BUSINESS MANAGEMENT UNIT 3&4: Lenina Lay

UNIT 3:

AOS 1: BUSINESS FOUNDATIONS:

1.2 INTRODUCTION TO BUSINESS
Business size The number of employees
‘non-employing’ = owner or owners operate the business on their own
small business = less than 15 employees
medium business = 20 or more employees
large business = 200 or more employees

the number of owners:

sole trader = one owner
shareholders = medium & larger size business
Amount of revenue earned
- large = several million $ annually
- small = less than $10 million annually

1.3 TYPES OF BUSINESSES:

GLOSSARY:

Business A business is an organisation where goods and / or services are exchanged for money, there are 6 types of businesses.
CSR refers to obligations a business has over and above its legal responsibilities to the wellbeing of employees and customers,
shareholders and the community as well as the environment.

Directors A manager of a particular area of a company often selected for their expertise.
dividends Company's share profits to the shareholders based on the corporation's performance.
Efficiency VS Effectiveness indicates to what degree business has accomplished the objectives it set out to achieve. Whereas efficiency, refers to
effectiveness how well a business uses the resources needed to achieve an objective.
incorporation The legal process of actually creating a new corporation:
The company is then owned by the shares (shareholders), once the incorporations is complete the company has a separate legal entity
to the previous owners and therefor has limited liability
Liability The responsibility of the owners to pay debts / losses.
Limited liability A form of business ownership in which the owners are liable only up to the amount of their individual investments.
(personal asset
protection)
Management Management styles refers to the behaviour and attitude of the manager when making decisions with employees (5 types)
styles
management The process of efficiently and effectively coordinating all the efforts of people and other available resources to achieve business
objectives.
Market share the portion of a market controlled by a particular company or product.
Partnership a business owned by two or more people
profit A financial gain earner after expenses are deducted
Perpetuity The ability to continue the business without the owner.
profit What is left after business expenses have been deducted from money earned from sales (revenue)
remunerate Receive pay for a service or work done
Shareholder A shareholder refers to someone who owns part of the business, through shares of stock.
Stake holder: a stakeholder refers to the people or groups who have a vested interest in the performance of a business which can include those both
in the external or internal environment.
shares the unit of ownership in a corporation, when an individual buy shares they become one of its owners.
Own legal entity The company will do its own tax returns, if the company is sued the company is to pay not the owners
(liability is limited + perpetuity)
Unlimited Refers to the legal obligations of a business owners’ responsibility for all debts of the business
liability
Private sector all other businesses in private nature

Public sector businesses owned by the government

unincorporated An owner and business being viewed as a single legal entity

debts What the business owners to banks, suppliers or customers
KPI Key performance indicators are specific set of criteria that measure the efficiency and effectiveness of a business’ performance.
Some of these include level of staff turnover, number of customer complaints or rates of staff absenteeism. They can be used to
evaluate a business’s performance before and after implementing change to see whether the change has been successful in
achieving its set objectives.

globalisation Globalisation refers to the removal of trade barriers between nations, leading to increased movement of investment, technology,
labour, finance and trade across nations. Its considered a driving force for change as business can operate in an international scale
 and make the most of global opportunities like sourcing inputs overseas, manufacturing overseas or selling their good / service to
customers in other countries.

What is a business?
A business is an organisation that aims to produce goods and/or services to satisfy the needs and wants of costumers with the aim to
make a profit.

types of businesses

c
sole trader partnerships private limited governemnt business
social enterprises
pbulic listed. enterprises

PRAGRAPHS APPLYING KNOWLEDGE.

Unlimited liability means that if the business runs into financial struggles, the owner will be responsible for paying off all the
business debts.

• Sole Traders are businesses with one owner. It is the easiest form of business to establish, and the owner gets to make all
decisions for the business. A sole trader has unlimited liability (meaning the owner of the business is personally responsible for
debts incurred by the business)

• Partnerships have 2-20 business owners. They are governed by the Partnership Act 1958. Unlimited liability. There are two
main types of partnerships:

o General partnerships – all partners share equal liability

o Limited partnerships – one or more partners don’t participate in the running of the business (silent/sleeping partners).

Companies: businesses that have gone through incorporation to become their own legal entity separate from the owners

• Private Limited Companies (Pty Ltd) – are incorporated. This means they have their own legal identity (limited liability).
Ownership is divided into parts called ‘shares. Shares must be offered to people and aren’t on the public share market. They
can have 2-50 shares. Must have PTY LTD or “Proprietary Limited” after its name.

• Public Listed Companies (Ltd) – shares can be bought on the public stock exchange (Australian Securities Exchange); business
partially owned by all shareholders. Unlimited number of shareholders. Directors run the company. The word “Limited” or LTD
will appear at the end of their name. Limited liability. E.g. Qantas

• Social Enterprises – aims to generate a profit but primary goal of business is to achieve social objectives. They trade to fulfil a
mission; they aren’t being given money; they are earning it from selling goods/services. (50% of income coming from trade, or
25% if business started up in last five years). E.g. Thankyou Water

• Government Business Enterprise (GBE) – government owned business but aims to make a profit. May one day be privatised.
E.g. Australia Postal Corporation, National Broadband Network

KEY FEATURES ADVANTAGES DISADVANTAGES

Sole trader A business structured and owned by one
person, in which the business and owner are
Examples: viewed as one legal entity (unincorporated)
Plumbers and therefore has unlimited liability for all
Electricians business debts.
The sole trader is able to hire other
employees but remains responsible for the
entire business.
- can retain all profits after
personal income tax is paid.
(keeps all profit)
- Inexpensive cost as the
business does not have to pay
company task
- Unlimited liability
- Burden of managing the entire
business
- More difficult to gain finance (on
one owner bringing initial
investment)
 - The owner has all control over - No perpetuity (easy end to busine
Size: decisions and directors
A smaller sized business - Reliant on owners for their own
One owner (can have employees) - Minimal government knowledge and skills
regulations as it is a small
Cost: business
inexpensive to set up

Liability:
unlimited liability
(if the business has a debt it is the owner’s
responsibility to sell their personal assets to
pay the debt)

Partnership A partnership is a simple, cost-effective - Workload can be shared - Unlimited liability

business owned by two or more people, with amongst partners as well as
Two types: a maximum of 20 partners. expenses - Possibility of disputes between
General A partnership has the same legal entity as the partners (disagreements)
partnerships: business and therefore has unlimited liability. - Different skills & expertise
partners have bought into the business - Difficult finding suitable partner
unlimited liability Size:
Owned by two to twenty people - Perpetuity (on death of one - Need to share the profits amongst
Limited Usually maximum 20 partners partner the business may partners
partnerships: continue)
liability of one or Cost: - Liability for debts incurred by oth
more partners is inexpensive to set up - Less costly to established. partners
limited to the
proportion of Liability: - Pooled funds and talent
their investment Unlimited liability

(however, a ‘limited partnership’ separates

partners’ liability based on their financial
contribution)

Private limited A small to mediums sized incorporated - Limited liability (members - More Costly to establish and
company business that is considered a separate legal liability is restricted to the maintain as business is subject to
entity to the owners. . This type of business number of shares they own) company tax
PTYD LTD. entity limits owner liability to their shares
(limited liability), limits the number of - Perpetuity: life of the - Shares cannot be traded freely
Example: shareholders to 50, and shares can’t be sold company can live longer than (not as easy to attract finance because
7-eleven freely to the public, rather they can only be the directors. the public cant purchase shares witho
Cotton on sold to those who the directors approve. director approval.)
- Directors have full control over
owned by the shareholders but controlled by who owns parts of the company - There is a higher degree of
nominated directors. as shares are not sold freely government control and reporting
requirements which may make th
Size: - Easier to raise capital by selling business complex.
2 – 50 shareholders shares to selected people.
- Medium - There is more work involved such
- Perpetuity having to provide annual reports f
Cost: auditing purposes.
more expensive to establish

Liability:
limited liability.

Perpetuity:
yes

Public listed A larger company with unlimited number of - Limited liability - highly expensive and complex to
company shareholders, in which shares can be freely establish
traded on an open market (Australian - Greater potential for growth
Example: Securities Exchange). (money) by selling more shares - possible loss of control by the
Telstra to the public directors as any member of the
Woolworths 'Limited' (Ltd) after its name public can any amount of purchas
Virgin Australia - Easier to raise capital by selling shares.
Liability: shares freely
limited liability - Shareholders have limited decisio
 - Perpetuity making influence on the business
Perpetuity: there are so many of them
yes
- Face loads of government regulat
(such as minimum of directors)

Social a business that produces goods and services - improves the morale of workers - Difficult to obtain finance to initi
enterprise: for the market but operates with the primary because they value what they the business
Example: objective of fulfilling a social need. do
STREAT The business makes profit through sales, but - Difficult to balance on financial a
Aims to provide this profit is used to fulfil their social or - -continues to make profit whilst social objectives
the homeless / environmental need / reinvested back into benefiting the community
disadvantaged the company. Although they can receive positively - Significant operating cost.
youths with life government or public funding, unlike
skill training& charities, they do not run simply on - encourages community support
work experience. donations.
- Can fulfil a need that
Often helps a e.g. STREAT provides homeless / commercial businesses wont.
social cause or disadvantages with life skill or work
social benefit but experience’ - Meeting a social need can have
requires capital. a positive effect on achieving
profit and fulfilling market
needs
Exists to benefit society include:
1. - provides opportunity for
unemployed
2. - provides services to disadvantages
communities
3. - focus on social needs other
businesses don’t.
Government A typically large business that is government - provides a community service Strategic directions can change with
business owned and operated. A GBE participates in other private business may not. changing governments
enterprise commercial activity but serves to fulfil a
specific purpose (community service). - operated with some independence Can experience political interference
Examples: Although they are managed separately from from the government
VicRoads the government, they implement government Can face criticism from members of
Australian post policies - provides healthy competition to opposing political parties.
private sector businesses which can
Often helps result in them lowering prices
general public How is it established:
An act of parliament must be passed to - Fulfils the needs of the market
establish other businesses haven’t
fulfilled.

Liability:
limited
 1.8 BUSINESS OBJECTIVES
importance of business objectives:
Business objectives are important as they give a business direction, that is the business has a path to follow which will often lead to their
success.

Vision expresses what the organization should become, where it wants to go strategically in the long run
statement:

Mission a statement of the organization's purpose - what it wants to accomplish in the larger environment
statement:

SMART (Specific, Measurable, Achievable, Realistic, Time-bound)

objectives
effectiveness Indicated to what degree a business has accomplished its objectives.
efficiency How well a business uses their resources to achieve an objective

Key performance indicators (KPIs) = used to measure success, efficiency and effectiveness of a particular area in a business

To make profit is what is left after the business expenses have been deducted from money earn from sales, this means getting a return on the initial
profit investment which increases the income of the business.
Profit is essential for the business to grow and to survive, it can be reinvested into the business to develop new products or hire employees.

This can be achieved by:

- Increasing sales
- Expanding business
- Increasing market share

increase Market share is the portion of total sales the business has in an industry of particular goods and services, often expressed as a percentage.
market share one of the most significant measurements of market power.

A business will want to increase market share to be more competitive in their industry and increase their sales.
Fulfil a A market need refers to the needs and desires of the market / customers. When business product fulfils a market need more sales are gained
market need and this generates revenue from customers. If a business can satisfy customer needs they will be filling a gap in the market and gaining
 loyal customers.

Fulfil a A business focusing on the community and how the business can look to improve the lives of others. By making considered choices and
social need addressing issues, businesses can achieve other business objectives as their reputation is improved leading to more sales.

e.g. thank-you water (founded Melbourne 2007) runs its business to donate profit to improving water quality
Meet Shareholders have invested a sum of their own money into the business by purchasing shares, therefore they expect a return on their
shareholder investments and some income in the form of dividends or capital gain
expectations *(only applies to private & public)

If the part of the profit gained by the company is returned to shareholders, or the value of a company’s shares increase, the shareholders
will have expectations met

How can this be achieved?

- Improving customer service to attract customers
- Fulfilling a market need to attract buyers

BUSINESS STAKEHOLDERS IN THE INTERNAL ENVIRONMENT

stakeholders refers to the people or groups who have a vested interest in the performance of a business which can include those both in the external or
internal environment. Some stakeholders will have conflicting interests and a manager needs to make decisions while taking into
consideration their interests.
shareholder an owner of shares in a company
Internal Refers to the people and groups that have a vested interest in the business
environment Found Inside of the business: the owners, directors, shareholders, management and employees.
External Refers to the people and groups that have a vested interest in the business
environment Found outside the business and beyond its full control: government, competitors, interest groups, customers, suppliers and members of
the community,

External macro: community & government

Corporate refers to obligations a business has over and above its legal responsibilities to the wellbeing of stakeholders and the environment
social
responsibility
Corporate Actions of the business which will satisfy stakeholder expectations, taking this into consideration can improve business performance and
social a stakeholder vested interest at the same time.
responsibility - using fair trade ingredients
consideration - giving non-profit organisations a portion of the business’s profits
- donating to charities
- lessening noise pollution of factories
- using renewable energy
Why may a - Improved business reputation = improved sales
business - Increase employee satisfaction as they’re working for an ethical business
implement - Sustainable supplies last longer than unsustainable supplies
CSR
practices?

INTERNAL ENVIROMENT:
Internal context interest Cooperate social responsibility
stakeholder consideration
owners The owner of the company is an individual who - Want the business to make profit as they - Donate businesses profit to
own shares in the company and is involved in the may depend on the success of the business charities
daily operation of the business for their income or wealth.
- They will want the business to conduct - Show care for the community,
itself in a socially responsible manner (as environment and employees
their reputation is on the line)
- Regular communication with
stakeholders
shareholders an owner of shares in a company, despite not - wanting to make a return on their investment Be transparent about the
being involved in day-to-day operations they through capital gain. performance of the business, so that
influence major decisions. shareholders are knowledgeable
- for the business to increase its market-share as about its progress & success.
this results in increased finance

Directors A person from a group of managers who leads - status and renumeration
and supervises a particular area of a company. - fair renumeration including directors’ fees.
Directors have a responsibility for developing and
overseeing the strategic direction
- Voted in by shareholders
- Develop strategies & make major business
 decisions
Management - responsible for different areas of the business
and they ensure the business strategy is
carried out well. There can be different levels
of management.
employees Those who work in the business in exchange for a
wage. Their contribution is vital as they
manufacture and sell the goods and services and
help to run day-to-day operations.
EXTERNAL ENVIROMENT:
External context
stakeholder
Customers Those who purchase goods and services from
the business.
Suppliers those who provide the business with material
and resources including equipment, machinery
and finance
Competitors rival businesses that sell similar products in the
same market. Businesses must monitor their
competitors’ actions in order to be able to
respond and remain competitive, increasing their
own market share.
Trade union An association of trade workers in a particular
industry or trade formed to secure improvement
for workers in wages, working conditions and
benefits.
Government a group with authority to govern a particular
(external area (federal, state or local) and who can make
macro) laws or change laws which affect a business.
- Businesses must adhere to government
regulations in order to function
Community refers to the people in the community which the
(external business operates in. The business must look to
macro) benefit their own community which can result in
increased sales and a good reputation
Creditors and A person, bank, other enterprise that has lent
banks money or extended credit to another party.
CONFLICTS BETWEEN INTEREST OF STAKE HOLDERS
Some interests and expectations of stakeholders oppose each other, in this case, satisfying one set of stakeholders will commonly result
in other stakeholders being dissatisfied.
- Expect to be involved in decision making
- to be paid fairly
- job security
- to be respected by other employees
- for the business to perform well
- Fair pay
- Decent working conditions
- Job security
- Access to training for additional
qualifications
interest
- Good quality products
- Fair prices
- Safe environment to shop in
- High levels of service
- Expect strong relationships with the business
- to be paid on time
- increase their own income
in return for their high-quality products
delivered promptly on time
- fair competitive practices
- increase their own market share own market
share
- prevent anything that diminishes workers’
rights.
- increase worker conditions
- ensure fair pay
- expect businesses to help the economy and
community in which they serve in by providing
employment that is fairly paid and in good
conditions.
- expect a business to success in order to receive
a portion of its profit through tax revenue
- for the business to obey legislation
- expect a business to give back (employment,
good products)
- expect a business to show concern for the
environment and the community
- To be repaid loans in full
- to ensure all banking interests of the business
are secured by the bank.
- relationship with customers
- Offer manager with higher level
training
- better conditions to improve their
wellbeing
- provide flexible working hours.
- be transparent and supportive
- consider stakeholders when
making decision.
- Extra Training
- Supportive work environment
- Providing a flexible atmosphere
for workers
Cooperate social responsibility
consideration
- receive value for their money,
going over the expected value.
- Honest marketing.
- Preference and taste satisfied
- use local supplies
- ethical suppliers
This reduces pollution from
transport.
- Using only fair-trade ingredients
- fair competition
- following the rules, such as not
defaming your competitors.
- Encourage employees to join a
trade union or make them aware
of their own rights as
employees.
- Being open and honest during
negotiations
- participate in community
projects
Such as the ‘She wear’ project
of providing footwear to
working women.
- Employ local workers
- Lookout for the environment
and minimise pollution
 AREAS OF MANAGEMENT RESPONSIBILITY:
It is a manager’s responsibility to oversee the areas of the business, each one of these areas contributes to the achieving of business
objectives. Areas of management responsibility must be addressed if the business is to successfully meet its objectives.

