Success in VCE Business Management

1. Success in VCE Business Management • Keep notes and handouts organised (a workbook for any class notes and exercises done and a folder with plastic sleeves for handouts) • Prepare summary notes from the textbook(s) you have and the slides referred to in class (summary diagrams or notes with heading and bullet points etc. • WORK ON A CONSISTENT BASIS (a bit (30+ minutes) most days not a lot one day and nothing for 6 days) • DO THE MAJORITY OF THE TASKS GIVEN TO YOU • MAKE EFFECTIVE USE OF CLASS TIME • Review the day’s lesson in the evening (look at the class slides / read the textbook section • Have some interest in current events / affairs involving businesses • DO THE REVIEW QUESTIONS GIVEN TO YOU BEFORE AN ASSESSMENT (SAC)

2. SUCCESS IN VCE = GETTING YOUR BEST RESULT Involves a partnership !!!!!

3. VCE Business Management Unit 3 & 4 • 2013: SUMMARY NOTES • UNIT 3: AREA OF STUDY 1 • LARGE SCALE ORGANISATIONS IN CONTEXT • (3 to 4 weeks)

4. Outcome 1 On completion of this unit the student should be able to discuss and analyse the context in which large-scale organisations operate. http://www.vcaa.vic.edu.au/vce/studies/index.html

5. Key knowledge • the context which contributes to the unique nature of large-scale organisations; • characteristics of large-scale organisations; • variations in types of large-scale organisations, their objectives and related business strategies; • typical management functions in large-scale organisations, including operations, finance, human resources, marketing, and research and development; • contributions, both positive and negative, of large-scale organisations to the economy; • internal and external (operating and macro) environments of large-scale organisations; • performance indicators used to evaluate the performance of large-scale organisations, including the percentage of market share, net profit figures, the rate of productivity growth, the number of sales, results of a staff and/or customer satisfaction survey, the level of staff turnover, level of wastage, number of customer complaints and number of workplace accidents; • identification and characteristics of stakeholders of large-scale organisations, including their interests, possible conflicts and related ethical and socially responsible considerations.

6. Key Knowledge: The context which contributes to the unique nature of LSO’s (Section 1.1 in textbook)

7. What is an organisation? • 2 or more people working together • Has an internal structure: - positions of responsibility • - tasks to be carried out by certain people • Use of ‘resources’... (human, natural,& capital (man-made) • to create a product or service (output) • Has goals or aims to be achieved, as expressed broadly • in a ‘Mission Statement’ and ‘Vision Statement’. • From goals or objectives, strategies(plans of action) • are undertaken to achieve those goals

8. What is an organisation? • Adding these elements together, we arrive at the following definition: • “An organisation is a structured arrangement where two or more people work together to achieve some specific purpose. They take physical, human, capital (man-made) inputs, then process them to create outputs of goods and/or services.”

9. Examples: Large Scale Organisations

10. Large scale organisations make up less than 1% of all businesses in Australia however, they generate approximately 56% of total revenue and are vital to Australia’s economy

11. The unique nature of LSOs • LSOs have complex management structures due to their size often with many departments • LSOs can produce of goods and services more cheaply than smaller businesses because they produce large volumes and thus can spread their costs over a greater number of units produced; LSOs can take advantage of ‘economies of scale’ • LSOs have access to large amounts of financial funds which allows them to expand their business • LSOs can influence Governmentsbecause of their size and their needs (can influence legislation, the building of infrastructure etc) • Operate in many countries • Can have many owners who are not involved in the day to day operations of the organisation

12. The growth of LSOs • LSOs have grown in number and size over the past 30 • years due to: • Globalisation of & deregulation of markets • - increased trade and • - movements of people and financial resources between countries • - Governments allowing more foreign investment and competition from overseas businesses • Improvements in technology andcommunications • - make it easier for organisations to expand nationally or • internationally, thus increasing their size. • Larger businesses can take advantage of ‘economies of scale’ ( lower unit cost of production as fixed costs can be spread over more units produced)

