BMAN 111 (Eng) - Bman 111 PDF

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Bman 111...

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INTRODUCTION: The business and its challenges

Learning Outcomes After completing this study unit, you should be able to: 1. Define the concept of business. 2. Explain the reason for the existence of a business. 3. Discuss business decisions.

1. The concept of business Any organisation that provides goods and services to its customers in the economic system they operate The term products, includes both Goods and Services which are products offered to consumers.

Goods: These are all those things that we can feel and touch (tangible products) e.g. fridges, clothing, shoes and cars. Services: These are things we cannot feel or touch (intangible products) e.g. services provided by a medical practitioner and a lawyer. Combination: Includes both tangible goods and intangible goods, e.g. Scooters Pizza. Pizza (good), delivering pizza to your home (service). Business can be found in private public sector as profit-seeking profit seeking activities that an organisation performs to provide and services to their customers.

or or nonproducts

Profit seeking businesses distribute the profit to its owner or re-invest it into the business. • Profit is the amount of money that remains in the business after the business has paid all its costs. • PROFIT = total revenue – total costs Non-Profit Organisations (NPOs) try get enough income to cover expenses • Sports clubs, welfare organisations and religious organisations are all examples of non-profit-seeking private sector business • Political parties and labour unions are examples of public sector not-for-profit seeking business. Why do businesses exist? • To satisify a need (Maslow hierarchy of needs) • To generate profit (Economic principle)

Economic principle: Obtaining the greatest possible benefits with limited recourses available MIN inputs with MAX outputs = Economic principle

The factors of production



Discuss business decisions The following decisions are taken to improve the productivity of the business: 1. Specialisation: A business focus’ on specific product or process or even very limited number of products and processes. It assists technical labour division and mass production. E.g. Clover in dairy She

2. Diversification: When the scope or range of products and/or services within a business is extended. E.g. Yoghurt (drinkable, small, flavours …)

Does The

3. Differentiation: When a business decides to let a task which was performed by a specific department be performed by an entirely different department.

Snake Dance

4. Integration: Activity leading to a vertical shrinkage of the transformation process. This is the opposite of differentiation and can result in markets

In Countr y Clubs

businesses disappearing. If this is only an internal process, it can lead to the merging of distinct departments in a business. 5. Combination: When business decides to grow by means of acquisitions or mergers. The process is similar to differentiation and diversification, but new businesses are not established. 6. Concentration: The internal growth of a business which results in the production capacity of the business expanding. 7. Standardisation: A decision taken where competing businesses (produce similar products) agree to adhere to certain norms (such as packaging, measurements, quality). 8. Tipisation: The decision to only manufacture certain types of a product. It’s the limitation of range of products produced, achieved by only using certain measurements, forms, quality or other important characteristics

Business Environment Study unit 1 Chapter 1

Learning outcomes: 1. Define the concept of a systems approach. 2. Discuss the components involved in viewing the organisation as part of a system. 3. Describe the micro-environment and how the various management functions affect the success of the business. 4. Explain how the different role players in the market environment affect the success of the business. 5. Discuss how the sub-environments in the macro-environment affect the business and its continued existence.

The systems approach  Systems approach is the idea that all organisations are made up of interdependent parts that can only be understood by looking at the whole.  Any system consists of three components:

The organisation as a system

INPUTS OUTPUTS

 Brought together in organization (PF)  Inputs processed by management functions  Goods or services after inputs been processed

The organisational environment A business’ organisational environment is the world outside the business as well as what goes on inside the business. 3 Parts:

1. Micro-environment = Environment inside business – consists of business functions

MARKET ENVIRONMENT

Control = Direct control 2. Market environment = Environment immediately outside business – where businesses get their resources from Control management

= Little or no control, can be influenced by

3. Macro-environment = All factors outside that affect business Control

= Very little or no control

Environment INSIDE the business o Includes the business functions and management tasks that are involved in running the organization Business functions: o

Operations = Getting the products that businesses sell Logistic = Getting right quality products, in right quantity, at right time, at right place MICRO ENVIRONMENT Financial = Ensure that business has enough capital to run the business in long and short term HR management = Gets the right quality of employees and look after them Marketing = Tell potential customers about business products and persuade them to buy Public-relations = Makes sure business keep positive image among customers & rest of society

o o

Environment OUTSIDE, where the organisation conducts its business Gets the inputs into business from 1suppliers and their intermediaries 2sells g&s to customers & 3competes with competitors

Give raw materials to businesses Wholesalers ‘middlemen’ between manufacturer and consumer

Sell the same/similar products People who buy the goods & services

o

MACRO ENVIRONMENT

All the factors on the national and international levels that affect success of the business o Business has very little or no control = business is a victim 6 Sub-Environments:

