Professional Documents
Culture Documents
Business Management
Outcomes
Thestudent:
Thefocusofthistopicisthenatureandresponsibilitiesofmanagementinthebusiness
environment.
P2explainstheinternalandexternalinfluencesonbusinesses
.
P4assessestheprocessesandinterdependenceofkeybusinessfunctions
P5examinestheapplicationofmanagementtheoriesandstrategies
P6analysestheresponsibilitiesofbusinesstointernalandexternalstakeholders
P7plansandconductsinvestigationsintocontemporarybusinessissues
P8evaluatesinformationforactualandhypotheticalbusinesssituations
P9communicatesbusinessinformationandissuesinappropriateformats
P10appliesmathematicalconceptsappropriatelyinbusinesssituations
Nature of management
Features of effective management
Skills of management
- Interpersonal, communication, strategic thinking, vision,
problem-solving, decision-making, flexibility, adaptability
to change, reconciling the interests of stakeholders
Achieving business goals
- Profits, market share, growth, share price, social,
environmental
- Achieving a mix of the above goals
- Staff involvement innovation, motivation, mentoring,
training
Nature of management
Management is a process of coordinating the businesss
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Skills of management
The main skills of management are interpersonal, communication,
strategic thinking, vision, problem-solving, decision-making, flexibility,
adaptability to change, reconciling the conflicting interests of stakeholders
Interpersonal
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Goal
A goal is a desired outcome (target) that an individual or
business intends to achieve within a certain timeframe.
Success in achieving your goals is often determined by the
amount of planning you undertake. Detailed planning
increases the likelihood of successfully achieving your
goals.
SMART Goal
Specific Goals should be straightforward and emphasise
what the business wants to happen.
Measurable Decide on goals whose progress can be
measured so the business owner can see the change
occur. This helps the business stay on track.
Achievable Goals needed to be challenging but not be
too far out of the businesss reach, otherwise the business
owner and employees will become unmotivated due to the
lack of success.
Realistic Goals must represent something that the
business owner and employees are both willing and able
to work towards.
Time bound The goals must have deadlines and subdeadlines attached to them, otherwise the commitment is
too vague.
Carefully prepared goals benefit managers by
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Serving as targets
Measuring Sticks
Motivation
Commitments
Profits
Profit is the most important goal because it relates to the
success of the business.
Profit = Revenue Cost
Payment of profit to shareholders is called a dividend.
The share of profit kept by the business to finance things
further for growth is called retained profit.
Market share
Market share is the percentage of the market a particular
businesss product or services have.
Growth
Growth refers to an increase in revenue from year to year.
Growth is achieved by doing things better than competing
businesses.
Growth is the aim of long-term investors and managers.
Share Price
Share price is the price at which the shares of the business
is sold in the ASX.
Social
Businesses have a number of social goals such as
providing employment, increasing the standards of living
in people.
Environmental
Environmental goal is to reduce the businesses carbon
footprint, reducing waste in packaging and reducing
packaging requirements.
Achieving a mix of above goals
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Teams
Participative/democratic leadership style
Contingency approach
Adapting to changing circumstances
Management approaches
1. Classical Approach (order comes from the top)
2. Behavioural Approach (teamwork to take decision and problems)
3. Contingency Approach (Backup plan as things come)
4.
Management
Theory
Classical Theory
Behavioural Theory
Contingency
Theory
Major Concept
Reduce costs,
Leading, Motivating
improve efficiency
and Communicating to
and increased profits. bring success to the
business.
Adapting to
changing
circumstances in
aspects of the
business.
Organisational
Structures
Structure is like a
pyramid. There are
managers that are at
the top, middle and
employees at the
bottom.
Employees remain
on their designated
job roles until there
are organisational
changes by the
management.
Levels of
management
Communication
Communication is
direct in tasks
required to perform
Communication is key
with managers and
employees interacting
with one another.
Teamwork is
encouraged in this
approach.
Depends on
situation but
communication is
usually limited.
Leadership
Style
The managers
decide on the
decisions that are
made and employees
have little to no say
in the decision
making.
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Classical Approach
Developed in the 1900s by theorists
Tries to reduce costs, improve efficiency and profits
Frederick Taylor believed that the best way to do things
were predetermined and with the right type of worker who
is trained and given specific tools, productivity would
increase
Other classical theorists include Henri Fayol, Max Weber,
Frank and Henry Grantt
Management as planning, organising and controlling
Planning is concerned with setting the goals and working
out ways to achieve them
Organising is concerned with designing a framework for
the business. What tasks need to be done? Which workers
will do those tasks?
Controlling is concerned with measuring actual
performance and comparing it with the planned
performance.
