PRELIMINARY BUSINESS STUDIES

The Ascent of money

NEW TOPIC! MANAGMENT PROCESS txt pg. 98

Management process

Coordinating key business functions and Resources

Use KRB as an example to identify key business functions and appropriate resourcesCoordinating key business functions and Resources

Identifying business functions:Core business functionOther functionsProfit to owners/shareholdersSupply a products/service to consumersCoordinating business functions Planning each part of the production of product or any stage or productionPlanning operationsProduction, marketing, finance and HR are coordinating unitsMarkets for goods and servicesPlace where the consumer (buyer) and producer (seller) meet.Wholesalers and retailersToday also have stock market/e-commerceIdentifying the Business FunctionsOperationsOrganising the production of goods and services. Includes:- business location, premises layout, number of employees, types of equipmentEmployment relationsOrganising the human resources. Hiring and firing, finding right skills, training, motivation.MarketingLink between the business and the consumer. Drives the business. Identifies what consumers want and then plans to meet these wants at an acceptable price. Includes promotion.Accounting and FinancingProvides the financial resources. Controlling how finances are used and regular reports on the businesss operation.

Operations

Human Resources

Marketing

Accounting and FinanceIdentifying the Business Functions

Operations

Human Resources

Marketing

Accounting and FinanceIdentifying the Business Functions

28 min. Using Holden as a case study, this program looks at the four key functions performed in business on a daily basis: manufacturing operations; human resources; marketing and sales; and finance.Take down five terms on each of the four business functions to write a paragraph on each at the end of the video.Key business functions of...

HOLDEN AND KBFsWhich functional area is most important to the operation of Holden Ltd?

Could the organisation exist without any of the functional areas?

Would Holden benefit from outsourcing any of the functions?

Holden's new solar powered carImagine that Holden has decided that it wants to develop a new solar-powered car. Explore how each of the 4 functional areas discussed in the video might be affected: Manufacturing Operations, Human Resources, Finance and Marketing & Sales in terms of the key management roles of planning, leading organising and controlling.

Vice President GoogleMich Mathews

You have been appointed CEO of Holden! Your first thought is that you want to know how successful each functional area of the organisation has been lately. Suggest 3 Key Performance Indicators that would be appropriate to evaluate the success of the 4 Functional Areas discussed in the video. What evidence of success was shown in the video?

Coordinating the Business FunctionsThe different functions of the business are INTERDEPENDENT.Small business owners are closer to their customers than large business. Large business managers may even lose touch with their business operations. Shareholders may have very little to do with the day to day running of the business.

KRB: key business functions and appropriate resourcesIN PAIRS ON POSTERS COME UP WITH KRBs KEY BUSINESS FUNCTIONS AND WHAT RESOURCE EACH FUNCTION NEEDS

Management: Operations goods and/or servicesthe production processquality management

goods and/or servicesWhat is a good and what is a service...do any businesses provide both?GOODS VS SERVICESGOOD: An item that is tangible. It can be seen or touched.;E.g...

SERVICE: An intangible good that is provided by an individual or organisation; E.g...

The production processWhat is the production process of a ...?SurfboardChocolateCheeseburgerdesigner dressCookiesCar wash

The production processOrganising operations in a business involves managing the production process.The production process includes identifying and procuring the inputs that will be transformed by the business into the final goods and services.MANUFACTORING transformation in factorySERVICES transformation in officesIn organising production the business managers will try to reduce cost, maximise efficiency and provide quality goods and servicesProduction process

Division of labourBreaking down tasks to the simplest level and designing jobs and employing people to do these jobs Division of labour brings advantages to an organisations as people become SPECIALISTS they become more EFFICIENTSpecialising promotes efficiencyWorkers rely on other people working in their specialised job to supply the products and services they need. Who does a heart surgeon or tennis professional rely on?The way that businesses create products and services is known as the production process.