Management: The process of accomplishing the goals of a business through the effective use of people and other resources.

context How each area contributes to the achievement of business

objectives:
Operations The operations are is responsible for the production of goods and services By ensuring quality product are made, customer
that a business sell. The operations system involves transforming inputs into satisfaction is increased which contributes to:
outputs (that is the final product) - Profit
- market share
Important: operations are a vital area as without a product to sell there is no - productivity.
business

- Sources stock
- Orders product
- Source the raw materials and resources
Finance Responsible for managing a business’s financial resources, this area is manages the finance, what goes in an out, this ensures the
responsible for ensuring that the business is making sound decisions business can keep the revenue higher than costs which =
surrounding their finance and managing their money well to ensure that are profit.
 keeping their revenue high and expenses lower. Likewise, they raise funds, budget and prepare reports for
financial matters, if the finance manages the money well,
- Managing the money profit can be made.
- budgeting
- Planning financial statements / information
- Preparing financial documents.
Human Those who handle the employee function, such es establishing, maintaining Ensures that the employees hired have relevant skills and
resources and terminating the business's relationship with an employee. This area experience to complete the required work tasks. Likewise,
ensures the right people are bought into the business. they ensure employees receive their fair pay and training. If
employees are treated well, they will be motivated and
- Recruitment perform better in day-to-day operations.
- training
- support employees - increase the profit
- market share a meeting the shareholders expectations
by providing a return on their investment.
Sales and This is the area that promotes and sells the business’s goods or services to Attracts customers, keeps relationships with customers &
marketing customers. A business can have a high-quality product but if customers are communicated with them to know what they want, which
not aware of it they won’t buy it. increases customers sales:
- profit
Marketing develops the pricing, promotion and distributes the product to - fulfil market need
potential customers. Further, the marketing will determine where products - increase market share
should be sold and the layout of the business. - meet shareholder expectations

Sales strategies form relationships with customers and builds brand loyalty.
- Determine the purchase options
- Determine the location & distribution method
- Promote the good / service through media etc.
e.g.
Determine the right pricing for a product which will
determine if customers want to purchase the product,
likewise, set a price high enough that the item won’t seem
low quality or cheap.

Technology Responsible for installing and maintaining technology as well as providing Technology support keeps the technology of the business
support assistance to the users of technology in the business running smoothly, leading to customer satisfaction and
e.g. website, laptops increasement in sales:
Technology will ensure operations works properly as they will be in charge
of the functioning of machinery and works to improve effectiveness and - Profit
efficiency in a business. This area will also look for the new types of - Market share
technology the business should implement to improve effectiveness and
efficiency. - Productivity
- Quality
Responsible for: - communications,
- installs and maintains equipment and machinery - sales (through websites)
- ensures business info is protected
- provides assistance to users

MANAGEMENT STYLES
The management style refers to the way a manager treats and involves employees, managers must select the appropriate management
style for the environment they operate in.
Centralised Decision making and control is kept to management only and Important decisions are made by them.
decision making
two-way Communication that is open and encourages discussion and feedback between manager and employee
communication
Decentralised Decision making is delegated to employees as well as the managers
decision making
The Managers choose the style they are most comfortable with and styles may change depending on the situations.
appropriateness - The nature of the task
of management - The time constraint
styles: - The experience of employees
- The preference of the manager’
What to address - Decision making
when explaining - The morale of employees
- What is it suitable for?

CONTEXT ADVANTAGES DISADVANTAGES which management styles

autocratic Management style where all decision-
making is centralised and done by the
manager, they have centralised control
over business decisions and decide the
objectives
 control is centralised so
time is used efficiently as
there is no discussing /
problems can be dealt with
quickly.
 ideas are no encouraged
which can result in low
morale.
 job dissatisfaction as staff
are suitable for which
situations?
Time: in time of crisis,
when decisions need to be
made fast
Employee experience:

There is little delegated authority and  Manager retains all control
communication is one way, meaning the (they are able to fulfil their
employees know little about the own vision)
decisions made.
 Work tasks are completed
centralised fast due to clear
one-way communication instructions
 Speed of decision making
persuasive Managers make the decisions, then  Fast and clear decisions /
persuades workers of the benefits of work tasks
those decisions and allows them to
understand why this decision is correct  Manager can gain support /
without their input. In order words, trust by providing more
he /she sells the decision to the information to employees
employees.
 Employees can feel more
Centralised valued (than in an
One-way autocratic situation)
 Manager retains control
 More acceptance towards
decision on behalf of
employees
consultative Manager recognises the importance of  Greater variety of ideas
relationships with employees and the which can improve the
manager consults employees before overall decision
“i put people
making decisions. A consultative
first, the task
second” manager seeks for feedback and shares  Employees take more
information to the employees. interest as they are more
involved
Two-way communication
 Improved confidence and
Centralised (although manager consults ownership = job
it is still the manager who makes final satisfaction
decision)
 Improves morale
participative Where the manager shares decision  Larger pool of ideas (can
making authority with employees, improve quality)
allowing them to be actively involved in
the decision making and recognising  Stronger relationship with
their abilities as employees. a high level of trust which
result in improved staff
Employees can initiate and monitor their performance.
own solutions and are able to provide
ideas and feedback  Employees can develop
more skills and experience
Two-way communication
decentralised  Job satisfaction and
motivation (employees feel
as though they have
contributed)
 Teamwork & group
decision making.
laissez-faire employees are totally responsible for the  Employees feel sense of
decision making and operations of the ownership which improves
doesn’t feel valued.
 Poor relationship between
staff and manager = us vs
them
 Employees are not
motivated to go to work
 No employee input
 Possibility for poor job
satisfaction as employees
are not heard
 Communication remains
one way which means there
is no opportunity for
employee input.
 Employee motivation
decrease
 Low morale, low
innovation.
 More time consuming (due
to more discussions)
 Some ideas will be
overlooked / rejected which
can cause conflict and
resentment
 Employees may not have
the knowledge to contribute
(they can feel uneasy when
asked)
 Time consuming as
different ideas are
discussing
 Conflicts can arise due to
disagreements on the best
decision
 More time on forming
decisions less time
completing work
 Manager loses control as
employees can now be
when employees lack
experience and
knowledge.
Nature of the task:
simple tasks
Time: when decisions
need to be made fast, but
the decision could benefit
from Ideas
Employee experience:
when employees lack
experience and knowledge
Nature of the task:
simple tasks
Time: when change is
implemented or when
decisions could benefit
from ideas.
or
manager could not have
knowledge on decision.
Employee experience:
when employees have
experience and knowledge
Nature of the task: more
complex tasks or where
problems need to be
solved
Time: when there is more
time to make a decision
Employee experience:
when employees have
experience and knowledge
and are creative
Nature of the task: more
complex tasks or where
problems need to be
solved
Time: for creative work
or research as they have
 business and the manager has no central their motivation independent more freedom to be
role or power. The manager may still set creative & have their own
objectives and have ultimate  Communication is  Can cause conflict amongst ideas
accountability. completely open & ideas workers (can create a
can be freely discussed, hierarchy)
The managers make decisions for the resulting in a large pool of Employee experience:
business & set objectives, but the ideas.  Overall objectives can be highly skilled employees
employee chooses how they run day-to- lost that are qualified and
day operations and are responsible for  Encourages teamwork & trusted + highly creative
their decisions and outcomes. creativity  Misuse of company
resources. Nature of the task: high
- Decentralised creativity required, and
minimal supervision
- Employees operate individually
needed.

Autocratic Persuasive Consultative Participative Laissez faire

Description “tells” “persuades” “asks” “shares” “chaos”

Communication 1 way 1 way 2 way 2 way 2 way

Decision making Manager Manager Manager Group Individual

CHOOSING MANAGEMENT STYLES:

Time Limited time = autocratic

Extended time = participative or laissez-faire.
Employee Little experience = autocratic or persuasive
experience Somewhat experiences = consultative
Highly experienced = participative and laissez
Manager High desire of control = autocratic or persuasive
preference Low desire for control = laissez fair and participative
Want some control = consultative
Nature of tasks Simple tasks = autocratic

Creative or complex = laissez fair or participative.

MANAGEMENT SKILLS
The abilities that managers use to achieve business objectives. Effective managers will possess a range of this skills

CONTEXT: ADVANTAGES DISADVANTAGES

communicating The managers ability to clearly exchange  Vision: assists to explain a vision,  Conflict: Can lead to conflict
information with employees or relevant outline possible changes and as employees can use
stakeholders. communicate new ideas. communication to agree or
The method of communication will depend on who disagree.
the manager is communicating with, and it will  Understanding: Communication
assist to communicate ideas, visions, changes and creates understanding and allows  Misinterpretation: Words can
needs. feedback to come through be misinterpreted and lead to
confusion.
- Oral communication  Relationships: Effective
- Written communication communication results in good  One-way: employees may use
relationships which can benefit the communication skills one-way
Communication can be one-way or can be two-way business. Employees will feel as though which can be negative
which can vary on the management style of the they are listened to and valued
business.
 Change: can be a god skill during a
business change in order to reduce
resistance.
delegating The process where authority and responsibility are  Time: Can free up time or the manager  Misuse power: Employee may
passed down to the employees. This allows misuse the power
employees to make their own decisions and work  Employee improvement: Improve  e.g share confidential
on their own following instructions. the employees skills. motivation and experience of information / create hierarchy
with deadlines and instructions and takes time to employees
review after the task.  distraction: employees may
 Trust: Build trust between employee not be fully focused and may
Suitable for: and manager miss deadlines which can affect
- Time consuming tasks business objectives.
 - Tasks that form a larger project
Not suitable for:
- Confidential matters
- High-risk / high cost decision
planning The ability to define business objectives and
determine methods / strategies that will be used to
achieve those objectives.
Planning provides short-term and long-term success
for the business.
Levels of planning
1. Strategic: long term goal (3-5 yrs.)
2. Tactical: mediums term (1-2 yrs.)
3. Operational: short term (day to day)
Planning process:
 Set business objective
 Outline strategies that can achieve it
 Search for further information & identify
alternative options
 Organise resources and execute strategies
leading The ability of a manager to influence and motivate
people towards the achievement of business
objectives. Effective leadership leads to a
successful business. Leaders welcome new ideas
solve conflicts and work with employees to achieve
business objectives.
Leaders will often try to lead by example.
The type of leadership depends on the attitudes that
manager have about people in the business
types of leaders:
 Transactional – use rewards in return for
compliance and agreement
 Transformational – inspires staff by providing
them with a vision of the business
Decision making The ability to identify the options available and
then choose the most appropriate course of action.
Effective decision making involves being able to
make appropriate decisions in time and allows the
manager to avoid conflicts / issues by choosing
alternatives.
Decision-making process:
1. Define the problem
2. Establish cause of problem
3. Develop / evaluate solutions
4. Decide on an alternative and implement it
5. Evaluate the implementation
interpersonal The ability of a manager to develop effective &
positive relationships with employees, which
allows them to positively interact, communicate
and understand them. These skills allow them to
build a strong culture and business.
If the manager uses interpersonal skills their
messages are more likely to be accepted by the
employees.
 Communication: Effective
communication & productivity.
 Stress: can relieve stress from the
manager as they have less to worry and
focus on
 Increased morale and motivation for
employees.
 Direction: Gives the business direction
and a goal = efficiency
 Unity: Objectives creates unity and
encouraged motivation for employees
 Uncertainty: Reduces risk and
uncertainty meaning employees can
work more effectively as they have a
guide to follow.
 Improvement: allows for continuous
improvement
 Provides the business with a clear path
to follow in order to achieve their
objectives.
 Motivated: Motivated staff with high
morale this can improve their overall
performance.
 Relationships: Strong relationship with
management = productivity
 Job satisfaction
 Vision: Allows the business to have a
vision which can inspire the staff to go
after that vision. This provides them
with motivation and means they are
more likely to achieve their objective.
 Improves the corporate culture of the
business as all employees and
stakeholders share a common goal
 Can be necessary in the process of
making business changes.
 Time saved: Decisions made quicker
which means that they can be enforced
faster as less time is spent planning and
more time doing.
 More ideas: Potential to collect more
ideas and knowledge.
 Avoid conflict: Ability to avoid
conflict or issue as problems can be
fixed in the business.
 Employees: Inspires and influences
staff which can improve their overall
performance.
 Empower: Empower worker which
leads to productivity and morale
 Corporate culture: Free from fear
workspace
 It can be good when giving negative
feedback to employees as because
 $$: Expensive strategies may
need to be implemented such as
introducing resources or
training employees in certain
ways to meet the goal.
 Time: time consuming to be
planning different strategies to
meet the objectives of the
business.
 Opportunities: Opportunities
can be lost whilst managers are
planning as they will lose focus
on other tasks.
 Conflict: Conflict between staff
and employee if they don’t feel
empowered
 “us VS them mentality”
 Disagreement: employees may
feel a manager is being ‘bossy’
in leading them and there can
be disagreements or corporate
culture can be damaged.

 Time: Time consuming as there
is more discussing (if it’s a
team made decision)
 Immediate action: May not
suit situations of immediate
action as decision making will
take time.
 Manager: Unable to be
performed if the manager lacks
empathy
 Manipulation: Manager
misinterpret the meaning and
use this to manipulate workers
 Time: Managers can take time
learning interpersonal skills.
 there is a strong relationship employee
will take it well.

 Better performance because employees

want to give back to the business.

Autocratic and persuasive consultative Participative Laissez-faire

Planning Only manager Only manager both Both (mostly employees)
Decision making centralised centralised De-centralised De-centralised
Communication One-way used to deliver Used to consult employees Used to discuss Used to outline the business vision to
instructions and provide about decisions and get information with and employees and between employees to
employees with feedback. feedback between employees develop ways to meet it.
and to discuss new
(persuasive uses it to explain Two way ideas
benefits of the decision)
Delegating Only used to assign tasks to Used to assign tasks to Used to select appropriate employees to
employees employees take ownership of different areas
Interpersonal Not important Bit more important as now Highly important as Less contact with employees as
employee’s contribution is the two make manager is more absent
important decisions together
leading Not as important as manager is Used to motivate employees Clear business purpose is set by the
expected to make all decisions. manager but there is less day to day
leading

Corporate culture
Refers to the shared values, ideas, beliefs and traditions that establish a collective ‘way of life’ within an organisation. Corporate culture affects the public
identity of the business, its decisions, as well as employee’s motivation and the interaction with customers. Businesses that don’t have a strong corporate
culture will often have different people within the business with different values and goals.

Corporate culture can be identified by:

- Dress code and behaviour of employees
- Slogans and logos used
- policies

A business where employees share the same values create a positive environment which can result in:
- Success for the business
- Positive and loyal employees
- Improve productivity

OFFICIAL CORPORATE CULTURE

The shared values and beliefs desired by a business and expressed through elements such as formal rules and symbols.
It is typically outlined by formal symbols or documents. Official corporate culture is also reflected through the business’s mission and vision statement.

Strategies:
- shared objectives: vision or mission statement: which provides indication of a business’s purpose, values and the goals.
- training: provide employees with training that shows them the skills / behaviour the business wishes to obtain

REAL CORPOARE CULTURE:

The shared values and behaviours that are actually practices by the employees and managers, which are expressed through informal rules and habits such as
celebration of rituals or events.
e.g.
dress code: the way the staff dresses projects the image the way that staff interacts with one another
management style: the prevailing management style in the business which reflects the behaviours within the business

businesses will look to match their real corporate culture with their official corporate culture so that everyone demonstrates the desired valued of the business.

elements of a corporate culture

indicate the type of corporate culture that the business has:
1. Values and practices: values include honesty and work ethic. Practices refers to the way things are done in the business
2. Symbols: events or objects established to represent something the business believes in (e.g sporting events if they support healthy lifestyle)
3. Rituals: routine or behavioural patterns used every day (e.g. social gatherings)
4. Heroes: successful employees who reflect the business’s values

Strategies for its developing:

A manager must understand and asses the business’s unique culture and knowing this initiate a change to routine to achieve a positive cooperate culture
which will benefit the business as a whole.
 Staff Training:
the process of training or educating the staff in line with the desired value or to build new skill sets, for example if the business wants to implement
teamwork, the staff would be trained focusing on this skill
  Communication:
communicating desired values so everyone understands the values.
 Rewards:
rewarding employees that reflect the desired values can influence others to act the same way
 Recruiting:
recruiting staff who fit in with the values of the business
 Management styles:
changing the prevailing management style to match the values
 Dress code:
changing the dress code or language used
 Physical layout:
The structure of the facility and its environment, for example if offices are all separated ad blocked then it is clear teamwork and interaction lacks.

how do management styles affect corporate culture?

