1. Internal environment of large-scale organisations
VCE Business Management Unit 3

2. Three basic types of management structure
These are:
Functional structure
Divisional structure
Matrix structure
Common exam question relating requiring you to choose one of these structures and relate it to a simulated scenario.

3. Different management structures
Horizontal Structure The Functional Model
Employees organised into departments based on the organisations’ functions.
Chief Executive Officer develops strategic plans
Senior Managers implement the plans
Middle Managers develop operational plans to carry out these visions.

4. Horizontal Structure The Functional Model
Lower level Managers organise day to day plans to run the business.

5. Horizontal Structure Divisional or Geographical Model
Employees grouped according to divisions and Geographical locations.
Billabong Limited
Wide range of products and markets
Shops all over Australia
Most employees in Billabong interact with customers and don’t make the clothes.
Results can be assessed on location levels.

6. Horizontal Structure Divisional or Geographical Model
Suited to large retailers like Billabong
Each store identified by geographical location.
Team building occurs.
Cultures often exist in the teams eg Billabong would have a surf culture.

7. Horizontal Structure Matrix Model
Combines both FUNCTIONAL and DIVISIONAL Models.
Complex
May be project specific
Construction firms or IT (Information Tech Companies)
May lead to power struggles between managers.

8. Formal Structures Known as mechanistic or bureaucratic structures.
They may appear on the firm’s website as representative of what the corporation wants the public to see.
In reality, the organisation is a dynamic structure, constantly changing and evolving as the business grows / contracts. These formal structures may be different than what is portrayed to the public.

9. Formal and Informal Structures
The Management Structure and its members can influence the valuation of the corporations shares.
Analysts of the share market look at the structures, board members and the CEO’s resumes with much interest and report to the public accordingly.

10. Informal Structures Exist inside the formal management structure.
Can be norms, work methods and unwritten procedures.
May be called ‘Organic structures’
Billabong - Surf culture
Nokia - tech culture
Toll Holdings - transport culture

11. Corporate Culture and its Future Development
Corporate Culture - definition (defn)
‘A learned and shared way of life of a group of people or society’

12. Corporate Culture
Includes values, beliefs, moral codes, customs and rituals.
Corporate Culture is the values and beliefs shared by employees of an organisation.
May be in the Mission or Vision Statement.

13. Levels of Culture in an Organisation
SURFACE CULTURE
What is visible to the public / shareholders and
potential investors.
Layout / dress code
Wesfarmers - owns Bunnings.
Uniform
Store layout
Policy of ‘no sales’ cheapest prices guaranteed.

14. Levels of Culture in an Organisation
MIDDLE LEVEL CULTURE
Stated beliefs and values.
On all correspondence or documentation.
The Mission Statement
Occupational Health and Safety Policy.
See Wesfarmers reports.

15. Levels of Culture in an Organisation
DEEPEST LEVEL CULTURE
The culture the employees / management believe in.
Virgin Blue - ‘a sense of fun’ but
No frills airfares and pay for your meals!
Richard Branson’s culture from day one.

16. Levels of Culture in an Organisation
DEEPEST LEVEL CULTURE
Management and employees believe in the culture, values and practices of the organisation
Firms with this type of deep level culture are often highly successful.
Nokia
Google

17. Ethical Morality
What we know as ethical and social responsible management
Evidenced by Corporate Governance sections on corporations’ websites.
Has arrived as a result of serious litigation by the Australian Securities and Investment Commission of company directors acting unethically.

18. Creating a Corporate Culture
Orienting - mission statements, policies and charters available to all stakeholders and given as an induction to new employees
Institutionalising - ensuring the practices of the organisation reflect the documentation.
Sustaining - continual improvement of these practices and assurance they become the norm for all new employees.

19. Creating a Corporate Culture
Horizontal organisational structures are the ones with the best chance of maintaining an effective corporate culture.
The team environment can aid all employees in following the line the management has chosen to show the public.
Eg: Ray’s Outdoors have morning staff meetings every day before the shops open for trade.

