B203 Business Functions in Context – Revision Notes Introduction * Communities of Practice (Wenger, 2007) - are groups of people the come together to share knowledge and experiences and learn from one another whilst providing a social context for that work. Three characteristics are crucial: 1. The Domain - It has an identity defined by a shared domain of interest. Membership implies a commitment to this and therefore a shared competence that distinguishes members from other people. 2. Community - In pursuing their interest, members engage in joint activities and discussions, help each other, and share information.
They build relationships that enable them to learn from each other. 3. Practice - Members of a community of practice are practitioners. They develop a shared repertoire of resources: experiences, stories, tools and ways of addressing recurring problems - in short a shared practice. This takes time and sustained interaction * Hoftstede’s (1980) dimensions of culture 1. Power distance 2. Individualism/ Collectivism 3. Masculinity/ Femininity 4. Uncertainty avoidance 5. Confucian/ Dynamism * Varieties of knowing action (Amin and Roberts, 2008)
Knowledge-in-action type| Innovation| Organisational dynamic| Craft/task-based| Customised, incremental| Hierarchically managed. Open to new members| Professional/specialised| Incremental or radical but strongly bound by institutional/professional rules. Radical innovation stimulated by contact with other communities| Large hierarchical managed organisations, or small, peer-managed organisations. Institutional restrictions on the entry of new members| Epistemic/creative| High energy, radical innovation| Group/project managed. Open to those with a reputation in the field.
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Management through intermediate and boundary objects| Virtual| Incremental and radical| Carefully managed by community moderators or technological sequences. Open, but self-regulating| * Reflective Cycle (Gibbs 1988) * Task Management System (Taylor 1911) is a system of scientific management based on Taylor's system of breaking down each job down into its individual motions which were then analysed these to determine which were essential. He believed that with unnecessary motion eliminated, the worker, following a machinelike routine, became far more productive. Gilbreath (1917) and her husband believed the concepts formulated by Taylor fell short when it came to managing the human element on the shop floor. The Gilbreth’s helped formulate techniques to breakdown and analyse work tasks into the smallest possible components of movement. * Experience Approach (Barnard 1938) states that to be effective the main purpose of an organisation should be divided down into parts. Bernard argued that so long as the organisations members accepted these divisions and there was sufficient communication between them they could achieve their own objectives.
If the balance was right the overall objectives of the organisation would be met and the business would survive and grow. * Psycho – Sociological Approach (Parker Follett 1974) based her philosophy on the idea that it is impossible to separate work from human beings hopes, fears and aspirations. She believed in three types of conflict, domination (least favourable), compromise and integration (most favourable). She suggested trying to avoid order giving ‘power down’, encouraging managers to allow employees to participate in decision making ‘power with’. To be governed by the situation not by superiority.
This is known as the Law of Situation. * Five Sources of Power (Handy 1976) 1. Physical – power of a superior force 2. Resource – power control and possession of valued resources 3. Position – result of an organisational role or position 4. Personal – power of charisma, personality 5. Expert – vested in someone because of their expertise * Balanced Scorecard – is an operational control model for business which aims to identify and improve various internal functions. It can provide feedback to organisation to help assist in the decision making process. Explicit Knowledge - can easily be communicated in words and numbers and can be easily communicated and shard in the form of hard data, scientific formulae, codified procedures or universal principles. * Tacit Knowledge - is not easily visible or easily expressed eg. subjective insights, intuitions and hunches * Management fiat – an order or instruction given by a manager * When looking at how organisations achieve effective functional integration, 4 modes have been identified (Kim 2003) 1. People (integration of managers, teams etc. ) 2. Information (flow of information through impersonal communications system eg. mail, databases) 3. Formulation (standardised functional activities in the workplace) 4. Centralisation (central, hierarchical decision making) * Routines – Recurrent patterns of functional interaction * Absorptive Capabilities – the capacity of an organisation to acquire new knowledge * Knowledge-intensive (KI) firms are organizations composed of multiple communities with highly specialized technologies, expertise, and knowledge domains (Boland and Tenkasi 1995) * Creative knowledge-intensive project-based firm: a model * KI organisations’ capacities to integrate new knowledge are limited.
This is because: 1. A firm requires specific capabilities in order to be able to assimilate new knowledge. These are costly to develop and maintain. 2. Acquiring the capability to acquire new knowledge is costly for organisations, so Cohendet and Simon (2008) that communities may play a role in acquiring and providing organisational knowledge that is otherwise ‘expensive’ to acquire. * New knowledge in a firm is acquired through what Cohendet and Simon describe as the ‘delicate balance’ between specialist communities and formal functional units Hard knowledge architectures are the functional units and hierarchical structures, often visible from organisational structure charts. * Soft knowledge architectures are the communities that create specialised, innovative, organisational knowledge Operations Management * Is concerned with activities that produce goods or deliver services to the customer. Seen as the ‘doing’ part of the organisation it is typically responsible for around 70% of total costs. * Relationship between the operations function and other core and support functions * Transformation process Transformed resources – are treated transformed in a process, usually a mixture of material, information and customers * Transforming resources – the resources that act on the transformed resources, usually classified as facilities * Products = tangible, service = intangible * Facilitating services – a those produced by an organisation to support its products. Facilitating products are the opposite * 3 levels of operation and process management 1. Supply network (arrangement of interconnected operations) 2. The operation (arrangement of interconnected processes) 3. The process (arrangement of interconnected resources) The 4 V’s model – shows the difference between different types of operation by using the following dimensions 1. Volume - how many products or services are made by the operation 2. Variety - how many different types of products or services are made by the operation 3. Variation – how much does the level of demand change over time 4. Visibility – how much of the operation’s internal working is exposed to the customer * Possible roles for the operations function 1. Implementing business strategy 2. Supporting business strategy 3. Driving business strategy * Hayes and Wainwright Four-stage model . Internally neutral - The operations function is internally focused and reactive, the best that the organisation hopes for is that operations don’t make mistakes 2. Externally neutral - The operations function tries to be as good as the competition, or to achieve parity with industry norms. Such an organisation is likely to benchmark its operations against its competitors. 3. Internally supportive - an operations strategy will be developed which will be derived from, and support, the business strategy. The organization’s operations are likely to be amongst the best in its industry 4.