13. Key knowledge: Characteristics of LSO’s (Section 1.1 in textbook)

14. Characteristics of a ‘LSO’ • More than 200 employees (Australian Bureau of Statistics definition) • Turnover / sales / revenue in the millions of $ per annum • Profit in the millions of $ per annum • Assets in the millions of $ • - items of value: land & buildings, cash, machinery, furniture, equipment, vehicles etc. • - Generally accepted that LSO assets worth > $200 million • Numerous branches / outlets nationally or internationally • “a large network of stores nationally”, • “transnational corporation”, • “multinational corporation”

15. Characteristics of a LSO • Large percentage of the market share in their industry • Eg: Woolworths has 45 % of the market share in the food and liquor industry • What is meant by market share ? • Number of customers compared to • ____________________________________ • Total number of customers in that industry • Sales revenue or profits achieved compared to • ________________________________________________________________ • Total sales revenue or profits of all businesses combined within the industry

16. CHECKLIST- Characteristics of a LSO • Employ over 200 employees • Over $200 million in assets • Extensive operations, often multi-national • Significant percentage of market share • Revenue and profits in the tens of millions of dollars Large Scale Organisation?

17. Examples of LSOs • Qantas • - 36000 employees • Sales revenue $16.2 billion • Profit (after tax) $970 million • - Over 200 aircraft (assets) • - 36,449,000 passengers carried to 140 destinations in 37 countries • BHP Billiton • - 41000 employees • - Sales revenue U.S $59.5 billion • - Profit U.S $15.4 billion • - 100 operations (mines) in 25 countries • Amcor Ltd • - 21000 employees • - Sales revenue $11 billion • - 260 factories in 38 countries

18. ACTIVITY- LSO Characteristics

19. 2009 BUS MGT EXAM Question 2 Wombat Airlines is a large-scale ....... a. Describe two characteristics that would identify Wombat Airlines as a large-scale organisation.

20. Typical management functions in large-scale organisations, including: operations(Unit 3 Area of study 3) finance human resources (Unit 4 Area of study 1) marketing research and development (Section 1.1 in textbook)

21. A Typical Organisational Structure Chief Executive Officier (CEO) Board of Directors Human Resources Finance Operations R&D Marketing Other functions may include: • Information Technology, Public Relations, Legal etc.

22. What are Management Functions? • The functions of management are the different key areas of work within an organisation • These functions or departments include such areas as: • Operations • Finance • Human Resources • Marketing • Research & Development

23. Management Functions • Operations Manager • Deals with the actual production of goods and services • Finance Manager • Deals with the monetary, accounting and financial aspects of the business including preparing accounting reports and financial budgets • Human Resources Manager • Deals with recruitment, training and well being of the staff, employees

24. Management Functions • Marketing Manager • Deals with promotions, prices and distribution of products, as well as gaining new customers • Research & Development Manager • Deals with the generation of ideas and the development of new goods and services, as well as testing the quality of the product.

25. ACTIVITY- Management Functions • Classify the following activities according • to their management function: • Preparing monthly profit reports • Recruiting new employees • Running an employee in-house training program • Planning the production ‘runs’ for the next month and maintaining machinery & equipment on the production line • Reviewing the organisation’s OHS policy • Preparing a new television advertising campaign • Developing a new and improved product

26. Key knowledge: Variations in types of LSOs, their objectives and related business strategies (Section 1.2 & 1.3 in textbook)

27. Types of LSOs • Large Scale Organisations can be of 4 main types: • 1) Corporations (Companies) • 2) Not for Profit Organisations • 3) Government Departments • 4) Government Business Enterprises (GBEs)

28. Types of LSOs • 1) Corporations • owned by ‘shareholders’ • managed by a ‘CEO’ & a board of management (‘Directors’) who are elected by the shareholders • Aim is to maximise profit for shareholders • Owners (shareholders) have LIMITED LIABILITY (not personally responsible for the corporation’s debts if it is unable to pay them) • Two types of corporations: • Public Companies (………….Ltd) • Private Companies (……….. Pty Ltd)