20. Creating a Corporate Culture
RAY’S OUTDOORS
Morning Staff Meetings:
‘This is what we have on special today / this week.’
‘This is what is appearing on our TV / Newspaper adverts at the moment.’
‘There are the staff away today and here are the new staff or replacements, please help them as much as possible today etc.’

21. Creating a Corporate Culture
RAY’S OUTDOORS
Every manager of every store (36 I believe) has a morning meeting with staff.
Every manager receives training on what the Ray’s Outdoors corporate image is to be like.
Although they are responsible for their store, changing the corporate image and culture is not negotiable.

22. Learning Cultures
Business needs to adapt to the changing times with subtle changes to their culture.
Ray’s Outdoors never opened a store in Townsville (population 130,000) because they couldn’t purchase a suitable site and were prepared to wait rather than risk a location that didn’t suit their culture.
Consequently ANACONDA and BCF (Boating, Camping & Fishing) both opened stores there.

23. Learning Cultures
Ray’s Outdoors still haven't opened in Townsville and management reports indicated that online sales and mail order sales from their Cairns shop
(4 hours away) has increased substantially over the last 3 years.
The learning culture at Ray’s is not to panic at market changes. Learn from them and create a Competitive Advantage.

24. Learning Cultures
Successful organisations can become innovative as Ray’s has done with the online catalogues and sales. They adjust to change without wasting shareholder’s money and Reinvent themselves.
Successful companies do this as research suggests.

25. Policy development and its application
Policy development involves
the following:
Policy – a written statement detailing processes and procedures, rules and regulations that must be observed in a given situation
© Cambridge University Press 2012

26. Policy development and its application (cont.)
External pressures to change policies – can be legal, social, environmental, international, technology
Operating pressures – lobby groups, regulatory bodies, customers, suppliers, unions
© Cambridge University Press 2012

27. Policy development and its application (cont.)
Internal pressures – these come from owners/shareholders, management, employees.
© Cambridge University Press 2012

28. Key Management Roles P O L C Planning Organising Leading Controlling
The key management functions of an organisation:
Planning
Organising
Leading
Controlling

29. PLANNING (P O L C)
Developing strategies or tasks to achieve objectives that are set by senior management.
Undertaking a Situational Analysis as to the current position of the corporation Where are we now?
Set Objectives - Where do we want to be?
The Strategy to get there - what do we want to do? Monitor - has it been done well?

30. PLANNING (P O L C)
Situational Analysis Evaluating the situation of the business and trends in the organisation’s market. Ray’s Outdoors and the Townsville dilemma. Open a store or wait? Their objective was to wait until a suitable commercial building was available to purchase in a preferred location matching their demographic ideal. Result - wait!

31. ORGANISING (P O L C)
Management aim to use the developed strategies in the organisation.
ILUKA - Plan to use Hopetoun as a freight terminal for Zircon and Mineral Sands deposits.
ILUKA - Management will carry out those plans.
ILUKA - Intend to employ 90 personnel either from the area or recruit nearby.

32. ORGANISING (P O L C)
Management needs to allocate the necessary resources to ensure strategies are achieved.
ILUKA - allocate the Human Resources
ILUKA - allocate the Physical Resources
Finance comes from share holders capital or loans are raised.

33. ORGANISING (P O L C)
Managers choose the personnel who will drive the plans / changes.
Managers use their judgement in these matters
Tasks are delegated to achieve necessary strategies.

34. ORGANISING (P O L C)
Managers receive information on the physical resources necessary to achieve their plans.
Finance officers prepare budgets and allocate the required resources for the new startegy.

35. LEADING (P O L C)
A complex task of directing and coordinating the business.
Day to day tasks.
Individual objectives.
Successful leaders motivate employees
Successful leaders help employees reach their potential.

