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- The organisation process is the range of activities that translate the goals of the business
into reality:
1. Determining the work activities-work activities required to achieve
management objectives must be determined and broken down into smaller steps.
2. Classifying and grouping activities-similar activities can be grouped together
to improve efficiency.
3. Assigning work and delegating authority-determine who is to carry out the
work and who has responsibility to ensure that the work is carried out.
- Controlling compares what was intended to happen with what has actually occurred.
- Control methods is the need to monitor (check) the quality of the products being
manufactured or provided
- Quality control:
- Involves inspectors checking finished products, and detecting and removing any
components or final products that do not meet the required standard.
- This method can involve considerable waste, as substandard products have to be
scrapped.
- Quality assurance
- Occurs during and after production.
- Stop faults occurring in the first place.
- Less wasteful than quality control.
- Aims to make sure that products are produced to pre-set standards.
- Responsibility of the employees working in teams.
- Total quality management
- Encouraging all employees in the workplace to think about quality in everything they
do.
- Managers should bring a range of leadership styles to their positions that can change
according to the situation.
- Most managers typically have a dominant style.
- A manager using an autocratic leadership style tends to make all the decisions, dictates
work methods, limits worker knowledge about what needs to be done to the next step to be
performed, frequently checks employee performance and sometimes gives feedback that is
punitive.
- The advantages of this style are:
- Directions and procedures are clearly defined.
- Employees roles and expectations are set out plainly, so management can monitor
their performance.
- Provides a stable and constant environment.
- Control is centralised at top-level management.
The disadvantages of this style are:
- No employee input allowed, so ideas are not encouraged or shared.
- It ignores the importance of employee morale and motivation. Job satisfaction
decreases which ultimately affects absenteeism and staff turnover.
- Conflict, or potential for conflict increases, and tension between employees.
- An us and them mentality may develop as a result of the lack of employee input.
2.2 Behavioural approach
- The behavioural approach to management stresses that people (employees) should be
the main focus of the way the in which the business is organised. It was pioneered by Elton
Mayo.
- The main features of behavioural management approach include:
- Humanistic approach: employees are the most important resource.
- Economic and social needs of employees should be satisfied.
- Employee participation in decision-making.
- Team-based structure.
- Managers need good interpersonal skills.
- Democratic leadership style emerging.
2.2.1 Management as leading, motivating, communicating
- Leading: having a vision of where the business should be in the long and short term
- Motivating: energising and encouraging employees to achieve the business goals
- Communicating: exchanging information between people; the sending and receiving of
messages.
2.2.2 Teams
- Teamwork involves people who interact regularly coordinate their work towards a common
goal.
- Well functioning teams can produce superior performance.
- Managers require a good understanding of team/group dynamics.
- The development of work teams has resulted in flatter organisational structures.
- The role of managers is changing from controller to facilitator.
- Businesses are adopting flatter management structures which results in:
- de-layering of traditional hierarchical structure
- establishment of market-focused work teams
- each work team responsible for a wide range of production functions.
- Reducing the levels of management gives greater responsibility to individuals in the
business.
- Flatter organisational structures have evolved due to a de-layering of management
structures resulting in the elimination of one or more management levels.
2.2.3 Participative/democratic leadership style
- A participative or democratic leadership style is one in which the manager consults with
employees to ask their suggestions and then seriously considers those suggestions when
making decisions.
- The main advantages of this style are:
- Communication is a two way process.
- Employer/ employee relations are positive and there is reduced likelihood of
industrial disputes.
- Motivation and job satisfaction are optimal.
- Employees have a greater opportunity to acquire more skills.
- Power sharing encourages the development of work teams and employees display
high levels of commitment.
- There is a high level of trust.
- The main disadvantages of this style are:
- Reaching decisions and introducing tasks can be time consuming. The quality of
decisions may also suffer due to compromises.
- The role of management may be weakened and undermined.
- Internal conflict may arise with so many views and opinions.
- The importance of the organisational structure may be minimised, leading to an
informal system.
- Not all employees want to contribute.
2.3 Contingency approach
- The contingency approach stresses the need for flexibility and adaption of management
practices and ideas to suit changing circumstances.
- Due to the unstable business environment, managers need to be flexible and borrow and
blend from a wide range of management approaches.
- Market segmentation occurs when the total market is subdivided into groups of people who
share one or more common characteristic.
- Consumer buying behaviour refers to the decisions and actions of consumers when they
purchase goods and services for personal household use.
- A target market refers to the group of customers to which a business intends to sell its
product. It better satisfies the needs of the group, because the business can:
- use its marketing resources more efficiently
- better understand the consumer buying behaviour of the target market
- collect data more effectively and make comparisons
- refine marketing strategies used to influence consumer choice
- Both primary and secondary target markets are utilised.
- A niche market is a narrowly selected target market segment.
