Business+Studies+Topic+2

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=__ Preliminary Business Studies Topic 2. __=

**Business Management **



=__Section 1: The Nature of Management. __=

Introduction. Managing is an essential skill that all people need to develop. How well you perform the task of management will often determine whether you achieve the goals you have set for yourself. In the world of business, just as in your personal life, management is a fundamental activity. It is what makes the business function.

The traditional definition of management  is the process of coordinating a business's resources to achieve its goals.

These resources include: > > Roles of a Manager. > >
 * Human resources. These are the employees of the business and are generally its most important asset.
 * Information resources. These include the knowledge and data required by the business, such as market research, sales reports, economic forecasts,
 * technical material and legal advice.
 * Physical resources. These include equipment, machinery, buildings and raw materials.
 * Financial resources. These are the funds the business uses to meet its obligations to various creditors.

Planning.
-Acquire information from within the business (internal) and externally. for example: trends in consumer tastes, technology and legal issues. As well opportunities and threats need to be identified. -This will impact on plans for expansion.

Organising.
Good decisions need to be made on: - what tasks needs to be done. - staff allocation - deciding on the most efficient methodology.

Leading.
- encourage staff to work as a team. - inspire people to reach their full potential. - command respect for the manager and the position.

Controlling.
- need to develop control process to monitor performance. - input controls (before production) - concurrent controls (work in progress) - feedback controls (final output) - analyse for planning adjustment.

__**Features of effective management. **__ The manager or managers of a small or large business plan and organise the __functions__ of the business to ensure that the effort of employees is <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">coordinated to maximise sales, profit and customer satisfaction.

<span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">Management has the responsibility to guide the business through <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">its life cycle.

<span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">Efficiency is the result of effectiveness. <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">Maximising __Outputs__ (goods or services produced by a business) <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">in relation to __Inputs__ (resources such as labour, finance and equipment).

<span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">In a large business, the business’s management is able to delegate overall <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">responsibility for its success to experienced people within the business’s <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">departments, while in a smaller business the manager is expected to be <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">an expert in every aspect of its operations.

<span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">In either case, effective managers will perform roles that could be <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">classed as __interpersonal__, __informational__ or __decisional__.

__<span style="font-family: 'Book Antiqua',serif;">Impersonal Role. __ - <span style="font-family: 'Book Antiqua',serif;">Communicate their vision to motivate staff to achieve the set goals <span style="font-family: 'Book Antiqua',serif;">and foster a positive relationship between the business and staff. - <span style="font-family: 'Book Antiqua',serif;">Help the staff and company achieve its personal and business objectives. - <span style="font-family: 'Book Antiqua',serif;">Ensure business satisfies the he human needs of the staff. - <span style="font-family: 'Book Antiqua',serif;">Negotiate between management and staff to ensure fair outcomes for <span style="font-family: 'Book Antiqua',serif;">all. __<span style="font-family: 'Book Antiqua',serif;">Informational Role. __ - <span style="font-family: 'Book Antiqua',serif;">Communicate to staff, goals, expectations and direction. <span style="font-family: 'Book Antiqua',serif;">(ensure effective communication channel). - <span style="font-family: 'Book Antiqua',serif;">Pass on knowledge and expertise (teach). - <span style="font-family: 'Book Antiqua',serif;">Gather information from staff on better and more efficient practice <span style="font-family: 'Book Antiqua',serif;">as well as problems. - <span style="font-family: 'Book Antiqua',serif;">Know the skills of staff and their needs. - <span style="font-family: 'Book Antiqua',serif;">Receive collate and analysis information. __<span style="font-family: 'Book Antiqua',serif;">Decisional Role. __ - <span style="font-family: 'Book Antiqua',serif;">Make informed and sound decisions. - <span style="font-family: 'Book Antiqua',serif;">Be an effective problems solver. - <span style="font-family: 'Book Antiqua',serif;">Balance immediate and long-term needs. - <span style="font-family: 'Book Antiqua',serif;">Take advice from key professionals.

__ Skills of Management __

Skills of management have moved away from an authoritarian or autocratic style with

a rigid hierarchical structure to a more people orientated, participative style of leadership

with a flatter structure.

A wide range of skills need to be developed.


 * 1) 1) Interpersonal skills.

Managers get their work done with and through other people; therefore, interpersonal (people) skills are extremely important. Such skills mean a manager can work and communicate with other people and understand their needs.

Interpersonal skills centre on the ability to relate to people, being aware of and appreciating their needs, and showing genuine understanding. People skills include the ability to communicate, motivate, lead and inspire (see Snapshot 1).

A manager who lacks empathy, is arrogant, opinionated, unable to communicate or who has difficulty relating to people will not be able to develop positive relationships with employees. Employees may actually work more efficiently when such a manager is absent because the fear of intimidation or victimisation is reduced (see the following Snapshot 2).
 * 1) 2) Communication Skills.

There is no simple recipe for great communication, but the Chinese philosopher Confucius once said:

‘Tell me and I'll forget. Show me and I'll remember. Involve me and I'll understand.’

Steve Jobs Iphone launch.

[]

One of the most difficult challenges for managers is getting employees to understand and want to achieve the business's goals. Effective communication is at the heart of meeting this challenge.

Managers who are effective communicators and who are able to share their thoughts and plans will find it easy to influence others

Owing to the complex nature of achieving effective communication, mistakes, misunderstandings and unforeseen barriers sometimes lead to false messages or no message being received. Miscommunication can have disastrous consequences in a business (see the following Snapshot).

Nonverbal communication mainly consists of body language (posture, facial expressions, placement of limbs and proximity to others).

If you have ever gone to a party, then you are likely to be aware of how effective body language can be. A smile, a glance, a stare, the angle of a person's head, a frown, a body movement or the invasion of someone's personal space — they all communicate a message.

It is important for managers to be aware of the power of body language and the messages that can be secretly conveyed. Usually, body language conveys a more powerful message than spoken or written communication. This can result in contradictory messages being intentionally or unintentionally given.