Externally supportive The operations function provides the basis of competitive advantage for the organisation, by setting the standard in their industry. Emulates best practice wherever it is to be found. Operations will be seen as the means of exceeding expectations by delighting the customer * The Four Stage Model of Operations Contribution * 5 performance objectives that can be applied to any type of organisation 1. Quality 2. Speed 3. Dependability 4. Flexibility 5. Cost * The External Effect of the 5 Performance Objectives * Four perspectives of operation strategy 1.
Top-down perspective - what the business wants operations to do 2. Bottom-up perspective - what day-to-day experience suggests operations should do 3. Market Requirements perspective - what the market position requires operations to do 4. Operations resources perspective - what operations resources can do * Order winners - the competitive factors that directly and signi? cantly contribute to winning business * Quali? ers - the competitive factors that have a minimum level of performance (the qualifying level) below which customers are unlikely to consider an operations performance satisfactory Structural decision areas| Infrastructure decision areas| FacilitiesCapacity ManagementTechnology Supply network| Planning and controlQualityWork organisation HRPerformance ManagementNew Product Development | * Generic Manufacturing Process Types 1. Project eg. large construction projects, movie production 2. Jobbing eg. tailors, specialist toolmakers 3. Batch eg. bakeries, the manufacture of sports shoes 4. Mass eg. automobile plant, dvd production 5. Continuous eg. steel making, electricity utilities * Generic Service Process Types 1. Professional Services eg. architects, lawyers . Service Shops eg. banks, high street shops 3. Mass Services eg. supermarkets, airports * Product Process Matrix * 3 aspects to all products and services that have to be designed 1. The concept - the understanding of the nature, use and value of the service or product 2. The package - the group of ‘component’ products and services that provide those bene? ts de? ned in the concept 3. The process - the way in which the component products and services will be created and delivered * Stages of product/ Service Design * Concept Screening includes 3 categories of design criteria . Feasibility - ‘can we do it? ’ 2. Acceptability - ‘do we want to do it? ’ 3. Vulnerability - ‘do we want to risk it? ’ * Influences on location decisions Supply side| Demand side| Labour costsLand costsEnergy costsTransportation costsCommunity factors (tax, language etc. )| Labour skillsSuitability skillsImageConvenience for the customer | * Indirect Process Technology – assists the management of a process rather than directly contributing to the creation of products and services * Integrating technology – processes combinations of materials, information and customers 4 Questions operations managers need to ask about technology 1. What does it do? 2. How does it do it? 3. What advantages does it give us? 4. What constraints does it impose * 3 types of material processing technology 1. Material-processing technology – form, shape and move materials 2. Information-processing technology (IT) 3. Customer-processing technology – interaction between customers and technology This can be a. Active (ATMS) b. Passive (Cinemas, moving walkways) c. Hidden (CCTV, barcode scanners) d. Through an intermediary (call centres, travel agents) Planning is concerned with: 1. What activities should take place in an operation 2. When should they take place longer term 3. What resources should be allocated to them * Control is concerned with: 1. Understanding what is actually happening in the operation 2. Deciding whether there is significant deviation from what should be happening shorter term 3. (If there is deviation) Changing resources in order to affect the operations activities * Enterprise Resource Planning (ERP) - The integration of all signi? ant resource planning systems in an organisation that, in an operations context, integrates planning and control with the other functions of the business * Materials Requirement Planning (MRP) - A set of calculations embedded in a system that helps operations make volume and timing calculations for planning and control purposes * Independent Demand - is demand which is not obviously or directly dependant on the demand for another product or service. In contrast Dependant demand is relatively predictable because it is derived from some other known factor. * Four distinctive ways in which operations can respond to demand: . Produce to stock – producing outputs prior to their being demanded by customers 2. Part-produce to order – producing work in progress prior to outputs being demanded by customers 3. Produce to order – producing outputs only when they are demanded by customers 4. Resource to order – buying in resources and producing only when outputs are demanded by customers * P:D ratios - A ratio that contrasts the total length of time customers have to wait between asking for a product or service and receiving it (D) and the total throughput time to produce the product or service Four sets of activities that need to be undertaken in order to plan and control the volumes and timing of outputs of an operation: 1. Loading - allocating work to each stage (or work centre) of an operation 2. Sequencing - deciding on the order in which work is to be performed. 3. Scheduling - producing a detailed timetable showing when each work activity should start and end. 4. Monitoring and controlling - checking any deviation from what has been planned and taking any corrective action required * Pull Control - workstation requests work from the previous station only when it is required Push Control - work is sent forward as soon as it is finished on the previous workstation * Managing capacity over time involves 3 steps: 1. Measuring aggregate demand and capacity 2. Identifying the alternative capacity plans 3. Choosing the most appropriate capacity plan * The second stage of capacity planning involves: 1. Level Capacity (i. e. , absorb demand) 2. Chase Demand (i. e. , adjust output to match demand) * 3. Demand Management (i. e. , change demand) *includes overtime, idle time, annualised hours, hire and fire, part-time staff, sub contracting Most operations use a mixture of the three above methods. Yield Management is a collection of such methods that can be used by an operation (usually with a fixed capacity) to maximise its potential to generate profit * Five types of inventory 1. Buffer (aka safety) 2. Cycle (eg. baking 3 types of equally popular bread on rotation) 3. De-coupling (creates the opportunity for independent scheduling and processing speeds between process stages) 4. Anticipation (accumulated to cope with expected demand or interruption to supply) 5. Pipeline (exists because material cannot be transported instantaneously) More common inventory classifications based on their position in the transformation 1. Raw materials 2. Work in progress 3. Finished goods * Economic Order Quality - determines the optimum order quantity that a company should hold in its inventory given a set cost of production, demand rate and other variables. This is done to minimize variable inventory costs. The full equation is as follows: EOQ = v(2CoD/ Ch) Co = cost of placing an order D = annual demand (in units) for the item Ch = the annual stockholding cost * Two approaches to the timing or reorder 1. Continuous review 2. Periodic Review Pareto law - A general law found to operate in many situations that indicates that 20 per cent of something causes 80 per cent of something else, often used in inventory management (20 per cent of products produce 80 per cent of sales value) and improvement activities (20 per cent of types of problems produce 80 per cent of disruption) * ABC Inventory Control is approach to inventory control that classes inventory by its usage value. Similar to the Pareto principle, 'A' items will typically account for a large proportion of the overall value but a small percentage of number of items.
