+ business management part 3 – management process

+

Business Management

Part 3 – Management process

+Students learn about – Management process

Coordinating key business functions and resources

Operations Goods and/or services The production process Quality management

Marketing Identification of the

target market Marketing mix

Finance Cash flow statement Income statement Balance sheet

Human Resources Recruitment Training Employment contracts Separation

Ethical business behaviour

+Introduction

How the task of management is done. Establish specific goals. Determine strategies to achieve goals.

Strategies Definition – the actions that a business takes to achieve specific

goals. Strategies involve:

What has to be done. Who is to do what. When it is to be done. What resources will be needed.

Management strategies need to ensure the key business functions are performing efficiently and effectively to support and implement the business’s overall intentions. Operation – strategy focus is to improve production processes.

Marketing – determine appropriate markets and decide on price, product features, promotion and channels of distribution.

Finance – financial requirements, budget allocation and financial record keeping.

Human resources – recruiting, training, employment contracts and separation of employees

+Who undertakes key business functions

In small businesses the key business functions are carried out by a few employees or outsourced.

Outsourcing is the use of external sources or businesses to undertake business functions or activities for the business.

In large businesses whole divisions or departments staffed by many people perform one specific function.

ActivityDevelop a learn the lingo page and copy all of the words in bold.

+Key Business Functions

Source Chapman & Devenish Bus Studies in Action Prel Course Page 195

+Interdependence of the key business functions

The key business functions are interdependent.

Interdependence refers to the mutual dependence that the key functions have on one another.

In the same way that players in a hockey team must work together to win a game so must too must the key business functions work in a coordinated and collaborative way to achieve business goals.

+Coordinating key business functions and resources

All business functions should: Work towards the fulfillment of the business’s goals. Be coordinated so they have a common purpose.

In large businesses the key business functions are separated into different divisions or departments headed by separate managers.

In small businesses work areas are not separated but often overlap.

• See figure 8.4 page 197

+Operations Operations refers to the business processes that involve

transformation or more generally ‘production’.

Operations management consists of all the activities in which managers engage to produce a good or service.

For example when buying a loaf of bread from the supermarket the bakery will have undertaken a number of processes: Buying ingredients Mixing and blending them Baking Cooling Wrapping the finished loaf Delivering the loaves to the retail outlets.

Activity – Demonstrate the concept of operations by describing the materials you would need and the process you would undertake to bake a cake.

+The operations management function

Has considerable influence on: The quality The cost And The availability

Of the business’s goods and/or services.

Source http://www.udonrice.com/image/gmp_haccp13.jpg

+Goods and / or services

Operations management is responsible for transforming inputs into goods.

Tangibles are goods that can be touched. They are handled and stored before being sold to the consumer. For example bread, clothing or a car.

Intangibles include services that cannot be touched like a training course. These can not be stored and the customer may need to be present when the service is being delivered, for example a haircut.

Many businesses today produce a combination of both manufactured goods and services. For example when a customer enters a contract with an internet provider they receive a service, their broadband connection, plus the modem and other goods necessary for the connection.

+The production process The three key elements of the production process in

any business are: Inputs – resources used in the process of production. Processes/transformation. Transformation – the

conversion of inputs (resources) into outputs (goods or services).

Outputs – the end result of a business’s efforts – the service or product that is delivered or provided to the consumer.


+Inputs The six categories of inputs:

Name Definition Manufacturing example

Service example

Material inputs

Raw materials consumed or converted by the transformation process.

Use water and steel to produce building products.

A bank consumes computer software and paper.

Capital equiment

Labour

Information from a variety of sources

Time

Money

Activity – Complete the table using page 202 of text.

+McDonald’s

Game

A popular online game is the McDonald's game. This game allows you to manage some of the inputs that McDonald's would use, from its suppliers through to its consumers. Use the McDonald's game weblink in your eBookPLUS to play the game, then answer the following questions.Identify the elements of this operations system.

State whether the business in this game offers a service or manufactures a product.

Propose which aspects of the game an operations manager would have responsibility for.

Explain what happened when you lost control of your materials or ran out of inputs. Outline what you needed to do to solve this problem.

