Ilana Rachman
MANAGEMENT PROCESS
Coordinating Key Business Functions and Resources
Though a business can separate the key business functions into
departments that perform their distinct roles, the functions are
interdependent each relies on the others to perform effectively.
Interdependence refers to the mutual dependence that the key
functions have on one another. This means that the various business
functions work best when they work together.
The coordination of key business functions depends on the broad
goals of the business as well as its size. In large businesses the key
business functions are often separated into different divisions or
departments headed by separate managers. This is because the key
functions require quite different skills and knowledge. Also, as
businesses grow their needs become more complicated: they
require many people to carry out each key function.
For example, in a large business the employment relations
department would have specialists in salaries and pay, hiring of
employees, staff training, work health and safety (WH&S), and so
on.
Operations
Operations management consists of all the activities in which
managers engage to produce a good or service. It is concerned with
creating; operating and controlling a transformational process that
takes inputs from a variety of resources, and produces outputs of
goods and services that are needed by customers.
How the operations management function is carried out will directly
affect a businesss competitive position because it will:
Establish the level of quality of the good or service
Influence the overall cost of production, given that the
operations function is responsible for the largest part of a
businesss capital and human expenses
Determine whether sufficient products are available to satisfy
consumer demand.
Goods and/or services: A manufacturer will transform inputs into
goods: tangible products. Tangibles are physical products that can
be handled and stored before they are sold to the consumer, such
as bread, clothing or a car.
A service organization will transform inputs into services. Services
are intangible, which means that they cannot be touched.
Study Notes
Ilana Rachman
Study Notes
Ilana Rachman
Toyota, for example, separates its vehicle manufacturing
operation from its customer service operation, although both
elements are critical to the businesss overall success. All
businesses carry out many activities that can be isolated from
direct involvement with the customer.
Quality management: Quality management is the strategy, which a
business uses to make sure that its product meets customer
expectations. Three quality approaches are quality control, quality
assurance and total quality management.
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Ilana Rachman
To do this successfully requires adopting a customer-oriented
approach to marketing.
Mass Marketing Approach: In a mass market, the seller massproduces, mass-distributes and mass-promotes one product to
all buyers. A mass marketing approach seeks a large range of
customers. The business develops a single marketing mix and
directs it at the entire market for the product.
Mass Segmentation Approach: Market segmentation occurs
when the total market is subdivided into groups of people who
share one or more characteristics based on four elements or
dimensions: demographic, geographic, psychographic and
behavioral. A business segments its market so it can better
direct its marketing strategies to specific groups of customers,
rather than the mass market. The ultimate aim of market
segmentation is to increase sales and profits by better
understanding and responding to the desires of the target
customers.
Niche Markets: An extension of the market segmentation
approach is that of the niche market, which is a narrowly
selected target market segment. In a sense, it is a segment
within a segment, or a micro market
Study Notes
Ilana Rachman
Study Notes
Ilana Rachman
4. Expenses
5. Net profit.
The income earned (or revenue) is always stated at the top of the
report.
This is done in three steps:
1. List the sales for the period.
2. Calculate cost of goods sold (COGS) and calculate the gross
profit.
3. Itemise all other expenses (which may be classified into
administrative, selling and financial expenses) and calculate
the net profit.
Net Sales: Net sales are the amount of revenue a business has
earned from sales when the effects of sales returns are
deducted. Revenue generally means income from sales.
Sometimes the business will offer discounts to customers who
pay outstanding amounts quickly.
Study Notes
Ilana Rachman
Study Notes
Ilana Rachman
Study Notes
Ilana Rachman
Ethical business behaviour: Ethics are standards that define what is
acceptable and unacceptable behaviour. Ethics involves the study of
moral issues and choices. It is concerned not with legal obligations
but with what is morally right or wrong and all the shades of grey
in between. In many decisions involving ethical questions, it is
sometimes difficult to give a definitive answer as to what is right
and what is wrong. It often depends upon the individual
circumstances surrounding the situation. Business ethics is the
application of moral standards to business behaviour.
Most businesses want to engage in ethical business practices; to act
honestly and morally. These businesses will honour commitments,
not engage in misleading or deceptive product descriptions and will
provide a safe working environment for their employees.