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Large Scale Organisations (LSO's) in context.
- Complex management
- Contribute to economic growth
- Produce goods and services cheaper
- Political influences
- Produce goods and services more efficiently
- Vast amounts of capital
Explain the (LSO's) context
Complex management - due to size and complexity.
Contribute to economic growth - by mass producing goods and services.
Produce goods and services cheaper - costs are spread over a great number of units.
Produce goods and services more efficiently - large number of staff and ability to specialize.
Political influence- on governments of their size.
Vast amounts of capital - access to capital to operate and expand the business.
Characteristics that determine whether a business is classified as large.
- Over 200 million employees; or
- Assets worth more than 200 million
- Turnover in the millions
- Often a public company (public can buy shares)
- Complex management structure
Types of Large Organisations
- Companies (corporations)
- Not For Profit Enterprises
- Government departments
- Government Business Enterprises (GBE)
Explain the types of Large Organisations
Companies (corporations) - objectives are generally financial; improving revenue and decreasing costs.
Not For Profit Enterprises - charities, unions, clubs and foundations.
Government departments - have a pre-determined budget and provide a service to the community. E.g.) centerlink, VCAA or the department of education.
Government Business Enterprises (GBE) - A profit making organisation that is owned by the government to make a product and provide a service. E.g.) Vicroads.
Define The Public Sector
The group of organisations that are managed and controlled by the government. This includes government departments and GBE's.
Define The Private Sector
Non-government organisations. These include companies, partnerships, sole traders and "Not For Profit" organisations. E.g.) Ripcurl (private company), Qantas (public company) and The Salvation Army (Not For Profit organisation)
Define Public Company
A company that people (the public) can buy shares in. Information about profit, assets, etc must be disclosed to the public. A public company has 'ltd' after its name.
Define Private Company
A company that is not listed on the stock exchange (therefor limiting trading of its shares) Financial information (such as profit) does not need to be disclosed to the public. They will have 'pty ltd' after their company name.
The main 'function' areas of management
- Research and Development
- Human Resources
Contribution (positive and negative) of LSO's to the economy
- Provide large profit to shareholders
- Pay large amount of tax
- Indirect employment
- Earn significant export dollars
- Have resources to take on big projects
- Develop Australia's Industrial Base
- NegativesDownsizing and/or sending jobs overseas.
ominate the market > negative effect on SME's.
arge ammount of import dollars have the reverse effect and can increase interest rates.
ajor polluters > government spends money fixing these problems, taking money away from being spent elsewhere in the economy.
Define Macro Environment and list the factors of a Macro Environment.
- External factors influencing the operation of a business and that the business has no control over. They can indirectly affect an organisation.
- Factors include:
- Political factors
- Economic conditions
- Legal factors
- The environment
- Social changes
Explain the factors of the macro environment in detail
- Political factors - decisions made by governments, may affect organisations.
- Economic conditions - amount of spending and job growth.
- Legal factors - laws passed by parliament.
- Technology - machine or device that performs some sort of function.
- The Environment - weather and natural disaster events
- Social changes - an alteration in community attitudes towards various issues.
Define Operating Environment and what are the factors of the operating environment
- External factors (pressures) influencing the operation of an organisation that an organisation has some sort of working relationship with.
- Factors include:Customers
- Special Interest Groups
Define Internal Environment and list the factors of the internal environment.
- The factors that an organisation has direct control of.
- Factors include:Policies
- Organisational structure
- Corporate culture
The growth in international trade and commerce. It is the rapid movement of money and resources around the world.
Reasons for growth
- Advances in technology
- Opening of trade barriers in many countries
- Reduction in tariffs (making it more affordable to import goods)
Ways Of Going Global
- Selling a license to use your business name.
- Internet (e-commerce).
- Moving operations off-shore/establishing some offices overseas.
- Merging with another organisation.
A tax on an imported good.
Where an industry is allowed to operate without restrictive laws in terms of how many organisations operate in its area. It may be open to more competition.
Example: This has happened to the banking and airlines industries. That is why foreign companies have been able to enter the Australian market
- Where control of a government enterprise is transferred to the private sector.
- E.g.) Commonwealth bank and Telstra.
- The process of following 'private sector' management methods to operate government business and departments more efficiently.
- E.g.) Australia Post now runs itself like a typical large business. It even provides an annual dividend to shareholders, its one shareholder being the Australian government.
- The process of reducing staff numbers with the objective of creating more efficient and lean organisation. Banks have downsized by cutting out middle management positions and closing country branches.
- E.g.) banks and airlines
Define Rate of Productivity Growth
Rate of Productivity Growth is the increase in output overtime compared to the number on inputs that are used.
Using resources in the best possible way. An organisation is efficient to the extent that it achieves its objectives at the lowest possible cost using minimum quantities or resources and maintaining quality.
An organisations ability to achieve its objectives.
Define Performance indicator (also known as a key performance indicator).
A measurable statistic that provides data to evaluate performance.
Define Quantitative Performance Indicator
A statistic that is clearly measurable. This could include profit, staff turnover, number of repeat customers, number of workplace accidents etc.
Define Qualitative Performance Indicator
A statistic that is subject and based on opinion. This could include level of employee morale and customer satisfaction, corporate image, employer of choice, quality of packaging etc.
List two safety performance indicators
- Workplace accidents
- Number of safety breaches per month
Financial Performance Indicators (must know 2)
- Profitability or Net Profit Figure
- Return on investment
- Level of costs
Human Resource Performance Indicators (must know 2)
- Staff turnover
- Level of staff satisfaction
Operations Management (must know 3)
- Number of defects
- Rate of Productivity Growth
- Waste levels
- Customer Returns
- Quality certificates obtained
How can Performance Indicators (and benchmarking) be used?
- Provides incentives (they can act as goals and motivate staff)
- Identify training needs
- Identify who should get promotions
- Identify areas that needs improvement
Where an organisation compares its own outcomes with other organisations, past results, budgets and/or forecasts and industry averages.
Define Worlds Best Practise
Comparing elements of your business performance with the best international standards. It is benchmarking on a global scale.
Define Best Practise
- Similar to Worlds Best Practice. It is analyzing and comparing your own organisation to a leading organisation in your industry.
- E.g.) Toyota Australia comparing their productivity levels with companies overseas.
All those that have a vested interest in the performance of an organisation. They have a concern about the performance of an organisation or the manner in which an organisation may conduct itself.
List examples of Stakeholders (must know 4)
Example of two different stakeholders may place competing demands on LSO's.
Employees want higher wages and better workplace conditions. Shareholders prefer such costs be kept down so they get a higher return on their investment.
Define Annual Report
A document released each year by an organisation that provides details on its financial environment and social performance. It will also outline goals for the future.
Define Social Responsibility
The commitment shown by an organisation to limit the negative impact of its business activity and not just focus on profit . It is going beyond the legal expectations of what is expected.
An organisation expresses its social responsibility through...
Being environmentally friendly by providing goods and services that improve society.
Limiting the negative outcomes of its own activities e.g.) greenhouse emissions and waste.
Helping protect Australian jobs.
Buying locally (protects Australian jobs and also help the environment: overseas transport creates greater emissions and pollution.
Supporting groups needing assistance.