Business Management - 3. Management Processes

Front 1

Name the four key business functions

Back 1

Operations
Marketing
Finance
Human Resources

Front 2

Interdependence of Key Business Functions

Back 2

Businesses can separate the key business functions into departments that perform their distinct roles, the functions are interdependent.

Interdependence refers to the mutual dependence that the key functions have on one another. This means that the various business functions work best when they work together.

Interdependence is always preferred because it provides a unified approach by the business as it works to achieve its objectives.

Front 3

Operations refers to...

Back 3

the business processes that involve transformation.

Front 4

Operations management consists...

Back 4

of all the activities in which managers engage to produce a good or service.

Front 5

Production involves...

Back 5

the skillful bringing together of a number of resources, such as finance, equipment, management, technology and people, to create finished goods and services through a series of operations.

Front 6

Goods and/or Services

Back 6

A manufacturer will transform inputs into goods: tangible products. Tangibles are physical products that can be handled and stored before they are sold to the consumer.

A service organisation will transform inputs into services. Services are intangible, which means that they cannot be touched. Services cannot be stored and the customer may actually need to be present when the service is being delivered.

Front 7

The Production Process - Inputs

Back 7

Material inputs – raw materials consumed or converted by the transformation process.
· Capital equipment – plant, machinery and property necessary to conduct operations.
· Labour – people involved in the operations function.
· Information from a variety of sources – contributes to the transformation process
· Time – its efficient use are critical to all business. Coordinating resources within appropriate time frame limits costs and wastage. Operational planning may involve achieving production tasks ranging in duration from one year to merely hours.
· Money – generally considered to be the most flexible of all resources because it can be easily converted into any quantity or combination of materials, capital or labour.

Front 8

The Production Process - Processes / Transformation

Back 8

The transformation process is the conversion of inputs into outputs.
Elaborately transformed manufactures (ETMs) are manufactured goods that are highly processed and valued.
Simply transformed manufactures (STMs) are goods that can be further processed in a wide range of processes.
Transformation processes in services businesses are less physical and take the form of knowledge, inputs and expertise.

Front 9

Outputs

Back 9

Outputs refer to the end result of a business’s efforts – the service or product that is delivered or provided to the consumer.

Outputs are the finished goods or services.

Front 10

Quality Management

Back 10

Quality management is the strategy which a business uses to make sure that its product meets customer expectations. Three quality approaches are quality control, quality assurance and total quality management.
Operations managers use a variety of approaches to maintain or improve quality.

Quality control involves the use of inspections at various points in the production process to check for problems and defects. Performance is measured in relation to set standards or benchmarks.

Quality Assurance - A quality system is in place to ensure that set standards are achieved. ISO stands for International Organisation for Standardisation.

Total Quality Management (TQM) is an ongoing, business-wide commitment to excellence that is applied to every aspect of the business's operation. A number of approaches may be used, such as employee empowerment, continuous improvement and improved customer focus.

Front 11

Marketing is a...

Back 11

total system of interacting activities designed to plan, price, promote and distribute products to meet the needs of present and potential customers

Front 12

Marketing is the process of...

Back 12

planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives

Front 13

Marketing is...

Back 13

a total system of interacting activities designed to plan, price, promote and distribute products to present and potential customers.

Front 14

The Marketing Concept Approach

Back 14

The business should direct all its policies, plans and operations towards achieving customer satisfaction.

Front 15

Identification of the Target Market

Back 15

Mass Marketing Approach

Market Segmentation Approach

Niche Market Approach

Front 16

Mass Marketing Approach

Back 16

A mass marketing approach seeks a large range of customers. The business develops a single marketing mix and directs it at the entire market for the product.

There is one type of product with little or no variation, one promotional program aimed at everyone, one price and one distribution system used to reach all customers.

Front 17

Market Segmentation Approach

Back 17

Businesses divide the market into distinct segments.

The business would direct its efforts towards a particular segment of the total market.


The aim of market segmentation is to increase sales and profits by better understanding and responding to the desires of the target customers.

Front 18

Niche Market Approach

Back 18

a narrowly selected target market segment. In a sense, it is a segment within a segment, or a micro market.

Front 19

A target market refers to...

Back 19

the group of customers to which a business intends to sell its product.

Front 20

The Four P's

Back 20

Product
Price
Promotion
Place

Front 21

Product

Back 21

o Quality
o Design
o Name
o Warranty and Guarantee
o Packaging
o Labelling
o Exclusive features

A product can be goods or service, and consists of both tangible and intangible features.

Product positioning refers to the development of a product image compared with the image of comparing products.