1. Natural 2. Technological

3. Social

4. Political 5. Economic

6. International

S

W

O

The availability of natural resources such as raw materials. Climate, weather & natural disasters Processes where people make tools and machines to influence the world Invention = create something new Innovation = new ideas become reality The demographics, which are the statistical characteristics of the society in which the business is located Age, Religion, Culture Where competition takes place Legislation e.g.= laws giving tax rates for businesses The science that describes and analyses the producing, distributing and using of goods and services, and the role played by money or the lack of money. Businesses want to operate in a healthy economy A healthy economy is one where :  new businesses are starting  job creation is growing Factors:  Productivity  Inflation  Disposable income  The business cycle  Average income  Exchange rate  Spending power  Interest rates Globalisation – the development of business activities on an international level: International competition eg. Markets & Natural disasters

T

Strengths Weaknesses Opportunities Threats

Ethics in data collection:

   

Accessibility: whether the business has the right to access the required information. Privacy: the degree of privacy of the information and how it’s shared Property: ownership of the information Accuracy: accurate information

Task of management Study unit 2 Chapter 2

Learning outcomes: •

Define the concept of management

•

Distinguish between the types of organisations in which managers work

• •

Identify the different levels of management Explain the various tasks performed by managers

•

Distinguish between the different areas of management.

•

Describe the various management skills.

•

List a number of important management competencies.

•

Explain the various management roles and sub-roles.

Management: The process of coordinating work-related activities so that people performing them complete these activities effectively and efficiently. Efficiency ‘Doing things right’

Effectiveness ‘Doing the right things’

Manager:  Appointed in a managerial position  Responsibilities to carry out management tasks  Through the efficient and effective use of people and other resources Should be able to: Maintain favourable work environment Create opportunities for all employees to perform their best Act as a leader Communicate continuously Commercial organisations Reward good performances

Governmental organisations Voluntary organisations Income not for profit

Types of organisations in which manager’s work: Manufactures goods, provides services, retails products (sells directly to consumers) Tax-funded department, formed by government

Levels of management:

Top management:  Responsible for overall direction and organization  Develop and communicate the organization’s mission, long term goals, plans & strategies  E.g. Presidents, directors, CEO, managing directors

Middle management:  Department managers, Functional managers, Branch managers, Project managers  Must have good understanding of overall organizational strategy  Create link between TM and FLM  Receive strategies from TM and change them into goals and action plans  implemented by FLM  Ensure that all organizing tasks are managed  Take care of operational planning

First-Level management:  Implement strategic plans sent through MM from TM  Responsible for operational planning (production of goods / provision of services)  Responsible for controlling activities in order to monitor performances of employees  Supervisors, Crew Leaders, Section Heads

Non-managerial employees:  Report to FLM  Responsible for basic process of production or service provision Management Tasks

What to do When to do it

Structure, delegate tasks and resources

Guide, direct, motivate on all management levels

Encourge goalorientated behaviour

Performance measurement and corrections

Who should do it Management skills

 Managers use CS to understand abstract ideas (cannot be seen or touched) so that they can consider possible solutions to a problem/opportunity.

Logistic Management Study unit 4 Chapter 4

Learning outcomes: Define ‘logistics’ and ‘logistics management’ Explain the objectives of logistics management Di warehousing, and inventory management CoLogistics of goods usually Ex involves: cs De s.  the integration of information flows Logistics = the process of - planning  the handling of materials  production or producers for efficient and effective transformation activities - implementing  packaging of the goods transportation & storage of goods.  tracking and storage - controlling Flow of goods (warehousing) of inventory from suppliers to an operation or outputs = the management of the movement of goods  transportation and delivery between:  Security  a point of origin (supplier)  the point of consumption (consumer / a purchase of goods by a customer) = includes inbound, outbound, internal and external movements Goods managed in logistics include:  Physical goods (example: food, raw materials, animals, equipment)  Time, information, energy (could also be part of the logistic process)

 Logistics management = Management of logistics and activities  Logistics strive to minimize costs of the movement of goods = so profit will maximize  Organisations have to purchase goods and services from various suppliers and then TRANSFER transformed goods to customers USING logistics activities  Fundamental aim of a logistic system = satisfaction of customer needs

Types of LOGISTICS

The logistics process from a systems approach Systems = decision-making strategy that emphasizes overall system efficiency rather than individual parts efficiency. A logistic system is made up of a consisting of two things:  Immovable facilities and physical activities between those facilities  Information flows betweentthe tvarious systems components To ensure an efficient and effective logistics system – focus on quality Quality focus can be summarised in a set of conditions / rights: “7 rights of logistics”: 1. Move the right materials / products 2. In the right quantity 3. In the right condition 4. At the right time 5. To the right place 6. At the right cost 7. To the right customers / suppliers Phases in logistics Inbound = Movement of goods / materials from point of origin to point of production (supply / upstream logistics). Outbound = Movement of finished goods from the point of production to consumer at point of consumption (physical distribution / downstream logistics). Reverse = Movement or return of damaged, expired or unsold goods from point of consumption to the producer / Recycling of unused or unsold goods.

