Engage EducationExamination Preparation Seminar Unit 3 & 4 Business Management University of Melbourne 2010 - Updated 2013
What have you done in Units 3 & 4? Unit 3/4 Business Management involves 5 Areas of Study across the 2 units (3 in Unit 3 and 2 in Unit 4) Unit 3: Corporate management AoS 1: Large-scale organisations in context AoS 2: Internal environments of large-scale organisations AoS 3: The operations management function Unit 4: Managing people and change AoS 1: The human resource management function AoS 2: The management of change
Characteristics of an LSO • AN ORGANISATION CAN BE DEFINED AS A FORMAL ARRANGEMENT OF PEOPLE TO ACCOMPLISH SOME SPECIFIC PURPOSE OR GOAL ORGANISATIONS USUALLY EXIST TO BRING TOGETHER PEOPLE AND RESOURCES (INPUTS) TO GET THINGS DONE (OUTPUT) MORE EFFICIENTLY AND EFFECTIVELY ORGANISATIONS ARE USUALLY LED BY ONE PERSON OR A NUMBER OF PEOPLE AND ARE COORDINATED BY SOME FORM OF STRUCTURE (MANAGEMENT) LARGE-SCALE ORGANISATIONS ARE THE FOCUS OF BUSINESS MANAGEMENT AND CAN BE DEFINED AS ORGANISATIONS THAT ARE SUBSTANTIAL IN TERMS OF: PEOPLE Employs 200 people or more TOTAL ASSETS Worth more than $200 million REVENUE Earn revenue in the millions
MULTIPLE LOCATIONS Branches/divisions/plants in a number of locations within and/or outside Australia STRUCTURE Complex structure to provide control over all aspects of the LSO. Eg; CEO R&D Finance Operations Marketing HR
Classifications of LSOs • AN ORGANISATION CAN BE CLASSIFIED ACCORDING TO AIM Profit or Not-for Profit OWNERSHIP Public, Private or GBE INDUSTRY LEVEL Primary, Secondary & Tertiary INDUSTRY TYPE Manufacturing, Retail, Tourism, etc ACTIVITY TYPE Manufacturing or Service
Macro environment 1. Political pressures 2. Economic pressures 3. Pressures for change 4. Legal issues 5. Technology 6. Ethical and social responsibility
Operating environment 1. Competition 2. Finance companies 3. Employees/Unions 4. Lobby Groups 5. Suppliers 6. Customers
The Internal Environment Corporate culture Organisational structure Policies Management roles Management styles Ethical and social responsibility Management skills
Performance indicators With LSO’s being affected by forces outside their control, they are required to evaluate how a ‘factor’ has affected their performance For example, has the credit crisis affected our cash flow – are we able to meet our financial commitments? Is now the best time to expand? Etc. There are 10 Performance indicators that students can be examined on and/or use in a response to an exam question. Can you name them? 1. Percentage of market share 2. Net profit figures 3. The rate of productivity growth LSO’s are continually engaged in evaluation of their performance.
4. The number of sales, 5. Results of a staff satisfaction survey 6. Results of a customer satisfaction survey 7. The level of staff turnover 8. Level of wastage 9. Number of customer complaints 10. Number of workplace accidents These performance indicators measure the efficiency and effectiveness of the business
Stakeholders A stakeholder is any person/group that interacts with an LSO and have an interest in the activities of the LSO Shareholders Management Employees Customers Suppliers Society/community as a whole
Organisational Objectives An objective is a desired goal, outcome or result that an organisation would like to achieve. Organisational objectives may include: * Profit * Expansion of the organisation * Increased market share * Providing excellent customer service * Providing services to the community. • Objectives can be: • Strategic • Tactical • Operational
Organisational Objectives Organisational Objectives often involve the creation of a Mission and Vision Statement
Ethical & Social Responsibility Society has developed a notion that all LSO’s should act in an ethical and socially responsible manner to all stakeholders Social responsibility is the obligations of an LSO over and above its legal responsibilities Ethical management is the process of abiding by moral standards and ‘doing the right thing’ in the interests of all stakeholders Can be measured by the ‘triple bottom line’ – economic, social and environmental performance of an LSO Situations where E & SR is a consideration?