There are three main parts to the production process:A firm must purchase all the necessary inputs and then transform them into the product (outputs) that it wishes to sell. For example a football shirt manufacturer must buy the fabric, pay someone for a design, invest in machinery, rent a factory and employ workers in order for the football shirts to be made and then sold.How well-organised a firm is at undertaking this transformation process will determine its success. This is known as the productive efficiency of a firm and it will want to be as efficient as possible in transforming its inputs into outputs (i.e. using the minimum number of inputs as possible to achieve a set amount of output). This will reduce the cost per unit of production and allow the firm to sell at a lower price.Ultimately, the objective of the production process is to create goods and services that meet the needs and wants of customers. The needs and wants of customers will be met if a business can produce the correct number of products, in the shortest possible time, to the best quality and all at a competitive price.

The Production of Goods and ServicesInvolves the management of:peoplecapitalinformationraw materialsRole of OperationsDesignOperation ofControl ofTransformationProcessesthatconvertRaw Materials, energy and labourinto Finished goods and servicesEach Step Adds Value

The production process

Discuss the concept of the production process and construct work flow charts demonstrating production of goods and/or services

http://www.thesourcesurfboards.com.au/homeProduction process

Goods or Services

?

Production processIn worksheets discuss the concept of the production process and construct work flow charts demonstrating production of goods and/or services

The future of food productionNo-till agriculture Feeding the world's growing population will require changes to the way we grow things. This might mean leaving the plough behind

Chain of command

Chain of commandRefers to the way a business structures its channels of authority, power, accountability and responsibilityIn a traditional business the chain of command starts with the CEOAuthority and power will move down through various levels (or links) of management, supervisors and workers.Accountability (and information) moves back u through these links to the CEOChain of command continuedThe chain of command can be shown as an organisation chartAuthority refers to the right a manager has to make certain decisions and to require a subordinate to carry our certain tasks in a satisfactory way.Power is the ability to cause subordinates to do what is required of themResponsibility is the duty an employee has to c ary out certain organisation al tasks or functionsAccountability who has authority over themAll workers are responsible for something and accountable to someone. The chain of command can be organised by function, product, geography or customers.See pg. 102Chain of command by functionOrganising chain of command is common and can be effective if each functional area does not need to collaborate closely with other departments...e.g.? Head of HR, Finance, manufacturing and marketing and reporting to CEPE.g.

Benefits of chain of command by FUNCTIONEasy to understandForms a basis for specialisationStaff with similar interests and skills can be grouped togetherUpper levels of management are likely to be aware of the needs and contributions of the functional areashttp://www.wesfarmers.com.au/

Quality managementDefine quality management and its importance

Good + Service

Quality managementGoal of every business should be to create the best possible product and/or deliver the best possible service.

Businesses that can deliver high quality products and services will gain a competitive advantage over other similar businesses e.g. http://www.apple.com/au/QUALITY : A FOCUS FOR OPERATIONSQuality management will only be attained if all the employees in operations are committed to achieving and maintaining quality output...

Is this easy to achieve?Quality managementat each stage of the production processProvide scenarios for an SME .......How do managers ensure high quality?What would a good manager do to rectify poor quality products/services?

Total quality managementAll aspects of the operations process INPUTS, PROCESSES, AND OUTPUTS are all subjected to constant quality analysis and monitoring..constant assessment and improvements to promote total qualityControl of OperationsQuality ControlInspectionInternational Quality StandardsTQMQuality CirclesContinuous improvementWorking Capital =the money needed for the day-to-day requirements of business.DISADVANTAGES of JIT - unable to meet sudden increases in demand, great reliance on suppliers and employees, huge problems if any part of the system breaks down, loss of discounts related to bulk buying.Quality ManagementCustomers define quality. It is different things to different people. But customers demand a high level of quality or they will switch to a competitor.Quality Control =Inspection of products to see it meets the need of the customers.Quality managementDefine quality management and its importance at each stage of the production process

Quality ManagementHow do managers ensure high quality?

What would a good manager do to rectify poor quality products/services?