Autocratic / persuasive consultative participative Laissez faire

Negative effect on corporate Positive or Negative effect on positive effect on corporate culture Positive effect on corporate culture
culture corporate culture (centralised
decision making but
communication)

AOS 2 – MANAGINE EMPLOYEES:

THE RELATIONSHIP BETWEEN MANAGING EMPLOYEES & BUSINESS OBJECTIVES
Effectively managing employees is essential to influence a business’s performance and the achievement of business objectives, if they are
managed well and strategies are followed their behaviour will have an effect on the business. Managing employees well ensures that the
employees are performing at an optimal level which will result in the business achieving their objectives.

Human resources manager refers to the effective management of the formal relationship between employers and employees. Human resources
management, coordinates all the activities involved in acquiring, developing, maintaining and terminating relationships with employees. If
managed well, employees are likely to feel values and motivated to perform to their best ability which can improve the performance of the
business & lead to the achievement of business objectives.

 Human resources management will take responsibility for ensuring that the business is able to get the best out of employees and the
employees are able to contribute effectively to the achievement of business objectives.
 HR will increase the relationship of employees and managers and lead to motivated staff, increased productivity and consequently, the
achievement of business objectives.
 They will be involved in determining business objectives and strategies that employees need to complete this.

MOTIVATION THEORIES
HIERACHY OF NEEDS (MASLOW)
Abraham Maslow’s hierarchy of need is a motivational theory that suggests employees have 5 fundamental needs which they strive to fulfil in a
set order of importance (you can’t skip levels), this is used to motivate as it allows a manager to understand where each employee is in the
hierarchy and assist them to go up leading to an increasement of motivation. The strategy will not move unless their needs are satisfied in the
lower levels of the hierarchy.

Maslow’s theory suggested that businesses have to satisfy all the needs. Business that attempt to motivate workers will have better performance.
 Identify where the employee sits
 Determine strategy to motivate
Needs Context
Physiological The basic requirements for the human survival, such as food, water and shelter.
needs
This is the first tier as without them humans are unlikely to be motivated by any other factors until they fulfil the requirement needed to
survive.

Fulfilled with:
- the wages they earn from work to purchase essential items, such as meals and housing.
- paying them a living wage. By paying employees a wage that enables them to meet all of their survival needs, individuals are motivated
to fulfil the next level of the hierarchy.

Safety & The desires for protection from dangerous or threatening environments.
security
needs To satisfy safety needs a manager can ensure that their workplace is:
- Provide sob security
 - abiding by all OH&S regulations
- employees are trained to use dangerous equipment and protective clothing is available to all employees.
- avoid physical harm
- longer-term contract

This minimises hazards in the workplace and promotes physical safety.

To satisfy security needs a manager can provide long-term employment contracts to enhance job security and introduce anti-
discrimination policies. This reduces an employee’s anxiety regarding their job status and promotes fair treatment. Ensuring that the
workplace is free from threat or danger allows employees to become motivated to fulfil the next need in the hierarchy

Love and Social needs are the desire for a sense of belonging and friendship.
belonging
needs This refers to the desire for interpersonal relationships outside or inside the workplace, for an employee, relationships at work may be between
other employees or the manager which can contribute to an employee feeling valued.

A manager can satisfy social needs by:

- encouraging team-based work
- celebrating employee’s birthday
- organising employee events
this can lead to employee motivation and allow them to fulfil the next need in the hierarchy.

Esteem needs Esteem needs are the desires to feel important, valued and respected.

This can allow the employee to gain a sense of belonging and increase their independence and attention whilst working.

In the workplace employees seek to satisfy their esteem needs by:

- achieving higher job status
- prestigious job titles
- financial bonuses for their performance

a manager can fulfil the esteem need of customer by:

- recognising good performance, giving them awards
- expanding job responsibilities
- promoting employees to a higher position for their hard work

this can lead to increased productivity and performance.

Self- Self-actualisation is the realisation of one’s full potential through creativity and personal growth.
actualisation
Self-actualisation is the final need in Maslow’s theory as it relies on the intrinsic motivation of an individual to accomplish their goals and
objectives. Employees who reach self-actualisation strive to achieve personal growth and advancement through their work and will work
harder in order to achieve that desired outcome.

In the workplace a manager can facilitate self-actualisation by:

- providing employees with challenging work

- opportunities for skill and knowledge development

- allow them to express their creativities

- understands that employees need motivation
- understands that if these needs are not met employees will be
unmotivated and less productive.
- no evidence suggests that there are five levels of need in real live, some
suggest there are only three.
- Maslow’s theory doesn’t take into account variables such as gender, cultura
age, differences
- Can be difficult to determine where the employees sit
- Can be hard to monitor the progress of the hierarchy.

MASLOWS THEORY OF NEEDS ADVANTAGES & DISADVANTAGES

FOUR DRIVE THEORY (Lawrence and Nohria)

A motivation theory that suggests that employees strive to fulfil four fundamental needs, these needs are classified as universal needs which
can be used to understand employee motivation. These four drives act independently, in order to satisfy the needs of employees, managers
need to find out the needs of each employee.
Drive to The drive to acquire is the desire to achieve rewards and high status.
acquire
Employees with a drive to acquire are motivated to receive both financial rewards and non-financial rewards for their work. In a business, a
manager can increase employee motivation and fulfil the drive to acquire by rewarding employees that contribute to business objectives.

Rewards that fulfil the drive to acquire include:

Non-financial
financial
- Bonuses for reaching performance goals. - Clear pathways for a promotion.

- Raise in wage. - Prestigious job titles

- Increase in salary due to promotion. - Increase in range of responsibilities and tasks.

- Time off

- Special allowance

Drive to The drive to bond is the desire to participate in social interactions and feel a sense of belonging.
bond
Employees with a drive to bond are motivated to engage in social activities with others to develop positive relationships. Within a business, a
manager can motivate employees and fulfil the drive to bond by developing an inclusive environment and encouraging employees to work with
each other. This involves promoting both work-related and personal interaction

Activities that develop a social workplace include:

 Introducing recreational team bonding activities such as a sports day.

 Allocating work projects to teams instead of individuals.

 Celebrating employee birthdays.

 Holding social events such as a company morning tea.

 Projects, support or fun

Drive to The drive to learn is the desire to gain knowledge, skills and experience.
learn
Employees with a drive to learn are motivated to improve their capabilities at work through training, mentoring and taking on new tasks. In a
business, a manager can motivate employees and fulfil the drive to learn by implementing programs that educate and upskill them. Furthermore,
businesses can increase the experience, knowledge and skills of employees by ensuring that jobs are regularly rotated.

Activities that can develop employee knowledge include:

 Conducting internal and external training seminars and courses.

 Pairing junior employees with a senior mentor.

 Allowing employees to regularly take on different types of tasks.

 Sponsoring employees to pursue further qualifications, such as a university degree.

 Stretch goals so employees can be motivated

Drive to The drive to defend is the desire to protect personal security as well as the values of a business. Business need to aim to minimise the
defend times an individual will feel fear or anger which drives them to defend themselves.

The drive to defend can motivate employees in two different ways:

1. Individual level: employees are motivated on an individual level to protect themselves from harm. Employees desire to preserve
their own safety by ensuring they receive fair treatment, have job security, and trustworthy managers.

2. Collective level: employees are motivated on a collective level to protect a business from harm. Generally, employees who feel a
sense of pride and connection to the values of a business desire to protect it from competitors and negative publicity.

A business can motivate employees and fulfil the drive to defend by aligning their vision and policies with employee values. In addition,
managers should lead by example, treat employees fairly and aim to increase levels of trust. This can then encourage employees to identify with
the values of the business.

Methods to improve the connection between a business and its employees include:

 Having a clear vision that employees can agree with.

 Developing policies using employee input.

 Ensuring that managers represent business values.

 Developing trust by supporting and collaborating with employees.

 Defend the business from threats (competitors, outside)

GOAL SETTING THEORY (Locke and Latham)

A theory that believes that employees are motivated by having goals set and receiving appropriate feedback regarding their achievement. The theory
states that working towards a goal can provide and employee with motivation to reach this goal and therefore improve performance.

Managers can use goals that fulfil five key principles to motivate employees in the workplace. This theory stated that working towards a goal can
provide motivation to reach that goal and therefore improve performance.

 Specific goals: goals need to be clear and specific

 Challenging goals: goals need to be challenging but achievable.

Satisfaction comes from the achievement of goals rather than trying to satisfy employee’s lives at work. More challenging and difficult goals = greater
effort by employees and higher work performance

The key principles of the goal setting theory:

When implementing he goal setting theory, managers should set goals on a regular basis with all employees across different departments. Managers can
motivate employees to complete tasks which can contribute to business objectives.

- Employees may focus on the goal too

much and then ignore other aspects of
their job.

If a task is too complex the employee will

almost be de-motivated by the goal.
 differences Similarities
Maslow and Four Drive:
- Hierarchal needs VS non hierarchal.
- Drive to defend is a latent drive meaning that the drive will be
employed to minimise negatives, whilst in Maslow’s theory its
implied that a negative will cause a person’s motivation to
deline.

EVALUATE THE MOTIVATION THEORIES:

ADVANTAGES DISADVANTAGES
MASLOW’S  Career advancement can improve the morale of  Can be expensive to fulfil some the needs such as
HIERARCHY employees implementing training to fulfil self-actualisation
OF NEEDS  Employee and employer communication increase  It focuses on a singular need at a time so if an employee
as the two will establish how to meet the drives struggles in two only one will be addressed.
together  Time consuming for the manager to establish a way to
 Social needs can improve corporate culture please the needs of all employees
 Can improve the achievement of business  The theory assumes all employees are motivated in the
objectives as employees with motivation perform same order and doesn’t take into consideration the personal
better needs of employees (therefore it may not work)
 Employees who reach self-actualisation can
improve business performance.
LOCKE AND  A goal comes with a personal reward which can  Can be time consuming to set goals
LATHAM’S motivate the employee further and make them feel  Can be demoralising if employees don’t achieve goals
GOAL valued. (they can feel bad about themselves)
SETTING  Goals are set collaboratively meaning that  The achievement of goals may take time away from other
communication and relationships can improve. tasks in the business
 Goals can contribute to the achievement of wider
business objectives
 After a goal is met an employee can feel motivated

LAWRENCE  Focuses on all 4 drives at once which means that  Can be costly to fulfil some the drives such as the drive to
AND NORIA’S the manager can ensure motivation doesn’t lack in acquire and the drive to learn
FOUR DRIVE any of the drives.  Can be time consuming to establish what each employee
 Increases communication needs and how to achieve it
 Can improve business relationships and corporate  Employees may become competitive through the drive to
culture (bond) acquire
 Can improve the skills of employees and therefore  It can difficult to manage all four drives at once as it can be
performance (learn) complex to keep track of all the needs.
 It is a simple framework on how to motivate 
employee and therefore may not be too difficult or
time consuming for the manager.
 MOTIVATIONAL STRATEGIES
Employees that are motivated can increase their performance levels and improve business competitiveness. In order to improve employee
motivation, managers must have a plan of action which encourages the achievement of tasks. Employees should be provided with the
necessary resources to sustain and direct their efforts towards work tasks.
STRATEGY CONTEXT
PERFORMANCE A FINANCIAL REWARD FOR REACHING OR EXCEEDING THE SET BUSINESS GOAL.
RELATED PAY
Performance related pay is a strategy that aims to encourage employees to perform well and reach goals by motivating them through
pay, such as increasing their renumeration. It can also work if employees see other earning extra pay for reaching set targets as it can
encourage them to do the same
(e.g. a pay rise, bonus (one off payment for an employee as a reward for meeting a target, it is not ongoing), commission (amount paid
for accomplishing a sale it is usually a percentage of the sale price)

* When implementing performance related pay, managers should carefully develop a reward system that is clearly linked to meeting
business objectives.

Employees will feel that they can personally gain by putting in more effort into their work.

advantages
 Quick: Can quickly motivate employees as money is
classified to motivate individuals easily
 Personal gain: Employees can personally gain from
meeting the set goals
 Business objectives: Renumeration can be directly and
indirectly linked to meeting the objectives (benefits the
business)
 Multiple employees: Can be used to motivate lots of
employees at once = improved business performance.
 Fast: provide an immediate and tangible reward for, this
means motivation will occur faster
 Performance: easily motivates higher performance in
order to receive rewards
disadvantages
 Shortcuts: Employees may take harmful shortcuts to reach
the objectives and get the reward
 Competitive: Can negatively affect the business’ corporate
culture due to competitiveness
 Rewards: Over time employees may require rewards to
increase in value
 Expensive: Can increase the expense of wages
 A manager may have to continuously increase money reward
to keep motivation going
 Time: may take time to implement bonuses and commissions
and planning them.
 Jealousy: Other employees doing the same work may expect
a similar level of pay, even if their performance is not as
good, leading to jealousies and lower morale.

Short term: possibility of more money. Motivating employees in the short term to work harder to achieve set standards

influence short-term employee motivation in that they provide an immediate and tangible reward for effort and/or commitment to the
business.

Long term: when financial rewards become an ongoing strategy, long term motivation can stop as when they reach a certain amount of
pay, they may be unmotivated.
CAREER THE UPWARDS PROGRESSION OF AN EMPLOYEE’S JOB POSITION THAT PROVIDES GREATER
ADVANCEMEN RESPONSIBILITY OR INCREASED OPPORTUNITIES
T
a non-financial strategy that can increase an employee’s performance through promotions or more challenging roles. The opportunity to
progress to a higher position can motivate employees who want more responsibility and authority in the workplace. In addition,
promotions can motivate employees that seek out higher levels of respect and status among their colleagues. A manager can use career
advancement as a motivation strategy by:

 Ensuring that employees are aware of any promotion criteria.

 Ensuring that employees are aware of any senior positions which need to be filled.

 Promoting from within the business to ensure that employees are constantly working towards career progression

 More responsibility.

Short term: employees strive to take on increased responsibility

Long term: if employees see the career path, they want in the business they will be motivated to achieve it. It also takes time to get
promotions.

disadvantages
Advantages
  High performance: Promoting employees can help a  Time: May not motivate employees immediately as
business retain high performing employees promotions take time to earn

 Cheaper: Promoting employees can be cheaper than  Increased wage: Promoting employees to higher positions
recruiting new employees will result in increased wages

 Personal: Can allow employees to achieve personal
improvement goals + Employees feel more valued by the
business as they are recognised.
 Employees: Satisfies Self-esteem and challenges
employees
 Wages: may motivate employees are their wages can
increase as they advance in the business, therefore they will
be more likely to work harder.
 Corporate culture: can improve corporate culture as
employees in the business feel more valued and considered
 Long term: leads to long term motivation as progression
can be ongoing
 Capabilities: Some employees may be promoted beyond
their capabilities and negatively affect the business
 Overlooked: Potential for employees to be demotivated if
they are overlooked for a promotion
 Competition: Can create rivalry and impact the corporate
culture
 New faces: career advancement will mean that employees are
promoted, and no external people are brought into the
business which can damage the presence of new ideas.
 Rivalries: can create rivalries in the business if more than 1
employee want the same position

INVESTMENT ALLOCATING RESOURCES TO IMPROVE EMPLOYEES’ SKILLS AND KNOWLEDGE.

IN TRAINING
Strategy that equips employees with the expertise needed to perform at a higher level. It motivates employees by providing
opportunities for employees to learn and develop their abilities and skills through their work this shows that they are valued by
the business and that they care about their skills. A manager can implement investment in training by:

 Providing employees with mentoring.

 Training programs within the business.

 Paying for employees to be trained by other professionals outside of the business.

disadvantages
Advantages
 Improved skills: Employees can undertake tasks in a  $$: Training programs are expensive
more productive manner due to improvements in their
skills  Time: Training takes time and can delay other tasks

 Relationships: Can build a strong relationship between  Absences: Employees may be absent from work to undertake
employees and management training

 Value: Employees may feel valued as the business  Relevance: Training may not be directly relevant to the exact
wishes to help advance their skills job of each employee as they perform different tasks.