Packaging helps preserve, inform, protect and promote the product.

Some businesses encourage the instant recognition of their brand symbol rather than their brand name. In some advertisements the brand name does not appeal at all, only the brand symbol. This is a clever and subtle method used to reinforce the meaning of the symbol and associate it with a brand name.

Front 22

Price

Back 22

A business must select the most appropriate pricing method suitable to its product and market conditions.


1. Cost plus margin à total cost of production and added percentage for profit.
2. Market price à pricing according to the interaction between the quantity that customers are willing to purchase and the quantity that producers are able to supply.
3. Competitors price à choosing a price that is either below, equal to or above that of the competitors.
4. Discount price à reducing the price of stock that is not selling to prompt demand.

Front 23

Promotion

Back 23

Promotion refers to the methods used by a business to inform, persuade and remind customers about its products.

Front 24

Place

Back 24

Channels of distribution Is a way of getting the product to the customer. This process usually involves a number of intermediaries such as the wholesaler or retailer.

Front 25

Financial Management

Back 25

Businesses need to be led by managers with a good understanding of accounting and financial management.

Accounting is a financial management tool that is involved with the recording and analysis of all the business's financial transactions.

Front 26

Financial Statements (3)

Back 26

Cash Flow Statement - movement of cash receipts and cash payments

Income Statement - Calculate how much profit has been made over a period of time by showing profits or losses, expenses and income.

Balance Sheet - Value of assets, value of liabilities and owner's equity balances at a certain point of time.

Front 27

Income Statement

Back 27

Gross Profit = Sales - COGS

COGS = Opening Stock + Purchases - Closing Stock

Net Profit = Gross Profit - Expenses

Front 28

Current Assets

vs

Non-Current Assets

vs

Intangible

Back 28

Items whose value is expected to be used up, or turned over, within 12 months.
- Bank Savings
- Cash on hand
- Accounts Receivable
-Prepaid Expenses
- Inventories

Items that have an expected life of three to five years or longer.
- Buildings
- Land
- Machinery
- Technology
- Vehicles
- Furniture
- Fixtures
- Fittings

Items of worth that have no physical substance
- Goodwill
- Trademarks
- Design
- Copyrights
- Patents

Front 29

Current Liabilities

vs

Non-current Liabilities

Back 29

The debt is expected to be repaid in the short term (less than 12 months).
- Bank Overdrafts
- Credit Card Debts
- Accounts Payable
- Accrued Expenses

Long-term debt items that can last up to 30 years.
- Mortgages
- Leases
- Debentures
- Retirement Benefit Funds

Front 30

Balance Sheet

Back 30

A = L + OE
Assets = Liabilities + Owner's Equity

Front 31

Human Resources

Back 31

Human resources management (HRM) in its simplest terms, is defined as the effective management of the formal relationship between the employer and the employees.

Front 32

Human Resource planning includes...

Back 32

the development of strategies to meet the business’s future staffing needs, forecasting the future demand for employees and estimating the supply available to meet that demand.

Front 33

What is Job Analysis?

Back 33

Job Analysis is a systematic study of each employee’s duties, tasks and work environment.

Front 34

Recruitment involves...

Back 34

finding and attracting the right people to apply for a job vacancy using advertisements, employment agencies and word of mouth.

Front 35

Internal Recruitment

Back 35

Internal Recruitment occurs when a business decides to appoint someone already within the business to a vacancy. This often occurs when a person is promoted. Internal recruitment is popular and involves less risk because the employer already knows the person who will be filling the vacancy.

Front 36

External Recruitment

Back 36

External Recruitment involves finding suitable applicants from outside the business. A business will use external recruitment methods when it wants to bring in people with new or different ideas or attitudes.

Front 37

Selection

Back 37

Employee selection is the means by which the employer chooses the most suitable applicant for a vacancy.
This involves identifying the skills, qualifications and experience of each applicant and relating them to the skills, qualifications and experience listed in the job specification, to achieve the closest possible match.

Front 38

Training and Development

Back 38

Training generally refers to the process of teaching staff how to perform their job more effectively and efficiently by boosting their knowledge and skills.

Development refers to activities that prepare staff to take greater responsibility in the future.

It is the task of the human resources manager to plan for the effective introduction of new technology.

Front 39

Types of Training (6)

Back 39

Formal off-the-job Training
Informal on-the-job Training
Action Learning
Competency-based Training
Corporate Universities
Training Technologies

Front 40

Maintenance of Human Resources

Back 40

Once employees have been recruited, selected and trained, it is crucial for the business to provide working conditions that will encourage them to remain with the business. This is the maintenance element of the human resource cycle.