1. Organisational Structure Organisational structure looks at how the various levels of management are arranged within an LSO. They tend to be hierarchical. An organisational structure provides: 1. Chain of command 2. Lines of communication 3. Positions of accountability 4. Positions of responsibility
Organisational Structure More Communication Authority Accountability Responsibility Less
TYPES OF ORGANISATIONAL STRUCTURE MAIN TYPES OF ORGANISATIONAL STRUCTURE 1. FUNCTIONAL 2. DIVISIONAL 3. MATRIX • FUNCTIONAL • THE FUNCTIONAL STRUCTURE IS THE MOST BASIC ORGANISATIONAL FORM • EMPLOYEES ARE GROUPED TOGETHER IN SEPARATE DEPARTMENTS ON THE BASIS OF COMMON TASKS, SKILLS OR ACTIVITIESie: A HIGH LEVEL OF SPECIALISATION
Organisational Structure Advantages of a Functional Structure * Career pathways can be easily identified * Staff can become experts in their field through task specialisation * Opportunities for skill and knowledge development * Efficient use of resources * Ability to develop as a team and enhance goal congruence
Organisational Structure Disadvantages of a Functional Structure * Departments can become inflexible and overly bureaucratic * Departments can become narrow in their focus and move away from broader organisational goals * Managers can become more concerned about ‘empire-building’ * Hoarding of resources for future use rather than ‘sharing’ excess resources.
Divisional Structure Product structure Products manager Manager – Canned food Manager - Confectionery Manager – Diet goods Manager – Soft drinks Manager – Dry goods Geographic structure Global manager Manager – Nth America Manager - Europe Manager - Asia Manager - Australia Manager – Sth America
Divisional Structure Customer structure Client services manager Manager – Corporate clients Manager – Private clients Manager – Government clients Process structure Operations manager Manager - Purchasing Manager – Warehouse Manager – Quality control Manager - Production
Matrix Structure • THE MATRIX STRUCTURE IMPLEMENTS FUNCTIONAL AND PROCESS ORGANISATION SIMULTANEOUSLY • EACH DEPARTMENT IS SUPERVISED BY TWO MANAGERS HAVING EQUAL AUTHORITYFUNCTIONAL MANAGER RESPONSIBLE FOR THE SPECIALIST DEPARTMENTPROCESS MANAGER (PROJECT MANAGER)IS RESPONSIBLE FOR INTEGRATING THE ACTIVITIES OF THE SPECIALISTS ACROSS THE FUNCTIONAL DEPARTMENTS • WHEN THERE IS A NEED FOR DUAL FOCUS • LARGE AMOUNTS OF INFORMATION MUST BE PROCESSED • EFFICIENCY OF RESOURCES IS NEEDED
Organisational Structure Advantages of a Matrix Structure * Enhanced flexibility – operations can be altered quickly to suit circumstances * Ability to trouble-shoot – if an area has a problem, a project team can be created to solve the problem * Enhanced communication, cooperation and teamwork * Pooled expertise allows better conditions for problem solving
Organisational Structure Disadvantages of a Matrix Structure * Decisions in one department can undermine line authority in that department * This can challenge the ‘unity of command’ principle * Employees may find themselves reporting to two managers which can effect communication and goal congruence
Organisational Structure Team structure General Manager - Products Manager – Diet goods Manager- Confectionery Manager – Dry goods Manager – Soft drinks Manager- Canned food Marketing team New products team
2. Corporate Culture Corporate culture is a set of unwritten or informal rules that dictate how people in an organisation should behave in any given circumstance. These rules are based on the beliefs, values, ideas and expectations shared by the members of the LSO. Knowing these rules makes it easier for managers to get things done and/or initiate change. An understanding of an LSO’s corporate culture by employees can create a positive and personalised environment leading to a more successful LSO. A corporate culture generally consists of 4 essential elements: 1. Values 2. Symbols 3. Rituals, rites and celebrations
3. Management Roles There are generally considered to be 4 roles that managers perform. These roles are referred to as POLC: PLANNING ORGANISING LEADING CONTROLLING
Management Roles - Planning Planning is seen as the most important or primary management role. Planning provides for the short- and long-term success of an LSO. Planning occurs once an LSO has identified its organisational objectives. Planning involves making the decisions on how to achieve the organisational objectives. Planning must involve all activities at all levels of the organisation. This requires 3 levels of planning:
Management Roles - Planning 1. Strategic (long-term) planning * Respond to emerging trends, events, challenges and opportunities within the context of the LSO vision and mission. * Provide direction towards achieving goals and targets. * Plan for and anticipate the future. * Concentrate on an idea and vision. * Create a framework for achieving competitive advantage by analysing the potential of the LSO and its internal and external environments. * Guide management of the human, financial, technical and social resources.
Management Roles - Planning 2. Tactical (medium-term) planning * Formal medium-term planning undertaken by middle management to implement the organisation’s strategic plan. * Respond to changes caused internally and externally. * The allocation of resources in order to achieve the organisation’s objectives. 3. Operational (short-term) planning * The planning of day-to-day operations by the lower level supervisors and managers within an organisation. * The implementation of the strategic plan against specific objectives.