 Satisfaction: Employees may experience improved job

satisfaction as they can perform their roles better

 Skilled workforce: employees become more skilled

which can drastically improve productivity

Short term: employees are motivated short term as they have improved their skills and knowledge, allowing them to perform better

Long term: an on-going investment in training creates a learning environment which can lead to long-term motivation.
SUPPORT AS A PROVIDING EMPLOYEES WITH ANY ASSISTANCE THAT IMPROVES THEIR SATISFACTION AT WORK.
MOTIVATION
STRATEGY Strategy that aims to ensure that managers provide employees with the resources necessary to perform to a high level. Support
(LONG TERM) motivates employees as it makes them feel valued, understood and considered by managers. This can also improve employee morale. A
manager can support employees by:

 Regularly checking on their health and wellbeing.

 Praising and encouraging good performance.

  Recognising achievements using awards.

 Accommodating for an employee’s out-of-work obligations.

Support will motivate employees because they are able to feel valued by the business as know that they can rely on their manager and
business to support their wellbeing and health.

advantages
 Staff turnover: Employees who feel supported are less
likely to quit
 No cost: Implementation involves very few expenses unless
the business is willing to contribute into wellbeing such as by
opening a wellbeing centre.
disadvantages
 Relies on managers having good interpersonal skills.
 Time: It can be time consuming for the manager to
maintain as focusing on the wellbeing of employees and
providing support constantly can take time away from other
tasks.

 Relationships: Employees feel valued by managers as their  Long process: May not motivate employees quickly as
wellbeing is supported, this can improve their performance. improving wellbeing is a long process

 Increases employee morale and can lead to a long-term  Relies on good communication skills
positive corporate culture
 Can be costly to implement support strategies
 Can reduce staff absenteeism

Short term: improves motivation by helping employees to complete tasks & pass difficult times.

Long term: positive culture in the long run because if employees feel constantly valued within the business their motivation improves
for the long run.
SANCTION AS A PENALISING EMPLOYEES FOR POOR PERFORMANCE OR BREACHING BUSINESS POLICIES.
MOTIVATION
STRATEGY Employees are motivated by sanction as they fear punishment from management. When sanction is utilised, employees are more likely
(LONG TERM) to abide by the business’s policies, minimise errors and put effort into their work. The idea of sanctions is that employees will be
motivated for fear of being sanctioned. A manager can implement sanction by:

 Verbally warning employees.

 Providing written warnings.

 Dismissing poor performing staff.

disadvantages
advantages
 Can pressure employees to act in accordance to  Can create a negative corporate culture
instructions
 Level of trust can decrease
 Can motivate employees immediately
 Employees may leave and the business will have to find new
 Does not incur any cost ones which can take time and cost money

 Fast, direct motivation  Employee morale decreased

 The instructions are clear and therefore can be easy to  Can result in long term resentment and avoid employees from
follow. taking risks which could impact the business.

 Can create fear when going to work and employees may not work
as well.

Short term: employees will feel pressured to do well quickly.

Long term: can result in a negative corporate culture as employees will feel targeted

LINKING TO THE MOTIVATIONAL THEORIES:

Maslow’s hierarchy of needs:
 career advancement links with self-actualisation by providing challenging work that promotes self-growth.
  Safety and security needs will link with esteem needs as by providing security an employee can feel safe and valued.
 Support links to esteem needs by providing an employee with a supportive environment and sympathy for their personal needs.
Four Drive:
 career advancement fulfils the drive to learn by providing new challenging skills that may provide employees with more skills
 investment in training will link to the drive to learn by improving skills
 performance related pay will link to the drive to acquire by providing employees with a financial reward that benefits them.

SHORT TERM OR LONG TERM

When implementing strategies to motivate employees, a manager must consider the length of time they have to improve employee
motivation. In some circumstances, it is important to quickly motivate employees to complete a necessary task. In other situations, a manager
may need to boost and sustain employee motivation over a long period of time. Time must be considered by a manager as various motivation
strategies can have positive and negative effects on short and long-term employee motivation.

SHORT TERM EMPLOYEE MOTIVATION

Boosting employee motivating in the short term this is in situations where the manager needs to quickly motivate the employees and
immediate gain is needed.

LONG TERM EMPLOYEE MOTIVATION

Long-term employee motivation is employees having a high level of job satisfaction that can be sustained. Sustained job satisfaction usually
occurs when employees consistently feel valued by the business and have strong relationships with management and their colleagues. To
develop and sustain job satisfaction, motivation strategies that improve corporate culture and provide employees with opportunities to improve
themselves should be used.

TRAINING OPTIONS:
Refers to where training is done, this can be externally or within the business. Training is the process of improving an employee’s skills &
abilities so they’re able to perform their job more effectively.
- Improves abilities
- Increases job satisfaction
- Can take greater responsibility which increases self- esteem.

ON-THE-JOB TRAINING (in the workplace)

 On-the-job training enables employees to interact and become familiar with the equipment, machinery or processes in the workplace,
which are related to their role. This form of training can occur while employees are performing their role and duties within the workplace.
Examples of on-the-job training include:

 Mentoring / coaching: Being coached by an existing employee on how to perform a specific role.

 Having a senior staff member act as a mentor who continually supports employees and provides advice on how to perform tasks.

 Job shadowing an experienced employee working in the same position.

 Hiring an external trainer to give on-site demonstrations of specific tasks.

 Having employees rotate between different jobs to gain experience in a variety of roles.

advantages disadvantages
Employees can perform their role while training, which minimises loss of Employees who are not being trained may be disrupted
productivity
Employees completing tasks may become distracted by what is going on in the
Individuals who train staff can develop relationships workplace

Employees can quickly become familiar with the equipment reducing the Senior staff may be too busy and unable to focus on other responsibilities as they
time taken during training. are too busy training.

Often less expensive then performing external training as there is no extra The quality of the trainer can vary, they may not be an experienced trainer.
travel costs.
Poor habits could be passed on through the business if the trainer is not
experienced.

OFF-THE-JOB TRAINING

Off-the-job training will often involve sending employees off-site to perform specialised courses where professional instructors teach employees
how to perform their job to a higher standard. Examples of off-the-job training include:

 Seminars

 Attending conferences that provide theoretical knowledge to employees.

 Performing simulations or workshops where employees apply new skills.

 Attaining specific qualifications from TAFE, university or other higher education course, that are funded by the business.

advantages disadvantages
Receiving training from professionals can enable employees to perform their Having employees away for training can disrupt the workflow of the business,
roles to a high quality. lowering productivity.

External experts can provide new perspectives on how staff can perform their Employees may struggle to apply new knowledge into the workplace if it is only
role to a higher standard. information based.

Employees are likely to perform training in an environment meant for training Employees may be unable to translate learned skills to the business’s equipment.
which can reduce distractions.
May involve paying external organisations, which is often expensive.
Employees’ employability may improve if they receive qualifications or
accreditations.
Accommodation and travel costs may become expensive, especially when a group
of employees are being trained
Does not take more experienced employees away from their jobs to train other
employees, enabling them to remain productive in their own tasks.

Less stressful for employees training as they are not on-site In front of
customers
 PERFORMANCE MANAGEMENT STRATEGIES:

Performance management is an assessment of employee’s present work performance and how this can be directed in the future to achieve both
business & employee objectives. Performance management allows human resource managers to determine if employees are completing their
tasks to the desired quality and identify areas that need improvement.

MANAGEMENT BOTH MANAGERS AND EMPLOYEES COLLABORATIVELY SETTING INDIVIDUAL EMPLOYEE GOALS THAT
BY CONTRIBUTE TO THE ACHIEVEMENT OF WIDER BUSINESS OBJECTIVES. THIS GIVES THE EMPLOYEE
OBJECTIVES DIRECTION ON WHAT IS EXPECTED OF THEM AND HOW THEY WILL BE ASSESSED.

Aims to improve performance of a business by clearly defining objectives that are agreed to by both management and
employees. Managers will also regularly provide feedback to employees regarding their progress towards achieving their individual
objectives. If an employee is struggling to achieve their objectives, a manager can adjust the employee’s current tasks, implement
appropriate training or extend the completion of the goal.

A process of defining specific objectives in a business and then deciding on how this can be achieved by what the employee can
contribute to the business.

In this process: business objectives will be defined, the individual employee goals will be considered, there will be regular monitoring
and there will be performance feedback.

The 5 key principles of goal setting apply to this: (set goal together, commitment, challenge, task complexity, feedback)

advantages
Alignment: Aligning employees and business objectives
contributes to the achievement of both employee & business
objectives
Relationships: Collaboration between manager and
employee when setting objectives can improve performance /
strengthen corporate culture
Employee achievement: Employees may gain a sense of
achievement if they reach individual goals, increasing their
motivation
disadvantages
Shortcuts: Employees may take harmful shortcuts in order to
achieve business objectives
Demoralisation; Failure to achieve personal objectives may be
demoralising.
Demotivating: Employees may become demotivated if they do not
receive compensation or praise aflter achieving objectives.
Time consuming Developing objectives that benefit both the
business and employees can take time.

Involvement: As employees are involved with the process of Cost increased: Employees that achieve objectives may desire
developing objectives, they will be more committed. compensation or promotions, increasing costs.
involvement in setting
goals and choosing the course of action to be followed to
achieve those goals, they are more likely to work productively
and fulfil their responsibilities.

Time efficient: Reviewing the performance of employees

may be done quickly as success is measured against the
achievement of objectives.
PERFORMANCE A MANAGER ASSESSING THE PERFORMANCE OF AN EMPLOYEE AGAINST A RANGE OF CRITERIA, PROVIDING
APPRAISALS FEEDBACK AND ESTABLISHING PLANS FOR IMPROVEMENT IN THE FUTURE.

The manager will use the established criteria to determine how well employees have performed over a period of time. This data gives a
manager insight into whether an employee’s performance is reaching the desired standard or is insufficient. Managers can use
performance appraisals to identify any problems amongst employee performance and make decisions about training, promotions and
dismissals.

1. Formal: occurs on annual basis through a meeting

2. Informal: oral or written feedback on particular tasks

disadvantages
advantages
Communication increases: between managers and employees Poor appraisals: Employees may lose motivation if they
during one-on-one reviews can improve workplace relationships. receive multiple poor performance appraisals.

Resolve issues. : The results from this process can outline areas time consuming: as appraisals review employee performance
 where employees are struggling, and training can be implemented individually + provide feedback on how one can improve
to resolve issues.
expenses of rewards: Staff who perform well may desire a
Staff: Can provide information for managers to determine if staff promotion or financial reward, increasing expenses.
is right for the business and if any staff require a dismissal.
Cost: Training courses provided to address employee weakness
Can result in job promotion, training & development, will increase business expenses.
counselling (if managers are able to understand where employees
are)

Feedback: can lead to having clear feedback as the manager

knows what they are looking for and how to improve it.

SELF- AN EMPLOYEE ASSESSING THEIR INDIVIDUAL PERFORMANCE AGAINST A SET CRITERIA.

EVALUATION
Self-evaluation enables a manager to gain insight into an employee’s perception of their own ability. Self-evaluation can create a
discussion between managers and employees regarding the employee’s perspective on their performance. The manager can therefore
identify what an employee believes their weaknesses are and put in place strategies to improve these areas. The employee will assess
their strengths, weaknesses and improvements.

Purpose: for an individual to reflect on their performance prior to a manger / employee discussion

advantages
Understanding: Manager can gain an insight into an employee’s
understanding of their own strengths and weaknesses.
Improvement: Employees can increase their employability as they
highlight their own weaknesses to managers which can lead to relevant
training opportunities.
Morality: Employees may be empowered to improve performance as
they are directly involved in their own performance management.
disadvantages
Bias: If an employee is biased or dishonest in assessing
their performance, a manager will not gain reliable
information. The employee may focus on their strength
over their weaknesses which can create bias in the result.
Time consuming for employee: The development of
criteria to be used in a self-evaluation can be time
consuming and take time away from other employee
tasks.

Can save managers time as employees evaluate their own Cost: Training courses provided to address employee
performance. weakness will increase business expenses.

Training: can highlight the need for training and allows employees to
request training opportunities to assist them to improve work
performance and productivity.
Confidence: employees may lose confidence if the
manager does not agree with their evaluation.
Complex: can be complicated to review one’s own
performance for a long period of time.
EMPLOYEE A RANGE OF EMPLOYEES FROM DIFFERENT LEVELS OF AUTHORITY ASSESSING ANOTHER EMPLOYEE'S
OBSERVATION PERFORMANCE AGAINST A SET CRITERIA. (360-degree feedback)

Managers can conduct employee observation to gain a broad insight into an employee’s performance. Employee observation usually
occurs across different days and input is gathered from employees at different levels within the business. This method can provide a
comprehensive picture of an employee's strengths, weaknesses and manner within the workplace

advantages
Interconnectedness: Involves a variety of employees, improving
the interconnectedness of the business and corporate culture.
Perspectives: The manager can gain multiple different
perspectives about an employee that they may not have had
previously. (Other stakeholders including customers and suppliers
may be involved in the 360- degree process)
Role model: Employees that are observing others may identify
strengths of other employees and then mimic this behaviour.
Valuable feedback: Employees may be responsive to feedback
provided by peers as they value their opinion.
Broader opinions: Having various different opinions can result
in a better understanding – often it is useful to seek a variety of
opinions on the performance of employees.
disadvantages
Bias: Results may be misleading if employees are aware,
they are being evaluated, as they may only work harder
under the presence of an observer. Workflow disruption:
Making other staff assess an employee's performance can
disrupt their normal workflow.
Time: It may be time consuming for many employees to
observe their peers.
Cost: Training courses provided to address employee
weakness will increase business expenses.
Trust: can only be applied in businesses with a high degree
of trust to ensure that there is no bias.
Relationships: The process could be damaging if any one
of the participants has a personal vendetta against the
employee.

*SAC TIP = it is important all performance management strategies are conducted fairly, and employees are clear about their objectives.

TERMINATION MANAGEMENT
retirement RETIREMENT IS AN INDIVIDUAL DECIDING TO LEAVE THE WORKFORCE AS THEY NO LONGER WISH TO WORK.
(voluntary)
when an employee voluntarily leaves the workplace and the workforce. There is not set age for people to retire. Businesses may provide
counselling to the employee in regard to financial matters/lifestyle considerations, they may also give the employee gifts or a retirement
party, which helps leave a positive impression and maintain a positive culture. Retirement generally comes down to the age that an individual
can access their superannuation and the qualifying age for the Age Pension

entitlement: unpaid wages, superannuation

redundancy REDUNDANCY IS AN EMPLOYEE NO LONGER WORKING FOR A BUSINESS BECAUSE THERE IS INSUFFICIENT
(voluntary WORK, OR THEIR JOB NO LONGER EXISTS.
or
involuntary) reasons for redundancy:

 There is no longer enough work for an employee or a group of employees: Insufficient work is often due to a business
undergoing change. For example, new technology may replace the roles of some employees which makes their roles within the
business no longer required.

 The business cannot afford to pay the current level of employees that they have: If a business is needing to lower costs, they
may make numerous employees redundant and merge the roles of staff to reduce their wage expenses.

 The company shuts down.

 Duties are allocated to other employees.

 Voluntary or involuntary:

 Voluntary redundancy: manager announces to employees that the business will be making positions redundant and provides a
group of employees with the opportunity to nominate themselves to become redundant.

 Involuntary redundancy: occurs when a manager notifies employees that their position has been made redundant and the
employee has to leave against their will

Redundancy pay: The amount of redundancy pay will usually depend on how long the employee has been continuously employed in that
workplace. Other entitlements, such as payment for accrued annual leave or long-service leave, may also be owing to the employee when
they leave the business.

Notice of termination: an employer must provide the employer with a written notice of the day of termination.

resignation RESIGNATION IS AN EMPLOYEE VOLUNTARILY TERMINATING THEIR OWN EMPLOYMENT, USUALLY TO TAKE
(voluntary) ANOTHER JOB POSITION ELSEWHERE.

Resignation can be due to a variety of reasons, such as better opportunities for career advancement, better wages and conditions or a
preferred management style at a different business.

Reasons may include: a new job, change of lifestyle, boredom.