Clarify how problems in your supply chain affected the profit trend.

Propose which operations management strategies you could use to improve productivity in the game. Share your answer with the rest of the class.

Outline some of the ethical issues that are raised within the game. Identify which of these apply to operations management.

Source - http://fast-food-nutrition.findthebest.com/sites/default/files/530/media/images/mcdonalds_101.jpg

+Processes / transformation Transformation implies physical changes but also

includes the conversion of resources into services. Complete table using page 203.

Inputs supplied by existing resources of external supplier

Transformation process

Outputs – either goods or services

Clothing factory

Private hospital

+Transformation processes

Transformation processes in manufacturing businesses. One type – take basic resources and transform to

a final product for consumers. Other types involve step like transformation.

Some processes assemble components from manufacturers.

Other processes manufacture components into elaborately transformed manufactures (ETMs) manufactured goods that are highly processed and valued.

Simply transformed manufactures (STMs) are manufactured goods that are intermediate by nature and have the ability to be further processed in a wide range of processes.

Transformation process in service businesses. The are less physical and take the form of

knowledge, inputs and expertise.

They differ from manufacturing for two reasons;1. Outputs can not be physically held in stock. For

example a bank can perform transactions in advance.

2. Rely on interactions with customers to determine output. For example bank needs customer to indicate whether require a car loan, a deposit or a withdrawal.


+Outputs

The service or product that is delivered or provided to the customer.

In many cases businesses carry out manufacturing and service operations. For example Ford Australia manufactures and sells cars.

+Quality management

Quality management is the strategy a business uses to make sure its product meets customer expectations.

A quality product should have a degree of excellence and should achieve its stated purpose. It should be reliable, easy to use, durable, well designed, delivered on time, include after sales service and have an agreeable appearance.

Three quality approaches are: Quality control Quality assurance and Total quality management

+Quality control and quality assurance

Quality control involves the use of inspections at various points in the production process to check for problems and defects. For example tip top use an automated product inspection and banks can inspect teller accuracy, speed or courtesy.

Quality assurance involves the use of a system so that a business achieves set standards in production. For example Tip Top’s quality systems are certified to the ISO 9002 standard (ISO stands for International Organisation for Standardisation).

+Total quality management Total quality management is an ongoing, business-wide

commitment to excellence that is applied to every aspect of the business’s operation.

TQM aims to create defect-free production process and maintain a customer focus in operations.

TQM can improve price competitiveness and improve product quality allowing attainment of competitive advantage.

Approaches used to achieve TQM: Employee empowerment – use of quality circles – groups of

workers who meet to solve problems relating to quality. At Chrysler quality circles discovered heating rubber seals before installation could prevent car door leaks.

Continuous improvement – involves an ongoing commitment to achieving perfection involving constant evaluation of and improvement in the way things are done.

Customer focus – the business should answer – What does the customer require?

Activity – Read snapshot Putting Quality First – W Edwards Deming page 211. Complete Questions 1 - 4

+Marketing For a business to make a profit it needs to create and

market products that consumers will purchase.

Marketing is a total system of interacting activities designed to plan, price, promote and distribute products to present and potential customers.

Successful marketing involves bringing the buyer and seller together and making a sale.

Businesses should continuously strive to not simply meet but exceed customer expectations.

The marketing concept is that a customer’s needs and wants are met while achieving the business’s goals.

Activity - Complete Exercise 8.5 Revision questions 1, 5, 8 and 9 page 218

+Identification of the target market

A target market is a group of customers with similar characteristics who presently or may in the future purchase the product.

Three broad approaches can be adopted when selecting a target market.

Source Chapman & Devenish Bus Studies in Action Prel Course 9

+Mass marketing and market segment approach

Mass marketing approach – seeks a large range of customers. The business develops a single marketing mi

and directs it at the whole market. For example basic food items, water, gas and electricity.

Market segment approach – occurs when the total market is subdivided into groups of people who share one or more common characteristics. Common elements or dimensions are

demographic, population characteristics, geographic, where people live, lifestyle, people’s attitudes and values and behavioural, loyalty to a product.

Once the market is segmented, one segment becomes the target market.