Example of ABC classes are: ‘A’ items – 20% of the items accounts for 70% of the annual consumption value of the items. ‘B’ items - 30% of the items accounts for 25% of the annual consumption value of the items. ‘C’ items - 50% of the items accounts for 5% of the annual consumption value of the items. * Just in time (JIT) - is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs.. Inventory is seen to obscure intrinsic production problems * Lean Philosophy comprises of 3 main elements 1. Eliminate waste 2.
Include Everyone 3. Continuous improvement (Small steps to expose waste and eliminate it) * 7 types of waste 1. Defectives 2. Inventory 3. Processing 4. Waiting 5. Motion 6. Transport 7. Overproduction * The 5 S Terminology 1. Sort (Eliminate what is not needed) 2. Straighten (things can be reached when needed) 3. Shine (clean and tidy workplace) 4. Standardise (maintain order) 5. Sustain (commitment and pride in standards) * Value stream mapping - a lean manufacturing technique used to analyze and design the flow of materials and information required to bring a product or service to a consumer MRP vs JIT 1. MRP is best suited to low-volume, high-variety production, where products and processes are complex 2. JIT, on the other hand, is best suited to high-volume, low-variety operations with simple products and processes 3. Slack argues that MRP is good for planning, while JIT is good for control. These conclusions would be relatively uncontested by most operations management authorities. However, their claim that JIT and MRP can operate in combination is somewhat controversial and would provoke debate * The supply side of the supply network refers to supplier side of the operation.
The demand side refers to customers * The first tier are suppliers and customers that are in immediate contact with the operation. The second tier are those separate from the organisation by only the first tier. * The Intermediate supply network is the suppliers and customers that have direct contact with the organisation. The Total supply network is all suppliers and customers involved in the supply chain that passes through the operation * Downstream cover the stages of the supply chain between the operation in question and the customer. Upstream is the other way, towards the supply side Vertical integration - ‘do or ‘buy’ decisions * Long-term capacity management – decisions that determine the level of physical capacity of an operation long term (usually one year plus) * Disintermediation – suppliers make direct contact with customer ‘cutting out the middle man’ eg. Dell Computers * Co- opetition - a business strategy based on a combination of cooperation and competition, derived from an understanding that business competitors can benefit when they work together eg. restaurants clustered together * The decision logic of outsourcing Sourcing, the activity of selecting which supplier to purchase from, is a vital task within the purchasing function. 1. Single and multiple sourcing: Single is obtaining one type of input from just one supplier. In contrast multiple is using more than one supplier, with the aim of maintaining market bargaining power or continuity of supply. There has been a trend in recent years for organisations to move towards more single sourcing. 2. e-procurement - Over the last few years, many organisations have sought to capitalise on the internet as a vehicle for purchasing supplies. 3.
Global sourcing - Increasing economic globalisation has led many organisations to purchase numerous goods (and increasingly also services) from outside their own country. * The Business/ Consumer Matrix * Customer relationship management (CRM) - a widely implemented strategy for managing a company’s interaction with customers and clients. It involves using technology to organise, automate, and synchronize business processes * The Bullwhip effect – the tendency of the supply chains to amplify relatively small changes at the demand side so that the disruption at the supply end is much greater, see below Channel alignment - the adjustment of scheduling, materials movements, stock levels, pricing etc. to bring all operations in the chain in line with one another * Vendor-managed inventory (VMI) - allowing an upstream supplier to manage the inventories of its down stream customer * Quality is hard to define. Slack defines it as: ‘Consistent conformance to customers expectations’ * Operation function is mainly responsible for making sure there is no gap between the product/service produced and its specification 1. Define quality characteristics 2.
Decide how to measure them 3. Set quality standards for each characteristics * Total Quality Management (TQM) is defined by Slack as: ‘A holistic approach to the management of quality that emphasizes the role of all parts of an organization and all people within an organisation to in? uence and improve quality; heavily in? uenced by various quality “gurus”, it reached its peak of popularity in the 1980s and 1990s’ Involves understanding quality from the perspective of the customer (both external and internal) * The costs of quality 1. Prevention costs 2. Appraisal costs 3.
Internal failure costs 4. External costs At some point it may not become economically viable to keep sinking costs into a business in pursuit of further small gains in quality. This goes against TQM’s goal of continual pursuit for the highest possible quality regardless of other factors. * A quality system is defined as the organisational structure, responsibilities, procedures, processes and resources for implementing quality management * ISO 9000 is a set of worldwide standards designed to help organizations ensure they meet the needs of customers and other stakeholders.
Third party certification bodies provide independent confirmation that organisations meet the requirements of ISO 9001. * A lot of TQM initiatives fail or lose their impetus over time (known as Quality Disillusionment). Those which succeed will likely have the following features: 1. A quality strategy 2. Top-management support 3. A steering group 4. Group-based improvement 5. Success being recognised 6. Training at the heart of quality improvement * The Six Sigma Approach seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in processes.