Entitlements: period of notice given to business, any pay for work completed such as long service leave.
dismissal DISMISSAL IS THE INVOLUNTARY TERMINATION OF AN EMPLOYEE WHO FAILS TO MEET REQUIRED
(involuntary STANDARDS OR DISPLAYS UNACCEPTABLE OR UNLAWFUL BEHAVIOUR.
)
Dismissal is informally known as the ‘firing’ or ‘sacking’ of an employee. If an employee has ongoing poor performance or is failing to
meet the requirements of the business, a manager can terminate an individual's employment. While this is a valid form of termination, a
dismissal needs to take place fairly and lawfully. When a business does not conduct dismissal properly, an employer can be found guilty of
unfair dismissal.

Summary: with no notice. On notice: dismissed with prior notice

Entitlement issues: unpaid pages, annual leave, notice given.

entitlement ENTITLEMENTS: RIGHTS OR PRIVILEGES GRANTED TO THE EMPLOYEE BY LAW OR CONTRACT
issues
After an employee is terminated, there is a range of entitlement issues an employer must consider. If an employer fails to fulfil these legal
obligations, the employees affected can take legal action to receive compensation.

An employee gets paid over their long service leave so when their employment is terminated, they must be paid for that amount.
transition The process of leaving a business can be a very difficult time for many employees. This can create transition issues such as financial
issues uncertainty, stress, and difficulty in obtaining new employment. While managers are not legally obligated to provide assistance to staff
 during this process, it is seen as a socially responsible and ethical consideration for managers to respond to these issues.

A manager can address transition issues by:

- Offering resume writing or interview training to employees to improve their employability.

- Provide networking support in the form of contacts that an employee can use to gain employment.

- Flexible working hours to allow employees to attend interviews at other businesses.

- Introducing counselling and financial services to ease the uncertainty of leaving staff.

- Holding celebrations and providing recognition of the achievements of staff who are leaving the business.

- Slowly reduce the working hours of a retiring employee to help them adjust to a lifestyle change.

advantage
- Save money of wages
- Getting rid of the less productive staff can increase productivity
- Removing employees who undertake bad behaviour
- Change in structure of the business (can take time to re-structure)
disadvantage
- Time and cost of having to hire again
- Productivity can be lost if a good employee resigns
- Reduced morale of employees, especially in redundancy and
dismissal.
- Adds pressure to remaining employees.

PARTICIPANTS IN THE WORKPLACE

Workplace participants actively influence or provide input about matters related to workplace relations. This contribution generally occurs in
order to reduce and resolve conflicts, promote communication within the workplace and assist with determining employee wages and working
conditions.

The role of Human resource managers are individuals who coordinate the relationship between employees and management within businesses. They
HR conduct activities such as the hiring, training and dismissal of employees.
managers
 Implementing agreements: The HR managements will implement agreements into a business once they have been approved by the FCW, it is
their role to notify the employees about these and to notify new conditions and wages.

Represent the employer: the HR manager will represent the employer in negotiation agreements with employees or their representatives.
The role of the role of the employees is to work towards the achievements of business objective in exchange for their wage and fait conditions. Often
employees employees will seek for better conditions and motivation.

Objectives:
Income
Job security
Skills

 Engage
with the
process of
developing
new agreements such as negotiating conditions directly with the employer if the union is unable to.
 Follow workplace procedures and rules in exchange for a wage and appropriate conditions.

The role of Employer associations are advisory bodies who assist employers in understanding and upholding legal business obligations. The employer
employer associations act in the same way that unions do as they offer advice, support and representation for the emploters.
associations

 C
a
n
 advise employees or represent them in workplace disputes.
The role of Unions are organisations composed of individuals who represent and speak on behalf of employees in a particular industry to protect the rights
unions of employees and improve their wages and working conditions.

 Provide services to employees: counselling, advice, provide assistance with finance and insurance.
 Organise industrial action: often organise industrial action to get the employees’ rights heard
 Legislation: notify any changes in policies or legislation in their industry

The role of The Fair Work Commission (FWC) is Australia’s independent workplace relations tribunal and has a range of responsibilities outlined by
the fair work the Fair Work Act. (part of the government) – they sit in the middle and are unbiased. The commission has the power to deal with unfair
commission dismissals, making and reviewing awards, setting a national minimum wage etc.

AWARDS AND AGREEMENTS

 Two common methods of determining wages and conditions are awards or agreements. Regardless of the method chosen, every business
must abide by the national employment standards set by the Fair Work Commission, or they may face legal consequences.

 Awards are legal documents which outline the set wages and conditions which must be provided to employees across an entire
industry.

 Agreements are legal documents developed between employees, employers and their representatives through mutual agreement of
wages and conditions. Agreements can be developed by an individual business or a group of very similar businesses.

Awards AN AWARD IS A LEGAL DOCUMENT WHICH OUTLINES THE MINIMUM WAGES AND CONDITIONS OF WORK
ACROSS AN ENTIRE INDUSTRY.

- This can be referred to as an industry award. Businesses that use awards as their method of determining wages and conditions
provide their employees with the national minimum standard for their relevant industry.
- These minimum standards are set by fair work commission, which develops industry awards and applies to businesses within a
particular industry.
- An award acts as a safety net for employees as employers must provide them with the minimum wages and conditions relevant
to their industry.
- Less than 20% of the workforce come under award wages.

Businesses that use an award are expected to uphold national employment standards (NES), set by the FWC, such as:

 Annual leave

 Parental leave

 Maximum weekly working hours

 Redundancy entitlements

 Notice of termination and redundancy pay

 Public holidays

 The right to request flexible work arrangements

agreement AN AGREEMENT IS A LEGAL DOCUMENT WHICH OUTLINES THE WAGES AND CONDITIONS OF EMPLOYEES
AND IS APPLICABLE TO A PARTICULAR BUSINESS OR GROUP OF BUSINESSES, THIS IS SET BY THE EMPLOYER
s AND UNION THROUGH DISCUSSION.

The process of establishing an agreement is known as collective bargaining. During this process, employees can be represented by a
union official to negotiate conditions and employers can be represented by members of their employer association.

The role of FWC in agreements:

 responsible for reviewing and approving it.

 For an agreement to be approved it must exceed the wages and conditions outlined in the relevant industry award. Unlike
awards, agreements allow for businesses to determine wages and conditions that suit both employers and employees.
 Must ensure it upholds the 10 NES

To be approved by the FWC, enterprise agreements must:

 provide employees with wages and conditions which are better than the relevant award.

 be mutually agreed upon between employees and the employer and documented in writing.

 comply with the national employment standards set by the FWC.

Once an enterprise agreement is accepted it is viable for the period of time stated in the agreement. The document must be updated every
couple of years to meet changes in employment standards and worker expectations. Additionally, once an agreement is established, the
relevant award no longer applies to employees within that business.
Ten National Employment Standards
 Maximum weekly hours.
 Requests for flexible working arrangements.
 Parental leave and related entitlements.
 Annual leave.
 Personal/carer's leave, compassionate leave and unpaid family and domestic violence leave.
 Community service leave.
 Long service leave.
 Public holidays.
 Notice of termination and redundancy pay

DISPUTE RESOLUTION

A dispute can arise in any workplace. Disputes can occur between an employee and a manager, two employees, or an employee and the business
in general.

Common causes of disputes relate to an employee’s wages, working conditions, discrimination, workplace safety and policies within the
workplace. Withdrawal of labour by employees is known as strike action, while refusal by employers to allow employees to work is known as a
lockout

GRIEVANCE PROCEDURES
A grievance procedure is a formalised set of steps that employees and employers can follow to resolve workplace disputes. Individuals within the workplace
can use grievance procedures to address and resolve their complaints. A dispute proceeds to the next step of a grievance procedure if the issue cannot be
resolved at the previous stage. Each successive stage of a grievance procedure increases in formality and seriousness. Below are typical steps of a grievance
procedure:
MEDIATION
Mediation is an impartial third party facilitating the discussion between disputing parties to help each side of the conflict reach a resolution themselves.
Mediation is a more formal method of the dispute resolution process. As a third party, a mediator assists the conversation by ensuring the discussion is
productive. However, the mediator does not offer their opinion or make decisions. This assistance encourages the parties involved to reach a decision
cooperatively.

Done by commonly by the Human Resources manager

DISADVANTAGES
ADVANTAGES
- Promotes positive working relationships for the future as - May not be effective for resolving all business disputes, as a final
disputing parties reach a decision together. decision may not always be reached.

- A mediator facilitating negotiation can reduce the likelihood of - Mediation does not always result in a legally binding decision
communication breaking down between disputing parties. meaning parties could go back on their agreement in the future.

- It is less expensive than more formal dispute resolution processes This process can be a waste of time as a final decision is not always
as it usually occurs in an informal setting. reached.

- A disputing employee has control over the final decision,

meaning they are more likely to be satisfied at the end of the
process.

ARBITRATION
Arbitration is an independent third-party hearing argument from both disputing parties and making a legally binding decision to resolve a conflict.
Arbitration is the most formal step in the dispute resolution procedure and occurs in
a court-like setting. Arbitration can be conducted by the Fair Work Commission with a tribunal member making the final decision. Arbitration is necessary
when conflicting parties are unable to reach an agreement themselves through mediation and less formal procedures.

Done by: Fair work commission is a more formalised environment and process.

DISADVANTAGES
ADVANTAGES
- Guarantees that a final decision is made by the third party, - The business has reduced control over the final decision.
enabling the business to move forward from a dispute.
- This process can harm future workplace relations as it is likely
- The final decision is legally binding, which prevents the same that one party involved in the dispute will be unhappy with the
dispute from occurring again between the two parties. final decision.

- Employees are not coerced into agreeing to something they do - Employees have reduced control over the final decision and
not want to. therefore may be unhappy at the end of this process.

- The process of hearing both sides in an external court-like setting

is time consuming for both parties.

Arbitration is the most expensive dispute resolution process due to costs

incurred from conducting hearings.

:
 AOS 3 – OPERATIONS MANAGEMENT

The coordinating and organising the activities involved in producing the goods and services that a business sells to customers. E.g. a
bakery buys ingredient and then uses them to make bread.

Effective operations management reduces the amount of time taken in producing goods and services with the fewest possible resources,
without impacting the overall quality of the final product. In order to improve the operations management system, operation managers
have to implement strategies that will contribute to the achievement of various business objectives.

Productivity: The effectiveness of productive effort which is measured in terms of the rate of outputs produced compared to the inputs
required.

GLOSSARY FOR AOS 3:

• Customised: when the features of a product are altered or ‘tailored’ to suit each specific customer.
• Standardised: where all finished goods are the same. For e.g. products made by a machine in the factory will all be the same.
• Capital intensive: produced predominantly using capital (equipment and machinery) rather than labour.
• Labour intensive: produced predominantly using the effort and skill of people, that is ‘labour’.
• Tangible: physical products that can be handled and stored before they are sold to the consumer.
• Intangible: a service cannot be physically touched or stored, and the consumer needs to be present when the service is being delivered.
• Forecasting: The process of predicting demand of a product or service in an upcoming period of time. This can help understand which materials and other
resources are needed and in what quantities.
• Master production schedule (MPS): a plan of what a business intends to produce, in what quantities over a set time frame taking into account forecast
customer demand and production costs.
• Materials requirement planning (MRP): a An itemised list of all materials involved in production to meet specified orders (this is created after a
business has a clear understanding of the quantities to be produced and time frames involved).
• Just in time (JIT): an inventory management system which aims to avoid holding excess stock (either as inputs or finished goods). Supplies arrive just as
needed for production, and finished products are immediately despatched or sold to customers.
• Automation: replacing human activity with technology
• Automated production line: process of raw materials enters, and finished products leaves with little or no human invention
EFFICIENCY Refers to how productive the business is with the use of their resources when producing a good or service (e.g. maximising
productivity). / the rate at which outputs are generated from outputs

An operations manager aims to maximise productivity in order to improve the levels of efficiency. They may implement strategies to
optimise the use of the business resources which improve the level of efficiency in operations and can have positive impacts on the
performance of the business, such as:

- Technological developments: automated production lines can be incorporated into the production process to improve
efficiency; this allows operations to occur faster and reduce cost and errors.
- Improved communication: between manager and staff can boost production and ensure that there is efficiency in the
business.
- ‘just in time’: by ensuring that the right amount of materials arrive as they are needed the business doesn’t need to maintain
inventory, reducing the chance of damaging or losses and minimising waste – this ensures the business only produced what
is needed when it is needed.

EFFECTIVENES Refers to the extent to which a business achieves its stated objectives.
S
Operations managers must optimise a business operations system, by selectin the most suitable strategies to lower productions costs,
improve quality and reduce wastage. The operations manager can ensure that customers are provided with a high-quality product at
the best possible price, and by satisfying customers they are more likely to purchase items in the future and increase sales and
profitability. Therefore, improving the effectiveness of operations can positively impact achieving business objectives.

- Reduced costs: in the process of operations which impacts profit positively

 - Technological developments: new technology such as an updated in software’s can incorporate into the production process
of a business, this can assist to reduce errors and waste and thereby reducing costs

Strategies to - Technology
improve - Quality
operations - Waste minimisation
management - Materials management.

The relationship Operations managers can contribute to the achievement of business objectives by improving levels of efficiency and effectiveness in a
between business’s production process. Additionally, operations managers are in charge of implementing strategies that optimise operations,
operations and improve business performance and achieve business objectives. The relationship between operations and objectives Is key, because
business objectives without operations there is no production of goods and service and meaning there is nothing to sell. Without generating income from
sales, businesses cannot achieve objectives.

Business objectives Operations objectives Operation strategies

Make a profit Reduce costs Through just in time
Increase market share Improve quality Quality control
Provide a return for shareholders Increase productivity Use automated production lines
Contribute to community wellbeing Minimise waste Establishment of lean management

*to answer these questions, introduce what operations management is, what business objectives are and how the two links to each
other and work together.

ANSWERING EFFECTIVENESS AND EFFICIENCY QUESTIONS:

 Define the concept you are being asked to talk about

 Link the concept to effectiveness
 Link the concept to efficiency
e.g. ____ are highly accurate and can reduce the amount of wasted materials as there are less errors in the production process.

KEY ELEMENTS OF AN OPERATIONS SYSTEM:

Operations managers oversee the production of a good or service. This responsibility includes selecting the resources used to produce the good
or service, implementing the procedures to transform resources into a finished product and finally, delivering the final good or service for
customers to purchase.

INPUTS Inputs are the resources used by a business to produce goods and services.

Businesses have a variety of resources needed to produce a good or service for customers. The inputs are carefully selected to best suit them
and can help them produce the best quality possible

Inputs include:

- Raw materials: e.g. unprocessed minerals, trees

- time resources: it is key that businesses use their time correctly
- Labour resources (employees)
- Machinery or equipment
- Information: the knowledge within the business
- Labour: human skills and human effort.
- Money, capital and labour.

PROCESSE Processes are the actions performed by a business to transform inputs into outputs.
S
Businesses perform various actions to transform their inputs into a finished good or service. These actions performed during the process of
producing goods or services are called processes. Processes will differ for each business depending on what the business is producing.
Processes include, but are not limited to:

• Mixing • Designing • Baking • Computing • Assembling • Constructing • interviewing customers • teaching

OUTPUTS Outputs are the final goods or services produced as a result of a business’s operations system which are delivered or provided to
customers.

Outputs are the final key element of an operations system. They are the final goods and services that have been produced by a business's
operations system. Outputs should meet customer expectations relating to quality, cost and availability of the product. The quality of an
output is impacted by the inputs and processes in a business’s operations system.
 Tangible: goods (this means you are able to physically touch the item; it is a thing)

Intangible: services (this means it is a thing you can’t touch, a plane ticket) (e.g. treated patients, customer who has received their service)

CHARACTERISTICS OF MANUFACTURING AND SERVICE BUSINESSES

MANUFACTURIN A manufacturing business is one that utilises their operations system to produce physical goods – having to produce tangible goods
G BUSINESS there are various unique characteristics of their operations system. This means that the business produces a physical product that they
can sell, for example a retail company
SERVICE Service businesses utilise their operations system to produce intangible products, that is products that cannot be touched / non- physical
BUSINESS products, due to this there are various unique characteristics of a service business’s operations system. A service business may be a
hospital or a legal firm, there is no physical product but instead they sell their service.

Services that are performed rather than produced, this means they are received at the same time they are delivered.