Source Chapman & Devenish Bus Studies in Action Prel Course 1

+Niche market

A niche market is a narrowly selected target market segment. It is a segment within a segment. For example a newsagent has rows of magazines each

appealing to a specific niche market – male, female, young, old, high-income, low income, urban, rural, outdoor lifestyle.

magazineActivityComplete Exercise 8.6Page 224Questions 1 and 7


+Marketing mix Marketing mix refers to the combination of the four

elements of marketing, the four Ps – product, price, promotion and place – that make up the marketing strategy.

Once the four P’s are established the business must determine the emphasis it will place on each variable. This is determined by where the product is positioned or its stage in the product life cycle (introduction, growth, maturity and decline).

For example a product being marketed with an image of exclusivity and prestige requires a marketing mix totally different from a no-frill generic.


+Product A product can be goods or services and

consists of both tangible and intangible features. A product is a combination of these variables:

Quality Design Name Warranty and guarantee Packaging Labelling Exclusive features

A intangible benefit of utmost importance is customer service. This involves service at the time of sale as well as after-sales service.

Product positioning is the development of a product image compared with the image of the competing products. Products like Rolex and Ferrari can immediately evoke an image of the

product’s quality. Many businesses invest considerable resources in the positioning of their

product thus when customers purchase products they both the tangible and intangible benefits.

Product packaging involves development of a container and the graphic design for a product. Packaging helps preserve, inform, protect and promote the product.

Product branding is the brand and associated brand logo. A brand is a name, term, symbol or design that identifies a specific product

and distinguishes it from its competitors. A brand logo is a graphic representation that identifies a business or product.

For example the ‘golden arches’ symbol used for McDonalds.

ActivityOutline the image the following products convey.a) No frills

tomato sauceb) Rolex watchc) Dolly

magazined) Sportsgirl

clothing and accessories.

http://www.replika-klockor.com/wp-content/uploads/2011/02/Rolex-watches.jpg

+Price A business must select the most appropriate pricing

method suitable to its product and market conditions. A price too high could mean lost sales. A price too low can give the impression of a ‘cheap and

nasty’ product.

One of four methods is usually chosen: Cost plus margin – cost of production plus a percentage. Market price – determined by customer demand and

production supplied. Competitor’s price – below, equal or above competitor. Discount price – reduced price to stimulate demand.

Activity –Exercise 8.7Question 13Page 230


+Promotion

Promotion refers to the methods used by a business to inform, persuade and remind customers about its products. Promotion aims to:

Attract new customers by raising awareness. Increase brand loyalty by reinforcing the image of the product. Encourage existing customers to purchase more of the product.

The main forms of promotion: Personal selling – sold by sales assistant to

meet individual customer needs. Sales promotion – Use of items like

free samples or coupons to attract interest. Publicity – A free news story to enhance the image, highlight favourable

features and reduce any negative images. Advertising – print or electronic media to attract, create demand and

communicate essential information.

Activity - Complete Outback Trekkers launch – live on the internet.

Questions 1 – 3 page 229


+Place or distribution Channels of distribution (place) is a way of getting the

product to the customer. This process usually involves a number of intermediaries

such as a wholesaler or retailer. There are three main types of distribution channels:

1. Producer to customer – no intermediaries.

2. Producer to retailer to customer – used for bulky or perishable items like furniture or fruit.

3. Producer to wholesaler to retailer to customer – most common method for distribution of goods.

Activity – Recommend a distribution channel for the sale of:

- a daily newspaper

- a washing machine

- an imported motor vehicle.

Source http://thumbs.dreamstime.com/thumb_535/1283639560MQZ1GK.jpg

+ Finance - Accounting Businesses need to be led by managers with a good

understanding of accounting and financial management.

Accounting is a financial tool involved with the recording and analysis of all the business’s financial transactions.

Accounting provides information that is useful, accurate presented in a clear and concise way. The information encourages: Prudent decision making (prudent means showing care and

thought for the future). Planning that is purposeful. Confidence in business management. Accountability.

The financial transactions are summarised into financial statements. The main ones are: Cash flow statement – information about the liquidity of the business. Income statement – detail the income received and the expenses

incurred by the business in the course of a period of trading. Balance sheet – detail the financial stability of the business in terms of

what it owes and what it owns.