 * 1) 3) Strategic thinking skills

Watch the following perspectives on creative thinking.

The Castle []

Edward DeBono []

Strategic thinking allows a manager to see the business as a whole — as a complex of parts that depend on and interact with each other, like the gears in a machine and to take the broad, long-term view.

The ability to think strategically lets the manager see the ‘big picture’ and then:


 * visualise how work teams and individuals interrelate ( identify common goals)
 * understand the effect of any action on the business (holistic view)
 * gain insights into an uncertain future (long-term perspective)
 * see the business in the context of events and trends, and identify opportunities or threats.

Strategic thinking therefore involves thinking about a business's future direction and what future goals the business wants to achieve.

Many people assume that strategic thinking skills are the exclusive field of senior management, however managers at all levels need to exercise this skill. It will help the business maintain its competitive position within a constantly changing business environment. Strategic thinking can be learned through practice.

Class Discussion:

As a student, for example, you were thinking strategically when you made your senior course subject selections in Year 10. You had to imagine what the future job or study requirements would be when you left school, how the workplace may change over time, what future goals you wanted to achieve, and what would interest and motivate you in the future.

What do you expect to achieve in the next 10 years.

4) Vision

A clear, shared sense of future direction that inspires people to attain a common goal.

Vision must foster a sense of cooperation and committment.

The vision should be understood and agreed to by all staff.

5) Problem solving and decision making skills.

Problem solving involves finding and choosing a course of action to correct or improve a situation.

__ Steps involved in the problem solving process: __

(Draw in a mind-map fashion)

<span style="font-family: 'Comic Sans MS',cursive; font-size: 9pt;">Evaluate the solution

 * Decision making is identifying the course of action and implementing.
 * Remember......
 * Decision making is the goal, problem solving is the process.

6) Flexibility and adaptability to change.

This has become an essential skill in the current environment.

Managers must be flexible, adaptive and proactive rather than reactive.

They must be aware of changes in the internal and external environments, and be prepared to take risks.

The maximises a businesses ability to take advantag of opportunities.

7) Reconciling the conflicting interest of stakeholders.

Must be acountable to all stakeholders.

Some of these stakeholders may have conflicting interests. Eg. Workers want good renumeration and a safe environment, customers a good price and shareholders a resonable return.

A primary management function is to resolve conflicts between stakeholders

Society increasingly expects businesses to accept responsibility and accountability towards all stakeholders.

Economic development must be accomplished sustainably.

The triple bottom line refers to the economic, social and environmental performance of a business.


 * <span style="font-family: 'Times New Roman',Times,serif; font-size: 20pt;">Achieving Business Goals. **

If you were absent for these lessons...

1) Get the handout notes from Dr Stoney and read them.

2) Watch these You Tubes.

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3) Complete the homework worksheet task sheet. This must be handed in for marking.

**Management Approaches**

Introduction


 * Knowledge about management today is the result of a long and continuing innovative process as ideas evolved over time.
 * The business's management approach will have an enormous impact on all aspects of the business's operations.

Management approaches influence:


 * the organisation and allocation of tasks to staff
 * the organisational structure
 * levels of management
 * management styles.

Management Theories

Classical Behavioural Contingency

__Classical management approaches__

The Industrial Revolution began with the invention of reliable steam-powered machines. For the first time, businesses could mass-produce goods in factories that operated year-round. This posed challenges that earlier businesses had not previously faced. Problems arose in training employees, organising the managerial structure, scheduling complex manufacturing processes and dealing with worker dissatisfaction. __Business owners now had to plan, organise, direct, control and staff many different types of operation.__

In response to these __many complex problems, managers developed and tested solutions with the focus on finding ‘one best way’ to perform and manage tasks. The evolution of modern management, called the__ __classical approach__, had begun.

__Classical–scientific approach__

__Frederick W Taylor (1856–1915) advocate of the production line method of manufacturing, which he viewed as the most efficient form of production. This production system was used in the industrialised countries of the world until the early 1970s and was based mainly on Taylor's scientific management ideas.__

Taylor, to assist his analysis, __developed the principles of__ __scientific management__ __: an approach that studies a job in great detail to discover the best way to perform it.__

__Taylor's four principles of scientific management__ are as follows:


 * 1) __Scientifically examine each part of a task to determine the most efficient method__ for performing the task.
 * 2) __Select suitable workers and train them__ to use the scientifically developed work methods.
 * 3) __Cooperate with workers to guarantee they use the scientific methods__.
 * 4) __Divide work and responsibility so that management is responsible for planning, organising and controlling the scientific work methods, and workers are responsible for carrying out the work as planned.__

One notable student of classical–scientific theory was Henry Ford. Being familiar with Taylor's work, Ford became an enthusiastic believer in scientific management and the use of machines. By combining these ideas, Ford developed his famous mechanised assembly line in 1913.

This approach to car assembly involved a chassis moving down an assembly line on a conveyor belt. A small team of workers would move with the car, fitting the various components that had been carefully set out along the production line. The end result was to reduce the hours spent on the assembly of a car from 728 hours to just 1.5!

[]

McDonald's is another business that uses Taylor's scientific management approach in the preparation of its food. For example, a Big Mac is produced according to a set number of steps.

