MONDAY 13 FEBRUARY, 2012 CHAPTER 1: LARGE SCALE ORGANISATIONS IN CONTEXT

LEARNING OBJECTIVES [TO BE COPIED INTO YOUR BOOK] Define and use relevant management terms Explain objectives, strategies and performance indicators in the context of a business

KEY TERMS Organisation; large-scale organisation; corporation; multinational corporation; shareholder; government business enterprise; government department; not-for-profit organisation; charities; foundations; public companies; private companies; management; privatisation; objective; vision statement; mission statement; strategies; gross domestic product (GDP); imports; exports; balance of payments; research and development; invention; innovation; tariffs; infrastructure; downsizing; outsourcing; internal environment; external environment; macro environment; operating environment; stakeholders; employees; unions; customers; suppliers; competitors; lobby groups; globalisation; effectiveness; efficiency; key performance indicators; profitability; number of sales; percentage of market share; rate of productivity growth; customer survey; staff survey; staff turnover; customer complaints; level of wastage; benchmarking; number of workplace accidents; social responsibility; ethical management; triple bottom line

GLOSSARY An organisation is two or more people working together to achieve an objective A large-scale organisation employs 200 or more people, earns revenue in the millions or has assets worth $200 million or more A multinational corporation is owned and based in one country and operates in many countries throughout the world A corporation is owned by shareholders and aims to make a profit A shareholder is any person who owns shares (unit of ownership) in a company A government business enterprise is government owned and operated

HOMEWORK REVIEW Question 6: Outline the difference between a vision statement and a mission statement. A vision statement is a broad expression of what an organisation hopes to become. Whereas a mission statement is more specific – it formally expresses an organisation’s reasons for existence, its purpose and method of operation. The vision statement is also more future oriented than the mission statement.

QUESTION 7 Does every large-scale organisation have profit as its objective? Not every large-scale organisation has profit as its main objective. Not-for-profit organisations such as charities and foundations like the Salvation Army and the Heart Foundation for example, exist to provide goods, services, or funds to benefit the disadvantaged or assist our community. They may make an incidental profit but it is not their primary purpose.

QUESTION 8 List some examples of organisational objectives Organisational objectives include making a profit, providing customer service, supporting the community and environment, fostering creativity and innovation, offering career opportunities, and meeting the needs of stakeholders.

QUESTION 9 Explain what a strategy is using an example. A strategy is an action taken by an organisation to achieve specific objectives. For example, if an organisation’s objective is to increase its profits, it may use the strategy of launching a new advertising campaign, improving efficiency through the use of new technology or increasing staff productivity through better training and procedures.

QUESTION 10 Outline the positive contributions that large-scale organisations make to the economy. Large-scale organisations make many positive contributions to the economy, including, providing employment and income for large numbers of employees, paying taxes to governments, exporting products that generate income for Australians, undertake investment, research and development which lead to economic growth.

QUESTION 11 Explain the various activities for which large-scale organisations are sometimes criticised. Large-scale organisations are sometimes criticised for seeking to maximise their profits without caring for their impact on society or the environment. Some negative activities including downsizing and outsourcing which results in local job losses, and damage to the environment e.g. Alcoa was prosecuted in relation to a spill and pollution at its Wagerup site.

QUESTION 12 What is the internal environment? The internal environment consists of all the conditions within an organisation which it has some control over. Also called the micro environment, it includes anything that may affect its performance such as people (employees, management), policies, culture and resources.

QUESTION 13 Explain the difference between the operating environment and the macro environment. Although the operating environment and the macro environment are both examples of an organisation’s external environment there are key differences. The operating environment includes the stakeholders that an organisation comes into contact with, such as customers, suppliers and competitors. The organisation retains some control over these conditions. However, the organisation has no control over the macro environment. This includes the legal, political and economic influences around it, e.g. globalisation

QUESTION 14 List the factors that make up the operating environment The operating environment is made up of the interactions with outside stakeholders such as customers, unions, competitors, creditors, suppliers, lobby groups, regulatory bodies.

QUESTION 15 List the factors that make up the macro environment. Factors that make up the macro environment include globalisation and other social/economic/legal forces beyond the control of an organisation, e.g. Global Financial Crisis, new laws/taxes such as the Carbon Tax

QUESTION 16 Explain the difference between effectiveness and efficiency Effectiveness refers to the extent to which an organisation is able to achieve its objectives. Efficiency on the other hand, refers to how well an organisation uses its resources to achieve those objectives.

QUESTION 17 Define the term ‘key performance indicator’ and explain how large-scale organisations use them. KPIs are specific criteria that evaluates the efficiency and effectiveness of an organisation. LSOs use them to measure success and precisely evaluate performance of a particular area of its operations.

QUESTION 18 Explain what is involved when large-scale organisations use benchmarking. Benchmarking is a practice used by organisations to evaluate its own performance by comparing it to other leaders in the field. This comparison allows for a more accurate evaluation as it measures the organisation against another that is known for its high performance.

QUESTION 19 What is a stakeholder? A stakeholder is an individual or group with an interest in (or is affected by) the operations of a an organisation.

QUESTION 20 List some of the main stakeholders Some of the main stakeholders include customers, employees, unions, management, shareholders, suppliers, creditors, lobby groups and members of the community.

QUESTION 21 In what ways can stakeholder interests conflict? Large-scale organisations have a range of stakeholders, each with their own set of interests and demands. Sometimes the interests will be compatible. Sometimes the interests will be incompatible. For example, satisfying shareholders’ demands for a high dividend may mean reducing production costs by outsourcing some of a company’s manufacturing processes. This may result in job losses and would therefore cause dissatisfaction among employees. Satisfying one set of stakeholders may therefore involve making another set of stakeholders dissatisfied.

QUESTION 22 Outline what is meant by the terms ‘social responsibility’ and ‘ethics’. Social responsibility refers to the obligations a business has to the wellbeing of its stakeholders and the environment. This responsibility is over and above anything prescribed by law. Ethics refers to moral standards (accepted ideas of right and wrong) which guide behaviour.

HOMEWORK Questions 1-4 on page 22 of the textbook Extension: Questions 5& 6 of the textbook