Wednesday, June 5, 2019
Business Management and Change at Billabong (BB)
Business vigilance and potpourri at Billabong (BB)HSC Topic wizard Business caution and wobbleCase Study BillabongManagement TheoryBehavioural Management TheoryCreative thinking and innovation be of great importance than ruthless efficiency. Managers see their roles primarily as motivating staff communicating the companys vision to customers stakeholders.Workers overcame problems and gave input into the way Billabong was run.Primarily to do with tune assimilation and lack of morale caused by inertia of managers their resistance to changeBILLABONGSources of Change* awayer influences sparing factors Negative direct of unemployment and growth/ busy rates subject matter less people mass afford BBs intersection points Rising incomes in East Asia and S step to the foreh America have helped create virgin marketsSocial factors ever-changing consumer tastes Increasing tastes in sports such as skateboarding and surfing BMX now included at Olympics increases recogniti on of sport and clothingPolitical factors Protectionism and limiting of imports done with(predicate) tariffs has seen BBs carrefour strengthened in the domestic market Gov emphasising and pushing Aus exports, BB has seen improved overseas gross revenue.Geographic Pollution of beaches discourages people from surfing Influences what products BB have to vent-hole Snow gear in countries like Switzerland and surf gear in markets like HawaiiInternal influences E-Commerce Positive Simplifying logistical and organisational difficulties + Monitoring and tracking sales control Internet website greater relationship/inter military happen uponment with customers New Procedures Private Public Comply with legitimate regulations meant financial record placements for annual financial enunciate Tighter control over finances so as to increase return for investors Business Culture Management team changed in 1998 when Matthew Perrin and Gary Pemberton bought 49% of BB Now compri sed of to a greater extent professional managers with greater air knowledge and procedures than the original surf enthusiasts who established the businessStructural responses to changeOutsourcingProduction to SE Asia and ChinaResponse to frugal and financial influences in allows company to focus more on design and marketingLowers costs to maintain competitive advantage in price-sensitive marketsStrategic everyiancesCooperated with Channel V Billabong Music Bus TourBoth had similar target marketsIncreased brand recognition and aw benessReasons for resistance to changefiscal Costsontogenesis immature products such as skateboards and sunglasses requires moneyAcquiring smaller businesses, eg. Honolua Surf Company cost around $20billionInertia of ownersInternational expansion brings or so risk from the financial backers/owners and therefore saw resistance from sh beholdersManaging change effectivelyIdentifying need for changeBB gained an edge over competitors by being one of the root businesses to expand overseas in the early 1980sDiversifying into skateboarding and accessories increased market shareCreating culture of changeNew management team in 1998 acted as change agents carry throughd growth by constantly observing and pursuing new opportunitiesChange Models (force field analysis)Driving ForcesRestraining Forces revenueNew opportunities for staff course of instruction round demand (seasons)Costs of intersectionLack of new designersNeed to hire new managers for new departmentsChange and Social ResponsibilityEcological SustainabilitySurfrider stem Conservation and regeneration of beaches and foreshores Quality of lifeEncourages team work and a relaxed atmosphere both in the transferice and in retail storesBB has a inexorable no child labour policy and regularly inspects overseas output facilitiesCultural DiversityEncourages communication between domestic and international stores/ off-keyicesEmployees are promote to transfer between international offices to gain new experiencesThe Nature of Management Management component parts-An interpersonal role is one in which the manager deals with people. Proactive- incorporates dynamic action and forward planning to achieve busy objectives-An informational gathers information within the business and go forths it outside the business-A decision-making role involves solving problems and making choices Skills of Management-People Skills-Strategic thinking-Vision-Self-Managing-Teamwork good behaviourResponsibilities to stakeholders includemanage changesocial justiceecological sustainabilitycompliance with the lawcodes of institutionalizeUnderstanding Business Organisations with Reference to Management theories casualty Theory Classical-Scientific Planning, Organising, ControllingDivision of labour, chain of command, autocratic leadership style moment the manager tends to make all the decisions in the business. Behavioural ability to take care and work with people from a variety of backgrounds and different expectations Leading, Motivation, Communication Flatter organisational structure democratic leadership style where managers consult employees to ask suggestions and take them into flier when decision making. Political encourages the formation of coalitions to promote different points of view. Power and Influence within a business fag have both a authoritative and negative effect. It can be sued to intimidate (negative) or empower others ( validating). Legitimate power due to status or position of the person in the strong e.g management Expert power due to a endpoint of a persons skills and expertise Referent power from a persons individual characteristics (personality and charisma) Reward Power to the rewards or compensation a manager distributes Coercive power controls individuals by the actions or words of the manager Negotiating and Bargaining, Stakeholder views, CoalitionsManaging Change Nature and Sources of Change in Business outside(a) changing Nature of marketplaces, frugal Influences, financial, geographic, social, levelheaded, political, technologicalInternal Effects of decelerating technological change, e-commerce, new placements and procedures, new business cultures Structural Response to Change-Outsourcing Flat social structure Strategic alliances Nedeucerks Reasons for Resistance to Change pecuniary CostsInertia of managers and ownersCultural incompatibility in mergers and takeoversStaffing Considerations de-skilling, acquiring new sources, loss of career prospects and opportunities.