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Management process –coordinating key business functions and resources –operations •goods and/or services •the production process •quality management –marketing •identification of the target market •marketing mix –finance •cash flow statement •income statement •balance sheet –human resources •recruitment •training •employment contracts •separation – voluntary/involuntary –ethical business behaviour management and change –responding to internal and external influences –managing change effectively •identifying the need for change •business information systems •setting achievable goals •resistance to change •management consultants The Ascent of money NEW TOPIC! MANAGMENT PROCESS txt pg. 98 Management process Coordinating key business functions and Resources Use KRB as an example to identify key business functions and appropriate resources Coordinating key business functions and Resources Identifying business functions: Core business function Other functions ◦ Profit to owners/shareholders ◦ Supply a products/service to consumers Coordinating business functions ◦ Planning each part of the production of product or any stage or production Planning operations ◦ Production, marketing, finance and HR are coordinating units Markets for goods and services ◦ Place where the consumer (buyer) and producer (seller) meet. ◦ Wholesalers and retailers ◦ Today also have stock market/e-commerce Identifying the Business Functions Operations Organising the production of goods and services. Includes:- business location, premises layout, number of employees, types of equipment Employment relations Organising the human resources. Hiring and firing, finding right skills, training, motivation. Marketing Link between the business and the consumer. Drives the business. Identifies what consumers want and then plans to meet these wants at an acceptable price. Includes promotion. Accounting and Financing Provides the financial resources. Controlling how finances are used and regular reports on the business’s operation. Operations Human Resources Marketing Accounting and Finance Operations Human Resources Marketing Accounting and Finance 28 min. Using Holden as a case study, this program looks at the four key functions performed in business on a daily basis: manufacturing operations; human resources; marketing and sales; and finance. Take down five terms on each of the four business functions to write a paragraph on each at the end of the video. Key business functions of... HOLDEN AND KBF’s Which functional area is most important to the operation of Holden Ltd? Could the organisation exist without any of the functional areas? Would Holden benefit from outsourcing any of the functions? Holden's new solar powered car Imagine that Holden has decided that it wants to develop a new solar-powered car. Explore how each of the 4 functional areas discussed in the video might be affected: Manufacturing Operations, Human Resources, Finance and Marketing & Sales in terms of the key management roles of planning, leading organising and controlling. Vice President Google Mich Mathews You have been appointed CEO of Holden! Your first thought is that you want to know how successful each functional area of the organisation has been lately. Suggest 3 Key Performance Indicators that would be appropriate to evaluate the success of the 4 Functional Areas discussed in the video. What evidence of success was shown in the video? Coordinating the Business Functions The different functions of the business are INTERDEPENDENT. Small business owners are closer to their customers than large business. Large business managers may even lose touch with their business operations. Shareholders may have very little to do with the day to day running of the business. Business Mission Business Plan Determines general direction, organisational objectives and strategies Functional Plans Outline how each function will achieve business objectives Operations Employment Relations Marketing Accounting and Finance KRB: key business functions and appropriate resources IN PAIRS ON POSTERS COME UP WITH KRB’s KEY BUSINESS FUNCTIONS AND WHAT RESOURCE EACH FUNCTION NEEDS Management: Operations goods and/or services the production process quality management goods and/or services What is a good and what is a service...do any businesses provide both? GOODS VS SERVICES GOOD: An item that is tangible. It can be seen or touched.;E.g... SERVICE: An intangible good that is provided by an individual or organisation; E.g... The production process What is the production process of a ...? Surfboard Chocolate Cheeseburger designer dress Cookies Car wash The production process Organising operations in a business involves managing the production process. The production process includes identifying and procuring the inputs that will be transformed by the business into the final goods and services. MANUFACTORING – transformation in factory SERVICES – transformation in offices In organising production the business managers will try to reduce cost, maximise efficiency and provide quality goods and services Production process Division of labour ◦ Breaking down tasks to the simplest level and designing jobs and employing people to do these jobs ◦ Division of labour brings advantages to an organisations as people become SPECIALISTS they become more EFFICIENT Specialising promotes efficiency ◦ Workers rely on other people working in their specialised job to supply the products and services they need. Who does a heart surgeon or tennis professional rely on? The way that businesses create products and services is known as the production process. There are three main parts to the production process: A firm must purchase all the necessary inputs and then transform them into the product (outputs) that it wishes to sell. For example a football shirt manufacturer must buy the fabric, pay someone for a design, invest in machinery, rent a factory and employ workers in order for the football shirts to be made and then sold. How well-organised a firm is at undertaking this transformation process