MANUFACTURING (GOODS) SERVICES

TANGIBILITY Tangible: The physical good that can be touched (IKEA Furniture) Intangible: Something that is not a material; cannot be seen
or touched (lawyer service)
PORDUCTION The production of the good and consumption are separate. Production and Consumption often occurs simultaneously. The
PROCESS -distributed to retailer lawyer comes to you and provides you with their service.
-purchased by customers

CUSTOMER Minimal level of customer contact High level of customer contact

CONTACT
STORABILITY Can be stored as inventory. Very difficult to store. However, records of the service may be
kept.
CONSISTENCY Can be standardized, consistent quality e.g.: The furniture is Often the service is tailored to meet the needs of the individual
consistent with production and quality. e.g.: depending on the case the lawyer provides a different
service
A good is produced A service is performed
CUSTOMISATIO Not customised but rather customers customise their needs to fit the Customised to suit the needs of each customer
N good
EXAMPLE - A car - A doctor’s service
- A makeup product - A lawyer’s service

SIMILARITIES  Share the same operations management goals such as improving productivity, quality and reducing waste
 Share the same elements of inputs/processes/outputs
 Deal with customers and suppliers

TECHNOLOGICAL DEVELOPMENTS:
 Technology has a major influence on an operation. This has improved the effectiveness and efficiency of a business tremendously:

 Less staff is required (efficiency)

 Less time is used (efficiency)
 If less staff and time is used, then business expenses are reduced which can equate to profit (effectiveness)

It is important that technology is used intelligently. Technology can be costly but without its businesses risk falling behind their competition.

1. Computer Aided Design

2. Computer Aided Manufacturing
3. Website development
4. Automated production lines

advantages
+Increases productivity (reduces costs and increases output)
+Improves safety by reducing danger and physicality of work practices
+Reduces Waste
+Greater accuracy and reliability in production
+Reduces harmful environmental impact
+Improves competitiveness and customer satisfaction
Disadvantages
-Causes staff redundancies and factory/department closures.
-Initial capital costs may be prohibitive to some businesses.
-Requires re-skilling and training of existing staff.
-Machinery breakdowns can be detrimental to a business during production.
-Equipment needs to be continually upgraded and replaced.

Computer- DIGITAL TOOL THAT ENABLES BUSINESS TO GENERATE AND MODIFY TECHNICAL ILLUSTRATIONS OF A
aided design PRODUCT IN 3D. THIS MAY IMRPOVE PRODUCTIVITY AND THE QUALITY OF THE DESIGN AS DETAILED
DIAGRAMS ARE CREATED BY MACHINERY RATHER THAN BY HAND. THIS ALLOWS FOR THE BUSINESS TO VIEW
THE END PRODUCT AND MAKE ALTERATIONS PRIOR TO IT BEING PRODUCED.

CAD software can facilitate and streamline the design process, it can develop 3 dimensional designs that enable businesses and clients to
view a product plan from multiple angles before the product is produced.
- This may allow for production to be accurate as mistakes and errors can be spotted and fixed prior to production.
- For the product to be viewed before production
- Enables a product to be tested before going into production.
- Enables product to be costed before going into production (e.g. if it’s too expensive alterations can be made)

CAD is used for any business that requires a design such as fashion to car manufacturing businesses – the technology can also determine
the costs, materials and time associated with a particular design.

efficiency
Time: Reduces the time and labour resources used to design a
product which improves productivity as there is a good use of
time resources
Accuracy: using technology can improve the accuracy of the
product plan which means that the product can be developed
easily as there is a clear plan to follow. This can improve the
business’s productivity with materials as less mistakes occur.
effectiveness
Quality: CAD can be used to develop various prototypes and choose
the best one to produce, this enables the business to manufacture the
best quality design and meet the expectation of customers. Customer
satisfaction = increased sales.
Staff: if there less staff is required, then business expenses reduce as
there is less cost due to less wages to pay.
Showcase: allows for the business to showcase models to potential
clients before production which can help generate more sales.

disadvantages
advantages
Accuracy: greater accuracy in the design process results in Redundancy: The business can develop a poor reputation if CAD
consistent level of quality which can improve the business makes numerous employees redundant.
reputation
CSR: Employees may be made redundant by this technology.
Flexibility: Customers have the flexibility to modify a design to
suit their needs. This customisation can attract more customers for
 the business.
Boring: Removes tedious processes involved in the design process
which could be boring for employees.
Creativity: Allows employees to be more creative.
$: Expensive in the short term due to purchasing and installing this
technology. + Constant updates in software can be expensive.
Training: There may be expenses associated with technical
employee training on how to use CAD. And this can be time
consuming

Time: Speeds up the design process. Break down: the computer or system can easily break down and
put halts in production or lead to product plans being lost.
Customer satisfaction: Improved accuracy results in a
consistently high-quality product which can increase customer
satisfaction and may increase the number of sales.

Sales: the ability to showcase models to potential clients before

production can help generate sales

Less errors: By viewing the end product prior to building it, it

can allow for production to be accurate as mistakes and errors can
be spotted and fixed prior to production.

Cost Enables product to be costed before going into production

(e.g. if it’s too expensive alterations can be made)

24/7: Allows for production to occur over a 24-hour period as

machines don’t need rests like employees do.

Computer- SOFTWARE USED TO CONTROL AND DIRECT THE PRODUCTION PROCESS BY CONTROLLING MACHINERY AND
aided EQUIPMENT THROUGH A COMPUTER. (THE COMPUTER GIVES INSTRUCTIONS TO MACHINES TO PRODUCE THE
manufacturin PLAN IN CAD)
g
CAM gives instructions to machines, equipment and tools and they proceed to complete their function automatically, businesses often use
CAM and CAD together. CAD can formulate the product design and CAM can control the manufacturing process to produce the final
product.

effectiveness
efficiency
Time: CAM doesn’t require machinery to be manually reset by humans Accuracy: Increased accuracy of using CAM means products
which reduces time and labour resources. are consistently good quality and can meet customer
expectations and increase sales.
Accuracy: Generally, more accurate than humans which reduces the
amount of waste that occurs during production and resources can be Employees: Reduces the need for employees as machines
used more productively. will perform their job = more profit
advantages disadvantages
Quality:
Accuracy: Greater higherresults
accuracy qualityinusing machines
a consistent which
level reduce waste
of quality Poorof reputation
materials The
Lessbusiness
errors:can
Thedevelop
use of machinery can reduce
a poor reputation if the amount of
which can improve the business’s reputation. CAM makes numerouserrorsemployees
that occur redundant.
in production which means less money is
Labour: less labour as machines do the work wasted in materials that will be discarded and profit can be
maximised.
Time: Speeds up the manufacturing process as machinery does not Redundancy: Employees may be made redundant by this
have to be manually reset by humans. technology.

Removes tedious processes involved in the manufacturing process Breakdowns: Sudden breakdowns can halt production altogether
which could be boring for employees. and compromise productivity.
Automated A SYSTEM WHERE MACHINERY AND EQUIPMENT ARE ARRANGED IN A SEQUENCE (CONTROLLED BY
production COMPUTERS)
Customer satisfaction: AND accuracy
Improved THE PRODUCTS
can improveARE DEVELOPED
quality AS There
Training: THEYmay PROCEED THROUGH
be expenses associated EACH STEP WHICH
with technical
lines and increasePERFORMS A SPECIFIC
customer satisfaction which OPERATIONS SEQUENCE.
can increase the number employee training on how to use CAM.
of sales.
An automated production line usually moves along a conveyor
$$: Ifbelt and each
repairs station performs
are required on CAM aequipment,
specific operation
it can beinexpensive
a sequence & is
controlled
Expenses reduced: byremove
Can a computer
manytoroles
perform tasks automatically.
completed by Automated
+ Constantproduction
updates in lines replace
software can human tasks such as repetitive and dangerous
be expensive.
ones. This
employees which maywage
reduces be controlled
expenses.by computers.

-
Mass: ability to mass Ultimately raw materials
produce reducing the cost enter, and finished products leave the production line with little to no human intervention.
of making
products
This can improve accuracy, efficiency, safety and reduce the cost of wages.
Speed up: ability to mass produce which can reduce the time it
can take to create goods, especially if many of the same ones need
to be made.
 advantages disadvantages
Accuracy: Increased accuracy provides a consistent level of the The business can develop a poor reputation if CAD makes
quality of products which can improve the business’s reputation. numerous employees redundant.
effectiveness
Improved accuracy can reduce waste from errors which can
Efficiency Redundancy: Employees can be made redundant due to this
improve the business’s reputation
Time: Performs for minimising
at speed and is much itsfaster
impact on humans,
than the technology
improvingreplacing
Moretheir role. Allows for a high degree of accuracy which
accuracy:
environment. productivity as products can be produced rapidly. decreases errors and enhances the overall quality of the product
which breakdowns
Breakdowns: sudden can lead to meeting business objectives
of this technology can halt
Benefits employees: Allows employees to avoid mundane, production
Accuracy: perfect accuracy which can reduce wastage and therefore altogether and compromise productivity.
repetitive andresources
potentially dangerous
and materialstasks which
are used to can
theirimprove
best ability. less employees: Having no employees reduces business
reputation and morale. expenses
There are high initial setupand caninmaximise
costs purchasingprofit.
and installing
Safety: Improves safety in the process which reduces wastage automated
and production lines.
Faster: Usually performs
injuries whichtasks
can much faster
stop the than human labour.
process.
$$: Can be expensive to repair and update this technology.
Time used well: Production
Mass: canability
there is an run 24/7.
to mass produce which can allow a business
to be productive with their time and meet customer demand.Training: There may be expenses and time-consuming processes
Quality: Improvements in accuracy can enhance the overall associated with training employees to use this technology.
quality of a product
Labour:which
less can leadastomachines
labour an increase
do in
thesales.
work

Wages reduced: Minimises the number of employees needed

which reduces wage expenses.

Cost: reduction in human labour cost as no employees are needed

to do the work
Website of the machine.
CREATION AND IMPROVEMENT OF ONLINE WEB PAGES CONTROLLED BY A BUSINESS THAT CUSTOMERS CAN
development USE TO DISCOVER INFORMATION AND PURCHASE ONLINE.

Website development is a vital tool for many businesses to gain competitive advantage as an online presence is a key method to attract
customers. Website development means items can be purchased 24/7 and information can be found easily (e.g. returns policy, opening
hours). It allows for communication and responses to customers.

- Allows the business to track demand for their products by tracking website traffic and orders which can assist in planning
materials and targets.
- Allows the business to gather feedback to improve quality or improve the operations feature.
- Provide information on the business which can allow the customers to see the behind the scenes of the operations system.
- Especially helpful for service business as they don’t need to have a physical presence in the marketplace if they don’t want to.
- Can allow for time resources to be used effectively by doing online booking.

effectiveness
efficiency
Providing info about the business online such as returns policy Expenses: Establishing an online business is cheaper than having a
can save customer service time and improve productivity physical business and can reduce expenses leading to profit

Availability: 24/7 availability means that there is a good use Global: Allows a business to reach a wider audience nationally and
of time as a resource. globally and lead to increasing market share and sales.
advantages disadvantages
Easy access: Time:
Websitetime resources may
development be useda optimally
establishes if the business
platform that MarketThe
Poor reputation: needs: Website
business canallows customers
develop to leave feedback
a poor reputation if meaning
develops an online booking
enables easy access to customer feedback. system, this way no time is lost as business knows what to focus on and satisfy
website development makes numerous employees redundant. market needs.
clients can do their own bookings.

Websites ensure information is consistent business-wide, such as EmployeesProfit:

may beCustomers can purchase
made redundant by this products 24/7 = profit.
technology.
their prices, sales and policies.
Time: Time consuming to develop and maintain.
Information: Businesses can publish information on its website
which can reduce the amount of customer service staff spend on Cost: Website development can incur costs to develop and maintain.
answering commonly asked questions.
MATERIAL STRATEGIES:
Training: There may be expenses associated with training
Saves time: Information, such as a business’s return policy, is employees on how to create and maintain a website.
readily available
Materials for customers
management is about to access onthe
managing a website, such as
way materials are received and stored in the business. Businesses must ensure they have the right
return
amountpolicies, saving
of materials oncustomer service staffcan
hand so production time.
meet demand. Materials is also about the work-in-progress inventory and finished goods; these
must also be made to the right amount. Breakdowns: websites can easily break down and halter the
production process
Expenses: Having an online website reduces the need for a
business
inventorytomanagement
establish a physical store
refers to thepresence,
control andreducing
co-ordination of an organisation’s inventory
expenses.
THE IMPORTANCE OF MATERIALS MANAGEMENT
ORDERIncreases
TOO sales: Customers  can purchase
Run goods or services at
out of storage
MUCHtheir
STOCKconvenience (24/7)
 which
Stock can pass itsa business’s
can increase use by date,number
go off, waste money
of sales.  Money is tied up, “trapped” in stock
 May be damages, lost, stolen or go to waste.
Money saved: Website development can reduce the number of
sales employees needed which reduces labour costs.

Service: especially helpful for service business as website

development may mean they don’t need a physical presence or an
office, they can just advertise / book online.
ORDER TOO  Production line grinds to a halt
LITTLE  Customer orders remain unfilled
 Business reputation collapses
FORECASTING A MATERIAL PLANNING TOOL THAT PREDICTS CUSTOMER DEMAND FOR UPCOMING PERIODS USING DATA
AND MARKET NEEDS OR SEASONAL DEMAND. THIS CAN HELP UNDERSTAND WHAT MATERIALS / QUANTITIES
ARE NEEDED.

In forecasting they predict what materials are needed and in what quantities – this is done to avoid having too many materials that they go
out of date or not enough that they can’t make outputs A business needs to forecast the quantity and timing of demand for its good or
service and then match supply with demand. This will allow the business to decide what goods or services to produce, how to produce
them and in what quantity.

Some ways in which forecasting can be done include looking at past data, looking at current market needs and assessing business info such
as information from marketing.

assists managers in:

- making informed decisions about the materials ad quantities needed to meet predicted customer demand
- helps avoid having insufficient or too many materials
- ensures customer demand can be met
- ensures materials aren’t wasted or damaged during storage.

efficiency
Reduces waste: Forecasting decreases the likelihood of ordering
and storing excessive stock which optimises the use of resources
by reducing wastage
effectiveness
Meet demand: Ensures business has enough materials on
hand to meet the production needs, ensuring demand is met
which can increase profit.

No halts: Having enough materials minimises halts to $: Less money is wasted if there is less waste of materials as
production which means time can be used effectively. no materials are bought to be simply discarded

Time: uses time well as there is no need for production to stop Storage: reduces the cost of inventory such as fridges or
to wait for materials to arrive. heaters as there won’t be over stocking of materials =
maximise profit.

Reputation: less waste = better reputation = more sales.

Inaccurate: it can likely be inaccurate if market needs change

or demand grows or decreases casually.

disadvantages
advantages
Demand: Informed decisions about materials can improve a Unable to meet demand: A business may be unable to meet
business’s ability to meet customer demand which improves its unexpected increases in customer demand which may damage
reputation. their reputation.

Reputation + less damage on environment: Improves a
business’s reputation by having a minimal impact on the
environment. This reputation is achieved as forecasting prevents
the excessive ordering of materials which reduces the amount of
stock wasted from expiry or damage in storage.
Cost: Can reduce the cost of storage as it prevents the need for a
large space to store materials
Save space: save space that would be used to store materials
which can be used for other necessary things.
Accurate: can help determine ordering quantities and timing
needs in order to avoid unnecessary waste and spending.
Errors: Amount of materials ordered may be incorrect as
historical data and market trends may not reflect current business
demand.
Time consuming: It can be time consuming to analyse historical
data and market trends.
Production may be brought to a halt if the business has
insufficient materials due to inaccurate predictions.
Need employees to do this job: Businesses may need to hire
employees specifically for forecasting which incurs training and
wage costs.
Inaccurate: to some degree forecasting may be inaccurate and
there can be a difficulty to meet demand.

Drop: if there is too many materials prices may have to drop to

get rid of them
MASTER A PLAN THAT OUTLINES WHAT GOOD / SERVICES (OUTPUTS) A BUSINESS INTENDS TO PRODUCE, IN ITS
PRODUCTION SPECIFIC QUANTITIES, WITHIN A SET PERIOD OF TIME. (what is going to be produced, how much of it will be made,
SCHEDULE when the item will be produced and how the items will be made)

This breaks down the production process and determines output targets that align with predicted customer demand. The master production
schedule specifies details such as location, timing and quantity of the production of outputs – this helps determine the materials, machine
and labour required to meet target.

- Outlines each good or service they will produce

- Outlines the exact quantities it will be produced
- States when and where will production occur to ensure materials arrive at the right time and place.