* Managing Change efficaciouslyIdentifying need for change- SWOT anaysis and balance sheetsSetting Achievable goals mission statements and company goalCulture of ChangeChange Models Force-Field Analysis Unfreeze/Change/RefreezeChange and Social ResponsibilitySocial Responsibility is the awareness of a businesss management of the social, environmental and human consequences of its actions. Customers eventually find o ut which businesses are acting responsibly and which are not. Ecological Sustainability Quality of Working life Technology E-Commerce Globalisation and Managing Cultural DiversityHSC Topic Two fiscal PlanningThe manipulation of monetary Planning* Strategic role of financial Planningstrategic planOrganisational goals and objectivesManaging financial resources* Objectives of pecuniary management Liquidity -pay debts in the short confines (less that 12 months) Profitability ability to maximise profit Efficiency -manage its assets to maximise profits with the lowest potential direct of assets Growth increase its size in the farsightedsighted status Return on capital -profit returned to owners or stakeholders as a % of their contribution* The planning Cycle Addressing present financial position e.g revenue, p l statements, budgets Determining financial elements of the business plan ontogenesis budgets Cash Flows Financial cut acrosss Maintaining record systems Planning fina ncial controlsFinancial commercialises Relevant to business financial inevitably* Major Participants in Financial marketsBanksFinancial companies -provide loans to individuals and businesses e.g personal and securedInsurance companies -loans to the corporate sector through insurance premiumsMerchant bks (investment bks) -services such as borrowing and loaning to the business sector.Superannuation/Mutual funds provide funds to the corporate sector through the investment of funds received from superannuation contributionsThe Reserve intrust of Australia (Government) -acts as a beacher and financial agent for the federal government* The Role of the Australian Stock Exchange (ASX) as a primary merchandiseThe ASX is the study financial exchange in the country. It comprises the largest primary and secondary markets for companies and individuals wishing to create and exchanges financial assets in the economy* Influences on Financial martsdomestic markets e.g change in inflation, dem ands for funding, changes in government policies. Companies can be positively and negatively affected.Overseas influences such as world events, alien exchange rates, tax regulation for external operations* Trends in Financial MarketsTechnology has allowed markets to become more competitive and grow allowing financial transactions all the time. Globalisation volition also outpouring overseas investors access to Australian companies and increase opportunities for Australian investors and international markets.Management of Funds* Sources of FundsInternal Owners fairness Retained ProfitsExternal short borrowing Bank Overdraft allows a business to overdraw their beak to an agreed limit Bank Bills Long Term Borrowing Mortgage Debentures -The company repays the tally of the debenture by buying back the debenture. Finance companies raise funds through debenture issues to the public. Leasing involves the payment of money for the use of equipment that is owned by other(prenominal) p arty. Factoring is the lead astraying of accounts receivable for a discounted price to a finance of factoring company. Venture Capital is funds supplied by investors to either a new organisation or to an already established business ready to grow or diversify. Grants are provided by the government for businesses to develop and promote international competitiveness. Grants lots enable an organisation to become competitive in the global environment e.g exporting organisations.* Comparison of debt to equity financingDebt finance refers to short and long term borrowing from external sources of an organisation truth Financing refers to the internal sources of finance in the organisationGearing/Leverage is the proportion of debt to equity which is used to finance the activities of a businessUsing Financial Information* The Accounting FrameworkFinancial StatementsRevenue Statements shows the revenue earned and expenses incurred over the accounting period with the answer profit or lo ss. Revenue statements show operating revenue earned from the main matters of the business e.g sales of inventories and the non-operating revenue earned from operations such as rent and commission. It also shows operating expenses such as rent, advertising, insurance.Balance Sheets represent the assets and liabilities at a accompaniment point in time expressed in money terms and calculates the net worth of the business. The balance sheet shows the level of current and non-current assets and liabilities including investments and owners equity. Balance sheets exhibit whether it has enough assets to cover debt delight and money borrowed that can be paid assets used to maximise profits if owners are making a good return on their investment* The accounting Equation and Relationships(A) Assets = (L) Liabilities + (OE) Owners EquityThe accounting equation forms the basis of the accounting process which shows the relationship between assets, liabilities and owners equity. The accounting equation shows that the assets of the business may be financed by either the owners or by parties external to the business.COGS = inventory + purchases closing stock* Comparative Ratio AnalysisBy comparing ratios of a steadfast over time reveals trends and auspicate directions for the future. Comparisons with other businesses and industry ratios is much used although can be inaccurate due to differences in companies and industries. Businesses often compare ratios against common standards such as statistics from the ABS.* Limitations for Financial ReportsHistoric cost accounting states that values are stated at the cost incurred at the time of purchase or acquisition, means financial statements ordain be a com flowture of different year figures. Historic cost has been used for a long time although may become inaccurate in times of inflation.Value of Intangibles licences, trademarks, brand names and goodwill.Effective Working Capital (Liquidity) Management* The Working Capital RatioWorking Capital Ratio = live Assets over rate of flow Liabilities (21 ACCEPTABLE ALTHOUGH VARIES)The Working capital ratio shows if current assets can cover current liabilities.* Control of Current AssetsCash Balances are generally kept at a minimum and hold marketable securities as reserves of liquidity.Receivables is important in terms of management of working capital. The speedy the debtors pay, the better the firms interchange position.Inventories make up a significant account of current assets and their levels must be carefully monitored so that excess or stingy levels of stock do not occur.* Control of Current LiabilitiesPayables must be paid by their due dates due to avoid any extra change charges imposed for late payment and to ensure that trade credit will be extended to the business in the future.Loans management of loans is important for establishment interest rates and ongoing charges must be investigated and monitored to minimise costs.Overdrafts policies should be used to manage bank overdrafts and monitor budgets on a daily or every week basis so that cash supplies can be controlled.