Components of a logistics system Components = set of very different activities / tasks that occur in the logistic process. 1. Customer service 2. Inventory management 3. Transportation 4. Storage and materials handling 5. Packaging 6. Information processing 7. Demand forecasting 8. Purchasing 9. Facility location 10. Production planning 11. Other activities Logistics management = part of the supply chain management that = plans, implements and controls = the efficient, effective forward and reverse flow = and storage of goods, services and the related information = between the point of origin = and the point of consumption. = Include: Inbound and outbound transportation management Fleet management Storage and warehousing management Stock and material handling Order processing and fulfillment Logistics network design Inventory planning and management Supply/demand management Management of third party logistics service providers Main objectives of logistics management:  To make available the right quantity and quality products.  To make products available at the right place and time.  To offer the most appropriate and best service to consumers.  To reduce the cost of activities within the operation.  To maintain transparency and visibility in the operation ACTIVITIES of logistics management

Purchasing Market research, requirements planning, make or buy decisions, supplier management, ordering, order controlling. Buying of materials Engaging with suppliers

Warehousing Storage of goods and materials as the operation transforms the inputs to outputs

Modes of transport

Order processing Forecasting of orders and order requirements. Customer order management Production and materials management

Material handling and packaging Internal movement of goods and materials as the operation transforms the inputs to outputs

Transportation The planning of the transport Intermodal transport Freight transport (air, road, rail, maritime, pipelines)

Inventory management Involves the purchasing of appropriate inventory and the management of production inventory

Integrated logistics A system-wide view of the entire supply chain as a single process, from raw materials supply through finished goods distribution. All functions that make up the supply chain are managed as a single entity. An organisations continuous ability to offer a one-stop solution to the product, material and logistic requirements of the organisation. Reverse logistics From point of consumption to point of origin (returns). The reuse of products and materials. = The process of planning, implementing and controlling the efficient and cost effective flow of 1raw materials 2in process inventory 3finished goods and 4related information from the point of consumption to the point of origin.  RL supports the recycling of products and use these recycled products for new products  E.g. Timberland = they use plastic bottles for shoes and boots  Activities: remanufacturing + recycling + refurbishing Global logistics Plans, controls and manages the movement and Storage of goods, services and related information As it moves across international boundaries From raw material provider  consumer Handles returned goods and containers Ethics in logistic management  Behave honourably in all aspects of the business  Maintain trust and confidence in the integrity of logistics processes  Avoid ‘creative’ practices that may negatively influence others  Publish and adhere to organizational standards & policies  Avoid conflict of interest amongst stakeholders

Financial Management Study unit 5 Chapter 5

Financial management = the functional area of a business that is concerned with planning and managing the business's funds in order to achieve the business's objective Functions of financial management

 When a business cannot carry its liabilities, it becomes insolvent or liquidated Core principles of financial management  Cost-benefit principle Benefits should be greater than the costs  Risk-return principle Higher the risks that a business takes, the higher the return it wants for taking the risk  Time-value- of-money principle Means money has value over time. A business can increase the value of an amount of money by investing it over time to earn interest Analysing financial statements Financial statements provide a written summary of the financial activities of the business Two primary financial statements:  Balance sheet = specific moment of time. List of all assets and liabilities  Income statement = financial summary of the profitability of business Ratio analysis  Liquidity ratios

 Asset management ratios  Debt-management ratios  Profitability ratios Break-even analysis Break-even analysis examines interrelationship between 1costs, 2volume and 3profit at different levels of sales activity. Also known as cost-volume-profit analysis. Break-even point: business does not make a profit or loss Financing capital requirements Every business requires finance for short-term commitments (rent, wages, telephone bills ect.) or medium- to long-term commitments (vehicles, machinery, buildings ect.) Period of funding should match life

Break-even point: N = F ÷ (SP – V) where: N = number of units where no profit or loss is made F = total fixed costs SP = selling price per unit V = variable costs per unit

span of asset  Short-term bank overdraft to finance current assets  Medium-to long-term lease financing to finance car  Long-term loan to finance buildings Types of short-term financing: Trade credit Bank credit Factoring of trade receivables debtors

Types of long-term financing: Equity funding Long-term bank loans Financial leases

Cash budget  A statement of estimated future cash receipts and payments, showing the forecast cash balance of the business at certain intervals.  Shows how cash flows in and out of business, as well as the business’s future ability to pay debts and expenses.  Financial manager must compare actual cash inflows and outflows of the business to the cash budget. PURPOSE:  Cash budget results in less bank credit being used & lower interest costs  Banks are more willingly to grant a business loan under favourable ...