TERM TWOManagement processcoordinating key business functions and resourcesoperations goods and/or servicesthe production processquality managementmarketing identification of the target market marketing mix finance cash flow statementincome statementbalance sheethuman resourcesrecruitmenttrainingemployment contractsseparation voluntary/involuntary ethical business behaviourmanagement and changeresponding to internal and external influencesmanaging change effectivelyidentifying the need for change business information systemssetting achievable goalsresistance to changemanagement consultants

Management process: marketingidentification of the target market marketing mix

The economisthttp://audiovideo.economist.com/?fr_chl=8c9fb7cb6ccca6fb5c1058e006b34355a6ec141c&rf=bm

What is marketing? Distinguish between marketing and sales

http://www.smh.com.au/

Definition of marketingThose functions in a business that directly involve contact with the consumer and assessment of their needs, and the translation of this information into outputs for sale.

Marketing is the process of developing a product and implementing a series of strategies aimed at correctly promoting, pricing and distributing the product to a core group of customers.Targeting consumersWhy is targeting consumers and identifying a target market so important?

What sort of magazines/TV shows do you read and watch? What products are advertised?

Have you heard of a target market what does this term mean in your own words?

Identification of the target marketA business needs to clearly establish who the consumers of the product are and them aims its efforts to gain sales towards that market.

E.g. Skim milk, chocolate, surfboards...who are their target market?TARGET MARKETSMost product promotions will be targeted so they appeal to a specific:AgeSocial group: middle aged men/women, affluent, young womenEach specific group is a TARGET MARKETAs a class look at different websites and notice the different ads

TARGET MARKETSMass marketing: product used by a large proportion of the population: food, household items: usually not specific

Niche marketing: small and exclusive market. Ski equipment, luxury cars, adventure holidays> IMAGE promoted is most important

Wise to target a specific group?? YouTube clipTake five points down from this clip!

MARKET SEGMENTATIONMarket segmentation occurs when the total market is subdivided into groups of people who share one or more common characteristics.Otherwise known as target markets.Markets can be segmented on the following four variables;Demographic age gender, ethnicity, income, occupation etc.Geographic Urban, rural, climate, regionProduct related regular user, new user, brand loyalty price sensitivityPsychographic personality, motives, lifestyles

Eg. Nova 96.9 only wants 18-39 year olds to listen so they dont play Frank Sinatra. They then have a valuable product to sell to advertisers.

The Toyota Tarago has also been developed for a certain market segment.

Processes used to identify target marketsMarket research: surveys in person/via telephone, demographic/social group, specific questions about the productFocus group: a group of potential consumers chosen at random, brought together and asked to respond to a campaign developed to promote a particular good or service..Advertising agencies, check whether there is a demand

MARKETING MIXTHE 4 PsPRODUCT PRICEPLACEPROMOTIONMarketing MixSummarise product, price, place and promotion

Read text then summariseMarketing MixProductBrand, packaging, positioning (healthier)PriceMatching its cost of production to the needs of its targeted customers. Will the price be set low and aimed at the mass market or will it be set high and aimed at a specialised market? What is problem with too low/too high pricing?PromotionSales promotionPersonal sellingAdvertisingPrint, radio, TV : choice of medium will depend on the products, audience, frequency of publication, coverage, cost of reading audienceCustomer servicePlaceTransporting/storing goods and getting them to the consumer at the right time. 1/5th of the cost of a product is taken up in distribution. Warehousing/storage/transportInventory: Just in time (JIT) in modern businesses stock is held in the form of finished goods, component or raw materials.