36. LEADING (P O L C)
Note the different management styles and understand how they work
Autocratic
Persuasive
Consultative
Participative
Laissez-faire

37. LEADING (P O L C)
The individual who leads an organisation can have a tremendous impact on the valuation of shares, future trends in share price and employee morale.
In many ways, the success of a corporation depends on the individual who is the leader either the CEO, Chairman of the Board or the managing Director. Read from management journals

38. CONTROLLING (P O L C)
Managers allocate tasks then ensure that resources, tasks and time are all use effectively.
ILUKA and Hopetoun Terminal.
ILUKA - careful checking and monitoring to ensure a schedule is adhered to within reason. The rain events of this last summer would be hard to allow for in any plan.
However, successful managers would still be able to control the project with minimum delays.

39. CONTROLLING (P O L C)
A manager that is good at controlling often measures events against standards.
Indicators may be used.
ILUKA - Product moved through the Hopetoun depot 2012, 2013 etc
ILUKA - savings in transport costs with Kalari (Those orange Trucks!) as a result of the Hopetoun depot 2011, 2012 etc

40. CONTROLLING (P O L C)
Human resources (shortage of skilled labour in WA has lead to shortages here in Vic especially earthmoving, mining and trades. Managers need to know this.
Financial resources - budgets, interest rates and working with financial managers.
Materials - no tyres for 50 ton and over haul dump trucks. Shortages due to the mining boom. Now Japan is restricted, managers expect shortages there.

41. CONTROLLING (P O L C) Performance standards for company depts.
Feedback - open door policy of some managers or closed door policy.
Feedback - depends on the culture and management styles in the organisation.

42. P O L C Planning Organising Leading Controlling
Know these, how they work both independently
and together. There will be a question on the
final examination about this management role.

43. POLICIES
High level statements or guidelines that embrace the strategic direction of the organisation.
Written
Internal Factors - changes to policies reflect circumstances.
External factors - changes to amend policies affected by govt legislation changes.

44. POLICIES
To carry out policies, organisations use procedures (usually written) to implement them.
Example:
ILUKA - short term incentive plan p9 annual report and p12 retention plan.

45. Styles of Management Know and Understand the 4 styles of
management examinable here.
Autocratic
Persuasive
Consultative
Participative
Realise their are some other styles such as laissez-faire,
Contingency management and situational approach.

46. Styles of Management
Management Style defn - ‘The way in which managers go about their work and interact with people.’
What managers do?
POLC
Aim at achieving organisational objectives and strategies.
Managers have different styles and abilities.

47. The Continuum of Management Styles
Centralised
AUTOCRATIC
Middle ground
PERSUASIVE
CONSULTATIVE
PARTICIPATIVE
Decentralised
LAISSEZ-FAIRE

48. AUTOCRATIC MANAGEMENT
Associated with hierarchical or vertical management structures - top down
Often seen as management focused.
Defn - Management style where the power and decision making remain with management in terms of policy, operations, planning and setting of tasks.
An autocrat is authoritarian.

49. AUTOCRATIC MANAGEMENT
Senior managers make decisions for subordinates and direct them accordingly.
Workers only receive monetary reward for their skills and services.
Praise of workers = seldom
Criticism - often handed out and in public.

50. Management Theory (Not on your exam)
In the Master of Business Administration degree, the best management theory has the following rule (1980)
‘Praise in public, Punish in private.’
Therefore our Autocratic managers are somewhat outdated in their methods?
Your Opinion ????

51. AUTOCRATIC MANAGEMENT
Managers rarely deviate from plans.
Often check on subordinates.
May cause poor morale in the organisation.
News Corp - modified version
Bob Jane T Marts - were autocratic under Bob until the company almost collapsed, his son took over and went back to their original successful management styles.

52. PERSUASIVE MANAGEMENT
Centralised Decision Making
Control at Management level.
Managers sell their decisions to employees.
Employees feel they have some ownership of these ideas and the decision making process.

53. PERSUASIVE MANAGEMENT
HARD SELL
Rewards or threats to employees to follow the new plans, strategies or policies.
SOFT SELL
Management forms relationships with employees to encourage the new procedures, strategies or plans.