It uses a set of quality management methods and creates a special infrastructure of people within the organisation who are experts in these methods. 1. Master Black Belts – act as in-house coaches on Six Sigma. They devote 100% of their time to Six Sigma. They assist champions and guide Black Belts and Green Belts. Apart from statistical tasks, they spend their time on ensuring consistent application of Six Sigma across various functions and departments. 2. Black Belts - Operate under Master Black Belts to apply Six Sigma methodology to specific projects. They primarily focus on Six Sigma project execution.
Again 100% of their time devoted. 3. Green Belts - are the employees who take up Six Sigma implementation along with their other job responsibilities, operating under the guidance of Black Belts * Polar diagrams can be a useful way of depicting performance * Importance–Performance Matrix - A technique that brings together scores that indicate the relative importance and relative performance of different competitive factors in order to prioritize them as candidates for improvement * Breakthrough improvement assumes the main vehicle of improvement is major and dramatic change in the way an operation works (more Western Approach).
It tends to favour innovation and technology as a means for improving performance. * In contrast Continuous Improvement (a more Japanese approach) is an ongoing effort to improve products, services, or processes. using a greater number of smaller, incremental steps over time. Seen as more people driven. * DMAIC cycle – Define, Measure, Analyse, Improve, Control. Increasingly used improvement cycle model, popularised by the Six Sigma approach to operations improvement * PDCA cycle - Stands for Plan, Do, Check, Act cycle, perhaps the best known of all improvement cycle models * 5 challenges for Operations Management . Globalisation 2. CSR – Cooperate Social Responsibility 3. Environmental Protection 4. Technology Awareness 5. Knowledge Management Marketing * Marketing - Individual and organisational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion and pricing of goods, services and ideas * Marketing Concept - The philosophy that an organisation should try to provide products that satisfy customers’ needs through a coordinated set of activities that also allows the organisation to achieve its goals Marketing Mix - The tactical ‘toolkit’ of the marketing programme; product, place/distribution, promotion, price and people variables that an organisation can control in order to appeal to the target market and facilitate satisfying exchange * Marketing Orientation - organisation which devotes resources to understanding the needs and buying behaviour of customers, competitors’ activities and strategies, and of market trends and external forces – now and as they may shape up in the future; inter-functional coordination ensures that the organisation’s activities and capabilities are aligned to this marketing intelligence. Marketing Programmes - A marketer’s marketing mix of activities and implementation processes designed to operationalise the marketing strategy * Marketing Strategy - The selection of which marketing opportunities to pursue, analysis of target market(s), and the creation and maintenance of an appropriate marketing mix that will satisfy those people in the target market(s) * Marketing Environment - External changing forces within the trading environment: laws, regulations, political activities, societal pressures, economic conditions and technological advances.
Micro = the business, suppliers, buyers, competitors etc. Macro = laws, regulations, technological, social/green etc. * Marketing management - A process of planning, organising, implementing and controlling marketing activities to facilitate and expedite exchanges effectively and efficiently * Market segment - A group of individuals, groups or organisations sharing one or more similar characteristics that cause them to have relatively similar product needs and buying characteristics * Targeting - The decision about which market segment(s) a business prioritises for its sales and marketing efforts Competitive advantage - The achievement of superior performance vis-a-vis rivals, through differentiation to create distinctive product appeal or brand identity; through providing customer value and achieving the lowest delivered cost; or by focusing on narrowly scoped product categories or market niches so as to be viewed as a leading specialist * Differential advantage - An attribute of a brand, product, service or marketing mix that is desired by the targeted customer and provided by only one supplier * Concentric Diversification - A process that occurs when new products related to current products are introduced into new markets Conglomerate Diversification - A process that occurs when new products unrelated to current technology, products or markets are introduced into new markets * Horizontal Diversification - A process that occurs when new products not technologically related to current products are introduced into current markets * Advertising - A paid-for form of non-personal communication about an organisation and its products that is transmitted to a target audience through a mass medium * Environmental Scanning - The process of collecting information about the forces in the marketing environment Green Marketing - The speci? c development, pricing, promotion and distribution of products that do not harm the natural environment * 4 Types of Buying behaviour 1. Routine Response Behaviour 2. Limited Decision Making 3. Extensive Decision 4. Impulse Buying * Routine Response Behaviour - Behaviour that occurs when buying frequently purchased, low-cost, low-risk items that need little search and decision effort * Consumer Decision Making Process 1. Problem Recognition 2. Information search 3. Evaluation of Alternatives 4. Purchase and 5. Post-purchase evaluation Level of Involvement - The level of interest, emotion and activity the consumer is prepared to expend on a particular purchase * Selective Distortion - The changing or twisting of currently received information * Selective Exposure - The selection of inputs that people expose to their awareness * Selective retention - The process of remembering information inputs that support personal feelings and beliefs, and of forgetting those that do not * New Task Purchase - An organisation’s initial purchase of an item to be used to perform a new job or to solve a new problem Straight Rebuy Purchase - The routine repurchase of the same products under approximately the same terms of sale * Modi? ed Rebuy Purchase - A new task purchase that is changed when it is reordered or when the requirements associated with a straight rebuy purchase are modi? ed * Relationship Management - The process of encouraging a match between the seller’s competitive advantage and the buyer’s requirements over an item’s life cycle * Relationship Marketing - All of the activities an organisation uses to build, maintain and develop customer relations Market segmentation involves three stages: 1. Segmenting: grouping similar customers into market segments (Demographic, Geographic, Psychographic, Behaviouristic) 2. Targeting: identifying the segments on which marketing effort will be focused 3. Positioning: creating an appropriate image for the product * Exploratory Research - Deliberately flexible data gathering used to discover the general nature of a problem and the factors that relate to it * Descriptive Research - Data collection that focuses on providing an accurate description of the variables in a situation Casual Research - Data collection that assumes that a particular variable X causes a variable Y * Quota Sampling – A sampling method in which the final choice of respondents is left to the interviewers, who base their choices on two or three variables (such as age, sex and education) * Random Sampling – A sampling method in which all the units in a population have an equal chance of appearing in the sample * Stratified Sampling – A sampling method in which the population of interest is divided according to a common characteristic or attribute; a probability sampling is then conducted within each group Syndicated Data Services - Organisations that collect general information and sell it to clients * Product Life Cycle – the four major stages through which products move: introduction, growth, maturity and decline * Product Mix - The composite group of products that a company makes available to customers * 3 level product analysis 1. Core – the benefits of the product to the consumer 2. Actual - A composite of the features and capabilities offered in a product, quality and durability, design and product styling, packaging and brand name 3. Augmented - Support aspects of a product, including ustomer service, warranty, delivery and credit, personnel, installation and after-sales support * Convenience Product - Inexpensive, frequently purchased and rapidly consumed item that demands only minimal purchasing effort * Shopping Product - Item chosen more carefully than a convenience product; consumers will expend effort in planning and purchasing these items * Speciality Product - Item that possesses one or more unique characteristic; consumers of speciality products plan their purchases and will expend considerable effort to obtain them New Product Development - The process a product goes through before introduction, involving seven phases: 1. Idea generation 2. Ideas screening 3. Concept testing 4. Business analysis 5. Product development 6. Test marketing 7. Commercialisation * Test Marketing - The limited introduction of a product in geographic areas chosen to represent the intended market * Commercialisation - The process of re? ning and settling plans for full-scale manufacturing and marketing * Product Adoption Process : 1. Awareness 2. Interest 3. Evaluation 4. Trial 5.
