VCE Business Management Unit 3 & 4

2013: LECTURE SLIDES

UNIT 3: AREA OF STUDY 2

INTERNAL ENVIRONMENTS OF LSOs

PART A

2

Key knowledge

• management structures;

• corporate culture and its future development;

• key management roles:– planning: long, medium and short-term

– organising: resource and task allocation techniques– leading: importance of leadership qualities, including

interpersonal, informational and decision-making

– controlling: financial and non-financial processes and control systems;

• the need for, and process of, policy development and its application;

• different styles of management, including autocratic, persuasive, consultative, participative and laissez-faire, and their appropriate application to various management situations;

• key management skills as appropriate to the process of effective management;

• the relationship between management styles and skills;• implications of managing the internal environment of large-scale organisations in an ethical and a socially responsible manner.

AOS 2 Contents- Dot Points (DPs)1.Management

structures

2.Corporate Culture

3. ManagementRoles (POLC)

4.Policy Development

5.Management Styles

6.Management Skills

7.Relationship (mgt. styles & skills)

3

8. ESR Management

DP1Management Structures

(2.1 in Textbook)

4

5

What is Management Structure?

Management Structures The division of the organisation into parts based on the roles, responsibilities and lines of communication required of each person

The structure is determined after goals, and then strategies to achieve these goals, have been determined.

Often represented in an Organisational Chart

Purpose of Management Structures

• To coordinate work activities within the organisation so that goals/objectives can be met.

• Formalise lines of communication

• Establish a hierarchy of decision making, also known as a chain of command

The vertical line of authority that passes through the levels of an organisation’s hierarchy.

Hierarchical Organisation• Relates to the different layers (levels) of management

the organisation has.

• It shows the levels of authority and decision making within the organisation, from senior positions down to the entry level of the organisation.

• It refers to the lines of communication up and down the organisation and to the chain of command

• Vertical Specialisation looks at the height of an organisation.

Hierarchical Organisation

Senior

Manageme

nt

Middle management

Lower management

Other Employees

Hierarchical Organisation• Senior management (executives)

-Set the long term goals & are involved in the long term strategic planning. -In charge of managers subordinate to them (middle managers)

• Middle management (Store Manager/Department head) -Involved in translating the long term goals into specific projects for those managers subordinate to them (front-line managers). -This is called ‘operational planning.’ -They monitor front-line managers and the project’s progress

• Front-line management (supervisors/team leaders) -lowest level of management ----spend most of their time leading, supervising & controlling employees under them who are working on specific projects or tasks. ---They are accountable or answerable to middle management

Lower level employees

Flatter Organisational Structures

• Relates to the span of control the spread of responsibility across an organisation

• It refers to the width of an organisation different areas of specialisation an organisation is

broken into

• A wide span of control is related to a flatter organisational structure

• A narrow span of control is associated with a more hierarchical structure

Traditional vs. New/Emerging Structures:

Traditional Current Bureaucratic

Top down approachTeam Oriented

Emphasis on delegation

TallMany levels of management

FlatFewer middle managers

CentralisedAll responsibility with managers

DecentralisedShared responsibility with employees

InefficientStatic

EfficientDynamic

More vertical specialisationLevels of management

More horizontal specialisationThe number of divisions

• Complete the Test Your Understanding questions 1-5 from your textbook – page 49.

Learning Activity:

Types of Management Structures Three main types of horizontal structures.

Employees can be organised and grouped on the basis of:

• Functional Structure• Divisional Structure• Matrix Structure

Functional Structures

Employees are grouped according to their management function

- i.e. type of work/role undertaken - Finance, Marketing, HR, Operations & R&D etc.

Often the best structure where the organisation has a small range of products

Example: A school Even though persons from each department/ division may liaise from time to time, they are sub divided into their own areas

Functional Structures - Example

Operations

Marketing

R&DFinanceHuman Resource

s

Board of Directors

Chief Executive Officer - CEO

Management Functions

involved with Promotion of the Product

involved with actualProduction of the Product

Financial transactions & reports

Designing new, or improving existing products

Hiring, training& maintaining employeewell being

Functional Structures - Evaluation Advantages

• Defined career pathway for employees

• High degree of task specialisation

• Efficient use of resources

Disadvantages• Lack of flexibility – due to bureaucratic nature

• Narrow focus of staff

• Isolation and ‘empire building’ behaviours

Divisional Structures Employees are grouped according to division Often used where the company has a large

product range or many geographical locations.

