Large-scale organisations in context VCE Business Management Unit 3

© Cambridge University Press 2012 LARGE SCALE ORGANISATIONS IN CONTEXT AREA OF STUDY 1 UNIT 3 CORPORATE MANAGEMENT CHAPTER 1 LARGE SCALE ORGANISATIONS

© Cambridge University Press 2012 What is an organisation? Organisations occur in every part of our lives, both socially and in our business or work life. Organisations are a deliberate arrangement of people working to achieve a specific purpose or set of goals.

© Cambridge University Press 2012 What is an organisation? (cont.) Organisations enable us to achieve more through a team environment.

© Cambridge University Press 2012 Why are organisations needed? They provide continuity of knowledge and experience and help us to manage complex social and technological change. Employment and career opportunities can result from being part of an organisation.

© Cambridge University Press 2012 What do all organisations have in common? Organisations have common characteristics: distinct purpose or goal(s), comprised of two or more people, and adopt a distinct form of structure.

© Cambridge University Press 2012 What do all organisations have in common? Common criteria for classifying an organisation as large are: number of employees (more than 200) substantial total assets

© Cambridge University Press 2012 What do all organisations have in common? substantial total revenue substantial profits dominant market share large-sized operations business locations – generally multiple.

© Cambridge University Press 2012 What do all organisations have in common? General characteristics of a large-scale organisation: Strategic objectives are formulated. Strategic planning is undertaken. Formalised policies, procedures and rules are adopted and documented. Organisational structure is devised.

© Cambridge University Press 2012 What do all organisations have in common? (cont.) A chain of command and hierarchical management structure is established. A coordinated and decentralised approach to decision making is adopted. Specialisation of activities into departments or within departments occurs.

© Cambridge University Press 2012 Large-scale organisations in Australia Many Australian large-scale organisations operate as multinational corporations with their business activities occurring in more than one country.

© Cambridge University Press 2012 Large-scale organisations in Australia (cont.) Organisations often enter into joint ventures, merge together, demerge, are taken over in a hostile manner, or are acquired by another organisation. Some may choose to downsize their operations or outsource their non-core activities.

© Cambridge University Press 2012 Large-scale organisations in Australia (cont.) A dual-listed company is created when a company, usually as the result of a merger, applies to have two independent listings (separate shareholders) on two stock exchanges.

© Cambridge University Press 2012 Different types of large-scale organisations There are many ways in which large-scale organisations can be differentiated: Ownership – government business enterprises (GBEs), government departments and statutory authorities that form the basis of the public sector, or private business organisations that form the basis of the private sector

© Cambridge University Press 2012 Different types of large-scale organisations (cont.) Orientation or focus – either as a for-profit or not-for-profit organisation Type of business activity – to which industry classification and level they belong.

© Cambridge University Press 2012 Organisational objectives and strategies All organisations must set objectives. The objectives set will depend on the nature of the business activity being undertaken.

© Cambridge University Press 2012 Organisational objectives and strategies (cont.) A hierarchy of objectives needs to be established, commencing with the mission statement (common purpose) down to the individual objectives of employees. This process is referred to as Management by Objectives.

© Cambridge University Press 2012 Organisational objectives and strategies (cont.) The SMART principle is used to ensure that objectives being set are specific, measurable, achievable, relevant and time-bound.

© Cambridge University Press 2012 Organisational objectives and strategies (cont.) Objectives may cover the areas of: financial, service, ethical and social responsibility, and environment.

© Cambridge University Press 2012 Organisational objectives and strategies (cont.) Plans (strategic, tactical and operational) need to be put in place at each level of the organisation to assist in achieving the objectives.

© Cambridge University Press 2012 Typical management functions Management undertakes the key roles of planning, organising, leading and controlling to assist the organisation to achieve these objectives.

© Cambridge University Press 2012 Typical management functional areas Typical management functional areas in large-scale organisations include operations, finance, human resources, marketing and research and development.

© Cambridge University Press 2012 Typical management functional areas (cont.) Large-scale organisations contribute either positively or negatively to our economy through: gross domestic product (GDP), employment, balance of payment (exports/imports), research and development, and infrastructure growth.

© Cambridge University Press 2012 Environments of business Businesses in Australia operate in an open system that interacts and is dependent upon its specific internal and operating environment. The general (macro) environment also exerts pressure on all businesses.

© Cambridge University Press 2012 Three levels of the organisation environment There are three levels of environment: external (macro and operating) and internal.

© Cambridge University Press 2012 Macro environment The macro environment refers to a range of factors or pressures such as economic, government and political, legal, technological, global, social and environmental.

© Cambridge University Press 2012 Operating environment The operating environment refers to a range of factors or pressures such as customers, competitors, suppliers, trade unions, lobby groups, financial institutions and regulatory bodies.

© Cambridge University Press 2012 Internal environment The internal environment refers to a range of factors or pressures such as shareholders/owners, management, employees, organisational structure and corporate culture.

© Cambridge University Press 2012 Stakeholders in large-scale organisations Stakeholders, being those individuals or groups with a vested interest in an organisation’s operations, are most commonly found in the operating and internal environments of the organisation.

© Cambridge University Press 2012 Stakeholders in large-scale organisations (cont.) Stakeholders can be: shareholders Directors management employees trade unions Customers

© Cambridge University Press 2012 Stakeholders in large-scale organisations (cont.) Suppliers creditors/banks the community government and competitors. Each of these stakeholders has either issues or interests associated with the organisation.

© Cambridge University Press 2012 Stakeholders in large-scale organisations (cont.) Business success for an organisation is dependent upon being able to respond quickly to changes or pressures that come from either Its external or internal environment.

© Cambridge University Press 2012 Stakeholders in large-scale organisations (cont.) Awareness of the interests and issues of stakeholders must also be taken into account.

© Cambridge University Press 2012 Evaluation of performance All stakeholders in an organisation want to know how it has been performing.

© Cambridge University Press 2012 Efficiency Efficiency measures the use of the resources of an organisation to produce goods and services.

© Cambridge University Press 2012 Effectiveness Effectiveness is measured in terms of whether an organisation has met its objectives.

© Cambridge University Press 2012 Productivity Productivity is a quantitative measure of efficiency. It measures the relationship between resource inputs and outputs.

© Cambridge University Press 2012 Measuring organisational efficiency and effectiveness Performance indicators (PIs) measure the efficiency and effectiveness of the organisation.

© Cambridge University Press 2012 Performance indicators PIs include: number of sales, percentage of market share, profit, the rate of productivity growth, the results of staff and customer complaints, the number of workplace accidents, job satisfaction and staff turnover.

© Cambridge University Press 2012 The ‘balanced scorecard’ measurement Using the balanced scorecard approach enables an organisation to review and assess the performance in a range of areas.

© Cambridge University Press 2012 Stakeholder approach The stakeholder approach evaluates the organisation from other perspectives.

© Cambridge University Press 2012 Growing importance of other measures of organisational performance Alternative performance indicators are becoming more important as these measures provide a more rounded approach to organisational evaluation.

© Cambridge University Press 2012 Growing importance of other measures of organisational performance (cont.) Stakeholders such as employees, shareholders, government, customers, suppliers and competitors all have an interest in the performance of the organisation.

© Cambridge University Press 2012 Growing importance of other measures of organisational performance (cont.) It is important for organisations to examine their performance in their role as a ‘good corporate citizen’ and for their contribution to the community and social responsibility.