Efficiency
Reduces waste: Prevents business from producing an excessive
number of products which optimises the use of resources and
reduces wastage.
Organisation: Promotes an organised operations system and
minimises the number of avoidable errors by reducing the number
of interruptions in the production
Less halts: Allows for a continuous flow because correct
materials are in hand and there is less halts therefore time is used
effectively.
effectiveness
meet demand: A business is more likely to produce an amount
that meets customer demand which meets business objectives.
Enables business to have a clear picture on what needs to be
produced to meet customer demand.
Reputation: can improve reputation which can lead to sales as
business is likely to always meet demand and have less impact
on the environment.

advantages
Reputation: Improves a business’s reputation by having a
minimal impact on the environment. This reputation is achieved
as master production schedules prevents the business from
producing an excessive number of products, therefore reducing
the amount of stock wasted from expiry or damage in storage.
Clear schedule: Can provide employees with a clear schedule of
operations that includes the timeline and quantity of production
targets.
Error is less likely: By determining specific details about how
production will occur, it is less likely production will be brought
to a halt and time is wasted due to an organisation error.
disadvantages
Businesses that are constantly changing details of their operations
system may find a master production schedule unhelpful as it is
not a flexible program.
Time consuming: It can be time consuming to map out details of
production and to track and record everything that will be
produced.
Expensive: Implementing and maintaining this plan can be
expensive.
Errors: errors may be committed in recording targets and the
business may struggle to meet customer demand.

Meet customer demand: By determining production targets, Not flexible: MPS may not flexible is businesses constantly
businesses are more likely to meet customer demand. Meeting change their production quantity or what they produce as they
customer demand can increase sales and increase a business’s net will constantly have to make new plans.
profit figures.

Waste: reduces general waste which can help save costs of

materials wasted.

Accurate: can help determine ordering quantities and timing

needs in order to avoid unnecessary waste and spending.
MATERIALS A PROCESS THAT LISTS THE TYPES AND QUANTITIES OF MATERIALS REQUIRED & WHEN THEY’RE NEEDED,
REQUIREMEN TO MEET PRODUCTION TARGETS OF ITEMS SET OUT IN THE MASTER PRODUCTION SCHEDULE. (makes it easier to
TS PLANNING place / schedule orders for material)

- Creates a detailed plan of the exact materials needed to meet production targets.

- Operations managers are required to consider the materials a business has on hand. Using this information, managers can
determine what materials need to be ordered in the appropriate quantities.

- Makes it easier to place orders accurately so suppliers are on time.

- Uses the MPS target to determine materials.

To successfully plan the required materials the operations manager must consider the stock in hand, the time the materials take to arrive
 and how many materials need to be ordered.

effectiveness
efficiency
reduces stops: Having the exact materials required reduces stops in the Meet demand: Ensures there is sufficient materials to meet
production which enhances productivity and allows a smooth flow customer demand = sales

reduces waste: Having the exact materials needed reduces the amount Continuous flow: Ensures production has a continuous
of excessive stock that expires or becomes damage = reduces wastage. flow without waiting for materials

Prevents overstocking which leads to less waste. Waste: less waste = less money wasted on materials or
products that will be discarded.

Reputation: meeting demand can help maintain a good

reputation for business amongst customers as market needs
are satisfied / profit increases.

disadvantages
advantages
Impact on environment: Improves a business’s reputation by Time: It can be time consuming to constantly update and
having a minimal impact on the environment. (This reputation is maintain the materials plan.
achieved as materials requirement planning ensures a business
only has the exact materials required which prevents reduces the Cost: Implementing and maintaining the materials plan can incur
amount of stock wasted from expiry or damage in storage.) costs.

Less errors: By determining the exact materials required, it is Inaccurate: There can be errors in MRP which may mean that
less likely that production will halt due to insufficient materials the business does not have enough materials to meet demand or
or organisational errors. satisfy customers who order large quantity of items unexpectedly
as they will not have enough storage in hand.
Avoid excess storage = $: Accurate ordering of the quantities of
material required avoids excess storage and therefore reduces
associated expenses.

Storage: can save up storage space which can maximise the

business’s ability to use their space appropriately.

Reputation: the reduction of waste and negative impact on the

environment can help maintain a good reputation as customers
like environmentally conscious businesses.

JUST IN TIME A STRATEGY THAT ENSURES THE RIGHT AMOUNT OF MATERIALS ARRIVE ONLY AS THEY ARE NEEDED FOR
PRODUCTION. This helps reduce cost of inventory and reduces the storage cost or waste of materials.

By delivering materials to be used immediately, just in time (JIT) ensures that a business always has minimal stock on hand. Reducing
the amount of stock held decreases storage costs and prevents stock from being damaged or expiring.

As the business does not have extra stock on hand, suppliers need to deliver the right materials, on time and in the correct quantities for
this strategy to be successful. This requires complex tracking of supplies, so everything is in hand when needed.

 It aims to reduce costs through the minimisation of inventory

 There is no large stockpile as small quantities of inputs are delivered more frequently to meet immediate requirements
 Inventory is replaced as it is used
 Employee participation is required to identify and eliminate wasteful work practises

effectiveness
efficiency
Space: holding minimal stock frees up storage space that can $$: Costs saved from reducing storage can be used in other
now be optimised to increase production. areas of the business such as sales and marketing

Waste: Reduces wastage as there is no over stocking of A reduction in pointless stock reduces expenses associated
materials which can allow the business to make the best use of
 their money rather than throwing it away in materials that
won’t be used.
Flow: allows for a continuous flow as materials won’t be
missing and put halts in production.
with waste which can meet the objectives of increased profit.
Demand: Assists to have a continuous flow which can help
keep up with demand and increase sales.
Reputation: reducing waste can improve reputation as the
business is reducing landfill waste of products or materials that
are thrown out due to not being sold.

Discount: products may need to be put on discount if they are

made in excess which can make the business loose profit, JIT
can help avoid this.

Time; takes time away from focusing on checking the quality

of inputs and processes as more time is devoted to focusing on
ordering materials.

advantages disadvantages
Reputation: Improves a business’s reputation by having a Fail to meet demand: A business may fail to meet customer
minimal impact on the environment. This reputation is achieved demand from a lack of reserve stock and damage a business’s
as JIT eliminates idle stock which reduces the amount of stock reputation.
wasted from STRATEGIES
QUALITY expiry or damage in storage.
Time: There may be less time to check the quality of stock as it
Able to switch
Quality to the production
is measured of a different
by numerous factors,product without
including must be
the reliability, used as it delivery
durability, arrives, which
time could result in errors
and consistency of or defects Having
products.
high
high wastage
quality as thereand
goods is minimal material
services on hand
can better to go
meet through.expectations
customer in products.
and assist a business in improving its competitiveness

Storage cost:
QUALITY THEReduces
USE OF storage costs and costs
INSPECTIONS ATassociated
VARIOUS with
STAGESSupplier:
OF THEIfPRODUCTION
suppliers are unreliable
PROCESSand fail
TOtoENSURE
deliver the correct
PRODUCTS MEET
waste meaning
CONTROL this money can
DESIGNATED be used in other
STANDARDS ANDareas of the
UNSATISFACTORY materials at the rightARE
PRODUCTS time,DISCARDED
production may be broughtARE
/ ERRORS to a halt.
ELIMINATED
business. POST-PRODUCTION.
Bulk: Discounts from bulk buying supplies may be reduced.
Productivity: can save money which can be used elsewhere and
This is the comparison between a good and service and its predetermined standards. This strategy is reactive as it detects & eliminates
may lead todefects
improving
afterthe productivity
they occur. Thisof isthe business.
known as a ‘check and reject’
$$: Delivery
strategy.costs
In this
may strategy
increase
although
due to more
the error
frequent
is identified,
deliveries.
there will also be
action taken towards the reason why the item was faulty and fix that. You have a ‘benchmark’ a criterion that you need to meet

1. standards of quality established

2. inspections are regularly conducted

3. a good or service is compared against a set of standards

4. a good or service is removed if standards aren’t met

5. the cause of error is fixed to prevent further errors

 Quality Control focuses on identifying errors and correct them after the product has been made, therefore it is a reactive process.
The goal of QC is to identify errors after the product is produced in order to avoid the same error occurring in the future.

 It is important to note that not every business will use quality control to inspect absolutely every product — quality control
typically involves the selection of samples.

Example: Yakult bottles being randomly selected out of the production run and being brought to the laboratory to test

Example (service): employees knowledge assessed against set criteria to ensure they can deliver service of high quality.
 STRENGTHS WEAKNESSES
No faults: Preventing customers from receiving a faulty good Reputation: Businesses can develop a poor reputation as
EFFICIENCY
or service can improve a business’s reputation for having environmentally harmful as this strategy does not actively
EFFECTIVENESS
consistently high-quality products. attempt to reduce waste.
Satisfaction: Eliminates errors which can ensure customers Less errors: Fixes errors which can ensure there is no halts in the
are satisfiedAand
QUALITY sales increase
BUSINESS (market share)
ACHIEVING A CERTIFIED STANDARD production and demandIN
OF QUALITY canITS
be PRODUCTION
met. AFTER AN INDEPENDENT
Refunds: Can reduce the number of refunds required for Proper inspections needed: Unless every product is
ASSURANC CERTIFIED BODY ASSESSES ITS OPERATIONS SYSTEM AGAINST NATIONAL / INTERNATIONAL STANDARDS.
faulty goods or services. inspected, inferior goods may still reach a customer and lead to
E Reputation: high quality products can improve the business’s Wastage: reduces wastage as errors are prevented from occurring in
a reputation for poor quality.
image and may be chosen
Quality by is
assurance customers more
a business often. an independent
organising the body
futuretowhich
assessmeans less waste
its operations is created
against during
national production.
or global standards. When
Inexpensive: The strategy is relatively inexpensive as it is
approved, the business can advertise the certification on their packaging or website. Quality assurance certification can increase a
internally controlled by the business Time: It can be time consuming to identify the causes of
Halts:aidentifying
customer’s confidence in a good or service as they are aware business hasand fixing the
received causeendorsement
official of an errors from
reduces the
a recognised body regarding
errors.
number
their quality. The certified body will have a criterion, and of potential
this will errors
be what the that is
quality could halt production,
assessed against. enabling the
Quality: conducting inspections can push business to focus operations system to flow continuously.
and improve quality which can improve customer satisfaction After they occur: Errors are eliminated after they happen
Steps: a consultant reviews the business ⇨ the business implements their feedback into processes ⇨ the business is granted certification ⇨
which can incur costs associated with waste.
the business can use the authority logo. This certification logo can assist with competitiveness as it is something that customers view as an
Profit: canadvantage.
assist with the increasement of profit as high
quality products can be easily sold as customers will be likely Bias: as the assessment is done by the business themselves it
satisfied. may be bias, or they may be too kind.
- Businesses will make adjustments to processes in like with certification standards

Benchmark: benchmark criteria can allow for the business to Waste: It can be wasteful as the materials that are spotted to
- Business has the right to use the certification sticker.
have a clear goal to meet which can ensure that the business is have low quality will simply be thrown out or will not be sold.
able to constantly achieve high quality.
- This is a widely used international standard that sets out the criteria for a quality management system. ‘ISO’ stands for
Time in reworking: some faulty products will need to be re-
International Organization for Standardization
Customer satisfaction: customer satisfaction is improved as worked on which can be time consuming and take away time
they are unlikely to receive a faulty product from producing new products.

EFFICIENCY
Slips: Not all products are accessed which means that some
EFFECTIVENESS inferior goods may slip through even with poor quality.
Certification: Through the certification sticker customers may feel Halts: Can ensure weaknesses
that halts in production can be pointed out
more confident instrengths
the business’s quality and therefore choose them and avoided for future operations which can ensure less
over others (market share) errors: Quality assurance reduces waste from
Reduces wastage
errors, Training: Employees may have to be trained and comply with the
which improves the environmental reputation of a business. new procedures that the expert implemented into the business which
Reputation: the certification can improve reputation and therefore can be time
Errors: preventing errorsconfusing
before theyandoccur
expensive.
reduces the
increase customers that shop there which can improve market share
Certification: Receiving external certification from an number of faulty products produces which reduces waste in
external body can improve a business's competitiveness general
as and reducing waste is an optimal
Time: Documenting use of resources.
the operations system for the external body to
Competitiveness:customers are likely
The Standards Markto ishave increased
a well- knownconfidence
scheme in the check could be time consuming.
around Australia business. (increasesmark,
and is a recognised competitiveness)
providing a competitive
advantage and differentiation to each product carrying this mark $$: It can be expensive to organise an external body to assess an
Safety: Workplace standards implemented to achieve external operations system.
certification is likely to improve the safety of the workplace.
Preparation: it can take additional time preparing documents and
Accuracy: A reduced number of errors enables production to processes prior to the inspections this may also mean that other tasks
flow smoothly. aren’t properly completed.

TOTAL Wastage:APPROACH
A HOLISTIC The proactiveWHERE
prevention of errors
ALL can reduce ARE
EMPLOYEES wasteCOMMITTED
Stress: knowing a certified body is coming
TO CONTINUOUSLY may implement
IMPROVING A stress on
and its associated
BUSINESS’S expenses.
OPERATIONS SYSTEM TO ENHANCE THE QUALITY employees
FORand they may messTHIS
CUSTOMERS. up due to being anxious
INVOLVES and affect the
CREATIVE
QUALITY
PARTICIPATION OF ALL PEOPLE IN THE BUSINESS. assessment.
MANG
Marketing tool: the sticker can be used as a marketing tool to
increase
Involves sales. maintaining and improving the quality of inputs, Productivity:
all employees processes and it can decrease
outputs. productivity
This strategy asencourage
aims to the business
themay be too
entire
business to strive for improvements in quality and to create a defect free focus on theprocess.
production preparation of production prior to their assessment.
Trust: easier to trust as it is done by an expert // External
assessment
Quality which
becomes both shows provesand
a commitment thatthe
they have an unbiased
responsibility of every employee in the business. The aim of TQM is to create a defect-free
and true
production certification
process and maintain a customer focus in operations. The adoption of TQM can reduce costs throughout the business and,
because it leads to a reduction in defects, should result in improved efficiency

THREE KEY FEATURES:

customer focus, which is identifying and fulfilling the customers’ exact needs and wants from a business good and services (the end
customer and the next person in the production process.)

continuous improvement, which is the process of constantly evaluating the way things are done and identifying methods to achieve higher
standards. This involves the business constantly making small improvements to get better.

The business will strive for higher standards and improvement continuously / Higher and higher standards are set in the continual pursuit of
improvement.

Employee empowerment, which is fostering teamwork and employee participation within a business environment, so employees are
involved in developing solutions to improving qualities. (quality circle: discussion about how quality can improve.
 Many businesses use quality circles as a means of achieving employee empowerment. Under this approach, teams of up to 10 workers meet
regularly to solve problems related to pro- cess, design or quality. The groups often make presentations to management with their ideas, in
order to improve the performance of the business

strengths weaknesses EFFICIENCY

Flexible: A business can adapt TQM to suit their specific Confusion: Employees may feel confused about their role in
EFFECTIVENESS
business requirements. improving quality if managers fail to communicate the TQM strategy
By focusing on continuous improvements of quality the by aiming for a zero-defect business then halts in the production
clearly.
business is ensured to have a better reputation and therefore process decrease and there can be a continuous flow.
Reputation:more
Improves
sales a(profit
business’s reputation
& market share)by having a
minimal impact on the environment. This reputation is Time: It can take a long time for a business to enjoy the benefits of
Continuous improvement: continuously improving the quality of the
achieved as TQM aims to prevent errors from occurring TQM as it requires a shift in culture.
Needs: by determining the needs and wants of customers production system to reduce errors reduces the number of faulty
altogether which reduces the amount of waste from defects.
(customer focus) TQM can help meet market share needs. products that got to waste. Reducing waste = optimal use of resources.
Costs: May incur costs as employees have to be trained to
Employees: Employees may feel valued and satisfied by continuously identify methods to improve quality.
Reduces cost increases profit by reducing the cost that can
being empowered in the process of improving quality.
come as a result of waste.
Stress: it can create stress and pressure on employees as they are
Errors: Being proactive prevents errors from occurring which expected to produce high qualities all the time.
Customer satisfaction: help improve satisfaction surrounding
reduces waste and its associated expenses.
quality = sales
Employees: is strategy relies on the full participation of all
Costs: zero defects in production processes can reduce waste employees which may take time away from other tasks as they
and operations costs. focused on quality.

Corporate culture: Quality becomes a part of the corporate

COMPARISON
culture OF QUALITY MANAGEMENT:

LEAN MANAGEMENT & WASTAGE MINIMISATION

Waste The process of reducing the amount of unused materials, time or labour within a business and reducing all waste in the production process.
minimisatio
n Wastage minimisation involves actively reducing the amount of defective, unused, returned or discarded materials by a business. Minimising
waste can allow a business to provide goods & services at a lower cost and better quality. In a business waste may occur as a result of:

 Transport: Time can be wasted when transporting products / resources

 Time can be wasted from delays between production states
 Materials can be wasted if left in inventory
 Products can be wasted when they are defective & can’t be sold
 Over-production or over-processing (e.g. if you produce to many __ and they are not sold they’ll just be thrown out)o
 Money wasted on raw materials
 Defects can create wastage as products will need to be thrown out.
 Waiting: waiting time can create waste, for example if customers are made to wait for long this can waste their time.