will determine its success. This is known as the productive efficiency of a firm and it will want to be as efficient as possible in transforming its inputs into outputs (i.e. using the minimum number of inputs as possible to achieve a set amount of output). This will reduce the cost per unit of production and allow the firm to sell at a lower price. Ultimately, the objective of the production process is to create goods and services that meet the needs and wants of customers. The needs and wants of customers will be met if a business can produce the correct number of products, in the shortest possible time, to the best quality and all at a competitive price. The Production of Goods and Services Involves the management of: •people •capital •information •raw materials Role of Operations Design Operation of Control of Transformation that Processes convert Each Step Adds Value Raw Materials, energy and labour into Finished goods and services The production process Discuss the concept of ‘the production process’ and construct work flow charts demonstrating production of goods and/or services http://www.thesourc esurfboards.com.au/h ome ? Goods or Services Production process In worksheets discuss the concept of ‘the production process ‘and construct work flow charts demonstrating production of goods and/or services The future of food production No-till agriculture Feeding the world's growing population will require changes to the way we grow things. This might mean leaving the plough behind Chain of command Chain of command Refers to the way a business structures its channels of authority, power, accountability and responsibility In a traditional business the chain of command starts with the CEO Authority and power will move down through various levels (or links) of management, supervisors and workers. Accountability (and information) moves back u through these links to the CEO Chain of command continued The chain of command can be shown as an organisation chart ◦ Authority refers to the right a manager has to make certain decisions and to require a subordinate to carry our certain tasks in a satisfactory way. ◦ Power is the ability to cause subordinates to do what is required of them ◦ Responsibility is the duty an employee has to c ary out certain organisation al tasks or functions ◦ Accountability who has authority over them All workers are responsible for something and accountable to someone. The chain of command can be organised by function, product, geography or customers. ◦ See pg. 102 Chain of command by function Organising chain of command is common and can be effective if each functional area does not need to collaborate closely with other departments...e.g.? Head of HR, Finance, manufacturing and marketing and reporting to CEP E.g. Benefits of chain of command by FUNCTION Easy to understand Forms a basis for specialisation Staff with similar interests and skills can be grouped together Upper levels of management are likely to be aware of the needs and contributions of the functional areas http://www.wesfarmers.com.au/ Quality management Define ‘quality management’ and its importance Good + Service Quality management Goal of every business should be to create the best possible product and/or deliver the best possible service. Businesses that can deliver high quality products and services will gain a competitive advantage over other similar businesses e.g. http://www.apple.com/au/ QUALITY : A FOCUS FOR OPERATIONS Quality management will only be attained if all the employees in operations are committed to achieving and maintaining quality output... Is this easy to achieve? Quality management at each stage of the production process Provide scenarios for an SME ....... How do managers ensure high quality? What would a good manager do to rectify poor quality products/services? Total quality management All aspects of the operations process INPUTS, PROCESSES, AND OUTPUTS are all subjected to constant quality analysis and monitoring ..constant assessment and improvements to promote total quality Quality Control Inspection International Quality Standards TQM Continuous improvement Working Capital =the money needed for the day-to-day requirements of business. DISADVANTAGES of JIT - unable to meet sudden increases in demand, great reliance on suppliers and employees, huge problems if any part of the system breaks down, loss of discounts related to bulk buying. Customers define quality. It is different things to different people. But customers demand a high level of quality or they will switch to a competitor. Quality Control = Inspection of products to see it meets the need of the customers. Quality management Define ‘quality management’ and its importance at each stage of the production process Quality Management How do managers ensure high quality? What would a good manager do to rectify poor quality products/services? TERM TWO Management process –coordinating key business functions and resources –operations •goods and/or services •the production process •quality management –marketing •identification of the target market •marketing mix –finance •cash flow statement •income statement •balance sheet –human resources •recruitment •training •employment contracts •separation – voluntary/involuntary –ethical business behaviour management and change –responding to internal and external influences –managing change effectively •identifying the need for change •business information systems •setting achievable goals •resistance to change •management consultants Management process: marketing identification of the target market marketing mix The economist http://audiovideo.economist.com/?fr_chl=8c 9fb7cb6ccca6fb5c1058e006b34355a6ec14 1c&rf=bm What is marketing? Distinguish between marketing and sales http://www.smh.com.au/ Definition of marketing Those functions in a business that directly involve contact with the consumer and assessment of their needs, and the translation of this information into outputs for sale. Marketing is the process of developing a product and implementing a series of strategies aimed at correctly promoting, pricing and