The Business Organisation

THE BUSINESS THE BUSINESS ORGANISATIONORGANISATION

The Role of BusinessThe Role of Business(Textbook Reference Pg 3-5)(Textbook Reference Pg 3-5)

What is a “BUSINESS ORGANISATION?”What is a “BUSINESS ORGANISATION?”Attributes:Attributes:1. Ownership and control reside in the 1. Ownership and control reside in the PRIVATE SECTORPRIVATE SECTOR2. The primary motive for establishing the organisation is 2. The primary motive for establishing the organisation is PROFITPROFIT3. The social purpose is 3. The social purpose is ECONOMIC PRODUCTIONECONOMIC PRODUCTION4. A dominant procedural value is 4. A dominant procedural value is EFFICIENCYEFFICIENCY5. A 5. A FORMAL FORMAL organisational structure existsorganisational structure exists6. Member involvement is 6. Member involvement is CONTRACTUALCONTRACTUAL7. The primary beneficiaries are 7. The primary beneficiaries are OWNERS/MANAGERSOWNERS/MANAGERS

CASE STUDY - HOLDENCASE STUDY - HOLDEN

PRIVATE SECTOR

Company Name: Holden Ltd

Ltd – Limited (which means that owners can only lose the value of their investment and not called on to sell their personal assets to meet the debts of the company)

Main BusinessManufacture and distribution of motor vehicles, engines, components and parts

Parent CompanyGeneral Motors Corporation, Detroit, Michigan, USA (GM)


PROFIT

“And it makes money. Plenty of it”

“ ….. has helped enhance its stance within the GM world, where it isRated as one of the most agile, competent and PROFITABLE of divisions”

(The West Australian, Friday January 2 2004)


ECONOMIC PRODUCTION

“It makes more vehicles than any other manufacturers, exports a healthy proportion of those, has built up a major engine export business and shown great agility on th factory floor and in the showrooms, where it launched 10 new models during 2003”



EFFICIENCY

“Prime aim was to make sure the company was BUILT TO LAST, and that meant beefing up its car production and engine operations”



FORMAL Organisational Structure

Dennis M. Mooney – Chairman and Managing Director Plus THE BOARD (e.gBrian DuCasse – Executive Director Customer Satisfaction and QualityAndrea Grant – Executive Director Human ResourcesJeff Jamieson – Executive Director ManufactuirngTony Hyde – Executivre Director Engineering and DesignVincent Kekhof – Executive Director FinanceRoss McKenzie – Executive Director Sales and Marketing )Plus GROUP OF 150Employees below the boardPlus NORMAL EMPLOYEES


CONTRACTUAL

Employees

• The Board

• Group of 150

• Other Employees

All on contracts as part of their terms of employment


OWNERS/MANAGERS

Parent Company – General Motors Corporation, Detroit, Michigan

The Board at Holden – Chairman and Chief Executive; Executive Directors

BUSINESS GOALSBUSINESS GOALS(Textbook Reference Pg5-8)(Textbook Reference Pg5-8)

STAKEHOLDERSSTAKEHOLDERS

““Are individuals or groups of individuals who Are individuals or groups of individuals who have an active economic and possibly have an active economic and possibly moral interest in an organisation”moral interest in an organisation”

FORCES ON AN ORGANISATIONFORCES ON AN ORGANISATION

ORGANISATIONAL ORGANISATIONAL EFFECTIVENESSEFFECTIVENESS

DEFINITION:DEFINITION:

““Is the degree to which an organisation Is the degree to which an organisation satisfies the demands of its stakeholders”satisfies the demands of its stakeholders”


Organisations play an important role in Organisations play an important role in everyone’s lives. For Example:everyone’s lives. For Example:SchoolsSchoolsBanksBanksGovernmentsGovernmentsTransport AuthoritiesTransport AuthoritiesTelevision StationsTelevision Stations