__Classical–bureaucratic approach__

__A classical–bureaucratic approach to management, pioneered by Max Weber and Henri Fayol, advocated:__


 * __that a bureaucracy is the most efficient form of organisation__
 * __the main function of management is planning, organising and controlling.__

__Main Points.__


 * __a strict hierarchical organisational structure__
 * __clear lines of communication and responsibility__
 * __jobs broken down into simple tasks; specialisation__
 * __rules and procedures__
 * __impersonal evaluation of employee performance to avoid favouritism and bias.__

__ T he main features of classical–scientific and classical–bureaucratic __

__management approaches include:__


 * __time and motion studies used to reduce inefficiencies__
 * __production line methods__
 * __hierarchical organisational structure (bureaucracy)__
 * __clear lines of authority (chain of command)__
 * __discipline as a feature of leadership__
 * __autocratic leadership style__
 * __rules and procedures.__

Management as planning __Planning is the preparation of a predetermined course of action for a business. It involves showing how the business will achieve its stated mission and business goals.__ Levels of planning — strategic, tactical and operational planning Once the business goals have been determined, decisions have to be made about how they will be achieved. This requires detailed plans for activities at all levels of the business. __There are three different types of plans.__ __Management as organising__ Organising is the next part of the process when management puts into practice the goals that were determined in the planning stage. The organisation process is the range of activities that translate the goals of a business into reality. These activities include the following three steps: __Management as controlling__ __Controlling compares what was intended to happen with what has actually occurred__. If there is a discrepancy between performance and goals, changes and improvements can be made. __Control methods__ At the heart of any control measure is the __need to monitor (check) the quality of the products being manufactured or provided__. There are three different levels of controlling a business's output quality.
 * 1) __Strategic(long-term)__ planning is planning for the following __three to five years__. This level of planning will assist in __determining where in the market the business wants to be, and what the business wants to achieve in relation to its competitors.__
 * 2) __Tactical__ (__medium-term__) planning is flexible, adaptable planning, usually over __one to two years__, that assists in implementing the strategic plan. Tactical planning allows the business to respond quickly to changes. __The emphasis is on how the goals will be achieved through the allocation of resources.__
 * 3) __Operational(short-term)__ planning provides specific details about the way in which the business will operate in the short term. __Management controls the day-to-day operations__ that contribute to achieving short-term actions and goals. __Examples of operational plans are daily and weekly production schedules.__
 * 1) __Determining the work activities.__ The __work activities required to achieve management objectives__ must be determined. Work activities are then usually broken down into smaller steps.
 * 2) __Classifying and grouping activities.__ Once the __work activities of a business have been broken down into smaller steps, similar activities can be grouped together__. This improves efficiency by enabling the most appropriate allocation of resources. __For example, it is common practice to group activities into departments__ or sections and allocate employees and supervisors to each section or department.
 * 3) __Assigning work and delegating authority.__ The next step in the organisation process is to determine who is to carry out the work, and who has the responsibility to ensure that the work is carried out. __Delegation also involves ensuring that the person who has been given responsibility does carry out the processes.__
 * 1) __Quality control.__ This __traditional control management technique 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 sub-standard products have to be scrapped.
 * 2) __Quality assurance.__ Because quality assurance occurs both during and after production, and seeks to stop faults occurring in the first place, it is less wasteful than quality control. __Quality assurance aims to make sure that products are produced to pre-set standards.__ It is the responsibility of the employees working in teams, rather than of the inspectors.
 * 3) __Total quality management__ (TQM). This is the most comprehensive form of control management. It is concerned with __encouraging all employees in the workplace to think about quality in everything they do. Every employee sets out to satisfy customers, placing them at the centre of the production process.__

__Hierarchical organisational structure__ __The primary characteristic of traditional hierarchical organisational structures has been the grouping of people according to the specialised functions they perform. These may include marketing, finance, human resources and operations. Even within each of these functional areas, tasks are further subdivided into specialised jobs__

__Characteristics of the pyramid-shaped organisational structure include:__
 * __rigid lines of communication__
 * __numerous levels of management, from managing director to supervisors__
 * __clearly distinguishable organisational positions, roles and responsibilities__
 * __hierarchical, linear flows of information and direction, with a large amount of information directed downwards__
 * __specialisation of labour resulting in tasks being divided into separate jobs__
 * __a chain of command that shows who is responsible to whom.__

Behavioural management approach [] Scientific management principles did not always lead to increased productivity due to the repetitive and boring nature of many jobs and the dehumanising structure of the workplace. Approximately 50 years after the emergence of scientific management ideas, behavioural, or ‘human relations’, approaches surfaced. __The behavioural school recognised that to make substantial productivity gains, worker participation in the production process was required.__ It acknowledged the workers’ contribution to output. __Advocates of the behavioural approach to management stress that people (employees) should be the main focus of the way the business is organised. They believe that successful management depends largely on the manager's ability to understand and work with people who have a variety of diverse backgrounds, hopes, desires and expectations. The development of this humanistic approach has greatly influenced management theory and practice.__ One major contributor to behavioural management theories was __Elton Mayo (1880–1949)__. Mayo is considered the founder of industrial psychology. __Through his revolutionary experiments, conducted at the Western Electric Hawthorne Company in Chicago, he discovered what became known as the ‘Hawthorne effect’, which demonstrates that meeting people's social needs has a significant impact on productivity__ (see the following Snapshot). __Two significant results from the research were that:__
 * __worker satisfaction to a large extent is non-economic; that is, workers have social needs in addition to economic needs__
 * __being made to feel part of a team increases job satisfaction and output.__

__Management as leading.__ For behavioural theorists leadership is critical. They encourage empowering techniques over traditional controlling techniques. Leader needs to:
 * Understand the workplace culture and use informal methods to motivate.
 * Listen to employees' contributions and opinions.
 * Understand the technical aspects of the job.
 * Communicate goals and vision to employees.
 * Understand the needs of employees.
 * Delegate tasks to appropriate people.

__Management as motivating.__ Behavioural theory focus on motivation to achieve productivity or the human factor. Abraham Maslow argued that individuals have intrinsic needs that that they seek to satisfy. [] [] Most behavioural theorists believe in some sort of needs hierachy. Managers need to find what the most appropriate motivators for individuals. The Hawthorne studies revealed that human factors such as recognition, self-worth and positive reinforcemnt are as important to motivation as money and working conditions. Employeees will work harder if they feel valued and rewaded. __Management as Communication.__ Many studies have shown that the performance of both individuals and businesses improves when managerial communication is effective. This is especially so when open communication is used to motivate employees by providing them with information regarding the business's goals, plans and overall financial results. A two-way flow of communication can provide feed-back and make workers feel more valued. How do you think technology has helped with this?

