Business Management Public

Business Management

Katelyn Gorman
Course by Katelyn Gorman, updated more than 1 year ago Contributors

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Units 3 & 4

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Measurements used to determine the size of a business: the number of owners (of the business)  the number of employees the legal structure  the amount of revenue earned  the amounts of assets owned market share    Characteristics  of a small business: fewer than 20 employees  independently owned and operated by usually one or two people  sole trader or partnership    Characteristics of a medium business: 20-199 employees owned and operated by a few people and/or private stakeholders  partnership or private company    Characteristics of a large business: 200 or more employees  owned usually by thousands of public shareholders public company (numerous)   The private sector is the part of Australia's economy that is operated by private individuals and companies usually for the purpose of making profit.   The public sector is the part of Australia's economy that is operated by the government. Businesses operating in the public sector are referred to as government business enterprises (GBEs).  Businesses can also be classified under the industry sector in which they operate.   Primary industry - concerned with extracting resources directly from nature. (farming, mining, forestry). Secondary industry - where raw materials are turned into finished  or semi-finished products. Tertiary - the provision of services. (Wholesaling, retailing and transport).   Advantages of a sole trader: low cost entry  simplest form complete control less costly to operate  no partner disputes owner's right to keep all profits less government regulation  no tax on profits, only on personal  income   Disadvantages of a sole trader: personal (unlimited) liability for business debts end of business when owner dies difficult to operate if sick   need to carry all losses burden of management  need to perform wide variety of tasks  difficulty in raising finance for expansion    Advantages of a partnership: low startup costs less costly to operate than a company   shared responsibility and workload  pooled funds and talent  minimal government regulation  no taxes on business profits, only on personal income  on death of one particular, business can keep going    Disadvantages of a partnership: personal unlimited liability  liability for all debts, including partners debts, even before the partnership has begun possibility of disputes difficulty in finding a suitable partner divided loyalty and authority    Advantages of a company: easier to attract public finance  limited liability - separate legal entity  easy transfer of ownership a long life - perpetual succession  greater spread of risk  company tax rate lower than personal income tax rate growth potential  as per recent legislation, ability to have only one shareholder and one director    Disadvantages of a company: cost of formation  double taxation - company and personal   personal liability for business debts if directors knew at the time that the business could not pay loans  requirement to publish an annual report of audited accounts public disclosure - reporting of certain information, too much growth, resulting in inefficiencies    Advantages of social enterprises: can open up new markets - the social enterprise may meet a need that commercial business choose not to  meeting a social need can have a positive effect on profit and market share   Disadvantages of social enterprises: difficulty in obtaining capital start the business  significant operating costs - social enterprises will often take on costs that conventional businesses would not  it can be difficult to focus on both social and financial objectives    Advantages of government business enterprises: a GBE is able to carry out government policies delivering community services in areas where private sector businesses might hesitate to invest a GBE can operate with some independence from government  provision of healthy competition to business operating in the private sector - this can lead lower cost prices in the markets where GBEs are competing   Disadvantages of government business enterprises: political interference in the day-to-day operation of the GBE inefficiencies caused by government 'red tape' - excessive regulation or rigid conformity to rules management of GBEs can be less effective than that of the private sector  there can be less accountability within a GBE, resulting in less productivity and negative attitudes amongst staff Business Objectives:  to make a profit  to increase market share  to fulfil market need  to fulfil a social need  to meet shareholder expectations    Internal Stakeholders: owners  shareholders directors  management  employees    External Stakeholders: government competitors  interest groups customers  suppliers members of the community    Stakeholders & their conflicting interest: Employees & shareholders - employees require safe working conditions and reasonable wages, but this will reduce the business's profit and dividends to shareholders. Management & customers - management could attempt to maintain profit and a high dividend to satisfy shareholders by raising the prices of products, but this will upset customers, who expect reasonably priced products.
