Unit 3 Business

Management Outcome 1 Revision

2014

Chapter 1 – large scale organisations in context

Organisation: two or more people working together to achieve an objective

Large scale organisation: •  employs more than 200 •  assets worth more then $200 million •  earn revenue in millions •  numerous business locations •  multinational •  large market share

corporation: owned by shareholders, aimed to make profit

shareholder: any person who owns shares in corporation

SAC/EXAM HINT •  Need to know all characteristics of LSO’s, and provide examples from case

study scenario or provide an example yourself of an LSO you know of.

•  According to the Australian Bureau of Statistics, a large-scale organisation is one that employs more than 200 employees. The Salvation Army employs approximately 1900 employees; therefore, it meets this criterion to be classified as a large-scale organisation.

MUST LEARN TERMS: •  Vision statement - states what the organisation aspires to become •  Mission statement - expresses why an organisation exists, its purpose and

how it will operate •  Explain these two terms referring to statement (if provided in a case

scenario). If not provide one you have learnt from an LSO.

•  Objective: desired goal, outcome or result that the organisation wishes to achieve .

•  Strategies: actions that an organisation takes to achieve objectives

Management by objectives

•  Management by objectives is a process of defining objectives within an organisation so that management and employees agree to the objectives and understand what they need to do in the organisation to achieve them.

•  These objectives are expressed in a hierarchical form, with the leading statement being the mission statement and extending down to individual employee objectives.

•  It can also be used as a performance management technique where individual employees set specific, measurable objectives with management and their performance is measured by management against achievement of these objectives.

Types of organisations

•  Public Companies (Ltd.) •  Private Companies (Pty Ltd) •  Government Business Enterprise (GBE) •  Government Departments •  Non-for-profit organisations

Types of Organisations

•  Public Corporations shares are traded on the Australia Securities Exchange (ASX) (BHP Billiton, Telstra)

•  Private Corporations are not listed on the ASX and can have up to 50 shareholders (Ripcurl, Retravision)

•  A GBE is owned and operated by the government (Australia Post, Medibank, VicRoads)

•  Government departments – community services (the department of education, employment and workplace relations)

•  Non-for Profit organisations include charities and foundations, (Salvation Army, World Vision, The Smith Family)

SAC/EXAM HINT: Types of LSO

Need to know type of large-scale organisation, orientation (focus) and main activity.

EG. •  World Vision is in the private sector and is a non-government organisation

(NGO). •  Its orientation is not for profit as its main focus is to provide a service to the

community and not to make a profit to return to shareholders. •  World Vision Australia operates in the quinary sector (a division of the

tertiary sector) and provides community services to people in need, supported by volunteers and members.

EXAM/SAC HINT Compare objectives of World Vision Australia with NAB.

What similarities and differences are there?

•  One difference is as a not-for-profit organisation, World Vision Australia focuses more on its service objective of serving the community with humanitarian aid in times of crisis, whereas for-profit organisations such as the NAB focus more on their financial objective of making profit and returning a dividend to their shareholders.

•  A similarity would include the fact that both types of organisations have ethical and social responsibility objectives as they have to contribute positively to the community and the environment and be a good corporate citizen.

Management functions: •  Operations

•  Finance •  Human resource •  Marketing •  Research and development

A large-scale organisation creates an organisational structure that has separate departments, each focusing on a particular functional area, and allocates people and resources to each area to achieve specific objectives; for example, Human Resources. The Human Resource manager is responsible for the management of the employees. This includes recruitment, selection, remuneration, training, and termination issues.

Positive contributions of LSO’s to the Australian economy

•  Gross domestic product: total monetary value of all goods and

services produced in country over 1 year •  - Employment •  - Exports •  - Research & development •  - Infrastructure growth

Negative contributions of LSO’s to the Australian economy

•  Downsizing •  Outsourcing •  Damage to environment

•  Downsizing: workplace staff reduction, eliminating jobs and positions •  Outsourcing: non-core tasks completed by another person or

organisation

Positive & Negative impact on the economy SAC/Exam hints

•  Wont get any marks if you say that one positive contribution LSO’s make to the economy is they provide employment.

•  LSO’s directly employ approx. 30% of our labour force providing income to many Australians. LSO’s require sizable workforces. They provide many employment opportunities, directly within their organisation and also indirectly through their purchase of goods and services as inputs in the production process. In an economic climate where there are lower levels of unemployment and rising incomes, people tend to spend more which helps businesses to do well and expand. Higher standards of living are also created through employment.

Internal & external (macro & operating environments)

Internal: •  includes anything the organisation has some degree of control over :

•  Corporate culture –values, ideas, expectations, beliefs shared by members of the organisation.

•  Employees •  Shareholders •  Managers •  structure

External(operating)

Outside stakeholder the organisation comes into contact with •  Customers •  Suppliers •  Competitors •  Lobby groups •  Trade unions

External(Macro):

Forces, conditions and trends in the economy and society which the organisation operates within. Has no control over

•  Globalisation •  Political influences •  Technological developments •  Economic influences •  Social attitudes •  Legal influences

VCAA EXAMS Question 3 VCAA 2012 exam •  a. Describe two factors from the internal and/or external environments of

large-scale organisations, and discuss how they have impacted on an organisation that you have studied this year.