__Teams and Flater Management Structure.__ Many businesses are starting to realise that a team approach can be the catalyst for superior performance. Teamwork involves people who interact regularly and coordinate their work towards a common goal.

Another significant impact of a team approach is the breaking down of the traditional pyramid-shaped hierarchical organisational structure. Hierarchical boundaries are disappearing as people and functions mix together to create much flatter organisational structures. Firms that adopt a flatter management structure reduce the number of levels of management, giving greater responsibility to individuals in the business

__Participative and democratic management styles.__ A manager who implemented a classical–scientific approach would normally adopt an autocratic leadership style; a manager who practised a behavioural approach would tend to use a more participative or democratic leadership style Sometimes referred to as the ‘we’ approach, participative or democratic managers recognise the strengths and abilities of employees and actively involve them in the decision-making process. Individual employees accept responsibility and can implement changes themselves, making the business more responsive to change. Contingency management approach While the classical and behavioural management approaches continue to provide important lessons for managers the contingency approach to management. It stresses the need for flexibility and the adaptation of management practices and ideas to suit changing circumstances. Contingency theorists point out to managers that no two situations are absolutely identical. Each situation, therefore, requires its own unique solution. For example, you may have used a particular strategy to complete a task for assessment. Although this strategy may have been quite successful for that particular task, another assessable task may well require a completely different approach. The contingency approach recognises that management makes decisions based on the current set of circumstances. As these circumstances are constantly changing managers need to make adjustments to the business process to maxamise progress. This requires close monitoring of the business environment. For example, Qantas altered its strategy because of competition from Virgin Blue and launched its own discount airline, Jetstar.

=__ Section 2: Management Processes __= in the following areas Interdependence refers to the mutual dependence that the key functions have on one another. This means that the various business functions work best when they work together. __Coordinating key business functions__ and resources The coordination of key business functions depends on the broad goals of the business as well as its size. In large businesses the key business functions are often separated into different divisions or departments headed by separate managers. This is because the key functions require quite different skills and knowledge. __The word__ __division__ __is often used by businesses to describe the separation of key functions. Division of a business along functional lines enables each part to specialise, but when the functions are separated, coordination between them becomes an important issue.__
 * what has to be done
 * who is to do what
 * when it is to be done
 * what resources will be needed.
 * __ operations __ focus on strategies to improve production processes and to create the ideal factory or office layout
 * __ marketing __ determine the appropriate markets for the business's products, and decide on pricing, product features, promotion and channels of distribution
 * __ finance __ are responsible for the financial requirements, budget allocation and financial record keeping
 * __human resources__ are concerned with the recruiting, training, employment contracts and separation of the employees who are required to run the business successfully.

=__ Operations Management __=

__Operations__ __refers to the business processes that involve transformation or, more generally, ‘production’.__

__ Operations management consists of all the activities in which managers engage to produce a good or service. It is concerned with creating, operating and controlling a transformational process that takes inputs from a variety of resources, and produces outputs of goods and services that are needed by customers.__

Production involves the skilful bringing together of a number of resources, such as finance, equipment, management, technology and people, to create finished goods and services through a series of operations.

Watch Video then answer questions. [] __Good and/or Services.__ A companies product can be a good or a service. Sometimes it can be both in the case of a restaurant. This greatly impact different operational process. Manufactured goods Services __The Production Process.__ Inputs Process / Transformation __Transformation in manufacturing__
 * 1) Outline the reasons Mark provides James as to why he is having difficulty selling his coffee beans.
 * 2) Outline the successful strategies Mark has implemented at Hudsons Coffee to sell his coffee beans.
 * 3) Outline the quality control measures evident at Hudsons Coffee.
 * 4) In relation to quality assurance, identify the standards that have been established at Hudsons Coffee to ensure its objective of always providing the highest quality coffee is achieved.
 * 5) Compare the transformation processes of the café in relation to making coffee.
 * 6) Recommend two quality management strategies James could implement at Café KitcCh.
 * produce tangible products.
 * results are easy to measure and cannot be changed onced created.
 * Simply transformed manufactured goods (STM).
 * Elaborately transformed manufactured goods (ETM). Complex finished goods.
 * Intermediate goods are components or more elaborate products.
 * not tangible (intangible).
 * quality often related to knowledge or skill.
 * easy to modify and customise the service.
 * Materials: could be raw materials or computer software.
 * Capital Equipment: could be mahinery, property, computers office furniture.
 * Labour.
 * Information: any knowledge that contributes to the process.
 * Finance: money used to invest in the business.
 * conversion of inputs into goods and services.



__Transformation in the service industry.__

Due to the intangible nature of services, the operations processes are less physical or visible. They take the form of knowledge, inputs, expertise etc.

__Outputs__ Outputs refer to the end result of a business's efforts — the good or service that is delivered or provided to the consumer So far, a distinction has been drawn between service and manufacturing operations, but in many cases businesses carry out both types of operation. For example: Ford Australia separates its vehicle manufacturing operation from its customer service operation, although both elements are critical to the business's overall success.

Marketing management

Marketing is vital to the existence of the business. Businesses make few sales if they do not market their products successfully, eventually ending in failure.

__What is marketing?__

[]

There are many definitions used to describe marketing. The most commonly accepted definition comes from the American Marketing Association: __‘__Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives.’

A more simplified definition of __marketing is a total system of interacting activities designed to plan, price, promote and distribute products to present and potential customers.__ At the heart of these activities is the most fundamental question all businesses should continually ask: ‘What do customers want to buy — now and in the future?’ This is the essence of marketing — finding out what the customers want then attempting to satisfy their needs.

__Sometimes ‘selling’ and ‘marketing’ are used synonymously.__ However, the two words have different meanings. __Selling is merely getting rid of existing stock,__ whereas marketing takes a much broader view. Successful __marketing involves bringing the buyer and seller together and making a sale.__

Small business and marketing

Some small business owners are excellent ‘technicians’ but dislike marketing and inadvertently turn away customers. Other small business owners are so convinced of the value of the good or service that they assume it will sell automatically. Unfortunately, this rarely occurs.