MarketingIn worksheets Discuss the meaning of marketingDistinguish between marketing and salesDefine the concepts target market and marketing mixUsing examples in worksheet identify relevant target markets

Marketing Australian red meatin Australia and around the globeBrochureHandout to be completedThe Pitch

Your marketing team has been given the challenge to create a marketing strategy for a new chocolate bar to be released in December.Your team of 3-4 will need present the following information to the board of directors (i.e. Yr 12 Business Studies class):Identify your target market (include method of segmentation)Develop marketing strategiesProduct - branding, packaging, positioningPrice - Propose and justify a pricing strategyPromotion - Select 2 forms of promotion to sell to the board. Outline the advantages of your forms of promotion.Place - Type of distribution channel, channel choice and address any physical distribution issues.Present your strategy in the form of a brochure

Beaus Floral Studio A Marketing PlanExamples from 2010

Marketing Mix: recap/promotion/advertisingM&C Saatchi is a global marketing services business working for clients across a wide variety of industry sectors.The Company was founded in 1995. Starting with a strong base in the UK and Australia, we have added new agencies and disciplines in Asia, USA and Europe, employing over 1,2850 staff in 22 countries. The Company was listed on AIM in 2004.http://www.lse.co.uk/SharePrice.asp?shareprice=SAA

M&C Saatchi wins Austrade contest to market Australia Simon Canning

From: The Australian

April 26, 2010 12:00AM

FORMER Tourism Australian and Tourism New Zealand advertising agency M&C Saatchi has won the job of building brand Australia for Austrade. The agency, which has also been involved in nation-branding and tourism projects in the US and the Middle East, will assume the $20 million project to market Australia as an export and investment nation.More than 60 advertising agencies from around the world pitched for the Building Brand Australia project announced by the federal government last year, with four agencies making the shortlist.Austrade took a number of concepts from the agencies and put them into research in 14 countries before handing the account to M&C.The contract will run for four years and will see an overarching brand developed to promote Australia. It will run separately from tourism campaigns.The concept will not be unveiled until next month.M&C developed New Zealand's lauded 100 per cent Pure campaign before resigning the account to take on Tourism Australia.The agency's "So where the bloody hell are you?" campaign shot bikini model Lara Bingle to fame but faced criticism from some industry sectors.Last week Media revealed that two local executives, chairman Tom Dery and regional creative director Tom McFarlane, had bought a 20 per cent stake in the agency for $5m from the parent company in London.

In the age of the brand, logos are everywhere. But why do some of the worlds best-known brands find themselves on the wrong end of the spray paint can the targets of anti-corporate campaigns by activists and protesters?No Logo, based on the best-selling book by Canadian journalist and activist Naomi Klein, reveals the reasons behind the backlash against the increasing economic and cultural reach of multinational companies. Analyzing how brands like Nike,The Gap, and Tommy Hilfiger became revered symbols worldwide, Klein argues that globalization is a process whereby corporations discovered that profits lay not in making products (outsourced to low-wage workers in developing countries), but in creating branded identities people adopt in their lifestyles.

FINANCEcash flow statementincome statementbalance sheet

FinanceThe financial statements (balance sheets, profit and loss account and cash flow statement) can be used to check the performance of a business entity. These statements can be used to compare businesses and to analyse trends

http://www.woodside.com.au/NR/rdonlyres/E4358161-A6CC-4514-B2C0-D242F718618B/0/WoodsideInteractiveAnnualreport2010.pdf

http://media.corporate-ir.net/Media_Files/IROL/14/144042/Reports/2010AR_pp_67_to_176.pdf

ENRONFinancial Statements fudged: ABC radio national.

Bigger than Enron..http://topdocumentaryfilms.com/bigger-than-enron/Finance (and accounting)Accounting and finance support the operations of a business. Accounting allows business performance to be monitored. It is concerned with information management.

Money comes into the business (revenue) as a result or salesMoney goes out of the business (expenses) And the flows are recorded. This is accounting.