distributing the product to a core group of customers. Targeting consumers Why is targeting consumers and identifying a ‘target market’ so important? What sort of magazines/TV shows do you read and watch? What products are advertised? Have you heard of a ‘target market’ what does this term mean in your own words? Identification of the target market A business needs to clearly establish who the consumers of the product are and them aims its efforts to gain sales towards that market. E.g. Skim milk, chocolate, surfboards...who are their target market? TARGET MARKETS Most product promotions will be targeted so they appeal to a specific: ◦ Age ◦ Social group: middle aged men/women, affluent, young women Each specific group is a TARGET MARKET As a class look at different websites and notice the differen ads TARGET MARKETS Mass marketing: product used by a large Niche marketing: small and exclusive market. proportion of the population: food, household items: usually not specific Ski equipment, luxury cars, adventure holidays> IMAGE promoted is most important Wise to target a specific group?? YouTube clip Take five points down from this clip! MARKET SEGMENTATION Market segmentation occurs when the total market is subdivided into groups of people who share one or more common characteristics. Otherwise known as target markets. Markets can be segmented on the following four variables; ◦ Demographic – age gender, ethnicity, income, occupation etc. ◦ Geographic – Urban, rural, climate, region ◦ Product related – regular user, new user, brand loyalty price sensitivity ◦ Psychographic – personality, motives, lifestyles Eg. Nova 96.9 only wants 18-39 year olds to listen so they don’t play Frank Sinatra. They then have a valuable product to sell to advertisers. The Toyota Tarago has also been developed for a certain market segment. Processes used to identify target markets Market research: surveys in person/via telephone, demographic/social group, specific questions about the product Focus group: a group of potential consumers chosen at random, brought together and asked to respond to a campaign developed to promote a particular good or service..Advertising agencies, check whether there is a demand MARKETING MIX THE 4 P’s PRODUCT PRICE PLACE PROMOTION Marketing Mix Summarise product, price, place and promotion Read text then summarise Marketing Mix Product Brand, packaging, positioning (healthier) Price Matching its cost of production to the needs of its targeted customers. Will the price be set low and aimed at the mass market or will it be set high and aimed at a specialised market? What is problem with too low/too high pricing? Promotion Sales promotion Personal selling Advertising Print, radio, TV : choice of medium will depend on the products, audience, frequency of publication, coverage, cost of reading audience Customer service Place Transporting/storing goods and getting them to the consumer at the right time. 1/5th of the cost of a product is taken up in distribution. Warehousing/storage/transport Inventory: Just in time (JIT) in modern businesses stock is held in the form of finished goods, component or raw materials. Marketing In worksheets Discuss the meaning of ‘marketing’ Distinguish between marketing and sales Define the concepts ‘target market’ and ‘marketing mix’ Using examples in worksheet identify relevant target markets Marketing Australian red meat in Australia and around the globe Brochure Handout to be completed Marketing Mix: recap/promotion/advertising M&C Saatchi is a global marketing services business working for clients across a wide variety of industry sectors. The Company was founded in 1995. Starting with a strong base in the UK and Australia, we have added new agencies and disciplines in Asia, USA and Europe, employing over 1,2850 staff in 22 countries. The Company was listed on AIM in 2004. http://www.lse.co.uk/SharePrice.asp?shareprice=SAA M&C Saatchi wins Austrade contest to market Australia Simon Canning From: The Australian April 26, 2010 12:00AM FORMER Tourism Australian and Tourism New Zealand advertising agency M&C Saatchi has won the job of building brand Australia for Austrade. The agency, which has also been involved in nation-branding and tourism projects in the US and the Middle East, will assume the $20 million project to market Australia as an export and investment nation. More than 60 advertising agencies from around the world pitched for the Building Brand Australia project announced by the federal government last year, with four agencies making the shortlist. Austrade took a number of concepts from the agencies and put them into research in 14 countries before handing the account to M&C. The contract will run for four years and will see an overarching brand developed to promote Australia. It will run separately from tourism campaigns. The concept will not be unveiled until next month. M&C developed New Zealand's lauded 100 per cent Pure campaign before resigning the account to take on Tourism Australia. The agency's "So where the bloody hell are you?" campaign shot bikini model Lara Bingle to fame but faced criticism from some industry sectors. Last week Media revealed that two local executives, chairman Tom Dery and regional creative director Tom McFarlane, had bought a 20 per cent stake in the agency for $5m from the parent company in London. In the age of the brand, logos are everywhere. But why do some of the world’s best-known brands find themselves on the wrong end of the spray paint can — the targets of anticorporate campaigns by activists and protesters? No Logo, based on the best-selling book by Canadian journalist and activist Naomi Klein, reveals the reasons behind the backlash against the increasing economic and cultural reach of multinational companies. Analyzing how brands like Nike,The Gap, and Tommy Hilfiger became revered symbols worldwide, Klein argues that globalization is a process whereby corporations discovered that profits lay not in making products (outsourced to low-wage workers in developing countries), but in creating branded identities people adopt in their lifestyles.