Many small business owners feel marketing is not for them. They happily place advertisements in local newspapers, display the name of the business on their cars and perhaps even advertise on a regional radio or television station. However, such advertising is just one part of marketing a good or service.

__Small business owners often view marketing campaigns as something only large businesses do, and as too expensive, complicated or time consuming for themselves. What they do not often appreciate is that they can run a marketing campaign and that it can be simple and inexpensive__ (see the following Snapshot).

__All businesses, regardless of size, need to undertake some form of marketing, otherwise customers will not be informed about the business's products.__

__Marketing is a way of thinking.__ __Businesses need to adopting a customer-oriented approach to marketing. That is view their business in terms of the needs and wants of their customers.__ __The customer relationship does not end with the sale; it begins there. This means Business, employees should work towards customer satisfaction by establishing positive relationships with customers called the marketing concept approach.__
 * __Role of marketing__ **

During the 1950s, businesses began slowly to accept that they were not solely producers or sellers, but in the business of satisfying customers' wants. This shift in focus to a __customer-oriented approach brought about significant changes to marketing, especially the need to undertake__ __market research and develop a marketing concept.__
 * __ The marketing concept approach __ **

[] __The marketing concept is a philosophy that all sections of the business are involved in satisfying a customer's needs and wants while achieving the business's goals. The business should direct all its policies, plans and operations towards achieving customer satisfaction.__ The marketing plan, therefore, needs to become integrated into all aspects of the business. For example, if the success of the marketing plan means having a product ready by a certain date, __the production plan will need to be in place to make sure that happens__. If the business makes Christmas puddings, it is no good delivering the puddings after 25 December! __Financial planning must also ‘connect’ with the marketing plan.__ Marketing costs money and finances must be available if, for example, the business wishes to embark on an campaign. The __marketing manager will also have to work with the human resource manager__ to __ensure that the right staff are employed__ to create the product or service that is desirable to customers.
 * __maketing research__ **

Very few businesses can afford to market their products to all consumers or all businesses in Australia. At the same time, few businesses would want to because it is a very rare product that is suitable to all consumers. Until the end of the 1950s, Coca-Cola was such a product. But today Coca-Cola offers consumers a range of carbonated soft drinks based on its original cola formula including Coca-Cola Zero, Diet Coke and Vanilla Coke, as well as non-cola drinks such as Pump still water, PowerAde Isotonic and Fruitbox Juice Drink. __Most businesses must select specific groups of customers on which to concentrate their marketing efforts: their target markets.__ __Three broad approaches can be adopted when selecting a target market: the mass marketing approach, the market segmentation approach or the niche market approach__
 * Identification of the target market **



Market segmentation Market segments are divided into: Geographic - region Demographic - age, sex. (segmented into Babyboomer, Generation X) Psychographic - persons lifestyle or personality Behavioural - eg someone's aversion to risk.

A__im of market segmentation is to increase sales and profits by better understanding and responding to the desires of the target customers.__ [] Target market Kids [] __Once the market has been segmented, the business selects one of these segments to become the target market.__

S__ometimes, a business may be able to identify both a__ __primary__ __and__ __secondary target market__ __.__ Customer research conducted by Sportsgirl Fashion, for example, revealed a primary target market of 18 to 25-year-old. See snapshop on flowershop. Niche markets __An extension of the market segmentation approach is that of the niche market, which is a narrowly selected target market segment. In a sense, it is a segment within a segment, or a ‘micro market’.__ For example, in any newsagency, you will see row upon row of magazines each appealing to a specific niche market — male,, young, old, high-income, low-income, urban, rural, outdoor lifestyle, indoor lifestyle and so on.

__The marketing mix — the four Ps__

Once the business owner has established the marketing goalsand selected a target market, the next step of the marketing plan is to develop marketing strategies to achieve the goals.

Marketing strategies are actions undertaken to achieve the business's marketing goals through the marketing mix.

__The marketing mix — the four Ps__ Once the business owner has established the marketing goalsand selected a target market, the next step of the marketing plan is to develop marketing strategies to achieve the goals. Marketing strategies are actions undertaken to achieve the business's marketing goals through the marketing mix.