* Strategies for Managing Working CapitalLeasingFactoringSale and Lease back is the exchange of an owned asset to a lesser and leasing the asset back through fixed payments for a specified come in of years.Effective Financial Planning* Effective Cash Flow ManagementThe activities of a business are divided into three categories as a statement of cash flows 1. Operating Activities e.g inflow cash and credit, outflow payments to employees2. Investing Activities -e.g distributeing of old motorbike, purchasing new property3. Financing activities- e.g inflow selling of shares, outflow repayment of debt.* Management Strategiesdistributing payments through out a month or year or different period so that cash short occurs do not occur payments and bad debt of accounts by debtors can cause short stocks of cash for businesses at important times.discount s for early payments* Effective profitability ManagementCost ControlFixed Costs e.g insurance and salariesVariable costs change with the level of act within a business e.g materials and labour used in the production of a product e.g fixing a roof.Cost Centres are particular areas, departments or sections of a business to which costs can be directly attributed. Direct costs are those allocated from a particular product, action mechanism, department or region e.g dispraise of equipment used solely in the production of one good. Indirect costs come from shared projects, activities, departments or regions.Staff should be motivated to minimise expenses where workable as savings can be substantial if people take a close look at costs and eliminate waste and supernumerary spending.* Revenue ControlsSales objectives must be at a level of sales that will cover costs (fixed and variable) and ensue in profit. Changes to the sales mix can affect revenue. Research should be made to identi fy the effects of sales mix changes before implantation.price Policy affects revenue and therefore impacts on working capital. To attract buyers while underprice may bring spicy sales but still result in cash shortfalls. estimable and Legal Aspects of Financial Management* Audited AccountsAn audit is an independent check of the accuracy of financial records and accounting procedures. Types of Audits-1. Internal conducted internally by employees2. Management used to review the firms strategic plans and make up ones mind if changes need to be made.3. External required by corporate law to ensure it complies with Australian auditing standards.* Australian Securities and Investments Commission (ASIC)ASIC enforces and administers laws and protects consumers in the areas of investment, life, insurance, super and Australian banking. ASIC sets out to reduce fraud and unfair acts in financial markets and products. ASIC ensures that companies adhere to the law. Collects information about companies and makes it accessible to the public.* Corporate Raiders and Asset StrippingAsset Stripping describes the practice of organisations that identify and sell off for a profit, assets of a company, especially one that has been acquired in a recent takeover. Entities that take over other companies and sell off the assets are known as corporate raiders.HSC Topic 3 marketingCase StudyTypes of MarketsResource BHP BillitonIndustrial PainterIntermediate Gloria Jeans selling cakes fold IBM ComputersNiche Mountain Bike MagazineDeveloping merchandise StrategiesProduct and ServicePositioning* Qantas was under competitive pressure from Virgin Blue in the leisure market* Qantas wanted to maintain its naughtyer positioned government and business segments* Expanded to a subsidiary Jetstar who were positioned as a value-for-money productPrice including determine methodsPrice Points* Jetstar International* Base price for seat, Charge $30 for meal, $7 for blanket and amenity kit and $12 for entertainment kitPromotion publicizing* Dell Computers focus much of their advertising to print media* Use inserts/pamphlets/brochures in magazines, typically in the technology liftout section of the newspaper, where their target market is most in all likelihood to be readingPlace dispersion* Dell distribute products directly, with no intermediaries* Exclusive dispersion (no stores), Intensive (internet)* statistical distribution system is e-commerceEthical and Legal AspectsRole of Consumer Laws in dealing withDeceptive and Misleading advertizing* Gillette (Duracell) VS Eveready* TV advertisement claims Duracell lasts up to four times longer than ordinary batteries* Eveready claimed the ad infringed the TPA* Independent tests showed the Duracell batteries neer last 4x longer* Federal Court ruled Duracell breached the TPA in the areas of misleading and deceptive conduct and false representations about the quality and benefits of goodsThe Nature and Role of Markets and MarketingMarketing is a make out system of interacting activities designed to plan, price, promote and distribute products to present and potential customers.* Types of Markets Resource markets e.g mining, agriculture, forestry and machinery. Industrial Markets purchase products to use in the production of other products e.g buying flour to make bread Intermediate markets (resellers) consist of wholesalers and retailers who purchase finished products and resell them to make profit Consumer Markets e.g cars, clothing, food mass Market is when the seller mass produces, mass distributes and mass promotes one product to all buyers Niche Markets are micro markets made for buyers who have specific need or lifestyles* Production Production Orientation 1820s 1920sWhen a business concentrates on making as many affirmable goods at the lowest price assertable Sales Approach 1020s 1060sWhen a business concentrates on selling techniques to attract customers Marketing Approach 1060s 1980 sWhen a business collects information on consumer trends to sell its products* The Marketing Concept Consumer Orientation when a business concentrates on maximising customer satisfaction to sell its products Relationship Marketing the focus on advance repeat purchases and loyalty to the business by managing customer relations at the time of and after the initial purchase.Elements of a Marketing Plan* Establishing Market Objectives* Identifying stain Market Total Market Approach one type of product with little or no variation aimed at everyone through one dissemination system. Market Segmentation approach the market is subdivided into groups of people who share certain characteristics.