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Areas of Management: Operations - responsible for the production of the business's product Finance - responsible for managing the financial aspects of the business Human Resources - responsible for coordinating all the activities involved from acquiring to terminating employees of the business Sales and Marketing - responsible for the marketing mix (product, price, place, promotion, people, physical evidence and process) Technology Support - responsible for installing and maintaining technology, as well as providing assistance to the users of technology in the business    Autocratic management style Advantages: - directions and procedures are clearly defined -  employees roles and expectations are set out plainly, so management can monitor their performance    Disadvantages: - no employee input is allowed therefore employees do not feel valued - potential for conflict arises    Persuasive management style Advantages: - managers gain trust and support through persuasion  - instructions and expectations remain clear & constant   Disadvantages: - limited to a top-to-bottom, one-way system - communication is still poor  - employees remain frustrated, because they are denied full participation in the decision-making process   Consultative management style Advantages: - asking for suggestions from employees allows for a greater variety of ideas, and should improve the quality of management decisions - when decisions are discussed and fine-tuned before implementation,  tasks are completed more efficiently and with better results.   Disadvantages: - the time taken to consult all the relevant employees can slow the entire process - when a number of ideas are shared, some are bound to be ignored or overlooked in the final decision. This may cause conflict or resentment.    Participative management style Advantages: - employees have a greater opportunity to acquire more skills  - there is a high level of trust,  often resulting in improved employee performance   Disadvantages: - internal conflict can arise with so many views and opinions being shared. More involvement may bring about disagreement  - not all employees may want to contibute   Laisssez-faire management style Advantages: - employees feel a sense of ownership, which can promote outstanding results  - communication is completely open and ideas are both discussed and shared    Disadvantages: - this style can breed personal conflicts, where individuals do not cooperate or wish to implement only their own ideas. In these cases, management is not there to direct or negotiate  - to focus on meeting business objectives can easily be eroded. Management may find themselves with a failed business and nothing to manage.    The management style chosen by a manager will be influenced by: - the manager - their personality, experience, values, beliefs and skills  - the personalities, experience, values, beliefs and skills of staff  - the nature of the task itself  - internal and external constraints, including time and resources    Management skills: Communicating - non-verbal, written & oral  Delegating - authority & responsibility to an employee Planning - strategic, tactical & operational  Leading - influence people to achieve objectives. Transactional & transformational Decision-making - choosing appropriate course of action  Interpersonal skils - build positive relationships    Official corporate culture: - corporate culture can be revealed officially in the policies, objectives or slogans of a business   Real corporate culture: - corporate culture can also be seen in the unwritten or informal rules that guide how people in the business behave, such as the way staff dress, the language staff us and the way that staff treat each other and customers.   Elements of a corporate culture: 1. values and practices  2. symbols 3. rituals, rites & celebrations 4. hereos
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Human resource management's focus on positive work and employment relationships should lead to a motivated staff, increased productivity and, consequently the achievement of business objectives.   MASLOW'S THEORY OF MOTIVATION: HIERARCHY OF NEEDS   1. Physiological needs - food, shelter & clothing   - satisfactory pay for survival    2. Safety & security needs - physical & emotional  - safe working conditions  - job security    3. Social needs - love, affection & sense of belonging  - team work  - involvement in decision making - supportive management    4. Esteem needs - respect & sense of accomplishment  - responsibility  - promotion  - recognition    5. Self-actualisation needs - fulfilment, personal growth and development  - creative, interesting jobs - opportunities for advancement    LOCKE & LATHAM'S GOAL SETTING THEORY - FIVE PRINCIPLES: 1. Clarity  - simple, clear and as specific as possible  - goals should be unambiguous & measurable  - goals should be developed within a time frame   2. Challenge  - the goal should extend the employee, but should still be achievable  - goals must also be relevant, in that they help to realise the overall business objectives    3. Commitment  - a  goal into which the employee has has some input is more likely to serve as motivation  -  the greater the input from the employee, the more likely it is that the employee will commit to the goal    4. Feedback  - feedback provides opportunities to offer recognition for progress achieved, to make adjustment to the goal is necessary, and to ensure expectations are clear and realistic    5. Task Complexity  - whilst goals should be challenging, the level of complexity should not overwhelm the employee - for long-term goals, formal feedback sessions may be necessary to ensure necessary detail is communicated    THE LAWRENCE & NOHRIA THEORY: THE 4 DRIVES 1.  The drive to acquire - includes the desire to own material goods, and encompasses the desire for status, power & influence   2. The drive to bond - includes the strong need to form relationships with other individuals and groups    3. The drive to comprehend  - includes our desire to satisfy our curiosity, to learn new skills and to explore the world around us   4. The drive to defend - the desire to remove threats to our safety and security and protect what we regard as ours   MOTIVATIONAL STRATEGIES Financial: - pay increases - bonuses - commissions  - share plans - profit sharing  - gainsharing    Non-financial: - career-advancement  - investment in training  - support and sanction