Could include divisions based on:

• Product e.g. cereals, confectionary, beverages, chocolate• Geographic e.g. Asian, North American & European

offices • Customer e.g. wholesale, retail and corporate clients

• Example; ANZ banking Customer based structure - corporate or personal banking options

Divisional Structures - Example

LondonDrinks

Manager

SydneySnacks

Manager

MunichDrinks

Manager

ParisSnacks

Manager

New YorkSnacks

Manager

Board of Directors

Chief Executive Officer - CEO

Division by Geographic location

Divisional Structures- Evaluation Advantages

• Staff expertise in a particular area

• Rapid response to changes

• Encouragement of cooperation between

departments

Disadvantages• Duplication of work in different divisions

• Rivalry amongst divisions

Matrix Structures A combination of a functional structure and

a divisional structure

Specialists from each area of the functional structure work together on a special project for a short period of time

They are responsible to both their team leader and department manager

• Example: Unilever Multi-National, sells various products across many countries, hence combination suits it.

22

Matrix Structures - Example

Matrix Structures- Evaluation Advantages

• Enhanced Flexibility

• Enhances communication, Co-operation and

teamwork amongst divisions

• Synergy of ideas using pooled expertise

Disadvantages• Uncertainty of who to report to

• Others have to cover the extra workload

Management Structures - Activity

Missing Word Passage.Copy the passage into your workbooks and fill the blanks using the word bank provided.

Complete Question 3 and 5 on Page 53.

SAMPLE EXAM QUESTION

Identify the ways in which a divisional structure can be organised – and why a company would choose one over the other.

2marks

DP2Corporate culture and its future development

(2.3 in Textbook)

26

What is Corporate Culture? The shared values, ideas and beliefs held by

people in the organisation that unite and keep the organisation together

A set of moral, social and behavioural norms

based on beliefs, values and attitudes employees use to interact with each other in an organisation

The way organisations ‘do things’. It guides how employees think, act and feel within an organisation.

Elements or Indicators of Corporate Culture

Values

• The beliefs shared amongst staff such as honesty, hard work, teamwork, innovation which are developed through:

Training programs Polices & procedures Management style Relationship between staff and management

Elements or Indicators of Corporate Culture

Symbols

• Events or objects that represent what the organisation value or stand for such as:

The company logo Uniform Slogans Style of language Song

Elements or Indicators of Corporate Culture

Rituals

• Routine patterns of behaviour that help frame the organisations identity such as:

Social gatherings Regular meetings Celebrations and ceremonies

Elements or Indicators of Corporate Culture

Heroes

• Employees who reflect the organisations values and act as an example for others

“The fish rots from the head” Champions of a common goal

Points to Consider There is often a difference between the official culture and the real culture

Sometimes the culture is a negative one

Difficult to change organisational culture ― “This is the way we’ve always done it!”

Change needs to be embraced by the employees

Developing Culture within an Organisation

In order to reinforce positive culture, management must:

- Model desired behaviour

- Provide adequate training

- Reward employees who embrace culture

- Recruit staff who fit the desired culture

- Devise strategies consistent with the culture

SAMPLE EXAM QUESTION

Explain what is meant by corporate culture. Name three ways in which a new employee in an organisation can learn about its corporate

culture. 4

marks

DP3

Key management RolesPlanning, Organising, Leading & Controlling

(2.4 in Textbook)

35

Always Remember:

POLC

What are the Key Management Roles? In the SACs and examination, you will be asked about management roles or the roles of management in a given situation.

Whenever there is a reference to ROLES, it is referring to the four roles of:

Planning Organising

Leading Controlling

What are the Key Management Roles?

“Key management roles refers to the process

of planning, organising, leading and

controlling resources (human, financial,

physical & informational) in order to achieve

the organisation’s objectives. Management

involves getting work done through the

actions of others”.

Key Management Roles: Planning • The process of setting objectives and formulating

strategies to achieve those objectives.

Planning can be: Strategic - Long term planning covering a period of the

next 2-5 years made by Upper or Senior Management

Tactical - Medium term planning covering a period of 6-24 months made by Middle Management

Operational - Short term planning covering daily planning up to 6 months made by lower, junior or frontline management

Often the best structure where the organisation has a small range of products

Example: A school Even though persons from each department/ division may liaise from time to time, they are sub divided into their own areas

Levels of Planning

TYPE TERM DURATION MANAGEMENT LEVEL

EXAMPLE

STRATEGIC Long 2-5 Years SeniorBoard & CEO

Expanding Overseas

TACTICAL Medium 6-24 Months MiddleHead of IT

Opening a new store

OPERATIONAL Short Daily up to 6 months

LowerManager

Weekly Staff Roster

Planning: What is a SWOT Analysis? • The process of analysing an organisation’s:

Strengths and Weaknesses (from its internal environment)

& Opportunities and Threats

(that exist from the external environment)

It is part of the Analysis phase of the Planning process

Always Remember: SWOT

The Planning Process

1. SET OBJECTIVES

2. ANALYSE CURRENT SITUATION

(SWOT Analysis)

3. DEVELOPALTERNATIVE

S

4. CHOOSE & IMPLEMENT

5. MONITOR

The Planning Process : SADIM 1. Set objectives

Managers define what they wish to achieve in a given period of time

2. Analyse the current situationManagers conduct a SWOT Analysis

3. Develop alternative strategiesManagers brainstorm various ways the company may achieve the objective

The Planning Process 4. Implement solution Managers choose the most appropriate strategy to achieve the objectives and put the strategy into practice

5. Monitor and Evaluate the solutionDetermine whether the objectives are being met by monitoring performance indicators

Activity: Planning

• Follow the “5 step planning process” to increase student numbers at RSC to 2100 students by 2015!