* Developing Marketing Strategies (examining elements of the 4 Ps)* Implementation, Monitoring and Controlling Financial Forecasting measures the sales potential and revenue forecasts (benefits) for strategies and compares these with anticipated costs. Comparing actual and planned results1. Sales analysis comparing of actual sales with forecast sales to influence the effectuality of the marketing strategy2. Market share analysis/Ratios by comparing competitions market share to their own this can reveal changes in integrality sales (increase or decrease)3. Marketing Cost Analysis marketer breaks down the total marketing cost into specific marketing activities to access the potential of each activity.Market Research ProcessMarket query is the process of systematically collecting, recording and analysing information concerning a specific marketing problem.The three locomote of the market interrogation process are1. Determining information needs2. Collecting data from primary and secondary sources3. Data analysis and interpretation -the data that represents average, typical or deviations from typical patterns. The data must be then displayed in way which statistics and figures can be conducted e.g spreadsheetsCustomer and Buyer BehaviourCustomers are classified into de vil categories Consumer the process of purchasing goods and services for personal household use. Organisational the purchase of goods and services by producers, resellers and government.Types of Customers Household Personal personal and household spending plays a prevalent role within the economy as it contributes to the level of scotch activity which affects business profits, unemployment levels, interest rates levels and rate of inflation. The Firms market consists of businesses that purchase goods and services for nurture processing or for use in their production process. Educational institutes Government Customers Governments spend billions of dollars each year for a wide variety of goods and services ranging from battleships to paperclips. All purchases of the government spend public funds to buy products, the government is accountable to the public, requiring a much more formalised set of buying procedures where firms submit quotes to tote up a particular good or servi ce and the lowest bid is generally accepted.* The Buying ProcessThe buying process involves 5 common stepsRecognise the problem need or want requiring satisfactionSearch for info brands, product characteristics, warranty, price etcEvaluate alternatives cost and benefit analysis corruptEvaluate after purchase stability of product, satisfaction gained or dissatisfaction may occur.* Factors influencing Customer Choice Psychological influences e.g perception, motive, attitude and personality Socio-cultural influences e.g family, friends, social class, culture and subculture. Economic Influences -A boom is a period of low employment and rising income. Contraction is a period of slowly rising unemployment with incomes stabilising. Recession sees unemployment reach high levels and incomes fall dramatically. Expansion means unemployment levels start to fall slowly and incomes begin to rise. Government Influences government will put into place policies that expand or contract the le vel of economic activity. These policies directly or indirectly influence business activity and customers spending habits and such will influence the marketing plan.Developing Market Strategies* determine StrategiesPrice Skimming charging the highest price possible for innovative productsPricing Penetration charges to lowest price possible for a product or service to achieve large market shareLoss-leader selling a product below its cost price to attract customersPrice Lining a limited turn of key prices for selected product lines e.g one line of watches for $35 and a more expensive line at $55* Pricing MethodsCost-plus margin the total cost of production then adds on metre for profit (mark-up)Market set prices according to the level of supply and demand, when demand is high prices are highCompetition based a business chooses a price based on competition, either below, equal to or above* Marketing segmentation and productMass marketing or a total marketing approach This inc ludes basic food items, water, gas, electricity etc.Concentrated Market Approach -By use the concentrated market approach the business is able to analyse its customer base more closely and design strategies to satisfy this select groups needs, and develop particular products based on customer feedback.Product Differentiation is the process of developing and promoting differences between the businesses products and those of its competitors. e.g jeans with designer labels and washing detergent with brightener additives* Place/Distribution Channels of Distribution or marketing channels are routes taken to get the product from the factory to the customer. The process usually involves a number of intermediaries such as wholesalers, brokers, agents or retailers. To choose the channel of distribution the location is the main contributor of the business market or market coverage (number of way outs a firm chooses for it product). There are three ways a business can cover a market Intensi ve distribution when a business saturates the market with their product e.g milk, lollies and newspapersselective Distribution businesses use a moderate proportion of possible subjects where customers are prepared to travel e.g clothing, furnitureExclusive Distribution only one retail, outlet in a large geographical area for exclusive and expensive products. Physical DistributionTransportWareho utilize involves receiving, storing and dispatching goods.Inventory controlled through a system that maintains quantities and varieties of products appropriate for the target market. Effects on Distribution1. Technology2. Local Government Approving new development applications and alteration to existing premises get up regulations Determining land zoning and the purpose for which a building and land can be used Parking regulations Health regulations Size, shape and location of business signsEthical and legal AspectsEnvironmentally responsible productsMaterialism an individuals desire to constantly acquire possessionsImpact of retail development -intensely competitive environment may result in nearly retailers using questionable marketing practicesSugging Selling Under Guise of a survey,Role of Consumer LawDeceptive and misleadingPrice- DiscriminationImplied Conditions or termsMerchandise quality meaning that the product is of a standard a reasonable person would expect for the priceFitness of purpose meaning that the product is suitable for the purpose for which is being sold. That is, it will perform as the instructions or advertisement impliesWarrantiesResale Price MaintenanceLegislations to respond to ethical and legal aspects of marketingThe Trade Practice Act 1974 is one of the most important pieces of legislation in Australia and has two purposes1. To protect consumers from misleading and deceptive conduct2. regulatory trade practices to re austere competition as well as ensuring that a number of businesses are operation at any one time in the same mark et, to avoid the problem of monopolistic power.Fair Trade Act (FTA) is a mirrors legislation that covers sole traders and partnership as well as companiesImplied conditions in both Acts Merchantable quality worth the money Fit for purpose does its jobs.HSC Topic Four Employment RelationsCase StudyManaging the ER dish outLine Management* ALDI Supermarkets* Individual store managers