The Business Organisation in particular:The Business Organisation in particular: supplies most of the goods and services supplies most of the goods and services that are used by peoplethat are used by people provides employment and careersprovides employment and careers major source of innovation, progress and major source of innovation, progress and internationalisationinternationalisation is a focus of the endeavours of many is a focus of the endeavours of many other legal, political and social other legal, political and social organisations organisations


Stakeholders CriteriaStakeholders CriteriaOwners (shareholders) Profitability, growthOwners (shareholders) Profitability, growthFinanciers Financial stability, liquidityFinanciers Financial stability, liquidityManagement Efficient production processes, profitability, market shareManagement Efficient production processes, profitability, market shareCustomers Price, product quality, satisfaction of needsCustomers Price, product quality, satisfaction of needsSuppliers Promptness of payment, fairness of demands, resource useSuppliers Promptness of payment, fairness of demands, resource useEmployees Salary, satisfying work, personal growth potential, non-Employees Salary, satisfying work, personal growth potential, non- discriminatory promotiondiscriminatory promotionGovernment Contribution to exports, employment, compliance with laws, Government Contribution to exports, employment, compliance with laws, payment of taxespayment of taxesGeneral public Community involvement, environmental impact, ethicalGeneral public Community involvement, environmental impact, ethical practicespractices

TYPES OF INDUSTRYTYPES OF INDUSTRY

The The THREE THREE types of Industry:types of Industry:

PrimaryPrimary SecondarySecondary TertiaryTertiary


PRIMARYPRIMARYDefinition:Definition:““Are the industries that ‘grow’ or ‘collect’ raw Are the industries that ‘grow’ or ‘collect’ raw

materials”materials”For ExampleFor Example

FarmingFarmingAgricultureAgricultureFishingFishingMiningMining


SECONDARYSECONDARYDefinition:Definition:““Use the raw materials from the Primary sector in Use the raw materials from the Primary sector in

what is sometimes referred to as ‘downstream what is sometimes referred to as ‘downstream processing’processing’

For Example:For Example:ManufacturingManufacturingConstructionConstructionWholesalingWholesaling


TERTIARYTERTIARYDefinition:Definition:““Involves selling an end product or providing Involves selling an end product or providing

a service”a service”Sub sections:Sub sections:

Retail – The selling of a finished product to Retail – The selling of a finished product to the end userthe end userService – Transport, Hospitality, Service – Transport, Hospitality, Education, Counselling or ConsultingEducation, Counselling or Consulting

TYPES OF INDUSTRYTYPES OF INDUSTRYFLOW FROM PRIMARY TO TERTIARYFLOW FROM PRIMARY TO TERTIARY

PRIMARY – TREE PLANTATION

SECONDARY - CARPENTER

TERTIARY – FURNITURE SHOP

Types of Business EntityTypes of Business Entity

Two SectorsTwo SectorsThe economy can be divided into two The economy can be divided into two sectors:sectors:

The Private SectorThe Private Sector

The Public SectorThe Public Sector

The Private SectorThe Private Sector

Private individuals and firms that are Private individuals and firms that are owned by private individualsowned by private individualsFirms in the private sector include:Firms in the private sector include: Sole TradersSole Traders Private Limited Companies (Pty Ltd)Private Limited Companies (Pty Ltd) PartnershipsPartnerships Public Limited Companies (Ltd)Public Limited Companies (Ltd)

The Public SectorThe Public SectorMade up of central government, local Made up of central government, local government, and businesses that are owned government, and businesses that are owned by governmentby government

LEGAL FORMS OF A BUSINESSLEGAL FORMS OF A BUSINESS

Sole TraderSole TraderPartnershipPartnershipPublic CompanyPublic CompanyPrivate CompanyPrivate CompanyCo-operativeCo-operativeFranchiseFranchiseGovernment EnterpriseGovernment Enterprise


Sole TraderSole Trader

This business has legally only one owner – This business has legally only one owner – usually the person who manages the usually the person who manages the businessbusiness


PartnershipPartnership

This business may have between 2 and 20 This business may have between 2 and 20 owners who can all be involved in running owners who can all be involved in running the business.the business.