Finance relates to the external sources of funding that allow the business to perform its prime function and to make a profit using borrowed fundsLarger businesses have separate departments however in a small business the owner is often responsible for keeping the basic records for accounting purposes and will outsource the final accounting, auditing and financial advice to an accountant.Source of funds (not in syllabus)There are two ways a business can source funds, can you think of what these are?Source of funds:

INTERNAL AND EXTERNAL

Equity and debtINTERNAL FUNDSBusiness owners hold profit back to reinvest in the business as retained profitsOwners equityEXTERNAL FUNDSWhen a company goes public or is listed/floated it means a business is seeking shareholders to contribute funds to the operation of the businessMany organisations have floated companies on the ASX Can all companies access money easily this way? Why/why not?What is a blue chip company?External FundsOther funds are available these can be from:Private funds: family, friends, personal loansBanking: Overdrafts, bank loansMerchant Banks: Investment, corporate financial advice, money marketFinance companies: medium-term financing to smaller businesses and companies. Active in lease financing and lending for equipment purchases.Building Societies: deposits/housing loans. Many now banks and can loan moneyInsurance companies and superannuation fundsFinancial markets76Debt vs EquityWhich is better?Debt vs EquityDebt financing comes from loans (borrowed funds). The business goes to an outside source for the money that it needs. The interest due from large loans needs much consideration.

Equity financing comes from the owners of the business either retained profits or personal savings.

Small businesses will often re-invest their profits in capital assets in an attempt to minimise taxation, such as purchases that are tax deductable. Employment contractsLooking at examples provided to you of employment contracts in different industries and for different employment types (casual, permanent, part-time); identify similarities and differences between the contractscash flow statement see pg. 127

Cash flow: businesses exist to make a profit..to keep up with payments and financial commitments and stay active, the business needs a steady flow of funds.

Liquidity: describes a businesss ability to meet its debts from its cash inflows.

All aspects of a business depend on its ability to pay bills as they become due. If it cant pay its bills it will be declared insolvent and cease to exist.

Cash-flow budgets will help a business predict if and when cash shortages are likely to occur. Such shortages may need to be covered by short-term loans such as bank overdrafts. Regular (monthly) cash-flow budgets and statements allow such needs for finance to be recognised and acted upon.income statement

REVENUE STATEMENT or PROFIT AND LOSS ACCOUNT

Summarises the structure of the revenue that has come into the business and the expenses that have been incurred in running and operating the business.

See income statement on pg. 122

Through bookkeeping and accounting each business is able to look at the GROSS PROFIT and NET PROFIT which will show how the business is performing.Gross profit vs Net profitGROSS PROFITsubtracting the costs associated with sales from the value of sales (revenue)

NET PROFITdeducting from the gross profit the other expenses that were part of operating the business.balance sheet see fig on pg. 124The final document that is produced at the end of the full accounting process.

It is built on the accounting equation:Assets = Liabilities + Owners equity

The balance sheet shows the owners all the things that have been done with its earnings.

Balance sheetAssets: items of value/there are 3 typesCurrent assets: cash or items that can very easily be converted to cash (stock, debtors, accounts receivable and pre-payments)Non-current assets: more durable and more expensive. Difficult to sell quickly (buildings, furniture, land, machinery and office equipment)Intangibles: difficult to measure/value. Goodwill, trademarks and patent rights and can be of great value when selling

Balance SheetLiabilities: items that the business owes to other people or organisations.

Current Liabilities: include short-term debts that need to be paid within 12 months or the financial year, bank overdrafts, creditors, accounts payable and accruals.

Non-current liabilities: include mortgages (land, buildings), and loans for large machinery and equipment (usually large, long-term loans)Balance SheetOwners equity: starts off with what the business owner invests in the business..in larger companies owners equity is replaces with shareholders funds

Paid-up capital: amount of money originally put into the business basis for determining the success of the original investmentReserves/retained profits: the amount added to the original money put into the business. Often owners have re-invested in the business or are preparing to do so.Net profit: figure calculated in the revenue statement for a certain trading period, presented as net profit before tax or a net profit after tax

Financial statements recap- in worksheetsAfter looking at various businesses annual reports online explain the construction of financial statements, their role and importanceUsing simple financial data construct examples of all three financial statementsAssess the importance of effective cash flow management for business