1)Product. The business owner needs to determine the product's quality, design, packaging etc  The product is a combination of all these variables. __Customers will buy products that not only satisfy their needs but also provide intangible benefits such as a feeling of security, prestige, satisfaction or influence.__  Product positioning  __Product positioning refers to the development of a product image compared with the image of competing products__  Customers purchase products, they buy both the tangible and intangible benefits  Product packaging  The packaging of a product is sometimes as important as the product itself to assist sales. __Well-designed packaging will give a positive impression of the product and encourage first-time customers to purchase. Tasteful packaging can create an image of luxury, sensuality and exclusiveness, helping to promote the product.__ In addition, packaging helps preserve, inform, protect and promote the product. Product Branding [] An important part of the product development is the __brand and associated brand logo. Combined, these can be a powerful marketing tool.__ For example, the three-pointed star of the Mercedes-Benz and Coca-Cola's distinctive narrow-waisted bottle are famous brand names and symbols. Some businesses encourage the instant recognition of their brand symbol rather than their brand name. __Perhaps the most famous example of this technique is the ‘golden arches’ symbol used by McDonalds.__ In some advertisements the brand name does not appear at all, only the brand symbol. This is a clever and subtle method used to reinforce the meaning of the symbol and associate it with a brand name. 2) Price A __price set too high could mean lost sales__, unless superior customer service is offered. A __price set too low may give customers the impression of a ‘cheap and nasty’__ product. Business owners normally choose one of four methods for calculating price.  __The role of promotion is to inform, persuade and remind consumers about a business's products, with the aim of:__  The main forms of promotion are as follows:  Changes in technology, especially advances in information and communication technology (ICT), are having a significant impact on how businesses promote their products. The internet, for example, has become an effective advertising tool used by businesses to deliver specific messages to its target market. Internet newsgroups, ezines, chat rooms, social networking websites and online publications can all be used in an advertising campaign. The internet has also provided opportunities for many small businesses to undertake more of their own promotional activities (see the following Snapshot). = 4. Place = The fourth ‘P’ of the marketing mix is ‘place’ or __channels of distribution__. A distribution channel is a way of getting the product to the customer. This process usually involves a number of intermediaries or ‘go betweens’, such as the wholesaler or retailer. Apart from the retailer, the other intermediaries are often invisible; that is, the customer knows little about their role and operation. __There are three main types of distribution channels:__
 * 1)  __Cost plus margin__ __: calculating the total cost of production and adding a percentage (a margin) for profit.__
 * 2)  __Market price:__ __pricing according to the interaction between the quantity that customers are willing to purchase and the quantity that producers are able to supply.__ If there is a shortage of the product, the market price will rise, whereas if there is a surplus, market price will fall.
 * 3)  __Competitors' price:__ __choosing a price that is either below, equal to or above that of the competitors.__
 * 4)  __Discount price:__ __reducing the price of stock that is not selling to stimulate demand.__
 * 5) __3)__ Promotion
 * __attracting new customers by raising awareness__
 * __increasing brand loyalty by reinforcing the image of the product__
 * __encouraging existing customers to purchase more of the product.__
 * __Personal selling:__ a sales assistant outlines the features of the good or service to the customer. The main advantage of this method is that the message can be modified to suit the individual customer's needs. However, it is a time-consuming and expensive technique.
 * __Sales promotion__: activities and materials are used to attract interest and support for the good or service. Examples include free samples, coupons with cash refunds, and loyalty programs such as Fly Buys.
 * __Publicity:__ the business sets up a free news story about its product. The main aim of publicity is to enhance the image of the product, highlight a business's favourable features, and help reduce any negative image that may have been created.
 * __Advertising__: print or electronic mass media are used to communicate a message about the product. Advertising is used to attract potential customers, create a demand for the product and communicate essential information.
 * 1) __Producer to customer. This is the simplest channel and involves no intermediaries. Virtually all services, from tax advice to car repairs, use this method.__
 * 2) __Producer to retailer to customer. A retailer is an intermediary who buys from the producer and resells to customers.__ This channel is often used for bulky or perishable products such as furniture or fruit.
 * 3) __Producer to wholesaler to retailer to customer. This is the most common method used for the distribution of consumer goods. A wholesaler is an intermediary who buys in bulk from a producer, then sells in smaller quantities to retailers.__ Producers will use the services of a wholesaler when a large number of retailers sell the product and the producer finds it difficult to deal with them all.

=<span style="font-family: 'Arial Black',Gadget,sans-serif; font-size: 200%;">Finance. = Accounting (Introduction) A__ccounting__ __is a managerial and administrative tool that involves the recording of financial transactions, so that a clear summary of what has happened to the money coming in and going out can be traced over time.__ __The main accounting reports are:__



__Accounting provides information that is valuable to managers. It also provides information to employees, owners and shareholders (if it is a company), suppliers, lenders, customers, government (including regulators), competitors and the general public.__ __Accounting is useful, as it provides information about each of the following:__ Finance (Introduction) __Finance refers to how a business funds its activities__ — __for instance, where it gets the money to trade, why it chooses to use certain lenders — as well as the costs, risks, terms and benefits of different types of borrowings__. Financial knowledge requires an understanding of a range of financial instruments. __Business to be able to manage its borrowing and to use appropriate types of borrowing .__ __Management of the cost and risk of finance that is the key to successful financial management.__ Gruen - Bogan Proof fence [] Cash flow statements __A__ __cash flow statement__ __shows the movement of cash receipts (inflows, such as money from sales) and cash payments.__ Cash flow statements are vital for the business to assess whether money inflows can match money outflows. __The term ‘__ liquidity’ __is often used to describe whether a business has a good or adequate cash flow. summarises the typical monetary inflows and outflows. A business is said to be liquid (or solvent) if it has the cash available to meet payments as they are due.__ Generally a business would prefer its sales to be in cash for precisely this reason — it has a need for cash to meet its own payments. Why do businesses allow credit sales when they prefer cash? This is because they need to match their desire for cash with the customer's ability to pay. By allowing customers to purchase on credit, the business will obtain sales it might otherwise lose.
 * __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 risks the business faces.__
 * __cost management to maximise profits.__
 * __risk management ot minimise loss.__

Cash flow statements are closely related to budgets, which are estimates of anticipated future cash flows. Cash flow statements, however, are broader than budgets because they are also used to summarise past information. Cash flow statements are vital for the information they give on the timing of payments and receipt of income.
 * A cash flow statement shows the movement of cash receipts (inflows) and cash payments (outflows) over a period of time.
 * Liquidity is used to describe whether a business has a good or adequate cash flow.

