Intro to business

CSR

Affects profit, Good ethics

Mission right now, vision long term

Stakeholders

Internal: Employees, managers & directors, shareholders

External: Customers, suppliers, competitors, government

Economies of scale

Lowering average costs achieved by producing larger scale

Diseconomies of scale

When increasing sales leads to increase of average costs

Mergers & Acquisitions

Merger: 2 business agree to form a new one

Acquisition: Takeover, usually above 51%

Benefit: Better use of combined resources to boost productivity. Synergy

Joint venture

2 or more businesses split costs, risks & rewards for a business project

Strategic Alliance

Undertaking business venture for business benefit

Franchise

Person/Business buys license to trade using firms, logo, products

Public and privates sectors

Public sector businesses are owned and operated by the government whereas private sector
businesses are owned and operated by private individuals

Profit based organisations:

sole traders-One owner. May employ others. Usually start up using own funds or borrowing

Unlimited liability: owner fully responsible for debts of business. If business is unable to its pay
debts, owners must pay from their own funds

Partnerships-Usually between 2-20 owners (varies between countries)

Roles and responsibilities set out in a contract called a deed of partnership or partnership agreement

Partnerships are unincorporated (owners are not legally separate from the business)

Private Limited Companies

Often family run businesses

Shares are sold privately (not listed on stock market)

Public Limited Companies

Able to raise funds by selling shares on the stock exchange. Their name ends with Ltd (limited
liability)

Social enterprises

Revenue-generating businesses with social objectives. They may operate as a non-profit or for-profit
organisation

Non-profit social enterprises: NGO’s, charities

NGO’s are private organisations that pursue activities to relieve suffering, promote the interests of
the poor, protect the environment, provide basic social services or undertake community
development.

Charities provide voluntary support for good causes (from society’s point of view). They raise funds
from individuals and organisations to support a cause that is beneficial to society.
Sectors

Primary: Extraction or production of raw materials from earth. E.g fishing, agriculture, mining.

Secondary: Manufacturing & processing, from raw materialsproducts for sale

Tertiary: Sells a service

Quarterly: Knowledge

MNC’s

In host countries

MNCs are corporations that have their headquarters in one country and operate in at least two
countries, one of which is outside the corporation's 'home' country.

Human resource management

HRM ensures recruitment, training and motivation of employees

Promotes a healthy, positive and inclusive culture in the workplace

Workforce planning involves forecasting how many and what type of employees are needed now &
future.

Internal factors that affect workforce planning

Structure or organisation, size of organisation, budget, promotion..

Flexitime: Working hours agreed & scheduled by the management and employees

External factors that affect workforce planning

Sociocultural changes, technological changes, economic changes.

HR strategies for dealing with change

Participation: Sessions and meetings discuss the change

Planning: Time must be allowed for employees to understand

Communication: Stakeholders are kept informed

Negotiation: Negotiate with staff to not resist to change

Manipulation: May be unethical. Persuading

Coercion: Force them to accept change by threatening dismissal.

Functions of Human Resource Management

• Recruitment - hiring the right number of appropriately qualified and suitable workers at the
right times to fill job vacancies.

• Induction - training for new employees to get acclimatised with the norms and operations of
the organization.

• Retention - retaining/keeping workers at the organization by meeting the needs of

employees.

• Appraisals - the formal procedure of assessing the performance and effectiveness of

employees in relation to their job description.

• Absenteeism - dealing with issues that arise when employees are unable to attend work.

• Dismissal - letting go of workers no longer needed, often due to underperformance or

misconduct in the workplace.

• Redundancies - letting go of workers if/when their jobs are no longer needed, perhaps due to
a prolonged economic recession.

• Training and development - improving the competencies, productivity, and skills of workers.

• Performance appraisals - holding workers accountable for their performance/conduct at

work

Outsourcing & offshoring

Outsourcing has become a key method of large corporations to reduce costs. It involves using
external providers to perform certain business operations, such as Foxconn producing iPhones for
Apple.

Offshoring involves relocating business activities abroad. It is possible to offshore without

outsourcing, although the combine practice of offshore outsourcing is common.

Organisational structure

The structure of an organisation will depend on a number of factors, such as size, complexity and
leadership style.

As a business gets larger and more complex, greater structure is required.

A typical organisational structure is a pyramid with few managers at the top overseeing the majority
of employees at the lower levels

Delegation

Delegation involves passing on control and authority to others. However, the responsibility may
remain with the manager / supervisor who is delegating.

Effective delegation has major benefits, including:

 - Time saved

- Motivate and develop staff

Spam of control

Span of control refers to the number of people who are directly accountable to a manager.

Levels of hierarchy

The hierarchy of a business refers to the organizational structure based on a ranking system.

Each hierarchical level refers to a different rank with associated authority and responsibility.

A line manager refers to the person directly above an employee on the next hierarchical level.