are expected to solve all instore problems there is no area manager or specialist ER departmentKey influences on ERSocial InfBusiness Management and Change at Billabong (BB)Business Management and Change at Billabong (BB)HSC Topic ane Business Management and ChangeCase Study BillabongManagement TheoryBehavioural Management TheoryCreative thinking and innovation are of greater importance than ruthless efficiency. Managers see their roles primarily as motivating staff communicating the companys vision to customers stakeholders.Workers overcame problems and gave input into the way Billabong was run.Pr imarily to do with business culture and lack of morale caused by inertia of managers their resistance to changeBILLABONGSources of Change* External influencesEconomic factors Negative level of unemployment and growth/interest rates means less people can afford BBs products Rising incomes in East Asia and South America have helped create new marketsSocial factors Changing consumer tastes Increasing tastes in sports such as skateboarding and surfing BMX now included at Olympics increases recognition of sport and clothingPolitical factors Protectionism and limiting of imports through tariffs has seen BBs product strengthened in the domestic market Gov emphasising and pushing Aus exports, BB has seen improved overseas sales.Geographic Pollution of beaches discourages people from surfing Influences what products BB have to difference Snow gear in countries like Switzerland and surf gear in markets like HawaiiInternal influences E-Commerce Positive Simplifying logistical and organisational difficulties + Monitoring and tracking sales control Internet website greater relationship/interaction with customers New Procedures Private Public Comply with legal regulations meant financial record systems for annual financial report Tighter control over finances so as to increase return for investors Business Culture Management team changed in 1998 when Matthew Perrin and Gary Pemberton bought 49% of BB Now comprised of more professional managers with greater business knowledge and procedures than the original surf enthusiasts who established the businessStructural responses to changeOutsourcingProduction to SE Asia and ChinaResponse to economic and financial influencesAllows company to focus more on design and marketingLowers costs to maintain competitive advantage in price-sensitive marketsStrategic AlliancesCooperated with Channel V Billabong Music Bus TourBoth had similar target marketsIncreased brand recognition and awarenessReasons for resistance to c hangeFinancial CostsDeveloping new products such as skateboards and sunglasses requires moneyAcquiring smaller businesses, eg. Honolua Surf Company cost around $20billionInertia of ownersInternational expansion brings some risk from the financial backers/owners and therefore saw resistance from shareholdersManaging change effectivelyIdentifying need for changeBB gained an edge over competitors by being one of the low businesses to expand overseas in the early 1980sDiversifying into skateboarding and accessories increased market shareCreating culture of changeNew management team in 1998 acted as change agents achieved growth by constantly observing and pursuing new opportunitiesChange Models (force field analysis)Driving ForcesRestraining Forces revenueNew opportunities for staff course of instruction round demand (seasons)Costs of productionLack of new designersNeed to hire new managers for new departmentsChange and Social ResponsibilityEcological SustainabilitySurfrider seat C onservation and regeneration of beaches and foreshores Quality of lifeEncourages team work and a relaxed atmosphere both in the office and in retail storesBB has a strict no child labour policy and regularly inspects overseas production facilitiesCultural DiversityEncourages communication between domestic and international stores/officesEmployees are encourage to transfer between international offices to gain new experiencesThe Nature of Management Management Roles-An interpersonal role is one in which the manager deals with people. Proactive- incorporates dynamic action and forward planning to achieve particular objectives-An informational gathers information within the business and supplys it outside the business-A decision-making role involves solving problems and making choices Skills of Management-People Skills-Strategic thinking-Vision-Self-Managing-Teamwork Ethical behaviourResponsibilities to stakeholders includemanage changesocial justiceecological sustainabilitycomplianc e with the lawcodes of practiceUnderstanding Business Organisations with Reference to Management theories chance Theory Classical-Scientific Planning, Organising, ControllingDivision of labour, chain of command, autocratic leadership style meaning the manager tends to make all the decisions in the business. Behavioural ability to view and work with people from a variety of backgrounds and different expectations Leading, Motivation, Communication Flatter organisational structure democratic leadership style where managers consult employees to ask suggestions and take them into account when decision making. Political encourages the formation of coalitions to promote different points of view. Power and Influence within a business can have both a positive and negative effect. It can be sued to intimidate (negative) or empower others (positive). Legitimate power due to status or position of the person in the firm e.g management Expert power due to a result of a persons skills and expe rtise Referent power from a persons individual characteristics (personality and charisma) Reward Power to the rewards or compensation a manager distributes Coercive power controls individuals by the actions or words of the manager Negotiating and Bargaining, Stakeholder views, CoalitionsManaging Change Nature and Sources of Change in Business External Changing Nature of Markets, Economic Influences, financial, geographic, social, legal, political, technologicalInternal Effects of decelerating technological change, e-commerce, new systems and procedures, new business cultures Structural Response to Change-Outsourcing Flat body structure Strategic alliances Networks Reasons for Resistance to ChangeFinancial CostsInertia of managers and ownersCultural incompatibility in mergers and takeoversStaffing Considerations de-skilling, acquiring new sources, loss of career prospects and opportunities.