__Income statement, or statement of financial performance.__ __P&L.__ __The income statement has also been called the statement of financial performance.__ __This alternative title makes the intent and the content of the statement clear.__ __It has had ther names including revenue statement,__ __and profit and loss (P&L) statement.__ __The income statement is a summary of the income earned and the expenses incurred__ __over a period of trading.__ __It helps users of information see exactly how much money has come into the business__ __as revenue, how much has gone out as expenditure and how much has been derived__ __as profit.__ __Usually this is one year, but it may be half yearly, quarterly, or even every__ __month or six weeks.__ __There are only five main categories of items:__ This is done in three steps: Net sales Net sales are the amount of revenue a business has earned from sales when the effects of sales returns are deducted. For example: __Gross profit and cost of goods sold (COGS)__ __Gross profit is the term given to the sales less cost of goods sold (COGS) or, mathematically:__ __Gross profit = Sales − COGS__ The gross profit calculation is important as, essentially, it tells the business how much its mark-up is on the cost price of the goods it has sold. This varies somewhat from business to business but is generally between 50 and 100 per cent. If the mark-up was enormous (say 800 or 1000 per cent), then it would attract other businesses to compete in the market. The cost of goods sold is an expense to the business. However, it is not grouped with other expenses. This is because the mark-up (or ‘contribution margin’) on the cost of goods sold determines the level of overall income. In a service-based business, there is no stock and therefore no mark-up. Therefore, income and gross profit are the same. Cost of goods sold only affects businesses that on-sell items they have purchased. __The calculation for COGS is determined as shown below:__ __COGS = Opening stock + Purchases − Closing stock__ Opening stock is the value of stock (or inventory) that the business has at the start of the financial year. Closing stock is the value of stock on hand at the end of the financial year. Here is an example showing how COGS is calculated: __Other expenses__ __ Expenses are simply costs. Specifically, expenses are the costs incurred in the process of acquiring or__ __manufacturing a product or service to sell, and the costs (direct and indirect) associated with managing__ __all aspects of the sales of that good or service.__ __Expenses must always be subtracted from income to work out net profit.__ The expenses are broken down specifically into three types. __Expenses can also be classified as operating or non-operating__ __‘Operating’ means occurring in the normal course of trading, for example wages, insurances.__ __‘non-operating’ refers to unusual, unexpected and unpredictable items that affect income either favourably or unfavourably__. Examples non-operating expense might be loss due to a burglary. __Net profit and expenses__ __A net profit is the amount remaining when operating and non-operating expenses are deducted from gross profit.__ __Net profit is shown mathematically as:__ __Net profit = Gross profit − Expenses__ When compiling the income statement, the manager should be mindful of several things — the proportion of gross and net profit to sales and also the level of expenses that accrue to selling, administration and finance.
 * 1) __revenue or income__
 * 2) __cost of goods sold (COGS)__
 * 3) __gross profit__
 * 4) __expenses__
 * 5) __net profit.__
 * 1) List the sales for the period.
 * 2) Calculate cost of goods sold (COGS) and calculate the gross profit.
 * 3) Itemise all other expenses (which may be classified into administrative, selling and financial expenses) and calculate the net profit.
 * Sales || 100 000 ||
 * Less discounts allowed to customers || 2 000 ||
 * Less returns of sold items || __3 000__ ||
 * Net sales || __95 000__ ||
 * Net sales || __95 000__ ||
 * Opening stock (stock at start of period) || 2 500 ||
 * Purchases (during the period) || 10 250 ||
 * Closing stock (stock at end of period) || 3 400 ||
 * COGS = Opening stock ($2500) + Purchases ($10 250) − Closing stock ($3400) ||  ||
 * = $12 750 − $3400 ||  ||
 * = $9350 ||  ||
 * = $9350 ||  ||

(get a copy of this statement from Drstoney to paste in your notes.)

__Balance Sheet.__ __Paste in sample balance sheet from the drstoney's handout.__ __A balance sheet is a summary statement providing a picture of a businesses financial stability.__ __Shows the business assests, liabilities and owners equity at a point in time (usually 30 June)__ __Based on principle:__ __Assets = liabilities + owners' equity__ __A= L+ OE__ __Assets__ __Assets are items of value to the organisation that can be given a monetary value.__ __Current assets are items whose value is expected to be used up, or turned over, within 12 months. Examples include bank savings, cash on hand, accounts receivable (also called debtors), prepaid expenses, and inventories (stock).__ __Non-current assets are those items that have an expected life of three to five years or longer. These include large physical items such as buildings, land, machinery, technology, vehicles, furniture, fixtures and fittings.__ __Intangible items are things of worth that have no physical substance. Examples include goodwill, trademarks, designs, copyright and patents.__ A good name or reputation (‘goodwill’) or an easily identifiable logo obviously has worth __Liabilities__ __Liabilities are items of debt owed to outside parties and/or other organisations__ (like suppliers or the banks) __includes loans, accounts due to be paid by the business, mortgages, credit card debt and accumulated expenses.__ Current liabilities __are those in which the debt is expected to be repaid in the short term (12 months or less) and include bank overdrafts, credit card debts, accounts payable (also called creditors) and accrued expenses.__ Non-current liabilities __are long-term debt items such as mortgages, leases, debentures and retirement benefit funds (money owed to employees upon their retirement from the business).__ Some of these non-current liabilities can last up to 30 years. __Owner's equity__ __The owners give a business money for it to acquire resources and begin operating. This money is called owner's equity (capital).__ As the business operates, it should start to earn an income to cover its costs and then later earn a profit. __The business can hold or retain profits to target money for a particular project or it may put money into ‘reserves’ for distribution later.__ The business could also choose to repay the owners who invested their money in the business at the outset. __Over time, a successful business will have its owner's equity amount increase in value. This means that the owner's claim on the business will also increase.__ This is the owner's reward for risking their money — and is also the reason for people investing in the stockmarket long term.

= Human Resource Management. =

__Human resource management (HRM), is defined as the effective management of the formal relationship between the employer and the employees.__

__Human resource cycle — the staffing process__

__Human resource planning includes the development of strategies to meet the business's future staffing needs, forecasting the future demand for employees and estimating the supply available to meet that demand.__ __Job analysis is a systematic study of each employee's duties, tasks and work environment.__ A job analysis examines: The job analysis for a particular position typically consists of two parts: J__ob description: a written statement describing the employee's duties, tasks and responsibilities associated with the job.__ __Job specification: a list of the key qualifications needed to perform a particular job in terms of education, skills and experience.__
 * 1)  Acquisition
 * actual job activities
 * equipment used on the job
 * specific job behaviours required
 * working conditions
 * degree of supervision necessary.

Recruitment and selection Recruitment __involves finding and attracting the right people to apply for a job vacancy using advertisements, employment agencies and word of mouth.__ __Can be internal (existing staff)__ __or external (outside the business).__ The main sources of employees available to a business include: Selection __Employee selection is the means by which the employer chooses the most suitable applicant for a vacancy. This involves identifying the skills, qualifications and experience of each applicant, and relating them to the skills, qualifications and experience listed in the job specification.__
 * advertisements in the media
 * private employment/recruitment agencies
 * schools, TAFE colleges or universities
 * public employment agencies — for example, Employment National
 * internal searches.

