Principles of Business

UNIT 1 The Nature of Business

Forms of Exchange and Economic Systems
Types of Business Organisations and Economic Systems
Business Functions and Stakeholders
Ethical and Legal Issues in Business

UNIT 2 The Internal Organizational Environment

Management
Organizational structure
Leadership
Resolving Conflict at Work
Motivation Employees

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SECTION 2: INTERNAL ORGANIZATIONAL ENVIRONMENT
describe the functions of management;

Functions of management:
(a) planning (to create short term and long term goals to achieve the goals a
business and sourcing the necessary resources to accomplish these goals);
(b) organizing;
(c) directing;
(d) controlling;
(e) coordinating;
(f) delegating; and,
(g) motivating.

2. Outline the responsibilities of management;

Management responsibilities to:
(a) owners and shareholders (by maximizing efficiency and creating
surpluses);
(b) employees (for example, providing adequate working conditions,
training, maintaining good communication and human relations);
(c) society;
(d) customers; and,
(e) government.

3. *construct simple organizational

charts;

The construction of simple organizational charts ensures that

students understand and outline the components or characteristics of
a simple chart.
(a) Line.
(b) Line and staff.

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(c) Functional.

Interpret simple organizational charts;

Interpretation of simple organizational

charts.
(a) Chain of command.
(b) Span of control.

5. Outline the essential characteristics of a good leader;

Characteristics including: Honesty, flexibility, focus, trustworthiness, and ability

to make intelligent decisions.

6. discuss the different leadership styles; The advantages and disadvantages of

different leadership styles: Autocratic, Democratic, Laissez-Faire.

7. identify potential sources of conflict within an organisation; Internal sources of

conflict, for example, poor working conditions.

8. outline strategies used by employers and employees to gain an upper hand

during periods of conflict; Employer strategies, for example, lock out and use of
scab labour; employee strategies, for example, strike action and work to rule.

9. describe strategies for the resolution of conflict within an Organisation;

Strategies such as mediation, arbitration, and the value of trade union
representation.Grievance procedure.

10. establish guidelines for the conduct of good management and

staff relations in the workplace; Guidelines for establishing good relations
between managers and employees.
Examples:
(a) good communication with workers; (b) improve working conditions;
(c) motivating workers; (d) practice good leadership.

11. identify strategies for motivating employees in a business;

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(a) financial methods; and,
(b) non-financial methods.

define the term entrepreneur; The concept of entrepreneurship is………

2. explain the functions of an entrepreneur; Conceptualising, planning,

accessing funds, organising, operating and evaluating the performance of a
business. Attention should be paid to the bearing of risks and the entitlement to
the profits and losses of the business.

3. identify the characteristics of the typical entrepreneur;

Personal traits and leadership qualities:

(a) creative;
(b) innovative;
(c) flexible;
(d) goal-oriented;
(e) persistent;
(f) persevering; and,
(g) propensity to take calculated risks.

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Leadership/Resolving Conflict at Work

1. Trade union:
A trade union is an organized group of workers who come together to protect and promote their
common interests. Trade unions negotiate with employers on behalf of their members
regarding wages, working conditions, and other employment-related issues. They also provide
support and representation to workers in disputes with employers.

2. Collective bargaining:
Collective bargaining is the process through which trade unions negotiate with employers on
behalf of workers to reach agreements on issues such as wages, working hours, benefits, and
working conditions. The goal of collective bargaining is to create a mutually beneficial
agreement that satisfies the needs and interests of both the workers and the employer.
Collective bargaining helps ensure that workers have a voice in decisions that affect their
working lives.

3. Shop steward:
A shop steward is a union member who is elected or appointed to represent and support their
fellow workers in a particular workplace or department. The shop steward acts as a liaison
between the workers and the union, providing information, advice, and support on workplace
issues and grievances. Shop stewards play a crucial role in organizing and mobilizing workers,
as well as ensuring that collective agreements are upheld.

4. Grievance process:
The grievance process is a formal procedure for addressing and resolving disputes or
complaints that arise between workers and their employer regarding workplace conditions,
rights, or collective agreement violations. Workers can raise grievances through their trade
union representatives, such as shop stewards, who then work with the employer to investigate
and resolve the issue. The grievance process ensures that workers have a mechanism for
addressing concerns and enforcing their rights in the workplace.

Establishing good employee relations is crucial for creating a positive work environment,
promoting productivity, and fostering mutual respect and trust between employees and
management. Here are four activities that management can apply to establish good employee
relations:

1. Effective Communication:

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Management should prioritize open, transparent, and two-way communication with employees.
Regularly sharing information about organizational goals, changes, and developments helps
employees feel informed and engaged. Management should also listen to employees'
feedback, concerns, and suggestions, demonstrating a willingness to listen and address their
needs. Establishing multiple communication channels, such as team meetings, feedback
surveys, and suggestion boxes, can facilitate effective communication between management
and employees.