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THE EMPLOYMENT CYCLE: 1. Establishment phase - staff planning in line with business strategy  - job analysis  - recruitment  - selection - employment arrangements and remuneration    2. Maintenance phase - induction - training & development  - performance management   3. Termination phase - termination management - retirement, redundancy, resignation & dismissal  - entitlement and transition issues    Benefits of training for employees: - opportunity for promotion and self-improvement  - improved job satisfaction through better job performance - a challenge - the chance to learn new things - adaptability - greater ability to adapt to & cope with changes    Benefits of training for business: - higher productivity through better job performance and more efficient use of human resources  - goals & objectives more effectively met  reduced costs due to less labour turnover and absenteeism , and fewer errors and accidents - a more capable, 'mobile' workforce   Advantages of on-the-job training: - the most cost-effective alternative, as no travel expenses or other costs are incurred - employees are often actually working while training, so are more productive - trainees uses the actual equipment that is required to do the job - employees are in a familar environment, with colleagues they are used to working with - immediate feedback from more experiences colleagues is available    Disadvantages of on-the-job training: - quality of the trainer may vary - not everyone has the ability to teach others  - bad habits of older staff may be passed on to younger employees - the learning environment may be noisy, with distractions from other work activities - if real tools and equipment are used, it may disrupt production  - the trainer may have to leave their own duties to carry out the training   Advantages of off-the-job training: - availability of a wider range of skills and qualifications than those in the workplace - outside experts and specialists can provide broader experiences  - usually more structured and organised, with clear assessment processes - can provide a formally recognised qualification for employees - can be more intense without workplace distractions for both trainer and trainee   Disadvantages of off-the-job training: - may be too theoretical without access to workplace tools or equipment  - more expensive, with fees charged, travel costs, etc. - lost working time while the employee is absent from the workplace - employees with an externally recognised qualification may be tempted to leave to find a better job - may  not relate directly to the exact skills required in the workplace.    Development: - job rotation  - mentoring  - formal business training     PERFORMANCE MANAGEMENT  Performance appraisal: 1. to provide feedback from management to employees regarding work performance 2. to act as a measurement against which promotion and pay rises can be determined 3. to help the business monitor its employee selection 4. to identify employees' training and development needs 5. to identify new objectives and put a plan in place to improve future performance    Common methods of appraisal: - essay method - journal on each employee  - critical incident method - records exceptionally good or bad aspects of work performance - comparison method - employee is ranked according to a list of predetermined performance characteristics    Management by objectives: 1. business objectives are clearly defined  2. individual employee goals are negotiated  3. regular monitoring of progress 4. performance feedback  5. performance appraisal on achievement on goals    Employee self-evaluation: - involves employees carrying out a process of self-assessment, based on a set of agreed criteria    Employee observation: - 360 degree feedback relies on observations from fellow employees    Termination of employment: Entitlement & transition issues: - employees are now expected to warn employees if their work performance is not satisfactory, and to provide training opportunities to help them improve. - employees must be given proper notice and employers must comply with procedures established in law   Unfair dismissal: - absence from work due to illness or injury - either belonging or not belonging to a trade union - race, colour, sex, sexual preference, age, disability, marital status, family responsibilities, pregnancy, religion, political opinions held, or nationality.   WORKPLACE RELATIONS Employers: - employers handle employee relations issues on a daily basis, including their involvement in developing programs that focus on improving business performance  - we have moved away from a centralised system where most worker in a particular industry would be given the same working conditions under what was known as an 'award' - we now have a more decentralised system where negotiation can occur at enterprise  level.   Employees: - the increasing practice of negotiating employment agreements at the workplace level means that employees will be more closely engaged in the process of developing new or changed agreements  - employers are likely to want improved productivity, or the achievement of specified objectives, in return for improved wages or conditions, so the process may involve employees having to modify existing work practices to achieve those objectives.   