Adoption * Product Portfolio Analysis - A strategic planning tool that takes a product’s market growth rate and its relative market share into consideration in determining a marketing strategy * Brand Equity - The marketing and ? nancial value associated with a brand’s strength in a market * Brand Extension - A company’s use of one of its existing brand names as part of an improved or new product, usually in the same product category as the existing brand * Search Qualities - Tangible attributes of a service that can be viewed prior to purchase Experience qualities - Attributes that can be assessed only after purchase and consumption, including satisfaction and courtesy * Credence Qualities - Attributes that cannot be assessed even after purchase and consumption * Service Quality - Customers’ perception of how well a service meets or exceeds their expectations * Service can be distinguished from products by 4 characteristics. 1. Intangibility 2. Inseparability 3. Perishability 4. Heterogeneity - Variability in the quality of service because services are provided by people, and people perform inconsistently Four different types of marketing channel * Assorting - The grouping of products that buyers want to have available in one place * Exclusive Distribution - Market coverage in which only one outlet is used in a geographic area * Selective Distribution - The use of only some available outlets in an area to distribute a product * Intensive Distribution - The use of all available outlets for distributing a product * Horizontal Channel Integration - The combination of institutions at the same level of channel operation under one management Marketing Objective - a statement of what is to be accomplished through marketing activities – the results expected from marketing efforts * Pricing Objectives - Overall goals that describe what a company wants to achieve through its pricing effort * External Reference Price - A comparison price provided by others * Internal Reference Price - A price developed in the buyer’s mind through experience with the product * Vertical Channel Integration - The combination of two or more stages of the channel under one management EVC (Economic Value to the Customer) - The underlying principle that a premium price can be charged while still offering the customer better value than the competition * The Promotional Mix 1. Advertising - A paid-for form of non-personal communication about an organisation and its products that is transmitted to a target audience through a mass medium 2. Personal selling 3. Sales promotion 4. Public relations - A planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its target publics 5.
Direct Marketing - The use of non-personal media, the internet or telesales to introduce products to consumers, who then purchase the products by mail, telephone or the internet * Brand Attitude - a consumer’s particular impression of a brand, formed by emotions and logic or cognitive beliefs * Brand Personality - The psychological cues and less tangible desirable facets of a wellpresented brand * Marketing Communications - the transmission of persuasive information about a good, service or an idea, targeted at key stakeholders and consumers within the target market segment Integrated Marketing Communications - the coordination and integration of all marketing communication tools, avenues and sources within a company into a seamless programme that maximises the impact on consumers and other end users, at minimal cost * Pull Policy - A promotional policy in which a business promotes directly to consumers in order to develop a strong consumer demand for its products eg. needs to raise consumer awareness * Push Policy - A promotional policy in which the producer promotes the product only to the next institution down the marketing channel eg. eeds to get product stocked in more outlets * Noise - A condition that exists when the decoded message is different from that which was encoded Accounting * Accounting - The process of identifying, measuring and communicating information to permit informed judgements and decisions by users of the information * Financial accounting - The measuring and reporting of accounting information for external users (those users other than the managers of the business) * Management accounting - The measuring and reporting of accounting information for the managers of a business Cash Flow Statement - A statement that shows the sources and uses of cash for a period. Direct method is an approach to deducing the cash flows from operating activities, in a cash flow statement, by analysing the business’s cash records. The difference between these two amounts in the net cash flow. Indirect method adjusts net income for items that affected reported net income but didn't affected cash * Income Statement - A financial statement (also known as a profit and loss account) that measures and reports the profit (or loss) the business has generated during a period.
