards that do not have an obvious financial value.

Individual rewards

An approach to monetary and non monetary rewards where the employee earns the reward based on their own personal performance.

Group rewards

An approach to monetary and non monetary rewards where the employee earns the reward based not on their own personal performance but on the performance of the groups of which they are a member.

Performance pay

what is the process of linking part of an employee's income to their performance at work called?

Strategic role of Marketing

To determine or influence an appropriate marketing mix to maximise sales in the chosen target market(s), contributing to profit maximisation.

Marketing mix

The combination of the four P's - product, price, promotion and place - that make up the marketing strategy.

Situational analysis

The process of assessing the internal and external factors affecting a business.

SWOT analysis

Involves the identification and analysis of the internal strengths and weaknesses of the business, and the opportunities in and threats from the external environment.

Target market

A group of present and potential customers to which a business intends to sell its product.

Market segmentation

Involves dividing the total market into smaller groups based on consumer characteristics.

Primary market

The market segment at which most of the marketing resources are directed.

Secondary market

A smaller and less important market segment than the primary target market.

Demographic segmentation

Dividing the total market according to objective features of the population (e.g. age, sex, income, cultural background and family size).

Geographic segmentation

Dividing the total market according to geographic locations.

Psychographic segmentation

Dividing the total market according to personality characteristics and attitudes that are not specific to the product(s) being sold.

Behavioural segmentation

Dividing the total market according to the customers' behaviour and attitudes in relation to the specific product(s) being sold.

Products

Goods or services that can be offered in an exchange for the purpose of satisfying a need or want.

Brand

Creating a unique identity for a product or business that people can recognise and trust.

Packaging

The development of the container or wrapping for a product, including its visual design.

Labelling

The presentation of information on a product or its package.

Price

The amount of money a customer is prepared to offer in exchange for a product.

Price skimming

When a business charges the highest possible price for a product during the introduction stage of its life cycle.