* Managing Change effectivelyIdentifying need for change- SWOT anaysis and balance sheet sSetting Achievable goals mission statements and company goalCulture of ChangeChange Models Force-Field Analysis Unfreeze/Change/RefreezeChange and Social ResponsibilitySocial Responsibility is the awareness of a businesss management of the social, environmental and human consequences of its actions. Customers eventually find out which businesses are acting responsibly and which are not. Ecological Sustainability Quality of Working life Technology E-Commerce Globalisation and Managing Cultural DiversityHSC Topic Two Financial PlanningThe Role of Financial Planning* Strategic role of Financial Planningstrategic planOrganisational goals and objectivesManaging financial resources* Objectives of Financial management Liquidity -pay debts in the short term (less that 12 months) Profitability ability to maximise profit Efficiency -manage its assets to maximise profits with the lowest possible level of assets Growth increase its size in the long term Return on capital -profit returned to owners or stakeholders as a % of their contribution* The planning Cycle Addressing present financial position e.g revenue, p l statements, budgets Determining financial elements of the business plan Developing budgets Cash Flows Financial reports Maintaining record systems Planning financial controlsFinancial Markets Relevant to business financial needs* Major Participants in Financial marketsBanksFinancial companies -provide loans to individuals and businesses e.g personal and securedInsurance companies -loans to the corporate sector through insurance premiumsMerchant bks (investment bks) -services such as borrowing and add to the business sector.Superannuation/Mutual funds provide funds to the corporate sector through the investment of funds received from superannuation contributionsThe Reserve bank of Australia (Government) -acts as a banker and financial agent for the federal government* The Role of the Australian Stock Exchange (ASX) as a primary MarketThe ASX is the stu dy financial exchange in the country. It comprises the largest primary and secondary markets for companies and individuals wishing to create and exchanges financial assets in the economy* Influences on Financial Marketsdomestic markets e.g change in inflation, demands for funding, changes in government policies. Companies can be positively and negatively affected.Overseas influences such as world events, foreign exchange rates, tax regulation for foreign operations* Trends in Financial MarketsTechnology has allowed markets to become more competitive and grow allowing financial transactions all the time. Globalisation will also communicate overseas investors access to Australian companies and increase opportunities for Australian investors and international markets.Management of Funds* Sources of FundsInternal Owners Equity Retained ProfitsExternal short-run borrowing Bank Overdraft allows a business to overdraw their account to an agreed limit Bank Bills Long Term Borrowing Mortga ge Debentures -The company repays the amount of the debenture by buying back the debenture. Finance companies raise funds through debenture issues to the public. Leasing involves the payment of money for the use of equipment that is owned by another party. Factoring is the selling of accounts receivable for a discounted price to a finance of factoring company. Venture Capital is funds supplied by investors to either a new organisation or to an already established business ready to grow or diversify. Grants are provided by the government for businesses to develop and promote international competitiveness. Grants often enable an organisation to become competitive in the global environment e.g exporting organisations.* Comparison of debt to equity financingDebt finance refers to short and long term borrowing from external sources of an organisationEquity Financing refers to the internal sources of finance in the organisationGearing/Leverage is the proportion of debt to equity which is used to finance the activities of a businessUsing Financial Information* The Accounting FrameworkFinancial StatementsRevenue Statements shows the revenue earned and expenses incurred over the accounting period with the concomitant profit or loss. Revenue statements show operating revenue earned from the main functions of the business e.g sales of inventories and the non-operating revenue earned from operations such as rent and commission. It also shows operating expenses such as rent, advertising, insurance.Balance Sheets represent the assets and liabilities at a particular point in time expressed in money terms and calculates the net worth of the business. The balance sheet shows the level of current and non-current assets and liabilities including investments and owners equity. Balance sheets indicate whether it has enough assets to cover debt interest and money borrowed that can be paid assets used to maximise profits if owners are making a good return on their investment* T he accounting Equation and Relationships(A) Assets = (L) Liabilities + (OE) Owners EquityThe accounting equation forms the basis of the accounting process which shows the relationship between assets, liabilities and owners equity. The accounting equation shows that the assets of the business may be financed by either the owners or by parties external to the business.COGS = inventory + purchases closing stock* Comparative Ratio AnalysisBy comparing ratios of a firm over time reveals trends and indicate directions for the future. Comparisons with other businesses and industry ratios is often used although can be inaccurate due to differences in companies and industries. Businesses often compare ratios against common standards such as statistics from the ABS.* Limitations for Financial ReportsHistoric cost accounting states that values are stated at the cost incurred at the time of purchase or acquisition, meaning financial statements will be a mixture of different year figures. Histo ric cost has been used for a long time although may become inaccurate in times of inflation.Value of Intangibles licences, trademarks, brand names and goodwill.Effective Working Capital (Liquidity) Management* The Working Capital RatioWorking Capital Ratio = Current Assets over Current Liabilities (21 ACCEPTABLE ALTHOUGH VARIES)The Working capital ratio shows if current assets can cover current liabilities.* Control of Current AssetsCash Balances are generally kept at a minimum and hold marketable securities as reserves of liquidity.Receivables is important in terms of management of working capital. The fast the debtors pay, the better the firms cash position.Inventories make up a significant account of current assets and their levels must be carefully monitored so that excess or depleted levels of stock do not occur.* Control of Current LiabilitiesPayables must be paid by their due dates due to avoid any extra cash charges imposed for late payment and to ensure that trade credit will be extended to the business in the future.Loans management of loans is important for establishment interest rates and ongoing charges must be investigated and monitored to minimise costs.Overdrafts policies should be used to manage bank overdrafts and monitor budgets on a daily or hebdomadary basis so that cash supplies can be controlled.