29. Types of LSOs • Public Companies ………… Ltd • Are listed on the Australian Stock Exchange (ASX) Listed companies – ASX • Raise funds by offering shares (units of ownership) to the public via the ASX • Unlimited number of shareholders (At least 5+) • Public is able to buy and sell their shares (units of ownership) in the Company • Shareholders are able to receive dividends (part of the profit) based on the number of shares they hold. Dividends are declared once or twice a year

30. Types of LSOs • Public Companies …………… Ltd • Shareholders are also entitled to vote at the Annual General Meeting (AGM) • Why be a shareholder in a public corporation ?? • Shares may increase in value if the company makes good profits (your investment is worth more) • Receive dividends hopefully at least once a year • What is meant by ‘market capitalisation’ ? • The total number of shares held by the public x Value of each share • Basically, it is a measure of the overall value of the listed company.

31. Types of LSOs • Private Companies (…………………….Pty Ltd) • Not listed on the ASX (don’t initially need to or want to raise funds from the public) • Created by individuals who buy the units of ownership and become the shareholders (often family members). THEY COMMENCE A PRIVATE COMPANY RATHER THAN A PARTNERSHIP OR SOLE TRADER BECAUSE THEY WANT THE BENEFIT OF ‘LIMITED LIABILITY’ !! • Maximum of 50 shareholders • Examples • Rip Curl, Retravision, 7-Eleven.

32. Types of LSOs • 2) Not for Profit Organisations (also called NGOs – non-government organisations) • Private sector organisations, such as charities and foundations Charities - ultimate objective is to lessen social problems to benefit the community • Foundations – set up to raise money for a particular social issue and raise awareness of that issue (eg Leukaemia Foundation) • Examples • Salvation Army, World Vision, Australian Conservation Foundation.

33. Types of LSOs • 3) Government Departments • Exist to implement Government policies and provide important services to society • Operate on a pre-determined budget (It receives money from the Government each year which it spends on services it is responsible for. It does not generate revenues / sales. It just spends money allocated to it for the year. It does not produce a profit. • Headed by a ‘Minister’ (an elected member of the Government selected by the PM/Premier) with Government employees (public servants) in the department • Examples: Department of Agriculture Fisheries and Forestry / Defence / Health and Ageing / Education, Employment and Workplace Relations / Foreign Affairs and Trade

34. Types of LSOs • 4)Government Business Enterprises (GBEs) • Not listed on the ASX • Owned & operated by the government (public sector) – they are not shareholders • Government elects a management team to operate the organisation (Board of Management) • Has sales revenues and expenses (costs) like a corporation • Aim is to maximise / produce a ‘healthy’ profit like a public corporation but also there is a community service aspect • Examples • Australia Post, Medibank Private, Vic Roads.

35. Types, Objectives & Strategies of LSOs Private Sector Owned by Private individuals Public Sector Owned and run by the Government Private Company Public Company Non Profit Organisations Government Business Enterprise Government Departments Seen to be inefficient Bureaucratic (Minister in charge with many public servants) Service motivated Does not generate sales Given a predetermined budget (money) to spend each year DefenceDept Charities & Foundations Objective to raise funds to provide for a cause or for the disadvantaged World Vision Australia Salvation Army St Vincent De Paul Society Run like a Corporation but NOT ON ASX Profit but also service motivated Make a profit for the government but also to provide a service Australia Post Medibank Private Not on ASX 2-50 Shareholders Restricted transfer of shares Objective to make a profit for shareholders Rip Curl Pty Ltd Listed on ASX 5+ Shareholders Shares traded on ASX Objective to make a profit for shareholders Qantas Airways Ltd

36. Key Terms • Privatisation (GBE turns into Public Corporation) • Where a government business enterprise (GBE) is sold to private investors or floated on the ASX, and the business is run primarily to make a profit; (i.e. Public sector asset or organisation now becomes part of the private sector) • Governments traditionally are seen to run inefficiently so privatisation will mean: • Cash injection for the Government because they sell it • lower prices for consumers as the business becomes more efficient to run and have lower costs • E.g. Telstra (89% shares held by public, and 11% by government) • CBA was once government owned