54. CONSULTATIVE MANAGEMENT
Management is willing to consult with subordinates.
Builds relationships.
Working in groups.
This is how modern management techniques are taught at undergraduate and postgraduate levels.

55. CONSULTATIVE MANAGEMENT
Group Synergy ie an effect created by collective intelligence.
The ideas of the group can outweigh the ideas of the individual.
Employees feel valued.
Morale and motivation may be high.

56. CONSULTATIVE MANAGEMENT
Managers require certain attributes to be good at this style of Management:
Good Listeners
Are trusted by employees / subordinates
Can use the information provided by employees and create solutions.

57. PARTICIPATIVE MANAGEMENT
Employees are able to actively make decisions themselves.
Supported by management to make these decisions and there is no consultative process.
‘Common Goals’ of workers and management ie to increase shareholder wealth and obviously this will lead to job security and long term employment.

58. PARTICIPATIVE MANAGEMENT
Employees need management training.
Employees are selected that have the ability and resources to make the required decisions.
Communication flows both ways.
People focused management
Example: Woolworths

59. PARTICIPATIVE MANAGEMENT
BENEFITS
Employees feel free to talk to management.
Team environment.
CRITICISMS
May be difficult to make quick decisions.
Uncertainty may exist in employee roles.
Example: Billabong

60. Other Management Styles LAISSEZ-FAIRE MANAGEMENT
‘Leave well enough alone.’ Employee focused management style with hardly any management interference.
Workers decide on how to achieve goals.
SAAB Sweden
Managers set deadlines that employees meet with their own KPI’s
Used where employees are highly motivated

61. Other Management Styles CONTINGENCY MANAGEMENT
Management vary their styles according to the circumstances.
Contingency - a situation that arises unexpectedly that needs to be handled quickly and effectively.
Used by the Australian Army
Multi-styled managers.

62. Other Management Styles CONTINGENCY MANAGEMENT
James Hardie limited
Head office and company located in Australia
Asbestos claims lead to multiple law suits
Management had a ‘knee jerk’ reaction and moved the company headquarters to Holland to avoid paying claims agreed to in court.
Australian directors faced court for not acting with due care and diligence in facing up to their responsibilities.

63. Other Management Styles CONTINGENCY MANAGEMENT
James Hardie
Knee jerk reactions of managers, bad contingency
plans, lack of Corporate Governance and failing to
listen to employees and the public has cost the
shareholders of the company.
Share prices fell and have remained below their
true worth.
Investors are still concerned about management
even though all 9 directors have gone and will never
manage a company again.

64. The Key Management Skills required for Effective Management
COMMUNICATION Defn - the transmission of information in a way that the recipient is ensured to understand the message. Communication that is ineffective in business leads to poor achievement of goals and strategies.

65. The Key Management Skills required for Effective Management
COMMUNICATION
Formal Communication - may be via policy,
memo or .
Informal Communication - unofficial message,
gossip, smokos etc.
Good managers take careful note of all forms of
communication.

66. The Key Management Skills required for Effective Management
COMMUNICATION
Verbal Communication - encourages feedback,
occurs frequently and may not require an
agenda. Effective managers send a written form
of communication after a verbal meeting to
confirm main points.

67. The Key Management Skills required for Effective Management
COMMUNICATION
Non-Verbal Communication - body language, tone of voice, image and setting. Can be regarded as important especially when dealing with overseas traders. Take note of cultural factors ie some cultures don’t like standing too close or touching. Other cultures may not look you in the eye.

68. The Key Management Skills required for Effective Management
Non-Verbal Communication
Body language, dress and setting for meetings.
Are you a mind reader or a manager?????
It is often smart to ask about cultural communication methods, most people respect this and will advise accordingly.

69. The Key Management Skills required for Effective Management
EFFECTIVE COMMUNICATION
Successful managers use a variety of skills and
techniques to promote effective
communication.