Download Introduction to Large Scale Organisations

Introduction to Large
Scale Organisations
Year 12 Business Management
Expectations
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Come prepared – organisation is key
Respect each other.
Work hard – good results come from effort.
Honesty – ask questions if you don’t understand.
Believe in yourself – if you don’t, who will?
Participate – attend every class and do the work.
Bring your textbook, pens, exercise book/folder
Key Information
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Ms Pham
Office hours: Wednesday & Friday, A Team
Email: [email protected]
Class wikispace:
Unit 3 AOS 1 Study Design
On completion of this unit of work you should be able to discuss
and analyse the context in which large scale organisations
operate.
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The context which contributes to unique nature of LSOs.
Characteristics of LSOs.
Variations of types of LSOs, their objectives and related business strategies.
Typical management functions in LSOs including operations, finance, human
resources, marketing and research & development.
Contributions of LSOs (positive and negative) to economy.
Internal and external environments of LSOs.
KPIs used to evaluate LSOs including percentage of market share, net profit
figures, productivity growth, number of sales, staff/customer satisfaction
surveys, staff turnover, wastage, customer complaints and workplace
incidents.
Stakeholders in LSOs, their interests, possible conflicts.
Ethics and social responsibility.
Learning Intentions
• Define relevant terms from Chapter 1.
• Describe the characteristics and types of LSOs, the
environments they operate in and their contributions to
the economy.
• Identify and explain the core management functions of
LSOs.
• Identify the main stakeholders in/around businesses.
• Identify and describe the main key performance
indicators businesses can use to measure performance.
• Begin preparing for Unit 3 SAC 1.
Organisation
GLOSSARY: Organisation - An organisation is a system that
enables people or groups of people to work together in a
planned and coordinated way to achieve common goals
and objectives.
Organisations combine physical, human, technological
and financial resources and process them to create a
product or service.
Managers are used to plan, organise, lead and control the
activities of organisations in order to help the organisation
achieve its objectives.
Large-scale Organisation
GLOSSARY: Large-scale organisation (LSO) - An enterprise
that employs 200 or more people, has more than $200mil in
total assets, has income/revenue in the billions of dollars,
makes profits in the millions of dollars, and operates across
a large scale (i.e. more than one country).
•200 + employees
•> $200mil in total assets
•$bn’s in income/revenue
•$mn’s in annual profit
•Large scale operations
Types of LSOs
Remember back to Unit 1 Business Management. You
learned about the types of organisations that exist.
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Corporations (companies)
Government Business Enterprises
Government Departments
Charities
Foundations
Corporations (Company)
GLOSSARY: Company - A corporation (company) is a
business with the objective of marking a profit. Companies
can be privately owned by up to 50 private owners, or
publicly listed on the Australian Stock Exchange (i.e.
owned by shareholders).
Government Business
Enterprises
GLOSSARY: GBE - A corporation owned by the Government
and shareholders. Its main objective is to provide a service
or product to the public and make a profit in doing so (e.g.
Australia Post, Vic Roads).
Government Department
GLOSSARY: Government Department - An organisation for
which the government is responsible. Its main objective is
to provide a service to the community in order to satisfy
social or political objectives (e.g. Centrelink, Australian Tax
Office).
Government departments are the responsibility of a
minister and public servants (for example, education).
Charities
GLOSSARY: Charity - An organisation that exists to provide
assistance in the form of goods, services or finances to
disadvantaged or marginalised groups in society.
Charities help alleviate (overcome/reduce) social
problems for the benefit of the broader community (e.g.
World Vision, Salvation Army)
Foundations
GLOSSARY: Foundation: An organisation that exists to
further a particular cause. Foundations are usually involved
in research, education or promotion of a particular cause
and play an important role in raising and distributing
finances related to that cause (e.g. Heart Foundation,
Butterfly Foundation).
Industry Classifications
All organisations are classified according to the industry
sector in which they belong – usually based on the area of
production in which the organisation operates.
•Primary: Businesses that extract raw materials/resources
directly from nature (e.g. mining – BHP).
•Secondary: Businesses that transform raw materials into
finished or intermediate goods (e.g. manufacturing – car
manufacturing – Ford).
Industry Classifications
• Tertiary: Businesses that provide services, particularly the
sale and distribution of finished goods. Also includes
Government-owned/run organisations. Examples: retail –
Big W, education – Copperfield College.
• Quaternary: Businesses involved in the provision of
information and communication (e.g. banking/finance –
Commonwealth Bank).
• Quinary: Businesses involved in the provision of
personal/domestic and hospitality services (e.g.
McDonalds, tattooist, cleaners, Hoyts, Libraries, Hilton
Hotel).
Management Functions
Given the size/scale of operations of large organisations,
managers are required to plan and coordinate resources and
activities to help it achieve set goals and objectives.
Resources within LSOs include:
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Land/physical resources: plant, equipment, raw materials.
Labour/human resources: employees of the business.
Capital or financial resources: $$$$
Knowledge or information resources
These four different resources need to be managed expertly.
Therefore, most LSOs are structured into functions which are
responsible for the effective management of specific resources.
Management Functions
• Operations Management Function: Deals with the day-to-day
core activities of the business and is responsible mostly for
land/physical resources.
• Human Resource Management Function: Deals with the
management of people within the organisation and is responsible
for labour/human and knowledge resources.
• Financial Management and Administration Function: Deals with
accounting, financial and all administrative support services and
is responsible for capital/financial and information resources.
• Information Technology Function: Deals with information and
communications management and is responsible for knowledge
or information resources.
• Marketing or Sales Management Function: Deals with the
promotion of the organisation and its products.