The process of determining how to make the most

efficient use of the organisations resources in order to put the plans into action to best achieve the company objectives.

For Organising, the study design states‘organising: resource and task allocation’

Key Management Roles: Organising

The 3 step Organisation Process: Determine the work activities which are required to

achieve the company objectives.- Includes the manufacturing of goods or the delivery of services

Classify and group the activities – to ensure efficiency- These include staff, raw materials, finances, machinery etc.

Assign work and delegate authority.- Which staff are allocated to which area of production etc.

Key Management Roles: Organising

The process of influencing, guiding and motivating

employees to ensure work is completed in the most efficient and effective manner in order to best achieve the company’s objectives

For Leading, the study design states ‘leading: importance of leadership qualities including interpersonal, informational and decision-making’

Key Management Roles: Leading

In the SAC and exam, use terms such as:

Directing..

Guiding..

Inspiring..

Supporting..

Developing..

Human Resources

Key Management Roles: Leading

Three of the most important leadership qualities include:

Interpersonal skills – the ability to get along with, understand and react to the needs of others

Informational skills – the ability to gather, analyse, interpret and transmit key information to other stakeholders in the organisation

Decision making skills – the ability to choose the best alternative from a range of different options to solve problems

For Leading, the study design states ‘leading: importance of leadership qualities including interpersonal, informational and decision-making’

Key Management Roles: Leading

• Qualities of good leaders include (but are not limited to) the ability to:– Communicate well – Understand themselves and their staff– Be sensitive to cultural issues– Provide for collaborative team– Undertake inclusive decision making– Be creative and visionary– Model good behaviour– Undertake Internal motivation & achievement– Make fair decisions

Key Management Roles: Leading

• Identify some good leaders in society

• Come up with a list of characteristics that make good leaders

Activity: Leading

The process of monitoring and evaluating

performance and taking corrective action where necessary to ensure the company is achieving its desired objectives.

For Controlling, the study design states ‘controlling: financial and non-financial processes and control systems’

Key Management Roles: Controlling

Financial and non-financial processes and control systems

Financial Controls include:- Budgets that anticipate financial performance

- Accounting systems to reflect recent performance- External audits

Non-financial controls include:- Measures of production levels

- Quality indicators- Health and Safety indicators- Environmental indicators

Key Management Roles: Controlling

Control Process 3 Step Process

1. Establishing standards

e.g. absenteeism rate of not more than 5% per week

2. Measuring & evaluating performance

against the standards. e.g. via observation, establishing KPI’s

3. Taking corrective action where necessary

to ensure objectives established in step 1 are achieved

Learning Activity:

• Complete the Test you Understanding Questions 1-8 of your textbook – Page 62

• Complete the Apply your skills Case Study and answer questions 1-4 on Page 64

DP4Policy development

(2.5 in your textbook)

56

What are Policies? Policies are a set of broad rules or guidelines that guide decision making and action in an organisation.

Some examples include:- ICT Usage Policy- Bullying Policy- Harassment Policy- Environmental Policy- Recruitment Policy- Uniform Policy

What are Procedures? Procedures are the practical steps and activities required for carrying out or applying the organisations policies.

Some examples include:

- How to record a complaint

- How to investigate a harassment claim

- Grievance procedures when staff feel unfairly treated

Policies and ProceduresBoth policies and procedures provide a sense of:

- predictability

- consistency

concerning behaviour & decision making in an organisation

They both help to reflect and develop corporate culture

The process of Policy Development 5 Step Process

1. Identify the issue or problem- This establishes a need for a policy

2. Research and seek stakeholder input- Find out why the problem exists and seek feedback

as to possible solutions from various stakeholders

3. Draft policy and seek stakeholder feedback- Make amendments to the draft based on feedback

The process of Policy Development

4. Approve, distribute and implement policy- Policy is finalised, communicated and put in practice

5. Monitor and evaluate policy- Monitor policies effectiveness

Internal and External Pressures on Policy Making and Amendments

Policy

Eg Management & employees re: Dress code, workplace flexibility

Eg Unions re: job sharing policy

Eg Legislative compliance re: OH&S Policy/ Procedures

Learning Activity

• Complete the Test your Understanding Questions – 1 to 3 and 8