Source http://www.google.com.au/imgres?imgurl=http://accountantschermside.com.au/wp-content/uploads

+Finance

Accounting is useful as it provides information in statements about: Financial position Cash position Cash flows Profitability and return on investment Trends in earnings, borrowings, sales to indicate the risks the

business faces.

Finance refers to how a business funds its activities. This includes: Where it gets the money to trade. Why it chooses to use certain lenders. The costs, risks and benefits of different lenders.

Activity1. Distinguish

between accounting and finance.

2. Identify the main accounting reports and statements.

+Cash flow statements

A cash flow statement shows the movement of cash receipts (inflows such as money from sales) and cash payments.

Cash flow statements assess liquidity – the amount of cash a business has access to and how readily it can convert its assets into cash so that debt can be paid.

ActivityExercise 8.9Complete -questions 5, 8 and 9 Page 239.


+Income statement or statement of financial performance

The income statement is a summary of the income earned and the expenses incurred over a period of trading.

It helps users of information see: How much money has come into the business as revenue. How much has gone out as expenditure. How much has been derived as profit.

The main classifications of items in the income statement are: Revenues Cost of goods sold (COGS) Expenses

+Components of income statement Revenue – income from sales.

Net sales – the amount of revenue a business has earned from sales when the effects of sales returns are deducted.

Gross profit – the sales less cost of goods sold.

Cost of goods sold (COGS) is the value of stock that a business has sold to its customers. Gross profit = Sales – COGS COGS = Opening stock + Purchases – Closing stock

Opening stock is the value of stock or inventory that the business has at the start of the financial year.

Closing stock is the value of stock on hand at the end of the financial year.

Expenses – costs. They are broken into three types: Selling – relate to the process of selling the good or service. Administrative – costs related to the general running of the business. Financial – costs associated with borrowing money and minimising risk. Expenses can be:

Operating – occur in the normal course of trading. Non-operating – unusual, unexpected and unpredicted items that are favourable or

unfavourable.

Net profit – the difference between the gross profit and operating and non-operating expenses

+Steps in completing income statement1. List the sales for the period.2. Calculate the cost of goods sold

(COGS).3. Calculate the gross profit.4. Itemise all other expenses under

categories of administrative, selling and financial).

5. Calculate the net profit.

Net sales calculation $Sales

100 000Less discounts allowed to customers 2 000Less returns of sold items 3 000Net sales 95 000COGS Calculation

$Opening stock (stock at start of period) 2 500 Purchases (during the period) 10 250 Closing stock (stock at end of period) 3 400COGS (2500 + 10250 – 3400) 9 350

The reports provide insights into how the business is earning and spending, the gross profit shows the mark-up.

Activity - Complete Exercise 8.10 Questions 1 – 9. Page 244


+Balance sheet or statement of financial position A balance sheet is a statement of the business’s assets and liabilities (financial position) at

a particular time using the heading ‘as at’ to pinpoint when it was created. It shows the overall financial stability of the business. It helps owners:

Watch debt and equity levels. Compare their overall financial position with that of previous periods. Assist with the process of financial decision making.

Balance sheet items On the left hand side are assets – what the business owns On the right hand side are liabilities and owners equity – what the business owes.

Assets - items of value to the business. Current assets – items whose value is expected to be used up or turned over within 12 months like bank

savings, cash on hand, accounts receivable (debtors), prepaid expenses, inventories (stock). Non-current assets – items with an expected life of 3 – 5 years or longer like buildings, land, machinery,

technology, vehicles, furniture, fixtures and fittings. Intangibles – things of worth that have no physical substance – goodwill, trademarks, designs, copyright.

Liabilities – items of debt owed to outside parties. Current liabilities – debts expected to be repaid in the short term (12 months or less) like bank overdrafts,

credit card debts, accounts payable (creditors) and accrued expenses. Non current liabilities – long term debts like mortgages, leases, debentures and retirement benefit funds.

Owners equity (or capital) – funds contributed by the owners to establish and build the business. A liability from the point of view of business because it is a type of debt the business carries.