Chain of command refers to the formal line of authority through which orders are passed down in an
organization.

Delayering: involves reducing the number of levels in the organizational hierarchy. Delayering can
help improve efficiency by improving communication. It can lead to more delegation and empowered
employees, increasing motivation.

Bureaucracy: is a system of administration with clear hierarchical structure in which people are
expected to follow precisely defined rules and procedures.

Centralization: is a situation where only one individual or small group of top managers makes
decisions about the company’s direction.

Decentralization: relies on a team environment at different levels to achieve the company’s goals.
This means that many decisions are not taken at the center of the business; instead they are
delegated to a lower level of management.

The organizational structures of businesses change in response to the dynamic global business
environment.

 Economic changes

 Technological changes

 Sociocultural changes

Changes in Organizational Structures

  Project based matrix- Employees report to both a project manager and a functional manager.
Project managers have the flexibility to choose the team members who are best suited for a
specific project

 Shamrock structure-add or replace its employees as needed.

 Holacracy- There aren't many managers, and power is shared.

By region, product, function (marketing, IT)

Leadership & Management

Managers are generally tasked with the following responsibilities:

• planning

• coordinating – ensuring that everyone is performing their assigned duties and that efforts
among employees are coordinated

• commanding – making decisions that impact a business’s day-to-day operations

• controlling – ensuring task and project completion

• resolving problems – solving day-to-day issues that arise

Manager vs Leader

Meets expectations/Charts new growth. Sees a problem/Sees a opportunity

Leadership styles

• Autocratic. This leadership style is characterised by a domineering and possibly tyrannical

approach. It is strong and rule-oriented. Authoritarian approach, decision-making at centre
of org

• Paternalistic. With this leadership style, the organisation’s interests and its employees are
looked after as if they were family. Building trust & loyalty

• Laissez-faire. From the French term which can be translated roughly as ‘hands-off’, this
leadership style is characterised by a lack of interference from the leader of an organisation.

• Democratic. This leadership style values inclusiveness and employees’ input. It is the
opposite of autocratic. Active participation of workers in taking decisions.

• Situational. This leadership style is not easy to define. The best way to think of it is as a style
that someone adopts for a particular situation.

Motivation and demotivation

Motivation refers to the desire, effort and passion to achieve something

Psychologists usually classify motivation into two categories:

1. Intrinsic motivation – when a person engages in an activity because there is a reward or

pleasure in taking part in or completing the activity itself

2. Extrinsic motivation – where a person engages in an activity because of a reward such as

being paid or receiving an award, which is outside the activity

Benefits of increased motivation

- Higher morale and job satisfaction

- Increased efficiency and quality

- Reduced conflict in the workplace

- Lower absenteeism

- Lower staff turnover (and reduced costs)

- Improved corporate image

- Higher profitability

Taylor
Fredrick Taylor’s principles of scientific management were based on the assumption that employees
are primarily motivated by money, hence productivity could be improved by setting targets related to
pay.

Limitations

- Ignores the non-physical contribution of employees a well as non-financial motivators (such

as job satisfaction and praise)

- Can lead to repetitive and monotonous tasks that leads to job dissatisfaction.

Maslow’s Hierarchy of needs

The psychological (emotional and mental) needs of workers. He proposed a hierarchy of 5 levels of
needs to be satisfied:

1. Physiological needs  basic needs such as food, water, shelter (for safety)

2. Safety and security  feeling safe and protected

3. Love and belonging  social interaction, being part of a group, trusted, loving and being
loved (family)

4. Self esteem  being independent, achieving success, mastering skills

5. Self actualization  achieving ones full potential, personal growth.

Limitations

Level of needs may be difficult to measure.

Herzberg

Herzberg’s theory claims that the factors that demotivate employees are different from the factors
that motivate employees.

Limitation-Ignores productivity

Marketing
A market as a place where buyers and sellers come together

Marketing- all the processes involved in identifying and satisfying customer needs
Market orientation is a marketing approach used by businesses that are outward looking. They focus
on making products that they can sell, rather than selling products that they can make.

Commercial marketing is the use of marketing strategies to meet the needs and wants of customers
in a profitable way.

Social marketing is the use of mainstream marketing methods to achieve the benefits of social
change.

Market share: Market share measures the value of a single company’s sales or revenues compared
with the sales of all businesses in a market

Market growth: Refers to the increase in sales revenues or sales volume in an individual market over
time.

Market leader: A company with the largest market share in an industry that can often use its
dominance to affect the competitive landscape and direction the market takes.

A niche market is a small part of a larger market

Unique selling point: A unique selling point (USP) is the feature that marks a product or brand out
from its competition

Market research: Allows companies to gain up-to-date and relevant information on their customers
and competitors, and on other external stakeholders who may affect them.
Cost of sales=Opening stock+ Purchases- Closing stock