Private Company (Proprietary Limited Private Company (Proprietary Limited Company – Pty Ltd)Company – Pty Ltd)

A private company has a minimum of one A private company has a minimum of one person and a maximum of 50 ‘owners’. person and a maximum of 50 ‘owners’. This structure is usually chosen for family This structure is usually chosen for family run businesses.run businesses.


Public Company (Ltd)Public Company (Ltd)

A Public Company has A Public Company has a minimum of 5 a minimum of 5 owners but no upper owners but no upper limit of owners limit of owners (shareholders)(shareholders)

A Public Company can A Public Company can sell its shares via the sell its shares via the Stock ExchangeStock Exchange


Co-operativeCo-operative

Co-operatives are owned by their staff, Co-operatives are owned by their staff, who are ‘members’ of the firmwho are ‘members’ of the firmProfits are shared amongst the Profits are shared amongst the membersmembersLosses too must be sharedLosses too must be shared

http://www.sunrice.com.au/index.asp


FranchiseFranchise

Many businesses today are franchisesMany businesses today are franchisesA business idea is licensed to a A business idea is licensed to a franchiseefranchiseeThe owners of the brand receive a The owners of the brand receive a license feelicense feeThe franchisee gains the right to use the The franchisee gains the right to use the business brandbusiness brand


TRUSTTRUST

KEY BUSINESS FUNCTIONSKEY BUSINESS FUNCTIONS(Textbook Reference p9-12)(Textbook Reference p9-12)

MarketingMarketingHuman ResourcesHuman ResourcesOperationsOperationsFinanceFinance

DRAW FIGURE 1.3 PAGE 10 TEXTBOOKS

“KEY BUSINESS FUNCTIONS”

MARKETING MANAGEMENTMARKETING MANAGEMENT

““Involves the planning and implementation Involves the planning and implementation of the design, pricing, promotion and of the design, pricing, promotion and distribution of products”distribution of products”

A primary purpose is to create an exchange A primary purpose is to create an exchange which satisfies the customer while which satisfies the customer while enabling the business to achieve its profit enabling the business to achieve its profit objectivesobjectives

HUMAN RESOURCE HUMAN RESOURCE MANAGEMENTMANAGEMENT

““Involves planning and implementation of the Involves planning and implementation of the processes associated with acquiring, developing processes associated with acquiring, developing and maintaining an organisation’s workforce for and maintaining an organisation’s workforce for the purposes of achieving the organisations the purposes of achieving the organisations objectives”objectives”

Involves:Involves:Job Design, recruitment and selection, training Job Design, recruitment and selection, training

and development, development of performance and development, development of performance appraisal systems and pay structures, and appraisal systems and pay structures, and industrial relationsindustrial relations

OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT

““Is the planning and implementation of the Is the planning and implementation of the organisation’s production system, which organisation’s production system, which transfers inputs into valuable outputs”transfers inputs into valuable outputs”

Involves:Involves:Questions relating to layout, location and Questions relating to layout, location and

capacity of production facilities, quality capacity of production facilities, quality control, inventory management, production control, inventory management, production scheduling and project managementscheduling and project management

FINANCIAL MANAGEMENTFINANCIAL MANAGEMENT

““is the planning, organising and controlling of the is the planning, organising and controlling of the acquisition and use of financial resources to acquisition and use of financial resources to achieve the business’ objectives”achieve the business’ objectives”

Involves:Involves:Obtaining the right types of finance on the most Obtaining the right types of finance on the most

advantageous terms, investment evaluation, advantageous terms, investment evaluation, budget planning and control, and accounting budget planning and control, and accounting information systemsinformation systems

Economy & Finance

The Business Organisation