Management Functions
Contribution of LSOs to
the Economy
LSOs make a significant contribution (both positive and
negative) to the Australian economy.
Positive contributions:
• Provision of employment/availability of more jobs
• Increased consumer demand/spending, which leads to
increased Gross Domestic Product (GDP)
• Economies of scale, more efficient production and
therefore lower costs of products
• Research, development and innovation
• Export earnings and foreign income
Breaking down the terms
• Gross Domestic Product (GDP) refers to the total value of
finished goods and services produced and sold within a
country. The more produced, the higher GDP is, the ‘healthier’
our economy is.
• Economies of scale (EoS) refers to a reduction in the cost of
production per unit of output as production volume increases
(i.e. costs fall as you make more – E.G. Model T Ford).
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Innovation refers to doing things in new and better ways and
developing clever solutions to problems. Many innovations
(e.g. iPhone and 3G technologies) come from LSOs.
• Exports refer to the sale of one goods/services produced
within the country to another country overseas.
Contribution of LSOs to
the Economy
Negative contributions:
•Damage to environment (e.g. BHP mining for coal).
•Global warming due to carbon/methane emissions from
production.
•Competition too demanding for small businesses which
may fold/cease to exist.
•Monopoly effect (increased prices) in certain industries
due to small number of large competitors (e.g. mining – Rio
Tinto and BHP) and price setting.
•Earnings taken offshore never to be seen again, as many
LSOs are foreign owned businesses (e.g. Toyota)
Operating
Environments of LSOs
Managers need to understand the environments in which
their business operates in order to manage any future
business opportunities or threats.
You might recall from Unit 1 Business Management that
there are three environments that influence the operations
and success of a business:
• Internal Environment
• Operating Environment
• Macro Environment
Internal Environment
GLOSSARY: Internal Environment – Consists of people
(employees, managers, owners), culture, policies,
processes and resources such as buildings and facilities.
Management has the most control over this environment.
Operating Environment
GLOSSARY: Macro Environment – Consists of factors
external to the business that are likely to have a direct
impact on the operation of the business.
Factors include:
•Customers
•Creditors (lenders, e.g. Bank)
•Suppliers
•Competitors
Macro Environment
GLOSSARY: Macro Environment – Consists of factors external to
the organisation that are likely to have an indirect impact on the
operation of the business.
Changes in this environment impact on more than one business,
and managers have no control over this environment
Factors include:
•Social
•Legal
•Economic/Environment
•Political
•Technological
•International
Stakeholders in LSOs
GLOSSARY: Stakeholder – Individuals, groups or entities
which have a vested interest or stake in how a business
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operates.
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Stakeholders Interests
and Conflict
Different stakeholders have different interests. Although all
stakeholders have interdependence with a business, they have
objectives of their own that may differ from the business.
The number one objective for most companies is profit for
owners and shareholders. However, this may be in conflict
with employees, who may wish to seek higher wages and
fair/safe working conditions, which are expensive.
Consumers may demand companies give back to the
community and treat the environment in a friendly manner –
again this can present increased costs!
Stakeholders Interests
and Conflict
Some argue that wages/conditions and social responsibilities do
not have to reduce profits - happy workers are more productive,
and social responsibility/socially responsible behaviour* can go
hand-in-hand with profit (see The Body Shop example).
*GLOSSARY: Social responsibility – The notion that a business
should operate in ways that fit in with community standards and
contribute to the welfare of the community and environment as
a whole.
* GLOSSARY: Socially responsible behaviour – creating a better
quality of life for the greater common good or the most benefit
and least harm for all stakeholders.
Vision and Mission
Statements
All organisations exist to achieve specific aims or goals. Thse are
developed from the organisation’s vision and mission statements.
GLOSSARY: Vision statement – A broad and inspirational
statement which is forward-thinking and describes the
company’s dreams for the future.
GLOSSARY: Mission statement – A written statement that sets out
who the organisation is, what it exists for and how it will achieve its
objectives.
Objectives of LSOs
The goals and objectives of an organisation are developed from
its vision/mission and form part of its strategic hierarchy.
Key Performance
Indicators
GLOSSARY: Key Performance Indicators (KPIs) – Specific criteria
used to measure or evaluate the effectiveness and efficiency of
a business’ operations. They include both quantitative and
qualitative measures.
GLOSSARY: Financial indicators – Performance indicators based
on the organisation’s financial statements. These include
profitability, return on investment and growth in share price.
GLOSSARY: Non-financial indicators – Performance indicators
that cannot be expressed in dollar terms and that reflect the
non-financial area of business performance. These include the
level of customer satisfaction, employee turnover, product
quality or level of innovation.
Key Performance
Indicators
Financial/Quantitative Indicators
Non-financial/Qualitative Indicators
Efficiency – how well a business uses its
resources (time, money, equipment, labour)
in order to achieve objectives.
Employee satisfaction – how happy, safe
and motivated employees are is an
indicator of business performance.
Productivity – how well a business
transforms inputs (e.g. materials) into
outputs/finished products.
Customer satisfaction – happy customers
are generally ‘repeat customers’ and have a
huge impact on financial indicators.
Profit – revenue from sales minus
costs/expenses incurred.
Staff turnover – rate at which employees
join and leave the business.
Return on investment – any interest or
dividends returned to shareholders.
Customer complaints/returns – amount of
customer concerns about product/service.
Share price – value of the company’s shares Staff Absenteeism – the absence of
on the stock exchange.
employees from work, usually expressed as
a percentage of days missed.
Percentage of market share – The
proportion of total sales made by the
organisaton compared to competitors.
Job safety – how safe the business is for
employees, customers and other
stakeholders.