37. Key Terms • Public Sector • Government owned • Private Sector • Non-Government owned. Owned by private enterprise – individuals or groups of people. • Public Private Partnership (PPP) • A joint venture between the Government and private enterprise in order to complete a project. • The government benefits by creating infrastructure for the community, without having to finance the entire project , and the private organisation benefits by gaining exclusive operation of the asset for an agreed period of time in order to earn revenue. • E.g. EastlinkCitylinkDesal plant in Victoria

38. Objectives and Strategies of LSOs Vision Statement Mission Statement Objectives Strategies (Plans of action)

39. What is a Vision Statement ? • A brief statement that broadly describes the future direction and outlook of the organisation. • It is the organisation’s value and philosophy • E.g. Telstra’s Vision • “To improve the way people live and work”

40. What is a Mission Statement ? • Sets out the reasons for the LSO’s existence & • it’s principal activities • what the corporation does • why it exists • E.g. Telstra’s Mission • “We build technology and content solutions that are simple, easy to use and valued by our customers. We strive to serve and know our customers better than anyone else”

41. What is a Mission Statement ? • Eg: Commonwealth Bank Ltd • “To be Australia’s finest financial services organisation through excelling at customer service” • Eg: Coles • “To give the people of Australia a shop they trust, delivering quality, service and value”

42. What are objectives? • Describes the goals or aims of the organisation for the short, medium and long term. • The purpose is to fulfil the company’s Mission. • Examples...

43. What are objectives? • Financial Objectives • Includes the level of profits, market share and revenue. • Eg. Company may want to increase profits by 10% in 2011 • Service Objectives • Provide a level of service to the customers. • Eg. To reduce the time spent by customers on hold by 5% • before May 2011

44. What are objectives? • Social and Ethical Responsibility Objectives • Becoming caring corporate citizens. • Eg. To increase donations to charities by 20% in 2011 • Environmental Objectives • Caring for the environment and reducing our impact • Eg. To reduce carbon footprint by 15% by 2013

45. What are strategies? • Statements of actions or plans outlining how the • objectives are to be achieved • What is the link between objectives and strategies ? • Objectives or goals are formulated based on the organisation’s vision and mission and then plans of action or strategies are formulated to ensure that objectives are achieved

46. Key knowledge: Contributions, both positive and negative, of large-scale organisations to the economy (Positive Contributions – Section 1.4 in textbook) (Negative contributions – Section 1.5 in textbook)

47. LSOs- Positive Contributions • LSOs contribute to the nation in many ways including: • Economic Growth • Employment (direct & indirect) • Research & Development • Infrastructure growth • Export Income • Industrial Base • Training and Skills Development

48. LSOs- Positive Contributions • Contribute to ‘economic growth’ • LSO’s are continually expanding and producing more products leading to an increase in the nation’s Gross Domestic Product (GDP), which is the total market value of all goods and services produced in Australia in a year • LSO’s contribute roughly 55% of Australia’s GDP

49. LSOs- Positive Contributions • Employment (Directly & indirectly) • LSO’s provide employment opportunities to approximately 2.7 million Australians, the equivalent to roughly 33% of private sector (non-government) employment both directly (those who work in LSOs) or indirectly through businesses that exist due to LSOs activities • Research & Development – R&D • LSO’s have the financial capacity and incentive to invest heavily in innovation and invention to gain a competitive advantage. Smaller companies may later copy these innovations leading to overall increased efficiency. LSOs spend approximately $8+ billion per annum on R&D

50. LSOs- Positive Contributions • Stimulate Infrastructure Growth • LSO’s force governments to invest in the provision of essential services that allow for the expansion of commerce and industry in such areas as roads, railways, water, power, education, health and telecommunications (especially when LSOs locate in regional areas of Australia) • This growth in infrastructure can also be utilised by smaller businesses and society as a whole