business management

Chapter 5 – Nature of Management
5.2 – Features of Effective Management

·       Management = the process of working with and through other people to achieve the goals of the business in a rapidly changing environment

·       Crucial to management is the effective and efficient use of resources

·       An effective manager must be good at:

i.        Planning

ii.       Organising

iii.     Leading

iv.     Controlling

·       The role of effective management is to make sure the joint efforts of employees are directed towards achieving the business’s goals

·       Effective management is the major factor influencing the success or failure of a business

5.3 – Skills of Management (Interpersonal, communication, strategic thinking, vision)

·       Effective managers are those who:

-  Possess a range of specific management skills

-  Can use these skills interchangeably

·       Interpersonal Skills:
- Involves clear communication and understanding others' perspectives
- Builds positive staff relationships and teamwork
- Helps motivate, influence, and resolve conflict

·       Communication Skills:
- Enables clear expression of goals, expectations, and changes

- Builds trust, reduces uncertainty, and supports teamwork

- Essential for influencing and motivating staff
- Requires awareness of both verbal and nonverbal communication

·       Strategic Thinking Skills:
- Visualise future opportunities and anticipate challenges seeing the big picture understanding how different parts of a business interact
- Identify patterns, trends, and long-term goals for business success
- Maintain a competitive edge in a changing environment

·       Vision Skills:

-  Helps staff understand business goals and fosters commitment and enthusiasm
- Essential during times of change to guide decision-making and maintain focus
- Without vision, a business lacks purpose and direction, leading to confusion and failure

5.4 – Skills of Management (problem-solving, decision-making, flexibility, adaptability to change, reconciling the conflicting interests of stakeholders) (CRISP FDV)

·       Problem-Solving Skills
- Identifying and implementing a course of action to fix an unworkable situation
- Six steps to problem solve - identifying, gathering information, developing solutions, analysing each solution, choose best option, evaluate the solution

·       Decision making Skills

- Identifying options and choosing the best one to solve a specific issue
- Good decisions require timely action, risk assessment and employee output

·       Flexibility and Adaptability to Change Skills
- Modern managers must: anticipate and adjust to fast-changing business environments
- Desired traits: proactive, open-minded, not rigid

·       Reconciling Conflicting Interests of Stakeholders
- Align business goals with stakeholder expectations
- Examples of conflict include:
    - Employees want higher wages ↔ Shareholders want higher dividend
    - Customers want low prices ↔ Management wants high profit
- Must attempt to satisfy as many stakeholder expectations as possible, while at the same time acting in a responsible manner

Chapter 6 - Achieving Business Goals
6.2 – Business Goals (SP GEMS)

·       Profits:

- Primary goal is to maximise profits

- Business can achieve a higher profit margin by lowering prices, improving advertising or introducing innovative products

- Non-profits aim to reinvest funds into their cause, not earn profit for owners

·       Market Share:

- Growing market share shows competitiveness and stronger performance

- Often achieved through brand variety and extensive marketing and promotion

- Woolworths (34%) and Coles (28%) account for approximately 62 per cent of the supermarket industry market share

- Increasing market share is an important goal for businesses that dominate the market, because small market gains often translate into large profits

·       Growth:

- To Increase business size, capacity, or market reach

- Internal growth: Hire more staff, open new stores, or launch new products

- External growth: Merge with or acquire other businesses

- SME prefer steady size to maintain control and customer contact

- Growth is not always a priority for lifestyle-based business owners

·       Share Price:
- Companies must maximise shareholder returns to remain successful.
      - Achieved by raising share price + paying healthy dividends

- Partial ownership in a public company

·       Social:

- Businesses have a responsibility to the community

- Common social goals:

      - Community service (sponsoring cultural, educational, welfare programs)

      - Employment (employing locals, families)

      - Social Justice (equal opportunities, environment)

·       Environmental:

- Economic growth must be achieved sustainably, as the earth’s resources are scarce

- There needs to be a balance between economic and environmental concern (sustainable development)

- Governments are imposing stricter environmental regulations on business practices

- 63% of businesses had a policy to reduce emissions in 2019

- Up 56% from 2015

6.2.7 - Achieving a mix of business goals

·       Businesses aim to meet multiple goals at once to satisfy all stakeholders

·       Goals are often interdependent and can support each other (e.g. Growth strategy can also improve profits and market share)

·       Managers often must make a trade-off between conflicting goals

6.3 – Staff Involvement (TIMM)

·       Staff involvement means involving employees in the decision-making process and giving them the necessary skills and rewards

·       A work environment that maximises employee involvement and satisfaction has high levels of labour productivity

·       Innovation:

- With markets becoming more global, Australian businesses are forced to become more innovative

- A business can gain a competitive advantage if it innovates successfully

- For business achieve successful innovation they must:

     - Value new ideas by taking them seriously

     - Rewards given to employees (recognising and encouraging)
    - A trusting management that does not micromanage

- E.g. Google embraces entrepreneurship by offering a 20% timeframe on developing personal projects (this is how Gmail was made)

·       Motivation:

- Motivated employees are more productive and committed

- Two classic motivators: rewards and punishments

- Managers must be motivators, not just task-givers
- Intrinsic: Driven by internal satisfaction (e.g. challenge, satisfaction)

- Extrinsic: Driven by external rewards (e.g. pay, higher roles)

·       Mentoring:

- Mentoring involves guiding, coaching, and modelling behaviour to help less experienced employees

- “take new staff under their wing”

- Helps new staff transition smoothly into the workplace

- Builds employee commitment and understanding of business values

·       Training:

- Teaches employees to perform their job more efficiently and effectively by improving their knowledge and skills
- Improve employee productivity

- Training should be seen as an investment in human capital, not an expense

Chapter 7 – Management Approaches

Classical Approach

7.2 – Classical Approach

·       Classical-Scientific Approach - Frederick W. Taylor in the 19th century

- Focused on how best to organise workers/production methods on the factory floor
- Emphasised specialisation: breaking down work into simple, repetitive tasks

- Encouraged a hierarchy of authority and tight managerial control

- Still seen in modern companies e.g. McDonald’s

- Criticised today for ignoring employee motivation, but its principles influenced modern efficiency strategies

·       Classical-Bureaucratic Approach - Max Weber and Henri Fayol
- Emphasised how businesses should be organised or structured

- Built on a strict hierarchy where each level had clear authority and responsibilities

- Communication and responsibility should follow clear, formal lines to avoid confusion and overlap.

- Clearly defined job roles

7.2 – Management as Planning, Organising, Controlling

·       Planning:

- Helping a business set its vision, goals, and strategies for both short-and long-term success

- The manager’s ability to plan, implement and monitor directly affects business outcomes.

- Types of planning:

     - Operational (short-term): day-to-day activities e.g. schedules/short-term goals.

     - Tactical (1–2 years): Strategic plans into actionable steps and allocates resources

     - Strategic (3–5 years): Long-term direction, goals, market position vs competitors

·       Organising:

- Organising puts plans into action by coordinating people and resources to achieve business goals

- Deciding what needs to be done, who will do it, and how it will be done effectively

- 3 Steps in the Organising Process:

    1. Determine work activities – Break down objectives into manageable tasks

                 2. Group activities – Organise similar tasks into departments to improve efficiency

                 3. Assign tasks – Allocate responsibilities and ensure tasks are completed well

·       Controlling:

- Controlling evaluates actual performance against goals and takes action to fix any issues

- Ensures the business stays on track by comparing planned objectives with real outcome

7.2.6 - Hierarchical organisational structure

·       Aim: The organisational structure shows how tasks, authority, and communication are arranged à  helping managers achieve business goals

·      

The pyramid-shaped structure gives clear authority levels helping with planning, organising, and controlling

·       Roles are grouped by function (e.g. marketing, HR), improving specialisation and task clarity à supports efficient organising

·       Clear communication lines

·       Specialisation of labour resulting in tasks being divided into separate jobs

·       Strong chain of command helping control and accountability

7.2.7 – Leadership Styles

·       Leadership style = a manager’s approach, attitude and behaviour in directing others

·       Leadership style directly affects team performance

·       Autocratic style (hierarchical management structure): manager makes all decisions, gives orders, and expects obedience — effective in emergencies or with low-skilled teams

·       Democratic/Participative style (flatter management structure): manager invites ideas, discusses problems, and makes joint decisions — improves motivation, trust, and innovation

7.2.8 – Autocratic Leadership Style

·       Similar with a strict classical–scientific approach 

·       Tends to make all the decisions, dictates work methods, limits worker knowledge 

·       Provides clear directives, without listening to or permitting any employee input

·       Controls employees closely and motivates through threats and disciplinary action

·      

Can be effective in a time of crisis when immediate compliance with rules or procedure is needed

·       For e.g. an army officer would implement this style during training exercises

·       Also, effective when individuals lack skills and knowledge for e.g. Maccas crew member

Behavioural Approach

7.3 – Behavioural Approach to Management

·      

Focuses on the human side of management — workers’ social needs, motivations, and satisfaction

·       Employee participation is essential for productivity and long-term success

·       Strong emphasis on motivation, communication, and teamwork

7.3.1 – Management as Leading

·       Leading = influencing and motivating people to achieve business goals

·       Leading supports the organising and coordinating functions by uniting teams

·       Effective leaders:
- Show empathy and are good listener
- Focus on team needs, vision, and empowerment/motivation, not just deadlines
- Build high-performance teams through trust and shared purpose