* Strategies for Managing Working CapitalLeasingFactoringSale and Lease back is the selling of an owned asset to a lesser and leasing the asset back through fixed payments for a specified number of years.Effective Financial Planning* Effective Cash Flow ManagementThe activities of a business are divided into three categories as a statement of cash flows 1. Operating Activities e.g inflow cash and credit, outflow payments to employees2. Investing Activities -e.g selling of old motorbike, purchasing new property3. Financing activities- e.g inflow selling of shares, outflow repayment of debt.* Management Strategiesdistributing payments thr ough out a month or year or different period so that cash shortfalls do not occur payments and bad debt of accounts by debtors can cause shortfalls of cash for businesses at important times.discounts for early payments* Effective profitability ManagementCost ControlFixed Costs e.g insurance and salariesVariable costs change with the level of activity within a business e.g materials and labour used in the production of a product e.g fixing a roof.Cost Centres are particular areas, departments or sections of a business to which costs can be directly attributed. Direct costs are those allocated from a particular product, activity, department or region e.g depreciation of equipment used solely in the production of one good. Indirect costs come from shared projects, activities, departments or regions.Staff should be motivated to minimise expenses where possible as savings can be substantial if people take a close look at costs and eliminate waste and needless spending.* Revenue Control sSales objectives must be at a level of sales that will cover costs (fixed and variable) and result in profit. Changes to the sales mix can affect revenue. Research should be made to identify the effects of sales mix changes before implantation.Pricing Policy affects revenue and therefore impacts on working capital. To attract buyers while underpricing may bring high sales but still result in cash shortfalls.Ethical and Legal Aspects of Financial Management* Audited AccountsAn audit is an independent check of the accuracy of financial records and accounting procedures. Types of Audits-1. Internal conducted internally by employees2. Management used to review the firms strategic plans and determine if changes need to be made.3. External required by corporate law to ensure it complies with Australian auditing standards.* Australian Securities and Investments Commission (ASIC)ASIC enforces and administers laws and protects consumers in the areas of investment, life, insurance, super and Australian banking. ASIC sets out to reduce fraud and unfair practices in financial markets and products. ASIC ensures that companies adhere to the law. Collects information about companies and makes it accessible to the public.* Corporate Raiders and Asset StrippingAsset Stripping describes the practice of organisations that identify and sell off for a profit, assets of a company, especially one that has been acquired in a recent takeover. Entities that take over other companies and sell off the assets are known as corporate raiders.HSC Topic 3 MarketingCase StudyTypes of MarketsResource BHP BillitonIndustrial PainterIntermediate Gloria Jeans selling cakesMass IBM ComputersNiche Mountain Bike MagazineDeveloping Marketing StrategiesProduct and ServicePositioning* Qantas was under competitive pressure from Virgin Blue in the leisure market* Qantas wanted to maintain its higher positioned government and business segments* Expanded to a subsidiary Jetstar who were positione d as a value-for-money productPrice including pricing methodsPrice Points* Jetstar International* Base price for seat, Charge $30 for meal, $7 for blanket and amenity kit and $12 for entertainment kitPromotionAdvertising* Dell Computers focus much of their advertising to print media* Use inserts/pamphlets/brochures in magazines, typically in the technology liftout section of the newspaper, where their target market is most in all probability to be readingPlaceDistribution* Dell distribute products directly, with no intermediaries* Exclusive distribution (no stores), Intensive (internet)* Distribution system is e-commerceEthical and Legal AspectsRole of Consumer Laws in dealing withDeceptive and Misleading Advertising* Gillette (Duracell) VS Eveready* TV advertisement claims Duracell lasts up to four times longer than ordinary batteries* Eveready claimed the ad infringed the TPA* Independent tests showed the Duracell batteries neer last 4x longer* Federal Court ruled Duracell breac hed the TPA in the areas of misleading and deceptive conduct and false representations about the quality and benefits of goodsThe Nature and Role of Markets and MarketingMarketing is a total system of interacting activities designed to plan, price, promote and distribute products to present and potential customers.* Types of Markets Resource markets e.g mining, agriculture, forestry and machinery. Industrial Markets purchase products to use in the production of other products e.g buying flour to make bread Intermediate markets (resellers) consist of wholesalers and retailers who purchase finished products and resell them to make profit Consumer Markets e.g cars, clothing, food Mass Market is when the seller mass produces, mass distributes and mass promotes one product to all buyers Niche Markets are micro markets made for buyers who have specific needs or lifestyles* Production Production Orientation 1820s 1920sWhen a business concentrates on making as many possible goods at the l owest price possible Sales Approach 1020s 1060sWhen a business concentrates on selling techniques to attract customers Marketing Approach 1060s 1980sWhen a business collects information on consumer trends to sell its products* The Marketing Concept Consumer Orientation when a business concentrates on maximising customer satisfaction to sell its products Relationship Marketing the focus on promote repeat purchases and loyalty to the business by managing customer relations at the time of and after the initial purchase.Elements of a Marketing Plan* Establishing Market Objectives* Identifying tooshie Market Total Market Approach one type of product with little or no variation aimed at everyone through one distribution system. Market Segmentation approach the market is subdivided into groups of people who share certain characteristics.