Activity Complete - Exercise 8.11 Questions 1 – 10 Page 247

+T format – the format for the balance sheet is called the ‘T-format’ because you can draw a line down the middle and separate the report into two halves by using the letter T.

The balance sheet equation is:Assets = Liabilities + Owners Equity

Activity Complete Exercise 8.12 Questions 1 – 3Page 249


+ Human Resources Employees can make or break a business so management of staff has to be the top priority of

every business.

Human resource management (HRM) – the effective management of the formal relationship between the employer and the employees.

Businesses that are successful maintain a balance between: Concern for success (expansion or profit) and Regard for their employees

For a business to make best use of its employees it should: Take care to hire the best people. Develop cooperative and effective working relationships. Motivate staff to do their best in the workplace. Provide employees with opportunities for training and development. The four main elements

of the human resources cycle / staffing process


+ Stage 1 – Acquisition Planning, Recruitment, Selection

Human resource planning is the development of strategies to meet the business’s future staffing needs.

Job analysis is the next step. Job analysis is a systematic study of each employee’s duties, tasks and work environment. A job analysis examines:

Actual job activities Equipment used on the job Specific job behaviours required Working conditions Degree of supervision necessary

The job analysis consists of two parts: Job description – a written statement describing the

employee’s duties, tasks and responsibilities associated with the job.

Job specification – a list of the key qualifications needed to perform a particular job in terms of education, skills and experience.

Graphic DesignerJob description – This full-time position involves creating flyers, brochures, posters, catalogues, advertising, stationery and web pages along with book interior and cover designs.

Job specification – The successful applicant will have excellent design skills and can format supplied text both quickly and accurately. A thorough knowledge of Abode CS3 studio software package for the Macintosh is vital. GoLive, PowerPoint, or web site design experience, as well as good English skills would be very advantageous.

+ Recruitment and Selection Recruitment is the process of attracting qualified job applicants from which

to select the most appropriate person for a specific job.

Internal recruitment involves filling job vacancies with present employees rather than looking outside the business.

External recruitment involves filling job vacancies with people from outside the business.

The main sources of employees available to a business include:

Employee selection is choosing the most suitable applicant for the vacancy. This involves identifying the skills, qualification and experience of the applicant to those in the job specification to find the closest possible match. Advertisements in the media Private employment / recruitment agencies Schools, TAFE colleges or universities Public employment agencies Internal searches

Selecting the most appropriate candidate involves the following options: Written application – curriculum vitae or resume Testing – psychological or personality tests and aptitude tests Interviews – face to face questions Background checks – verify accuracy of experience and past performance

ActivityComplete - Exercise 8.14 Questions 2, 9 and 13 and extension 3Page 261

+Stage 2 –Training and development

Training is teaching staff to perform their job more efficiently and effectively by boosting their knowledge and skills.

Development is the process of preparing employees to take on more responsibilities in the future.

Ongoing training for all employees can be promoted by the business becoming a learning organisation. A learning organisation is aware of its actions and its environment and tries to improve its understanding of the relationship between the two. All employees are involved in developing knowledge and insights that allow the business to continually grow and improve.

Training needs must be identified well in advance of any proposed technological implementation. This ensures change happens at a pace consistent with the capabilities and expectations of the workforce.

The most common training methods: Formal off-the-job training – like classroom activities Informal on-the-job training – like coaching Action learning – learning by experience Competency based training – identify skill strengths and areas where further

training is required. Corporate universities – partnerships between business and academic

institution. Training technologies – computer based training.

Activity Read Investment in training at Delta Industries Questions 1-3Page 264

Source http://www.dfcentre.com/?Programmes_%26amp%3B_Projects:Training_Activities

+Stage 3 - Maintenance

Maintenance is the provision of working conditions to encourage employees to remain with the business.

Employers need to offer productive and efficient employees – compensation – appropriate for the job performed and attractive enough to keep existing employees satisfied. Compensation refers to payments or benefits or both

an employee receives in exchange for their labour.

An award outlines an employee’s minimum pay and conditions.