Human resource managers: - negotiation of employment agreements with employees and their representatives - training of staff and other managers -  dealing with disputes - implementation of the agreement    Governments & government organisations: 1. legislator 2. employer 3. economic manager 4. administrator of government policies on employee relations 5. representative of Australia in the international arena    The Fair Work Commission: - to deal with the resolution of industrial disputes, and to act as an independent umpire in setting minimum wages and employment standards  - approves agreements reached at the enterprise level  - resolves disputes between an employer and the employees when no agreement can be reached  - sets a minimum wage level for the lowest paid workers    Industry-wide awards: - the significance of industry-wide awards today is that they provide a set of minimum employment standards for employees working within an industry    Collective & industrial agreements: - even though many employees will sign an individual employment contract when they commence  work with a new employer, the terms and conditions of the contract will generally be based on the enterprise agreement that has previously been negotiated   Collective:  - a collective (enterprise) agreement, may be made between an employer and a union, acting on behalf of its employees, or between the employer and a group representing the majority of its employees.   Individual: - all individual employment contracts must comply with the relevant award, and must be consistent with the 10 National Employment Standards - such contracts may provide conditions that are better than the relevant Award, but cannot exclude any Award condition, or reduce the relevant conditions or benefits  - the only cases in which a common law employment contract can exclude relevant Award conditions is when the employee is guaranteed an income that is above the high income threshold   Industrial action: 1. strike  2. lockout 3. picket lines  4. work bans 5. work-to-rule 6. absenteeism, vandalism & sabotage   Causes of conflict: 1. disputes relating to the negotiation of Awards and collective/enterprise agreements  2. disputes relating to outside Awards and collective/enterprise agreements    Resolution of disputes: - negotiation  - mediation  - grievance procedures  - conciliation  - arbitration
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- the core objective of all businesses is to maximise profit. This aim therefore requires businesses to maximise efficiency and effectively use the resources to produce goods or services at the lowest possible price. Operations management is responsible for achieving this objective.    - efficient and effective operations should lead to satisfied customers, sales and consequently, the achievement of business objectives. Besides profit, these objectives include increasing market share, fulfilling a social need and providing a reasonable return for investors.   Operations on a manufacturing business: - a manufacturer will transform inputs into tangible products. The production process and consumption are not linked. That is, there is little customer involvement in the production   Operations in a service business: - a service business will transform inputs into services. Services cannot be stored and the customer may actually need to be present when the service is being delivered.   Inputs: - materials - capital equipment - labour - information from a variety of sources - time  - money    Transformation process: - design  - manufacturing  - quality control    Outputs: - building product    Technology developments: - customer relationship management  - website development  - automated production lines - computer aided design  - computer aided manufacturing  - computer integrated manufacturing    Materials management: - forecasting  - materials planning  - inventory control    The management of quality: - quality control  - quality assurance  - total quality management  - employee empowerment  - continuous improvement  - customer focus    Waste minimisation: - lean management    Strengths of lean management: - reduced energy and resource consumption  - reduced delays  - increased worker productivity  - reduced uncertainty  - increased customer satisfaction   Weaknesses of lean management: - requires committed and experienced employees - employees may resent the change to lean or may prefer not to provide any input  - the constant focus on improvement and elimination of waste can result in workplace stress - requires good relationships with suppliers  - can involve high implementation costs    Corporate social responsibility: 1. managing inputs appropriately  2. managing suppliers appropriately  3. managing staff appropriately  4. managing the customer relationship appropriately    Strengths of global sourcing: - reduce costs  - the opportunity to learn how to do business in a potential market  - accessing skills or resources that are unavailable domestically  - developing alternative suppliers/ sources of inputs  - increasing capacity of total supply    Weaknesses of global sourcing: - hidden costs associated with different cultures and the time zones  - exposure to potential high risk, both financial and political  - long lead times (for manufacturing goods) - the risk of ports shutting down and interrupting supply  - difficult to monitor the quality of inputs    Strengths of global outsourcing: - improved quality because of access to expert knowledge and high quality service  - the business is able to focus on its core activities  - costs can be reduced (instead of employing a full-time driver, a business can use contracted drivers as required) - production may be quicker as the outsourced provider should be able to focus on the task they specialise in    Weaknesses of global outsourcing: - management may have less control over the production process - it may be difficult to maintain quality  - loss of local jobs and career prospects  - there may be security and confidentiality issues  - there may be communication issues that lead to customer service problems
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