* Developing Marketing Strategies (examining elements of the 4 Ps)* Implementation, Monitoring and Controlling Financial Forecasting measures the s ales potential and revenue forecasts (benefits) for strategies and compares these with anticipated costs. Comparing actual and planned results1. Sales analysis comparing of actual sales with forecast sales to determine the effectiveness of the marketing strategy2. Market share analysis/Ratios by comparing competitions market share to their own this can reveal changes in total sales (increase or decrease)3. Marketing Cost Analysis marketer breaks down the total marketing cost into specific marketing activities to access the effectiveness of each activity.Market Research ProcessMarket research is the process of systematically collecting, recording and analysing information concerning a specific marketing problem.The three steps of the market research process are1. Determining information needs2. Collecting data from primary and secondary sources3. Data analysis and interpretation -the data that represents average, typical or deviations from typical patterns. The data must be then d isplayed in way which statistics and figures can be conducted e.g spreadsheetsCustomer and Buyer BehaviourCustomers are classified into two categories Consumer the process of purchasing goods and services for personal household use. Organisational the purchase of goods and services by producers, resellers and government.Types of Customers Household Personal personal and household spending plays a possessive role within the economy as it contributes to the level of economic activity which affects business profits, unemployment levels, interest rates levels and rate of inflation. The Firms market consists of businesses that purchase goods and services for notwithstanding processing or for use in their production process. Educational institutes Government Customers Governments spend billions of dollars each year for a wide variety of goods and services ranging from battleships to paperclips. All purchases of the government spend public funds to buy products, the government is acc ountable to the public, requiring a much more formalised set of buying procedures where firms submit quotes to supply a particular good or service and the lowest bid is generally accepted.* The Buying ProcessThe buying process involves 5 common stepsRecognise the problem need or want requiring satisfactionSearch for info brands, product characteristics, warranty, price etcEvaluate alternatives cost and benefit analysis grease ones palmsEvaluate after purchase stability of product, satisfaction gained or dissatisfaction may occur.* Factors influencing Customer Choice Psychological influences e.g perception, motive, attitude and personality Socio-cultural influences e.g family, friends, social class, culture and subculture. Economic Influences -A boom is a period of low employment and rising income. Contraction is a period of slowly rising unemployment with incomes stabilising. Recession sees unemployment reach high levels and incomes fall dramatically. Expansion means unemploym ent levels start to fall slowly and incomes begin to rise. Government Influences government will put into place policies that expand or contract the level of economic activity. These policies directly or indirectly influence business activity and customers spending habits and such will influence the marketing plan.Developing Market Strategies* Pricing StrategiesPrice Skimming charging the highest price possible for innovative productsPricing Penetration charges to lowest price possible for a product or service to achieve large market shareLoss-leader selling a product below its cost price to attract customersPrice Lining a limited number of key prices for selected product lines e.g one line of watches for $35 and a more expensive line at $55* Pricing MethodsCost-plus margin the total cost of production then adds on amount for profit (mark-up)Market set prices according to the level of supply and demand, when demand is high prices are highCompetition based a business chooses a price based on competition, either below, equal to or above* Marketing segmentation and productMass marketing or a total marketing approach This includes basic food items, water, gas, electricity etc.Concentrated Market Approach -By using the concentrated market approach the business is able to analyse its customer base more closely and design strategies to satisfy this select groups needs, and develop particular products based on customer feedback.Product Differentiation is the process of developing and promoting differences between the businesses products and those of its competitors. e.g jeans with designer labels and washing detergent with brightener additives* Place/Distribution Channels of Distribution or marketing channels are routes taken to get the product from the factory to the customer. The process usually involves a number of intermediaries such as wholesalers, brokers, agents or retailers. To choose the channel of distribution the location is the main contributor o f the business market or market coverage (number of outlets a firm chooses for it product). There are three ways a business can cover a market Intensive distribution when a business saturates the market with their product e.g milk, lollies and newspapersselective Distribution businesses use a moderate proportion of possible outlets where customers are prepared to travel e.g clothing, furnitureExclusive Distribution only one retail, outlet in a large geographical area for exclusive and expensive products. Physical DistributionTransportWarehousing involves receiving, storing and dispatching goods.Inventory controlled through a system that maintains quantities and varieties of products appropriate for the target market. Effects on Distribution1. Technology2. Local Government Approving new development applications and alteration to existing premises decamp regulations Determining land zoning and the purpose for which a building and land can be used Parking regulations Health regul ations Size, shape and location of business signsEthical and legal AspectsEnvironmentally responsible productsMaterialism an individuals desire to constantly acquire possessionsImpact of retail development -intensely competitive environment may result in some retailers using questionable marketing practicesSugging Selling Under Guise of a survey,Role of Consumer LawDeceptive and misleadingPrice- DiscriminationImplied Conditions or termsMerchandise quality meaning that the product is of a standard a reasonable person would expect for the priceFitness of purpose meaning that the product is suitable for the purpose for which is being sold. That is, it will perform as the instructions or advertisement impliesWarrantiesResale Price MaintenanceLegislations to respond to ethical and legal aspects of marketingThe Trade Practice Act 1974 is one of the most important pieces of legislation in Australia and has two purposes1. To protect consumers from misleading and deceptive conduct2. suppr essive trade practices to restrict competition as well as ensuring that a number of businesses are operation at any one time in the same market, to avoid the problem of monopolistic power.Fair Trade Act (FTA) is a mirrors legislation that covers sole traders and partnership as well as companiesImplied conditions in both Acts Merchantable quality worth the money Fit for purpose does its jobs.HSC Topic Four Employment RelationsCase StudyManaging the ER functionLine Management* ALDI Supermarkets* Individual store managers are expected to solve all instore problems there is no area manager or specialist ER departmentKey influences on ERSocial Inf
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