2. Employee Recognition and Appreciation:

Recognizing and appreciating employees' contributions and achievements is essential for
building positive employee relations. Management should acknowledge and reward employees
for their hard work, dedication, and performance. This can be done through formal recognition
programs, informal praise, awards, bonuses, or other forms of appreciation. Recognizing
employees' efforts shows that their work is valued and motivates them to continue to perform at
their best.

3. Training and Development Opportunities:

Offering training and development opportunities to employees demonstrates a commitment to
their growth and advancement within the organization. Management should provide access to
training programs, workshops, seminars, and skill development initiatives that help employees
enhance their knowledge, skills, and abilities. Investing in employee training shows that
management values employees' professional development and supports their career
progression. This can lead to increased job satisfaction, engagement, and loyalty among
employees.

4. Conflict Resolution and Employee Support:

Management should have effective processes in place to address and resolve conflicts,
grievances, or issues that may arise in the workplace. Providing a fair and transparent
grievance procedure ensures that employees' concerns are heard and addressed promptly.
Supporting employees through challenging situations, such as personal or work-related issues,
demonstrates a commitment to their well-being and welfare. Offering employee assistance
programs, counseling services, and resources for work-life balance can help employees cope
with challenges and maintain a healthy work environment.

By implementing these activities, management can establish and maintain good employee
relations, foster a positive workplace culture, and enhance the overall employee experience
within the organization.

Conciliation, mediation, and arbitration are three different methods of dispute resolution that
can help parties to resolve conflicts and reach a mutually acceptable agreement.

1. Conciliation:

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Conciliation is a process where a neutral third party, known as a conciliator, assists the parties
in resolving their dispute. The conciliator facilitates communication, helps the parties to
understand each other's perspectives, and explores potential solutions to the issues at hand.
The conciliator does not make decisions or impose solutions but instead helps the parties to
reach a voluntary agreement. Conciliation is often used in labor disputes, contractual conflicts,
and interpersonal disputes.

2. Mediation:
Mediation is a voluntary and confidential process in which a neutral third party, known as a
mediator, helps the parties to negotiate and resolve their dispute. The mediator facilitates
communication, guides the parties through the negotiation process, and assists them in finding
a mutually acceptable solution. Mediation is a flexible and informal process that allows the
parties to maintain control over the outcome of the dispute. It is commonly used in family
disputes, workplace conflicts, and commercial disputes.

3. Arbitration:
Arbitration is a formal process in which an impartial third party, known as an arbitrator, hears
the arguments and evidence presented by the parties and makes a binding decision to resolve
the dispute. Arbitration is more similar to a court proceeding, but it is typically less formal, more
flexible, and can be conducted more quickly and privately than traditional litigation. Parties
agree in advance to be bound by the decision of the arbitrator, and the decision is usually final
and enforceable. Arbitration is commonly used in commercial disputes, labor disputes, and
contractual disagreements.

Each of these dispute resolution methods has its own advantages and may be more suitable
for certain types of disputes or parties. Choosing the most appropriate method depends on the
nature of the conflict, the parties' preferences, and the desired outcomes of the dispute
resolution process.

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 Organisational Charts

Slide 21 Product Departmentalisation

Slide 20 Geographical
Slide 19 Functional

Tall Structure
Flat Structure

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 Terms to Know

- Manager: A person who is responsible for directing and overseeing

the work of other individuals within an organization.

- First-line managers: Managers who are responsible for directing the

work of non-managerial employees.

- Middle managers: Managers who are responsible for managing the

work of first-line managers.

- Top managers: Managers who are responsible for making decisions

about the overall direction of the organization.

- Management: The process of planning, organizing, leading, and

controlling an organization's resources to achieve its goals.

- Efficiency: Achieving the maximum output with the minimum input

of resources.

- Effectiveness: Achieving the desired result or outcome.

- Planning: The process of setting objectives and determining the best

course of action to achieve them.

- Organizing: The process of arranging resources and tasks to

achieve organizational goals.

- Leading: The process of motivating and directing employees to

achieve organizational goals.

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- Controlling: The process of monitoring performance and making
adjustments as needed to achieve organizational goals.

- Directing: Giving instructions and guidance to employees on how to

accomplish tasks.

- Coordinating: Ensuring that different parts of the organization work

together towards a common goal.