It is derived by deducting from total revenue for a period, the total expenses associated with that revenue * Balance Sheet - A statement of financial position that shows the assets of a business and the claims on those assets * Capital - The owner’s claim on the assets of the business * Revenue - A measure of the inflow of assets (for example, cash or amounts owed to a business by credit customers), or a reduction in the liabilities, arising as a result of trading operations * Accruals convention - The convention of accounting that asserts that profit is the excess of revenue over expenses, not the excess of cash receipts over cash payments Working capital - Current assets less current liabilities * Committed Costs - A cost that has been incurred but not yet paid, but which must, under some contract or obligation, be paid * Sunk Costs - Costs that were incurred in the past; the same as a past cost * Opportunity Cost - The cost incurred when one course of action prevents an opportunity to derive some benefit from another course of action * Relevant Cost - A cost that is relevant to a particular decision * Irrelevant Cost - A cost that is not relevant to a particular decision * Breakeven Point = total fixed costs No of units sold to breakeven contribution* per unit * sales value less variable cost of sales * Scarce (limiting) factor - Aspect of the business (for example, lack of sales demand) that will prevent it achieving its objectives to the maximum extent * Cost object - is any activity for which a separate measurement of cost is desired * Direct Costs - are those that can be directly attributed to the cost object * Indirect Costs are those which cannot! * Absorption Costing - charges both direct and indirect costs to units Full Costing - Deducing the total direct and indirect (overhead) costs of pursuing some activity or objective * Target Costing - An approach to deriving product costs where the business starts with the projected selling price and from it deduces the target cost per unit that must be met to enable the business to meet its profit objectives * Flexing the budget - Revising the budget to what it would have been had the planned level of output been different * Accounting rate of return (ARR) - The average profit from an investment, expressed as a percentage of the average investment Internal Rate of Return (IRR) - The discount rate for an investment that will have the effect of producing a zero NPV * Net Present Value (NPV) - A method of investment appraisal based on the present value of all relevant cash flows associated with an investment * Payback Period - The time taken for the initial outlay for an investment to be repaid from its future net cash inflows * Preference shares - Shares of a company owned by those who are entitled to the first part of any dividend that the company may pay Human Resource Management * HR objectives 1. Staffing 2. Performance 3. Change Management 4.
Administration * HRM moves personnel department forwards as it attempts to align and inter relate functions. All managers are involved in its implementation * HR Strategy (Tyson 1995): The intentions of the corporation both explicit and covert, toward the management of its employees, expressed through philosophies, policies and practices’ * 3 Theoretical Perspectives on the nature of HR strategy: 1. Universalist Approach - an ideal set of practices suggests that a specified set of HR practices (the so-called ‘best practices’) will always produce superior results whatever the accompanying circumstances . Fit or Contingency Approach - It is based on the premise that picking the most effective HR policies and practices that align appropriately to the organization's environment. The contingent factors influencing HR strategy might include type of business strategy pursued, organization size, type of technology, geographic location and labour market, management skills and preferences, industry sector and economic conditions. 3. Resource Based Approach – focuses on the quality of the human resource available to the organisation It is helpful to focus on the concept of strategic management rather than on HRM strategy. The former considers strategic thinking and a strategic orientation rather than something that is written down and exists as a physical entity. * HR Planning - HR planning is an approach to strategic planning. It can be viewed as a useful medium- to long-term approach and covers not only people and skill but also structure culture, systems and behaviour. * It can be criticised as an approach to managing the organisation. For instance, cynics and some bodies responsible for supporting the interests of employee groups (e. . unions) have argued that it may be deployed almost as a formulaic tool in order to plan and manage downsizing, redundancies and organisational restructuring. Moreover, it has also been argued that it is difficult to put in place meaningful and accurate human resource planning systems as the present era of work is subject to so much change and environmental flux * 4 components of HR planning 1. Analysing the environment 2. Forecasting future HR needs 3. Analysing the current situation and projecting forward 4. Reconciliation decisions and plans (comparing the two above and attempting to bridge the gap) Type of employment include full and part time, night shifts, double day shift, three-shift working, compressed work shifts, flexitime, annual hours, zero hours * Selection is a two way process with both the employer and potential employee making decisions * 3 perspectives can be considered during selection 1. Organisational fit 2. Team/ functional fit 3. Job fit * Competence is the ability of the potential candidate to perform a job properly * Selection methods include a combination of interviews, test and assessment centres. These should be validated Staff turnover decreases during recessions and increases during economic booms. While modest staff turnover can be seen as beneficial and is common in certain sectors, too much is damaging * Specific programmes which aid staff retention include flexible benefits, better induction, effective management of expectations, family-friendly initiatives, training opportunities and improved line management * Organisational Performance Initiatives include: 1. Total Quality Management - is a set of management practices throughout the organisation, geared to ensure the organization consistently meets or exceeds customer expectations.
TQM places strong focus on process measurement and controls as means of continuous improvement 2. Business Process Reengineering – the break away from old ways of working, and effect radical (not incremental) redesign of processes to achieve dramatic improvements in critical areas (such as cost, quality and service). This is often achieved through an in-depth use of information technology. 3. The Learning Organisation - a LO acquires knowledge and innovates fast enough to survive and thrive in a rapidly changing environment. Learning organisations: ) creates a culture that encourages and supports continuous employee learning, critical thinking, and risk taking with new ideas b) allow mistakes and value employee contributions c) learns from experience d) disseminates the new knowledge throughout the organisation 4. Knowledge Management - The management of knowledge as an asset and the development and cultivation of the channels through which knowledge and information flow. KM comprises a range of practices used in an organisation to identify, create, represent, distribute and enable adoption of what it knows, and how it knows it Typologies of knowledge (see introduction) * Performance Appraisal considers both development and reward. Traditionally this feedback has been given via one-to-one meetings * 360-degree feedback differs from the more traditional one-to-one feedback between a line manager and employee as it involves feedback being sought on the performance of senior colleagues from those more junior to them. The idea behind 360-degree feedback is that it allows people who work with you on levels below, with and above you to make a comment on how they think you perform. This has to be conducted in a clear and objective way. Nine characteristics of a strategic approach to HR development 1. HR development shapes the organisation’s mission and goals, as well as having a role in strategy implementation. 2. Top management are leaders rather than just supporters of HR development. 3. Senior management, and not just HR development professionals, are involved in environmental scanning in relation to HR development. 4. HR development strategies, policies and plans are developed, which relate to both the present and the future direction of the organisation, and the top management team is involved in this. . Line managers are not only committed and involved in HR development, but involved as strategic partners. 6. There is strategic integration with other aspects of HRM. 7. Trainers not only have an expanded role, including facilitation and acting as organisational change consultants, but also lead as well as facilitate change. 8. HRD professionals have a role in influencing the organisational culture. 9. There is an emphasis on future-orientated cost-effectiveness and results, in terms of evaluation of HR development activity. * Learning Perspectives 1.