Strategies for a business to minimise waste:

 Improving quality processes: higher quality means that there is fewer defective products to discard.
 Sourcing higher quality materials: if a business has better materials this could mean less defects or less waste through outputs.
 Improving technology: machines may assist to save time and make things more accurate, for example the concept of CAM and CAD
can assist to ensure the products are good and there is no need for wastage.
 Reuse: if the waste is produced, effort is made to reuse it where practical
 Recycle: to recycle waste material into useable products
 Recovery: Sometimes it is possible to recover materials or energy from waste which cannot be reduced, reused or recycled
 Redesigning products and packaging to be environmentally friendly.

effectiveness
efficiency
By only using the required amount of materials, time etc, a lowers operational costs which can assist to maximise profit
business can produce items faster, increasing their rate of by minimising spending.
production.
 Waste minimisation mean that there is a reduction of materials Lower operational costs mean that products can be made
and supplies thrown out which means resources are being used cheaper and customers can be satisfied increasing market
well. share etc.

Improves productivity. Improves reputation of business and therefore sales

If waste is reduced one can:

- Reduce material costs = increase profits

- Legal breaches and costly legislation infringement = increases market share as the business reputation is good
- Lower waste disposal and waste treatment costs
- Lower storage costs

LEAN MANAGEMENT:

An approach that improves the efficiency and effectiveness of operations by eliminating waste and improving quality. ‘Lean’ refers to having no
excess and is the approach of removing any inefficiencies that don’t add value to the product and any waste involved in the production process.

Key objectives: Deliver customer value, eliminate waste and strive for continuous improvement

A business that applies lean management identifies and then eliminated the amount of waste generated within its operations system. By
reducing the amount of waste generated in production, less materials are purchased which then reduces the overall cost of inputs.

Examples:

 A manufacturing business could attempt to minimise waste through avoidance of excess motion by reducing any unnecessary
movement of workers and materials between production processes
 Service business may reduce excess motion by reducing wait time which may be achieved by installing technology to book
online instead of having a waiting line.

Pull WHERE THE BUSINESS FOCUSES ON CUSTOMER DEMAND TO DETERMINE THE NUMBER OF PRODUCTS A
BUSINESS SHOULD PRODUCE FOR SALE.

A business that practises the principle of pull produces goods only when it is required by customers, this minimises waste through
overproduction and stockpiling because the business only produces outputs that will be sold. In this strategy customer demand is that dictates
the rate of production which can minimise waste as it will only be producing the outputs that will be sold rather than too many.

For example, in a café, a coffee is only made by demand.

One-piece WHEN A SINGLE PRODUCT MOVING THROUGH ALL STAGES OF PRODUCTION ONE AT A TIME, THIS IS LARGELY
flow DONE TO ELIMINATE WAITING TIME AND ANY MISTAKES.

One-piece-flow production delivers products to customers quickly by building one product at a time. When one item goes through an entire
production process, each stage takes a lot less time. This means that all steps in the operations process will be focused on that single piece and
will remove any waste or unnecessary activities and also improve the quality of this product.
Takt THE BUSINESS SYNCHRONISING PRODUCTION STEPS TO MEET CUSTOMER DEMAND / HOW FAST A PRODUCT
SHOULD BE MADE TO MEET CUSTOMER DEMAND.

Takt is a German word meaning pace, rhythm or pulse. Accordingly, a business applying takt ensures that there is a continuous pace in its
operational processes to keep up with customer demand.

If implemented correctly, the business ensures items complete the production process with no delays between steps. For example, if a business
has a takt of 10 minutes, this means every 10 minutes a new product is completed, this is because on average a customer buys something every
10 minutes.

Zero STRIVING FOR PERFECTION AND PREVENTING DEFECTS FROM OCCURRING IN THE PRODUCTION PROCESS.
defects
a business and employee approaching production with an ongoing attitude of preventing defects from occurring and improving the final
output. If a defect is found, production is halted so that it is not passed on to the next production stage.

The error in the production process that caused the defect will be identified and fixed to prevent any future defects

Efficiency: One-
piece flow will improve quality as there is more focus on a singular piece being produced which can reduce waste and satisfy customers.

Efficiency: zero defects ensures resources are utilised with minimum waste and avoids quality issues which means that resources are used
well.

Effectiveness: eliminates waste, reduces costs that may lead to the improvement of profit + may improve customer satisfaction which can lead
to sales.

Efficiency: A business can reduce the amount of waste produced whist working to achieve objectives, productivity increases nd resources
should be used efficiently.
 advantages:

 reduces energy and resource consumption

 reduces delays and increases customer satiscation

 reduces delays.

disadvantages:

 involes high implementation costs for training

 requires good relationship with suppliers.

 The ocnstant focus on the elimination of waste can be distracting and can produce stress.

GLOBAL CONSIDERATIONS:

In order to remain competitive, businesses may choose to take advantage of overseas opportunities. These opportunities can include
cheaper resources, a wider range of resources and expertise which may not be locally available.

When involved in global outsourcing a business must consider:

 Local labour costs and conditions: as they may be cheaper in Australia

 Environmental impact
 Exchange rate of currency
 Tariffs: taxes to import can impact cost
 Location of suppliers
 Global talent / different expertise in different countries
 Higher quality materials may come from overseas.

SUPPLY INCLUDES THE MANAGEMENT OF ALL ACTIVITIES INVOLVED IN SOURCING, STORING, PROCESING AND
CHAIN DSTRIBUTING OF MATERIALS IN THE SUPPLY CHAIN. SUPPLY CHAIN MANAGEMENT ALLOWS FOR
PROCESSESS TO FLOW CONTINOUSLY BETWEEN SUPPLIERS, MANUFACTURERS, WHOLESALERS AND
RETAILERS BEFORE REACHING THE END CUSTOMER. Every good / service that reaches the end customer must represent
the effort of multiple bodies that worked together to deliver this product.

- Involves a series of steps involved to get a product or service to the final customer such as the transforming of raw materials
into finished products and the transporting and distributing of the product.

The supply chain management refers to managing the movement and storage of raw materials, work-in-progress and of the finished
goods to ensure that the correct materials reach the customers and are delivered in the right quantities and in the right times. Supply
 chain can be complex to manage which can create halts in production due to activities or materials being delayed.

To ensure the supply chain is efficient businesses need to:

- Ensures that inputs are delivered in the correct time frame in order to let production flow.
- Assess proximity to suppliers and end customers
- Quality of suppliers
- Cost of suppliers
- Cost of transportation
- If one link fails then the whole supply chain can be damaged.

GLOBAL PURCHASING RAW MATERIALS OR RESOURCES FROM AN OVERSEAS SUPPLIER WHICH CAN ALLOW FOR
SOURCING OF MORE VARIETY AND CHEAPER PRODUCTS.
INPUTS
This is done at times to:

 obtain resources that are only available in some countries

 reduce the cost of its raw materials through global outsourcing of inputs as compared to Australia overseas suppliers may sell
raw materials much cheaper due to lower operating costs such as wages.
 Low cost skilled labour / low cost raw materials

When outsourcing inputs, one should consider:

 price of raw materials and resources differing from each country

 delivery costs due to distance
 environmental impact of the different methods used by suppliers to extract raw materials.
 Other countries have different quality and safety standards.
 The quality of the product which may vary depending on where they are produced.

Examples:

 ANZ bank and Telstra benefit from cheaper labour in call centres in India
 Yakult purchase Shirota Strain Bacteria from Japan.

Disadvantages:
Advantages
More availability: Able to source materials which are not $$: Imports may be affected by quotas imposed by governments.
 readily available in the country of operations.

Higher quality: Able to source resources of a higher quality Lang: May be difficult to communicate with suppliers due to
which allows the business to better meet customer expectation language barriers.

Cheap: Improves access to cheaper raw materials, reducing Monitoring: May be difficult to monitor the activities of suppliers
the cost of production. due to different time zones and locations.

Variety: Allows businesses to have access to materials Damage: Materials may be damaged during delivery.
outside their local country.
Employee mistreatment: May reflect badly on the business’s
- Low cost skilled labour reputation if a supplier does not treat their employees in an ethical
manner.
- Low cost materials
$$: May increase the expenses of a business due to tariffs
- Lower taxes
Lost: goods may be lost in transit

Time zones: different time zones may make it difficult for a

business to calculate their delivery times and follow up their
supply chain correctly.

OVERSEAS PRODUCING GOODS OR SERVICES IN A LOCATION OUTSIDE OF A BUSINESS’S HEADQUARTERS COUNTRY.

MANUFACTUR THIS IS DONE BY THE SAME BUSINESS (INTERNALLY). ULTIMATELY THIS IS DONE TO CUT THE COSTS OF
E LABOUR AS MINIMUM WAGES OR CONDITIONS MAY BE LOWER IN OVERSEAS COUNTRIES.

(internal) Businesses may set up their own manufacturing plant in an overseas country, perhaps to produce high quantities for a lower price. This
means that they still have full control over their operations system.

A business may choose to manufacture overseas to reduce labour, overhead and component costs, while keeping research and
development, design and short-run manufacturing in Australia – this means the business can focus on what they do best.

o Manufacturing business would have certain processes done overseas, such as the production of bottles done in another country
and then those bottles are sent to Australia for completion.
o Service businesses may have their finance area or technology area in an overseas country as perhaps that country has better
qualifications in that certain area. For example, a lawyer service may have their call centre of booking centre in another
country ran by the same business.

Advantages
Expertise: Can improve access to skilled employees who
have expertise in production as they may have been trained in
their country for that duty.
Less expenses = cheaper product: Can lower prices for
products, increasing customer satisfaction and sales.
Can improve production speed due to the expertise of
overseas employees.
Cheap labour: Can improve access to cheaper labour and
reduce business costs.
$: Setting up a manufacturing plant overseas may be less
costly than a local factory.
Expertise: labour in an overseas country may be expertise in
that particular area, for example if the business opens a
finance plan in another country that is good at finance this
may be beneficial.
Disadvantages:
Damage: Finished goods may be damaged during delivery.
Child labour: Poor CSR practices in the country may reflect badly
on the business. i.e. use of child labour.
Loss of jobs: Local employees are likely to lose their jobs due to a
business moving manufacturing overseas.
Time: Delivery can be time consuming depending on where
manufacturing occurs. This may damage the business as there may
be experienced delays.
Lang: Poor communication and language barriers may lead to
multiple delays.
$$: extra shipping costs
Risks: risks can occur such as criticism fur to poor CSR practices in
the countries being used which can drive customers away.
Transportation: transportation from overseas may affect the
 environment through transport emission which may damage the
business’s reputation.s
GLOBAL TRANSFERRING SPECIFIC BUSINESS ACTIVITIES TO AN EXTERNAL BUSINESS IN AN OVERSEAS COUNTRY,
OUTSOURCIN THIS MEANS THAT IT IS DONE EXTERNALLY.
G
A business may decide to outsource specific areas of management to external businesses. By implementing global outsourcing, a
(external) business can access a large number of external businesses with specific expertise. Most recently businesses have decided to do this in
order to save costs and use businesses that have expertise in managing the certain tasks that the business requires done (they may not
have this expertise either).

o Service business like Qantas contracts its information technology to an external business in Australia and overseas.
o Manufacturing business may have their financial or technology area done overseas
o A call centre is global outsourcing as it handles services for the business from anywhere in the world.

Disadvantages:
Advantages
Expertise: Can improve the quality of business activities as Lost control: Reduced control over the business as some activities
the external business may be experts in the area. have been transferred to external businesses.

Focus in other areas: Allows the business to allocate more
resources and focus towards their own areas of expertise.
Productivity: Productivity may increase as the external
business has expertise to complete tasks efficiently.
$$: Able to save on costs associated with labour by reducing
the need for local employees and there is now access to
cheaper labour rates.
Lang: May be difficult to communicate with external overseas
businesses due to language barriers. This may create some service
problems.
Reputation: Poor CSR practices performed by the external
business may reflect badly on the business reputation.
Loss of local jobs: Local employees from the business’s main
operating country are likely to lose their jobs.

Responsible for non-core: Business is not directly Delays: being overseas there may be delays in shipping
responsible for non-core services and their employees &
entitlements

Jobs: increases jobs and economic opportunities in developing

countries.

Time: production may be much quicker as the outsourced

provider should be able to focus on the task they specialise in.
 CSR IN OPERATIONS:

Corporate social responsibility (CSR) is the obligations a business has above and beyond its legal responsibilities to be ethical, and to be
responsible for the wellbeing of stakeholders, the community and the environment.

Businesses can choose the quickest and cheapest methods of producing their products to increase their profits. However, the quickest and
cheapest methods may negatively affect both the general community and the environment.

Example: Cotton On group donate profit to overseas countries through their ethical sourcing program, sources from environmentally friendly
suppliers who comply with their Vendor ethical code of conduct. Removal of plastic bags in 2018 to reduce their impact on their environment
through packaging.

INPUTS One consideration a manager should have when sourcing inputs is identifying how the business can improve the environmental sustainability
of its natural resources.

Local suppliers: Sourcing from local suppliers instead of overseas suppliers to reduce transport emissions. This may be seen to be helping
small suppliers and provide them with income.

Environmentally friendly: Sourcing from suppliers that use environmentally sustainable methods with regards to natural resources.

Forecasting: Implementing forecasting and just in time to reduce the risk of over ordering inputs that may later be discarded.

Energy: Purchasing energy efficient machinery to be used in production or Installing reusable and clean energy sources.

Raw materials: Raw materials are selected which are a renewable resource and can be accessed without damaging the environment for
future generations.

Ethical: inputs should be sourced ethically and not from businesses that support poor treatment of employees such as child labour. Sourcing
from those who don’t underpay employees.

Local: hire local employees which is going above and beyond the legal obligation of the business by assisting the economic situation of the
people within the community
PROCESSES When performing operations processes, a business will aim to be as efficient and effective as possible. However, many processes may use a
large amount of energy or excess inputs that are discarded freely. Implementing CSR in the operations processes can make a business more
efficient and effective by reducing waste and improving its reputation.

Technology: Using technology that performs processes in a precise and consistent manner to reduce waste generated from errors. (could use
solar panel, renewable energy)

Recycle: Developing methods to capture and recycle excess input materials to be reused in production and place them back into the input
element of the operations system. For example, a service business may find a way to re-use their resources such as booklets to avoid
purchasing and throwning out.

JIT & Lean: Implement just in time and lean management strategies to reduce unnecessary materials waste.

Chemicals: Removing harmful chemicals from waste products.

Harmful waste: Disposing of any harmful waste that cannot be treated safely and reducing the amount of waste that the business produces.

Solar panels: service businesses may implement solar panels in their offices in order to create renewable energy and maximise their ability
to positively impact the environment.

Staying local: service businesses may keep processes in Australia local in order to support local employment.

Waste: aim to minimise waste which will lead to less landfill and can show an interest in the environment.
OUTPUTS one of the most important CSR considerations is that any output produced creates minimal waste and environmental damage.

Environmental: Developing an alternative product that is environmentally friendly such as biodegradable packaging for items.

Recyclable: Creating products that have recyclable elements at the end of their lifecycle.

Plastic: Eliminating as much plastic as possible in the packaging and creation of the final product.

Bulk delivery: Delivering products in bulk to retailers to reduce the business’s carbon emissions from transportation.
 Returning to recycle: Offering customers incentives for returning the product at the end of its life cycle so that it can be recycled properly.

Produce quality outputs: that add real value to the customers.

Operations strategy advantage disadvantage

Adoption of new, cleaner
technology imported from
overseas
Use of recyclable packaging
Adoption of a purchasing
policy that stipulates that only
local suppliers will be used
To use green energy rather
than that produced through
burning coal
To close a manufacturing
plant that has been found to
have produced waste and
carbon emission
May be more professional and be more effective in reducing More expensive
wastage
Environmentally friendly which can assist the business’s More expensive to find recyclable packaging than plastic
reputation one.
Assists the business’s reputation as transport emission from Not all equipment may be sold locally, and it may be
overseas deliveries are reduced more expensive
Assists to improve reputation and impact on the environment May be more expensive
Business’s impact on the environment is improved and the Loss of profit, loss of money as the plant has already
reputation may increase, therefore have more sales been made, loss of jobs