Hierarchical organisational structure
Hierarchical organisational structure is pyramid like. The
structure consists of a few managers at the top, a few
middle management to supervise and lots of workers at
the bottom
The classical theorists advocated a strict line of authority
from the top to the bottom
Small Span of control means a manager should control
between four to fourteen workers
Autocratic Leadership Style
Is where the managers use a high degree of direction and
permit little or no participation in decision making by
subordinates
Behavioural Approach
Studied how people behaved in the work environment
Motivation, leadership and teamwork are the major
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Contingency Approach
Contingency theory advocates adapting to changing
circumstances in every aspect to the business
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Management Process
Coordinating key business functions and
resources
Coordination involves making sure the different parts in a
business work together efficiently
Coordination is about making sure all the functions are
working towards common goals
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Operations
Operations has the tasks of making a product that meets
customer expectations
It is concerned with activities that transform inputs into
finished goods and services
An effective operation is important for the profitability and
competitive position of a business
Goods and Services
Businesses provide goods and services to meet the needs
of customers more effectively than competitors
Goods are tangible things designed to meet customer
need cars, iPod and clothes
Services are intangible products such as doctor,
accountant and banking
The goods and services must be provided with the level of
consistency, quality and efficiency
The production process
INPUT sugar, water, cola essence, chemicals, carbon dioxide
TRANFORMERS
OUTPUT Can of coke
Quality management
Quality is manufacturing products or providing services
that are as consistently similar as possible
Quality is about manufacturing products or delivering
services that meet the standards or specification that
were set for that product
Quality management is all about minimising the variations
to defined limits and then building system and procedures
to ensure those limits are never exceeded
Quality assurance involves putting into place systems and
procedures that makes sure an error or fault would not
happen
Quality management has to be proactive workers. Workers
need to be trained to assess the quality of their own work
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Marketing
The role of marketing is to develop a product that
customers want
Marketing is not easy because all competitive businesses
are trying to develop a product to meet the same
customer demand
In a successful business, marketing will identify a
customer need and develop a product to meet that in
need. This process will involve pricing, promoting and
distributing
Identification of target market
The target market is a group of people the marketing
effort or product is focused on
Market segmentation is concerned with breaking down the
total market into smaller or more manageable bits
Differentiated marketing involves focusing the market
effort on a number of different segments
Marketing mix
The marketing mix refers to how the 4Ps are combined to
achieve business objectives. These are Product, Price, Place
(distribution) and Promotion.
Product
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Price
Place
Promotion
Positioning (Product)
Brand (Product)
Advertising (Promotion)
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Finance
Finance is concerned with where the business sources its
funding. Accounting is a tool that provides information on
financial affairs of a business. There are three major
statements, these are the cash flow statement, income
statement and the balance sheet.
Business Finance Terms
Financial Management
Contingencies
Credit Rating
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A business that is well managed will have a good credit rating which
means that lenders will be prepared to lend the business money
because they know it is safe for them to do so.
The credit rating is determined by financial organisations that
assess the capacity of the business, both to repay debt and manage
finances responsibly.
Accounting
Financial status/position
Cash status/position
Financing or funding information
Cash flows
Profitability and return on investment
Trends in earnings, borrowings, sales and so on that together
indicate the risk the business faces
Cash form operating activities these are cash flows related to main
trading operations and prime function
Cash from investing activities these are cash flows related to the
sale and purchases of assets such as land and buildings.
Cash from financing these are cash flows related to the acquisition
of and repayment of both debts and equity finance.
Liquidity
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Sales
Cash Sales $6000
Payment from credit sales $3000
Inflow
Interest from bank deposits $250
Outflow
Rent $5000
Wages $4000
Electricity $750
Stock $8500
Advertising $500
Loan Payments $2000
Telephone $300
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Total Inflow $9,250
Total Outflow $21,050
Income statement
Sales - $10,000
Cost of Goods sold - $4,000
Gross Profit - $6,000
Expenses - $3,000
Net Profit - $3,000
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COGS - cost of goods sold - value of stock that the business has sold
to the customer.
COGS = Opening Stock $2,000
+Purchase $23,000
Expenses/Costs
Selling
Administrati Financial
ve
Commission
Stationary
Salaries
Office Salaries
Wages
Rent
Advertising
Rates
Delivery Expenses
Telephone
Electricity
Audit fees
Depreciation on shop
fittings
Accountant's
fees
Interest
Payments
Lease payments
Insurance
payments
Balance sheet
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Bank overdraft - Your balance is 5000 but you have to pay 8000 so you
get an overdraft which is like a short term loan.
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Balance Sheets/Statements of financial positions
Balance sheets details the financial stability of the business in terms of
what it owns and what it owes.
Noncurrent assets are items that have an expected life for over a year.
Building, furniture, car and truck.
Intangible items are those of worth that have no physical substance e.g.
good will, trademarks, copyright and patens.
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Owner's equity is the money given to a business in order for it to acquire
resources, known as capital.
Human Resources
Effective management of the formal relationship between the
employer and employees. The human resource cycle is
acquisition, development, maintenance, separation.
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Recruitment (Acquisition)
Award cover the minimum conditions: pay rates, holidays, sick, longservice and maternity, overtime, allowances for tools or uniform and
hours of work.
Enterprise agreement
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Must comply with all NSW laws regarding employments rights and
entitlements.
Must be in writing and signed by both parties. Are usually for a fixed
term.
Cover those employees who are not under any award or enterprise
agreements. They are common under professional and managerial
employees. Such contracts are signed individually and are secret.
Both parties have the right to sue if either party do not fulfil their
part of contract.
Maintenance
Voluntary separation
Retirement (Old)
Resignation (Choose not to work)
Redundancy (Occupation is non existent anymore)
Retrenchment (Cutting down workers)
Dismissal (Bad work behaviour)
Unfair Dismissal
Employees leaving business
Voluntary: employees leaving on own accord retirement,
resignation.
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Ethical Issues
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Outsourcing
Flatter organisation structure (Less levels of managers)
Work teams
Resistance to change
Change is resisted because
It can be achieved with considerable effort
Is emotionally stressful
Management
Fear of job loss
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Disruption to routine
Fear of unknown
Inertia
Cost
Management consultants
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tasks
Resistance to change
Change is resisted because:
It can only be achieved with considerable effort
Is emotionally stressful
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Management change
Fear of job loss
Disruption in routine
Fear of the unknown
Inertia (Tendency to remain unchanged)
Cost
Management consultants
Is someone who has specialised knowledge of skills within an
area of business. They help the business adapt by:
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