•  b. Large-scale organisations, whether for-profit or not-for-profit, exist to achieve specific objectives. Explain two differences between the objectives of for-profit and not-for-profit large-scale organisations.

VCCA EXAM QUESTIONS 1d. (2011 exam)

The Human Resource Manager of Southern Industries needs to use performance indicators to assist him in monitoring staff morale. Describe and justify two suitable performance indicators he could use to measure staff morale.

2. (2011 exam)

Question 2 Freda Campbell is setting up a new business in Melbourne that will

manufacture and sell furniture. a. Evaluate two positive and two negative contributions of large-scale

organisations to the economy.

PAST VCAA EXAMS •  Question 1 a(2010 exam) •  a.The Global Financial Crisis has led to a substantial reduction in the

number of customers for Flyalot Airlines. •  Management is predicting that a further drop in customer numbers will occur

over the next twelve months. As •  a result management is reviewing all areas of the organisation. •  a. Define the term performance indicator. 1b. Identify and explain how two stakeholder groups of Flyalot Airlines would

have been adversely affected by the Global Financial Crisis. c. Identify two management functions. For each function discuss one strategy

that Flyalot Airlines could use to overcome the problems caused by decreasing customer numbers.

d. For each of the strategies you have identified in part c., select and justify a performance indicator that could be used to measure the success of the strategy.

PAST VCAA EXAMS Question 1 (2013) •  a. Identify two characteristics of large-scale organisations. 2 marks •  b. Outline two positive and two negative contributions that large-scale

organisations make to the Australian economy. 4 marks •  c. Stakeholders may place competing demands on large-scale

organisations. Explain why this may occur. 2 marks

Performance Indicators •  PIs - specific criteria used to measure the efficiency and effectiveness

of the organisations performance •  Effectiveness: degree to which an organisation has achieved its stated

objectives •  Efficiency: how well an organisation uses resources to achieve

objectives.

Types of PI’s: (Performance Indicators) •  Profitability

•  Number of sales •  Percentage of market share •  Rate of productivity growth •  Results of Customer & staff satisfaction surveys •  Level of staff turnover •  Number of customer complaints •  Level of wastage •  Number of workplace accidents •  Benchmarking

SAC/EXAM HINT MUST KNOW KEY TASK WORDS •  Compare (similarities & differences) •  Evaluate (strengths & weaknesses)

Identify a performance indicator the Finance function of World Vision Australia could use to evaluate the organisation’s performance

•  A performance indicator is a measure used by an organisation to help it determine whether the objectives of the organisation are being met. Performance indicators can be qualitative or quantitative.

•  One performance indicator the Finance function could use to evaluate the performance of World Vision Australia could be the level of donations collected from the public. The higher the value of monetary donations raised from public collections, the lower the dependence on government funding, which will help the organisation achieve its strategic plan goals.

•  social responsibility: obligations a business has over and above its legal requirements to the wellbeing of stakeholders as well as the environment

•  ethical management: to the process of abiding by moral standards and doing the right thing in the interest of all stakeholders

•  ‘Ethical and social responsibility is just good business’

stakeholders: groups and individuals who interact with the organisation and have an interest in its activities. These exist at three different levels of the business environment that it operates in: internal environment, external operating environment and external macro environment.

•  Shareholders •  Management •  Unions •  Employees - might seek higher pay and better conditions of work, •  Customers •  Suppliers •  Members of the community

Identify a stakeholder from the external and internal business environments of World Vision Australia.

•  Must define stakeholder first, even if question does not ask you to do this. •  These exist at three different levels of the business environment that

operates in: internal environment, external operating environment and external macro environment.

•  From the internal environment, the employees and volunteers of World Vision Australia are stakeholders. Employees might seek higher pay and better conditions of work, which a not-for-profit organisation might find difficult to meet. Volunteers provide their services often for a short period of time and the organisation might face the pressure of trying to retain them for a longer period of time in order to maintain continuity of operations.

•  From the external operating environment, suppliers that donate goods for distribution as aid are stakeholders. Donations by suppliers may not be assured, which can create a pressure in terms of its ability to sustain operations.

What type of pressure would stakeholders such as employees and suppliers exert on an organisation such as World Vision Aust to be ethical and socially responsible in its operations. •  One socially responsible consideration would be that humanitarian aid is

provided in an efficient and equitable manner to those in greatest need. •  If employees,and volunteers were to think that World Vision Aust was not acting

in an ethical and socially responsible manner they could exert pressure by withdrawing their services.

•  Similarly, suppliers could exert pressure by discontinuing donations if they were not satisfied that donated goods and services were being distributed to those in greatest need or for designated causes.

•  Summarise Chapter One. •  Make sure you have completed all WIKI

activities. •  Complete last years SAC. •  Check study design. •  Go through checklist. •  See your teachers!!!