Management Roles - Planning To work effectively – all levels of planning must ‘fit’ together Strategic Plan Tactical Plan Tactical Plan Tactical Plan Tactical Plan Operat Plan Operat Plan Operat Plan Operat Plan Operat Plan Operat Plan Operat Plan Operat Plan
Management Roles - Planning The basis of the planning process is a SWOT analysis. Internal assessment External assessment S Strengths W Weaknesses O Opportunities T Threats What does the LSO do well? Are we financially sound? Do our processes reflect best practice? Are our staff performing to the level expected? Is our equipment the most modern and efficient? Is the economic climate right? What new markets are available to us? Is there new competition emerging? What new laws affect us? Is our market share declining?
Management Roles - Organising Organising – managers need to make decisions that reflect the mission statement, objectives and goals that have developed from the planning process. Managers organise a variety of people and tasks and systems to ensure the LSO operates efficiently and effectively. Organising involves the following activities: 1. Division of labour – divide jobs between individuals and/or groups who are then assigned responsibility for performing them.
Management Roles - Organising 2. Delegation of authority – distribute authority to employees. How much authority to give to each employee. 3. Span of control – in organising employees and delegating authority, managers must determine the ‘span of control’ for each employee with management responsibilities. 4. Coordination – organising the various sections/departments/work units so that all employees are working together and aiming to meet LSO objectives.
Management Roles - Leading Leading – the ability to influence others so as to achieve goals. Leading is a dynamic process that helps to define and shape the LSO’s culture and is primarily a process of influence. Power is the focal point of leadership. There are four categories of power: 1. Legitimate power – the power that is confirmed on a manager by the very structure in place at the LSO. It is accepted by all and is not disputed.
Management Roles - Leading 2. Expert power – the employment of expert skills, knowledge and information allows a person to influence others. 3. Reward or coercive power – the power to reward or punish people as a means of influencing them so they comply to the way of thinking required. 4. Referent power – power achieved through being liked and respected by subordinates, peers and supervisors.
Management Roles - Controlling Controlling – a continuous process that ensures plans are being implemented appropriately and alerts managers to any deviations from the plan so corrective action can be instigated. There are a number of types of controls: 1. Cost controls 2. Time controls 3. Financial controls Most LSO’s develop a control process:
Management Roles - Controlling The control process 1. Establish performance standards in line with LSO objectives and influences from employees, government, industry & management. 2. Measure performance and make comparisons against standards. 3. Take corrective action – changing processes, personnel and activities to ensure plan is ‘back on track’.
4. MANAGEMENT STYLES How a manager interacts with stakeholders in an effort to achieve the LSO goals will in some way depend upon the style of management they adopt. A management style is the manner and approach of providing direction, implementing plans and motivating people. There are 5 broad management styles Most managers will use all 5 broad management styles at some point, however, most long term managers will develop a style that will become more dominant.
4. MANAGEMENT STYLES Task orientated hierarchical structures Employee orientated flatter structures Management control More Less Autocratic Laissez-faire Consultative Participative Persuasive
Autocratic An autocratic manager likes to be in control – the POLC functions are centralised around the manager. Decision making is centralised with a strict hierarchical chain-of-command. An autocratic manager has a high regard for production and efficiency (task orientated. An autocratic manager expects team members to comply with their decisions and are not concerned with the attitude or thinking of the group. This type of management style results in passive resistance and requires continual pressure and direction to get things done. This type of management style uses rewards and punishments to achieve objectives.
Persuasive A persuasive manager uses their ability to interpret a situation, people’s actions and dialogue, and then convince them to do a task their way Decision making is made by the manager who then tries to convince others it is in the best interests of subordinates to agree.. A persuasive manager lets their intentions be known. A persuasive manager operates a centralised system as communications are still one-way and reflects a hierarchical system. This type of management style does not encourage initiative and commitment from employees. This type of management style is task orientated.
Consultative A consultative manager likes to gather the opinion of staff members before making a decision. While seeking ideas and suggestions from employees, the manager ultimately makes the decision. The power of a consultative manager is more employee-based and less centralised than the previous mentioned styles.. The level of communication (or consultation) and employee involvement means employees are task-orientated, motivated and perform at their best in achieving the LSO’s goals and objectives. Communication is more two-way.
Participative A participative manager will share the decision-making with employees and team members. The participative management style engages employees by asking for their opinions and sharing information and agendas openly in order to gain the best performance from the team. Communication is open and two-way, there is high employees involvement and generally a flatter organisational structure. This type of management style empowers employees be being a leader and a coach. Allows the team to decide how a task will be tackled and by whom This type of management style encourages employees to design their own work and involves a decentralised system.