The remuneration package is the combination of monetary and non-monetary benefits. Monetary benefits – pay rates Non-monetary benefits include – conditions and

fringe benefits including a car or cheap housing loan

ActivityComplete - Exercise 8.15 Questions 13 & 8 and Extension 4Page 266

+ Employment contracts An employment contract is a legally binding formal agreement between an employer and an employee.

There are three different types of employment contract:

Award – an employee’s minimum pay and conditions.

Advantages Disadvantages

Set a minimum for pay and conditions Can be inflexible and not suit all

Cover all employees performing a similar job Prevent recognition and individual initiative

Enterprise Agreement – a negotiated agreement between between an employer and a union or a group of employees.

Features Replace an award or agreement as an add on agreement to an award.Must comply with all NSW laws regarding employment rights and entitlements.Must be in writing and signed by each party.Usually for a fixed term, but remain in force until rescinded

AdvantagesConsultation with and involvement of employees encouraging involvement and empowerment.Possibility of improved pay and conditions, tied to workplace performance.Greater flexibility by agreeing on conditions that suit employer and employee

DisadvantagesMore time consuming as agreement meetings required.More administration as agreement must comply with all existing laws.

Activity-

Distinguish between an enterprise agreement and a common law contract.

+Common law contracts

Common law contract – exists when employers and employees have the right to sue for compensation if either party does not fulfil their part of the contract.

For example an agreement with your business studies teacher ‘classroom (employment) package’ that includes more homework in return for the right to attend only 2 Business Studies lessons each week. This is a common law contract.

They are common among professional and managerial employees. Contracts are signed individually and are secret.

Advantages Disadvantages

Flexible to suit individual and business needs.

One party could be exploited.

Individual initiative rewarded.

Court case expenses if either party sues for compensation.

+Rights and responsibilities

Employers responsibilities: Provide work and tasks for employees. Pay award or contract wages and reimburse

expenses. Meet requirements of industrial relations legislation

for example equal employment opportunity. Duty of care – bound by Occupational Health and

Safety Acts to provide reasonable care for health and safety of employees.

Employees’ responsibilities: Obey lawful and reasonable commands of employer. Use skill and care to carry out work activities. Act in good faith and in the interests of the

employer.

+ National Employment Standards Minimum employment conditions known as the National Employment standards commenced on

January 1, 2010.

Legislated by the federal government and apply to permanent and fixed full-time and part-time employees.

Superannuation for employees 18 – 69 paid more than $450.00 before tax in a calendar month or under 18 and work 30 plus hours in a week.

The 10 standards are:

1. Hours of work – 35-38 hours fulltime.

2. Parental leave – 12 unpaid parental leave on birth or adoption of a child.

3. Flexible working for parents – if caring for a child under school age entitled to reduced hours, different start and finish times or home-working arrangements if worked for employer for more than 12 months.

4. Annual leave – 4 weeks generally.

5. Personal, carer’s and compassionate leave – 10 days for fulltime employees.

6. Community Service leave – unpaid leave to provide community service like jury duty or SES volunteer work.

7. Public holidays – Not required to work, if work may be entitled to penalty rate or other compensation.

8. Information in the workplace – supplied with ‘Fair work information statement’ when commence work outlining the National Employment Standards.

9. Notice of termination and redundancy – entitled to minimum notice of termination of employment.

10. Long service leave – entitled to after a qualifying period.

Activity - Select what you consider to be the three most important standards. Justify your answer.

+Changing employee expectations

Employees want challenging work, greater responsibility and autonomy.

Employees are aware of occupational health and safety issues and the effects of stress due to long working hours.

Women seek increased increase equity and require a balance between work and family.

Workplace democracy is the move towards increasing the influence of employees in decisions affecting their organisation and their jobs.

Fair Work Act 2009. This legislation covers nature of employment contracts and agreements, unfair dismissal, dispute settling methods, protection of human rights in employment and employer responsibilities for tax payments.

+ Legal responsibilities when employing staff

Equal employment opportunity (EEO) and anti-discrimination. Two of the most important pieces of legislation are:1. Anti-Discrimination Act 1977 (NSW). Unlawful to discriminate against any

employee on the basis of race, sex, marital status, disability, sexuality or age.