Behaviourist - This refers to a change in behaviour, an external change that we can observe 2. Cognitive - stages through which people pass as they learn, the learning experience itself, resources required, how much is knowledge is retained and retrieved for application at a later date 3. Social Learning - the social nature of learning and interactions with others 4. Constructivist – Subjective perceptions. Meaning is inferred from different learning encounters according to experience and individual personalities * Learning cycle (Klob 1984) * Learning Styles (Honey and Mumford 1989) 1.
Activist – having a go 2. Reflector – listening and observing 3. Theorist – building a concept or theory on the basis of their analysis 4. Pragmatist – keen to use whatever they learn and apply it to a real situation * Methods of learning include 1. Off-the-job (eg. educational and training courses) 2. On-the-job (line manager, mentors, coaches) 3. e-Learning 4. Blended (combination of different learning methods) * Total Reward encompasses all aspects of work that are valued by employees, including both transactional (tangible) and relational (intangible) categories of reward * 4 mechanisms for setting base pay . External market comparison 2. Internal labour market 3. Job Evaluation 4. Collective bargaining (employer and trade union) * Employers must be seen to operate equitably 1. A standard approach for the determination of pay 2. As little subjective decision making as is feasible 3. Maximise communication and employee involvement 4. Clarity in pay determination * Traditional salary structures assign each job to a grade (in which there are several steps). Recent developments on this include 1. Single pay spine covering all jobs 2. Broadband structure (give managers greater flexibility in setting pay scales) Job analysis is a systematic way of gathering information about a job * Job evaluation involves using a system (analytical or non-analytical) to determine the value/worth of a job in relation to other jobs in an organisation * Incentive schemes should be used where they are appropriate to the needs of the business and where they can clearly contribute to the achievement of the organisational objectives 1. Performance related pay systems are either merit or goal based. This is open to debate as some believe there is a mismatch between theory and practical outcomes 2.
Skill based pay involves linking incentives to the achievement of defined competencies and qualifications. What people bring to the job rather than their efforts during employment 3. Another example is profit sharing (employees holding shares in their own companies) * Since 1979 the UK has seen a decrease in trade union activity and collective bargaining * In contrast the law governing employment has increased over the period. This legislation can be derived from national or transnational (eg. EU) level * Most employers do not have a definable employee relations strategy but make strategic choices when required to by events 5 styles of employee relations management (Purcell and Sisson 1983) 1. Traditional - Workers are excluded from decision-making, and power is concentrated in the hands of management while a policy of union suppression or avoidance is adopted. Workers are treated as factors of production and a cost-minimisation approach is taken to the management of labour. 2. Paternalist - Unions regarded as unnecessary because of employers enlightenment. High pay. Concentration on encouraging employee identification with business objectives 3.
Consultative - Reflects a less formal, more flexible approach to employee relations where union participation in decision-making is encouraged through recognition, problem-solving mechanisms and two-way communication 4. Constitutional - emphasis is on formal agreements to regulate relationships 5. Opportunistic - Large companies devolving responsibility for employee relations to subsidiaries, with no common approach but emphasis on unit profitability * Much HR work involves discriminating between individuals. The essence of equality is to make sure this is not carried out unfairly Legislation can only have a limited effect in delivering equality and does not change attitudes, beliefs, cultures and structures * Equal opportunities - highlights the moral argument for equal treatment, whereas managing diversity hightlights the business sense. * CSR - refers to corporate social responsibility. It is a somewhat controversial term and is used to refer to the process whereby organisations do not just concern themselves with the legislative and other statutory requirements by which they must abide, but also pay due attention to the wider implications of the decisions made.
Therefore, CSR is situated within the broader discourse of business ethics and denotes the responsibility of organisations to take into account the effects of their operations upon a variety of groups, including customers, employees, suppliers, communities, the environment and society at large. * De-skilling/ Up-skilling - De-skilling is the process whereby the amount of skill required by a role is reduced due to changes or adaptations made to that role (e. g. , the introduction of automated machinery or other technology).
Up-skilling occurs when additional skills are required which may lead to a role or occupation increasing in status. Debate as to the extent both of these concepts will occur in the future Information Management * Information society - is a society where the creation, distribution, diffusion, use, integration and manipulation of information is a significant economic, political, and cultural activity. The aim of the information society is to gain competitive advantage internationally, through using IT in a creative and productive way. Data , information and knowledge are markedly different and can be defined as: 1. Data - Discrete, objective facts about events. Data are transformed into information by adding value through context, categorisation, calculation, corrections and condensation. 2. Information - Organised data, meaningful and contextually relevant. Used for decision making. 3. Knowledge - The combination of data and information to which is added expert opinion, skills and experience to result in a valuable asset which can be used to make decisions. Digital Divide - The gap between people with effective access to digital and information technology and those with very limited or no access at all. * Key issues which occupy the attention of the IM function in virtually all organisations. 1. Aligning organisational goals with what the new technology can deliver 2. Employing ICT to enhance productivity and quality 3. Exploiting ICT to generate competitive advantage 4. Redesigning business processes to support the organisation more effectively 5. Justifying the ICT investments needed to achieve all of this Strassmann’s (1995) Information Management Superiority Model addresses the challenge of aligning organisational foals with appropriate ICT investments 1. Governance - concerns power and applying an understanding of the distribution and sharing of power to the management of information and communication technologies 2. Business Plan Alignment - if ICT plans are to have credence they need to be in line with organisational plans 3. Process Improvement - regular analysis of ICT activities is necessary to discover areas where improvements might be made 4.