- Delegating: Assigning authority and responsibility to others to

complete tasks.

- Motivating: Encouraging and inspiring employees to work towards

organizational goals.

- Staffing: The process of recruiting, selecting, training, and

developing employees.

- Evaluating: Assessing employee performance and providing

feedback.

- Communicating: Sharing information and ideas with others.

- Decision making: The process of identifying and choosing among

alternative courses of action to achieve organizational goals.

- Budgeting: The process of setting financial goals and planning how

to achieve them.

- Systems: Interconnected parts that work together to achieve a

common goal.

- Procedures: Established methods or steps for completing tasks.

- Directions: Instructions or guidelines for completing tasks.

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- Control system: A system for monitoring and regulating
organizational activities.

- Organizational chart: A visual representation of the formal structure

of an organization.

- Lines of authority: The flow of authority within an organization.

- Hierarchy: A system of ranking individuals in an organization based

on authority and responsibility.

- Staff authority: The right to advise or make recommendations to

other employees.

- Subordinate: An individual who is lower in rank or authority.

- Chain of command: The formal line of authority within an

organization.

- Span of control: The number of employees a manager can effectively

supervise.

- Silo: A metaphor for departments or groups within an organization

that operate independently of each other.

- Control: The process of monitoring and adjusting organizational

activities to ensure that they are on track to achieve goals.

- SMART goals: Goals that are Specific, Measurable, Achievable,

Relevant, and Time-bound.

- Tall organization: An organization with many levels of management

and a narrow span of control.

- Flat organization: An organization with few levels of management

and a wide span of control.

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- Line authority: The authority that gives managers the right to make
decisions and to give orders to subordinates.

- Stakeholder: Anyone who is affected by or can affect the activities of

an organization.

- Stockholder/shareholder: An individual or entity that owns shares in

a company.

- Government: The governing body of a nation, state, or community.

- Society: The community of people living in a particular country or

region.

- Suppliers: Companies or individuals who provide goods or services

to an organization.

- Customers: Individuals or entities who purchase goods or services

from an organization.

- Informal organizational structure: The unwritten or unspoken

relationships and communication patterns within an organization.

- Formal organizational structure: The official structure of roles,

responsibilities, and relationships within an organization.

- Functional organizational charts: Organizational charts that group

employees according to their job functions.

- Responsibility: The duty to perform a task or achieve a goal.

- Authority: The right to make decisions and give orders to

subordinates.

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Ethical and legal issues in establishing and operating a business

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 Communication and Motivation

- Motivation: a reason or reasons for acting or behaving in a particular way.

- Financial rewards: monetary benefits or incentives provided to employees

for their performance or achievements.

- Non financial rewards: rewards given to employees that do not involve

monetary compensation, such as recognition, opportunities for
advancement, or additional time off.

- Team: a group of individuals working together to achieve a common goal

or objective.

- Teamwork: collaborative effort of a group to achieve a common goal or

task.

- Productivity: the measure of how efficiently resources are being used to

achieve desired outcomes or goals.

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- Workplace communication: the process of exchanging information and
ideas among employees or within an organization.

- Communication process: the steps involved in transmitting information

from one person or group to another.

- Communication channels: the various methods or channels through which

information is relayed or shared within an organization.

- Grapevine: informal communication network within an organization, often

characterized by rumors or gossip.

- Communication methods: the different ways or techniques through which

information can be communicated or shared.

- Communication barriers: factors that hinder effective communication,

such as language barriers, physical barriers, or cultural differences.

- Effective communication: the successful transmission of information

resulting in shared understanding between sender and receiver.

- Noise: any disturbance or interference that affects the transmission or

reception of information during the communication process.

- Encoding: the process of converting information into a form that can be

transmitted and understood by others.

- Decoding: the process of interpreting or understanding the message

received by decoding the encoded information.

- Transmitted: information that has been sent, conveyed, or delivered from

one person to another.

- Fringe benefits: additional benefits provided to employees along with

their regular salary or wages, such as health insurance or retirement plans.

- Performance based pay: compensation system in which employees' pay is

based on their performance or achievements.

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- Profit sharing schemes: incentive programs that allow employees to share
in the profits of the company based on performance.

- Commission: a percentage of sales revenue or profits paid to employees

as an incentive for their sales performance.

- Basic pay: the fixed salary or wages that employees receive for their
work.

- Time rate: a method of determining pay based on the number of hours

worked by an employee.

- Piece rate: a payment system in which employees are paid based on the
number of units or pieces they produce.

Physical context refers to the environment or setting in which communication takes place. It
includes factors such as the location, time of day, noise level, and proximity between the sender
and receiver.

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