2. Affirmative Action (Equal Employment Opportunity for Women) Act 1986 (C’wealth) Businesses are to promote equal opportunity for women by establishing affirmative action programs.

Occupational Health and Safety (OH & S) refers to the responsibility the employer has to ensure the workplace is safe for employees and that steps are taken to minimise harm. The Act has four main aims: To ensure the health, safety and welfare of employees. To protect other people in the workplace like visitors. To promote a working environment for employees adapted to their physical

and psychological needs. To provide a simple framework for protection of employees.

Activity Complete Extension 4 and 5. page 275.

+Separation

Separation is the ending of the employment relationship.

Two broad categories: Voluntary and Involuntary Voluntary separation – occurs when an employee chooses to leave the

business of their own free will. Retirement – when an employee decides to give up full-time or part-

time work, since the 1990s no official age is set. Resignation – a voluntary ending of the employment relationship.

Reasons include – a promotion within another business, boredom, to start their own business, for a change lifestyle.

Redundancy – voluntary and involuntary. Redundancy is when a particular job a person is doing is no longer required to be performed usually due to technological changes, a merger or takeover. Voluntary redundancy occurs when the business wishes to reduce the size or nature of its workforce.

Involuntary separation

+ Involuntary separation Involuntary separation occurs when an employee is asked to leave the business

against his or her will.

Retrenchment – when a business dismisses an employee because there is not enough work to justify paying him or her.

A dismissal is when the behaviour of an employee is unacceptable and then becomes necessary for a business to terminate the employee’s employment contract.

Summary dismissal is when an employee commits a serious breach of their employment contract. For example drunk at work.

Dismissal on notice is when an employee is not performing satisfactorily.

Redundancy

Unfair dismissal occurs when an employer dismisses an employee for discriminatory reasons. Examples include:

Absence from work due to illness.

Either belonging or not belonging to a trade union

Race, colour, sex, sexual preference, age, disability, marital status, family responsibilities, pregancy, religion, political opinions held or ethnicity.

ActivityComplete Ex 8.17 Questions 5, 8 and Extension 3.Page 279

+ Ethically and socially responsible business behaviour

The majority of businesses want to be seen as responsible corporate citizens.

Socially responsible businesses want to structure production methods to fit environmental regulations. They consider raw material usage, packaging, waste treatment and energy consumption.

Businesses want to engage in ethical business practices – to act honestly and morally.

Many businesses today are concerned with triple bottom line – they no longer simply focus on making profit (economic) but rather recognise that environmental and social performance are also important.

Activity Read snapshot Honesty is the best policy.

Complete Questions 1 and 2. Page 280

+Ethical business behaviour

Ethics are standards that define what is acceptable and unacceptable behaviour.

Business ethics is the application of moral standards to business behaviour such as: Fair and honest business practices. Decent workplace relations. Conflict of interest situations. Accurate financial management. Truthful communication.

A Corporate Code of Conduct is a set of ethical standards for managers and employees to abide by.

Activity - Complete Exercise 8.18 Question 10 and Question 14. Pages 285-286

Activity – (Pages 283 - 284)Summarise ethical issues –Fairness and HonestyRespect for peopleConflict of interestFinancial managementTruthful communication

+Socially responsible business behaviour Social responsibility refers to a business’s management of the social, environmental,

political and human consequences of its actions.

A socially responsible business tries to achieve two goals: Expanding the business. Providing for the greater good of society.

Social responsibility is good business. It may have short term costs but turns out to be in the company’s interest in the long run.

Activity – Read Corporate social responsibility – everyone wins. Complete questions. Page 287.

Milton Friedman amongst others believed a business’s sole responsibility is to survive by making a legal profit.

Today society is more informed and better educated resulting in higher expectations of business practices and greater awareness of social responsibility. Employers demand improved working conditions. Consumers want reliable safe products. Businesses need to be accountable and responsible for their actions. Governments pass legislation which influences business behaviour. Conservationists desire careful consideration of our environment. Businesses expect high ethical standards.

A sustainability report/social audit is a report that details what a business has done and is doing concerning the social issues that affect it.

Activity -Complete - Exercise 8.19 Question 5 and 6. Page 289.

+ business management part 3 – management process

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