__ Training and development __ __ Training is teaching staff to perform their job more efficiently and effectively by boosting their knowledge and skills.__ __Development__ __is the process of preparing employees to take on more responsibilities in the future through acquiring better knowledge and skills, and gaining more experience in a particular area.__ Developing staff often involves training. It is interesting to note that many employees expect their business to provide them with opportunities to grow and learn, and ultimately improve their employability. __The aim of training and development is to seek long-term change in employees' skills, knowledge, attitudes and behaviour in order to improve work performance in the business.__ Many businesses do not, however, spend enough on staff training.

__Types of training__ A number of training methods are available to businesses. The most common of these include: Training should be viewed as an investment in the human capital of the business. Maintenance of human resources __The maintenance element of the human resource is providing working conditions that will encourage staff to remain with the business.__ __By retaining productive and efficient employees a business is able to increase its productivity, achieve high levels of morale, lower the rate of absenteeism and reduce the costs of staff turnover.__ To do this successfully, a business can offer its employees a range of monetary and non-monetary benefits as compensation.Compensation refers to the payment or benefits (or both) an employee receives in exchange for their labour.
 * __Formal off-the-job training__ — for example, classroom activities, simulations
 * __Informal on-the-job training__ — for example, coaching, job rotation
 * __Action learning: learning by experiencesolving real workplace problems__ — for example, NAB and IBM use this form of training
 * Competency-based training: identifies skill strengths and areas where further training is required — for example, medical education uses this form of training.
 * Corporate universities: businesses can also form partnerships with academic institutions to develop training — for example, Coles and Qantas have forged partnerships with academic institutions.
 * __Training technologies__ — for example, computer-based training (the computer becomes a vehicle for learning), multimedia training, web-based training (training via the internet).

Get Handout on Remuneration from Dr Stoney.



**Ethical and socially responsible business behaviour** Not all businesses have adopted such an outlook. Some business owners still regard socially responsible and ethical business practices as a waste of money, the cost outweighing any benefits. They will often attempt to justify their behaviour as ‘smart business practice’ or ‘everyone does it, why shouldn't I?’ And like most questions of ethical behaviour, not all the answers are a simple ‘black’ or ‘white’ response. Some businesses have become involved in lengthy and very expensive court cases, which attempt to resolve particular situations that are often centred around a number of ethical issues or socially responsible actions. This frequently results in a deal of negative publicity and a deterioration in the business's reputation. = Management and Change = What is organisational change? In Australia, over the past decade, there has been extensive and unprecedented change in the business environment. There is every indication that the pace of change will intensify during this decade. The prevailing attitude in business today can be summed up as follows: ‘There is only one constant in business and that is change.’ Change [] **Responding to internal and external influences** Changes can be major (transformational) or minor (incremental). eg. complete restructure to changing some smaller operation. When a business responds to the forces of change, the result will be a change to its: This is necessary to improve the effectiveness of changes made in other business divisions, could include structure, technology, recruitment and selection, training, performance appraisal, and redundancy procedures. In response to changes in the environment, businesses are constantly seeking ways to speed up production time, shorten production development, streamline distribution and serve customers. Managers must therefore develop strategies for managing change effectively. Resistance to change is strong because for most people personal change is: Low Risk High Risk Reasons for resistance to change include: Driving forces are those forces that initiate, encourage and support the change. Restraining forces are those that work against the change, creating resistance. Resistance to change [] common among managers and employees. Two strategies for overcoming resistance to change include: management consultants are often used to assist with change management.
 * The majority of businesses want to be seen as responsible corporate citizens.
 * The triple bottom line refers to the economic, environmental and social performance of a business.
 * Ethics are standards that define what is acceptable and unacceptable behaviour.
 * Business ethics is the application of moral standards to business behaviour such as:
 * fair and honest business practices
 * decent workplace relations
 * conflict of interest situations
 * accurate financial management
 * truthful communication.
 * A corporate code of conduct encourages ethical business behaviour.
 * Social responsibility refers to a business's management of the social, environmental, political and human consequences of its actions.
 * A socially responsible business tries to achieve two goals simultaneously:
 * expanding the business
 * providing for the greater good of society.
 * Some businesses argue that making a legal profit is all that is required to act responsibly.
 * Today's society has high expectations of business practices and greater awareness of business's social responsibility.
 * A sustainability report/social audit is a report that details what a business has done, and is doing, concerning the social issues that affect it.
 * Organisational change is the adoption of a business's new idea or behaviour in response to internal or external influences.
 * The ability to embrace, manage and adapt to change will increasingly determine a business's competitive advantage.
 * Successful managers are the ones who anticipate and adjust to changing circumstances
 * 1)  organisational structure, including outsourcing, flatter structures and work teams.
 * 2)  business culture; for a business to survive in the long term, changes should be reflected in its culture. New external environment require a new way of thinking — a new business culture.
 * 3)  human resource management practices,
 * 1)  operations management-
 * Managing change effectively **
 * To manage change effectively requires the change to be as productive as possible; to make it a process for revitalising and strengthening the business.
 * Need to collect, organise, process and retrieve information quickly.
 * achieved only with considerable effort
 * often emotionally stressful.
 * Identifying the need for change
 * setting achievable goals are two low-risk strategies for managing change.
 * Manipulation and threat are two high-risk strategies for managing change.
 * management (may make hasty decisions or be indecisive)
 * fear of job loss (fearful of changes that threaten job security or require new work routines)
 * disruption to routine (worried that they cannot adapt to the new procedures that threaten established work routines)
 * time (either poor timing, or lack of time)
 * fear of the unknown (feelings of lack of control and anxiety)
 * inertia (prefer to stay with the safe and predictable status quo)
 * cost (financial cost of implementing major changes can be substantial).
 * creating a culture of change (encouraging teamwork)
 * providing positive leadership (sharing the vision).