·       A good leader brings out employee potential

7.3.2 – Management as Motivating

·       Managers must design practices and a culture that energise employees

·       Employees need to feel valued, included, and recognised

·       Motivated staff improve productivity, quality, and innovation

·       Effective motivation involves:
- Positive reinforcement, employee recognition, and team rewards.
- Creating meaningful work and trust-based relationships

7.3.3 – Management as Communicating

·       Communication = the process of sharing information, plans, goals and expectations

·       A core managerial task that links all other functions — without it, plans fail

·       Communication is essential to leading, delegating, problem-solving, and coordinating teams

·       Effective communication involves:
- Clarity, openness, and two-way conversations
- Sharing business goals and performance to foster team alignment

7.3.4 – Teams

·       Teamwork enhances productivity, innovation, and business performance

·       Effective teams require shared purpose, trust, and cohesion,

·       Self-directed teams create much flatter organisational structures, creating a wider span of control à the ‘de-layering’ of traditional hierarchical structures

·       If managers shift from autocratic to participative styles, trust grows — and teamwork improves

7.3.5 – Participative/Democratic Leadership Style

·       Sharing decision-making authority with employees

·       Involve employees in decisions through meetings, brainstorming, and seeking their input

·       Creates Motivated employees à more likely to perform at higher levels and adapt to change, as they feel their input matters in decision-making

·       The participative style can cause slower decision-making because managers need to consider various opinions

·       Most effective when a business is operating in an environment undergoing rapid change

7.4 - Contingency Approach

·       Contingency approach = managers must adapt strategies based on the specific situation

·       Flexibility is essential; no single management style suits all circumstances

7.4.1 – Adapting to changing circumstances

·      

Managers should borrow and blend from classical, behavioural, and other theories to create the best response

·       Reject a “one-size-fits-all” mindset

·       This approach helps managers respond to constant change in the business environment

·       Because no two situations are identical, managers must adapt their methods for each case

Chapter 8 - Management Process

8.2 – Coordinating key business functions and resources

·       Key business functions = operations, marketing, finance, and human resources

·       Operations = the producing of goods and services. While managing inputs(resources), processes and outputs (finished products)

·       Marketing = the promoting and selling of products/services. While through market research, pricing, advertising, promotion, product design

·       Finance = managing the business's financial resources. This includes budgeting, monitoring cash flow, and ensuring the business remains profitable

·       Human Resources = managing people within the business. Recruiting staff, training employees, handling workplace relations, and maintaining a positive and productive work environment

·       All departments must coordinate and collaborate toward shared business goals

·       Larger business size = more specialised divisions → requires stronger coordination systems

·       In small businesses, functions often overlap, so staff take on multiple roles

8.3 – Operations

·       Operations refers to the production process that transforms inputs into outputs

·       Core function that aims to maximise profits by producing efficiently

·       Involves managing resources like labour, equipment, and materials

·       Good operation management includes product quality, production cost and product availability

·       Operations is vital for achieving business goals like profit, growth, and market share

8.3.1 – Goods and/or Services

·       Businesses produce either goods (tangible) or services (intangible), or both

·       The type of product affects how operations are managed

·       Manufacturing businesses:

- Produce tangible goods

- Little customer involvement in production

- E.g. bread and cars

·       Service businesses:

- Produce intangible goods

- Customer usually present during production

 - E.g. haircut, transport

8.3.2 – The production process

·       The production process converts inputs → transformation → outputs

·       Inputs: Resources used to create goods/services

- Transformed resources (get changed):

     - Materials (e.g. steel) à become part of final product

     - Information (e.g. research) à improve decision making

- Transforming resources (do the changing):

     - Human resources à carry out the work

     - Facilities à machinery, building, technology
     - More skilled labour → faster, better production
    - Better facilities → greater efficiency and lower costs

·       Transformation Process: Conversion of inputs into outputs
- Manufacturing businesses → Physical transformation (e.g. sewing clothes)
- Service businesses → Intangible transformation (e.g. medical treatment, teaching)
-Automated transformation → mass production and cost savings
-Customised labour → higher service quality, but higher labour costs

·       Outputs: Final goods/services delivered to customers

·       High output quality → better reputation and customer loyalty

·       Poor customer service → lost sales and negative word-of-mouth

8.3.3 – Quality Management

·       Quality Control: Inspects the product at various stages to detect and correct defects

- Reduces defects by identifying problems early

- Decreases waste and faulty products

- Ensures consistency in product output

·       Quality Assurance: A proactive system that ensures products meet set standards before errors occur

- Builds customer trust by showing the product is reliable and safe

- Reduces risk of errors or safety issues

- Prevents rework and production slowdowns

·       Total Quality Management: A business-wide commitment to excellence, where quality is everyone's responsibility

- All employees are trained and involved in improving quality.

- Customers are the focus of every decision

- Improves teamwork and employee involvement