Resource Optimisation – in seeking to maximise the benefits of information resources managers must take into account their resources. These resources might be better utilised elsewhere 5. Operating Excellence - delivering superior performance and quality across all business processes * Nolan (1979) Stages of Growth Model found that organisations go through 6 distinct phases of growth 1. Initiation Stage - technology is placed in the organisation. Few applications in the organisation are computerized. There are only a small number of users.
This stage is characterised by minimum planning. 2. Contagion Stage - during this stage rapid and uncontrolled growth in the number and variety of IT applications takes place. Many users adopt computers in solving their IT-related problems. 3. Control Stage - After that, a need for control arises. 4. Integration Stage - use of new technology increases rapidly, providing new benefits. Much emphasis is laid on integrating the applications 5. Data Administration Stage - Administration/management of data is necessitated to support decision making processes 6.
Maturity Stage - indicates that the application portfolio is complete and matches the objectives of the organization * The Applications Portfolio Grid 1. Support - applications that improve management effectiveness but are not critical to the organization. The benefits they deliver are predominantly economic as with the cost savings realised from automation (payroll systems, accounting systems etc. ). 2 2. Key operational - applications that sustain the existing business supporting core organizational activities (inventory control, order management etc. 3. Strategic - applications that are critical to both current and future organizational goals 4. High potential - applications that can be seen as innovative and potentially of future strategic importance, such as electronic commerce applications or expert systems * Parsons (2001) framework for understanding an organisation current information systems consist of 6 generic strategies 1. Centrally planned - information systems strategy is developed to support the greater organisational strategy and is managed at the highest level accordingly.
The role for the information management function is one of service provider closely linked to the user community to deliver the business demands and combining this with significant input into the ongoing organisational planning 2. Leading edge - this strategy is implemented because the organisation believes that innovative new technologies will create competitive advantage. Following this strategy can produce huge rewards but is based on a high level of risk taking for the organization. The role for the information management function with this strategy is one of experimenter and promoter, constantly pushing the technical boundaries. . Free market - ICT requirements are determined by an organisation’s business units (say marketing department, HR etc. ) and may be supplied either internally or externally subject to best price and service. The role for the information management function is as a competitive business unit providing ICT solutions in competition with external service providers. Many organizations that employ this strategic approach outsource components of their information management structure to specialized ICT companies 4. Monopoly - the organization has decided that there will be one internal source of supply for ICT.
In this strategic scenario the information management function role is reactive with no requirement to direct future developments. User departments have to bid for ICT 5. Scare resource - there must be clearly justified returns on investment in new systems with little scope for innovation. The role for the information management function is to make the best of the limited resource 6. Necessary Evil - this strategy is adopted in organisations that believe that information is not important in their business.
The information management function provides the minimum level of resources, just enough to meet basic needs. Users in other functions take no part in the development or management of information systems * New challenge of knowledge management requires the ICT departments begin providing systems that are capable of supporting knowledge management * Tension between IT service providers and users results in a need to strike a balance between: 1. Innovation and control of organisation of IM and IT 2. The possibilities of being led by IT specialists or by users The communication process * Control is exercised in organisational systems by feedback loops which gather information on past performance from the output side of a system, department or process, which is used to govern future performance by adjusting the input side of the system * Single-loop feedback is feedback of relatively small variations from plan. Double-loop or higher-order feedback is designed to ensure that the plans, structures and control systems are revised if necessary * Negative Feedback 1.
The decision maker gathers information on the situation of interest and uses this information to compare the actual situation with what is desired 2. If there is some discrepancy between the actual and desired situations, the decision maker initiates some appropriate action. 3. This simple feedback loop is sometimes called a ‘balancing loop’, since its overall function is to keep the situation in balance: a deviation from the desired state in one direction is balanced by an action in the opposite direction. 4. The information on the situation in a balancing loop is called negative feedback.
The ability of a system to engage in self-regulating behaviour depends on the processes of information exchange involving negative feedback. 5. This kind of feedback is called ‘negative’ because it is conveying information about a state of affairs that is not desired; the appropriate action is usually to do less of whatever is going on at present. Perhaps the most common example of a negative feedback loop – inside and outside work – is reducing expenditure when you receive information that your spending is too high. Positive Feedback is where information leads to more of whatever is going on. Positive loops can involve ‘vicious’ or ‘virtuous’ circles. For example, If you receive good reports about a project, you may allocate still more resources, thus increasing the chances of further good reports, more resources, and so on. * From an information management perspective, negative feedback is about maintaining control and stability; positive feedback is about responding to change. * Closed-loop systems are those where control is an integral part of the system.
Open-loop systems are where no feedback loop exists and control is external to the system * Steady State - If a system is in steady state, then the recently observed behaviour of the system will continue into the future, with the system properties unchanging over time. * Relationships between critical success factors, key decisions and information requirements (based on Robson, 1994) * Critical Success Factors are elements which are necessary for an organisation or project to achieve its mission.
They are the critical factors or activities required for ensuring the success of a business. * Information Quality Criteria (Bentley 1998) 1. Relevance - Information is relevant when the recipient is able to use it to perform more effectively than would be possible without it. 2. Reliability - Reliable information is timely, so that it is available when needed; accurate, to the extent necessary for the way it is to be used; and verifiable by checking it in some way if necessary. 3.
Robustness - Information is robust when it can stand up to the rigours of time, human frailty, system failure and organisational changes. * Gap analysis identifies key measures using critical success factors to produce a battery of statements. Respondents are presented with these and asked to state what expectations they have, usually by marking a seven-point scale, ranging from ‘strongly agree’ to ‘strongly disagree’. The process is repeated with the same people to ascertain their perceptions.
It is then possible to measure the gap between their expectations a
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Business Functions in Context Notes. (2016, Nov 05). Retrieved from https://phdessay.com/business-functions-in-context-notes/