3.3.2 Marketing Mix
- Marketing strategies are actions undertaken to achieve the businesss marketing goals
through the marketing mix.
- A business controls four basic marketing strategies to reach its target market: product,
price, promotion and place (the four Ps of the marketing mix).
- A product can be goods or service, and consists of both tangible and intangible features.
Product
- Product positioning is the development of a product image compared with the image of the
competing products.
- Packaging helps preserve, inform, protect and promote the product.
- Product branding is the brand and associated brand logo.
Price
- A business must select the most appropriate pricing method suitable to its product and
market conditions.
- Cost plus margin calculating the total cost of production and adding a percentage for
profit.
- Discount price reducing the price of stock that is not selling to stimulate demand.
- Competitors price choosing a price that is either blow, equal to or above that of the
competitors.
- Market price pricing according to the interactions between the quantity that customers
are willing to purchase.
Promotion
- Promotion refers to the methods used by a business to inform, persuade and remind
customers about its products.
- Personal selling a sales assistant outlines the features of the goods or service to the
customer.
- Sales promotion activities and materials are used to attract interest and support for the
good or service (e.g. coupons and free samples).
- Publicity the business sets up a free news story about its product.
- Advertising print or electronic mass media are used to communicate a message about
the product.
Place
- Channels of distribution (place) is a way of getting the product to the customer.
- Producer to customer this is the simplest channel and involves no intermediaries.
- Producer to retailer to customer this channel is often used for bulky or perishable
products.
- Producer to wholesaler to retailer to customer - this is the most used method.
3.4 Finance
- Accounting is a financial management tool that is involved with the recording and analysis
of all the businesss financial transactions.
- Finance details how a business funds its activities.
- Contingencies are unanticipated events that can lead to financial difficulty.
- It is vital for a business to be able to manage its borrowings and to use appropriate types of
borrowings.
- There are three main financial statements created by accounting processes: the cash flow
statement, the income statement (also called revenue statement, profit and loss (P&L)
statement or statement of financial performance), and the balance sheet (or statement of
financial position).
3.4.1 Cash flow statement
- A cash flow statement shows the movement of cash receipts (inflows) and cash receipts
(outflows) over a period of time.
- Liquidity is used to describe whether a business has a good or adequate cash flow.
- Cash flow reports are vital for the information they give on the timing of payments and
receipts of income.
- Cash flow statements are divided into three categories: cash flows from operating activities,
those from investing activities and those from financing activities.
- Administrative costs include stationary, office salaries, rent, rates, telephone, audit fees,
accountants fees, insurance.
- Financial costs include interest payments, lease payments, dividends and insurance
payments.
- They can also be classified as operating or non-operating.
- The balance sheet equation is: Assets = Liabilities + Owners equity or A = L + OE.
- Training provides employees with the right knowledge and skills to perform their job
effectively and efficiently.
- Development focuses on preparing the employee to take on more responsibilities within the
business in the future.
- Ongoing training for all employees can be promoted by the business becoming a learning
organisation.
- Training needs must be identified well in advance of any proposed technological
implementation.
- Training should be viewed as an investment in the human capital of the business.
- Examples of training include:
- Formal off-the-job training (e.g. simulations).
- Informal off-the-job training (e.g. coaching, job rotation).
- Action learning - learning by experience to solve real world problems.
- Competency-based training - identifies areas that need training (e.g. medical).
- Corporate universities - form partnerships (e.g. Coles and Qantas).
- Training technologies (e.g. web-based training, multimedia).
3.5.3 Employment Contracts
- An employment contract is a legally binding, formal agreement between an employer and
an employee.
- There are three different types of employment contract:
- award: an employees minimum pay and conditions
- enterprise agreement a negotiated arrangement between an employer and a union
or a group of employees
- common law exists when employers and employees have the right to sue for
compensation if either party does not fulfil their part of the contract.
- The employment contract outlines the rights and responsibilities of the employer and the
employee.
- The National Employment Standards are a set of minimum employment conditions
employees are entitled to. A modern award must not exclude their standards.
- As the nature of work and the characteristics of the workforce change, employees are
seeking more involvement in the decision-making process.
- One of the most important pieces of legislation relating to employment arrangements is the
Australian governments Fair Work Act 2009.
- Businesses need to be aware of their legal responsibilities when employing staff, especially
concerning discrimination and equal employment occupational health and safety.
3.5.4 Separation
- The final stage in the employment cycle is the separation stage, in which employees leave
the workplace on a voluntary or involuntary basis.
- This stage must be handled carefully and sensitively by the human resource manager.
- Voluntary separation occurs when an employee decides to give up full-time or part-time
work and includes: retirement, resignation and redundancy.
- Involuntary separation occurs when an employee is asked to leave the business against
their will and includes: retrenchment, dismissal and redundancy.
- Redundancy is when a particular job a person is doing is no longer required to be
performed, usually due to technological changes, a merger or takeover.