1. Engage Education Examination Preparation Seminar Unit 3 & 4 Business Management
University of Melbourne 2010
- Updated 2013

2. What have you done in Units 3 & 4?
Unit 3/4 Business Management involves 5 Areas of Study across the 2 units (3 in Unit 3 and 2 in Unit 4)
Unit 3: Corporate management
AoS 1: Large-scale organisations in context
AoS 2: Internal environments of large-scale organisations
AoS 3: The operations management function
Unit 4: Managing people and change
AoS 1: The human resource management function
AoS 2: The management of change

3. What is a Large Scale Organisation?

4. Characteristics of an LSO
AN ORGANISATION CAN BE DEFINED AS A FORMAL ARRANGEMENT OF PEOPLE TO ACCOMPLISH SOME SPECIFIC PURPOSE OR GOAL
ORGANISATIONS USUALLY EXIST TO BRING TOGETHER PEOPLE AND RESOURCES (INPUTS) TO GET THINGS DONE (OUTPUT) MORE EFFICIENTLY AND EFFECTIVELY
ORGANISATIONS ARE USUALLY LED BY ONE PERSON OR A NUMBER OF PEOPLE AND ARE COORDINATED BY SOME FORM OF STRUCTURE (MANAGEMENT)
LARGE-SCALE ORGANISATIONS ARE THE FOCUS OF BUSINESS MANAGEMENT AND CAN BE DEFINED AS ORGANISATIONS THAT ARE SUBSTANTIAL IN TERMS OF:
No LSO can operate in isolation – there are surrounding conditions (environments) that affect the way an LSO functions.
These two environments are:
Internal – or micro, those things which the LSO has some degree of control over
External – those areas over which the business has very little or no control over.
PEOPLE
Employs 200 people or more
TOTAL ASSETS
Worth more than $200 million
REVENUE
Earn revenue in the millions

5. Complex structure to provide control over all aspects of the LSO. Eg;
MULTIPLE LOCATIONS
Branches/divisions/plants in a number of locations within and/or outside Australia
STRUCTURE
Complex structure to provide control over all aspects of the LSO. Eg;
CEO
R&D
Finance
Operations
Marketing HR

6. Classifications of LSOs
AN ORGANISATION CAN BE CLASSIFIED ACCORDING TO
AIM
Profit or Not-for Profit
OWNERSHIP
Public, Private or GBE
INDUSTRY LEVEL
Primary, Secondary & Tertiary
No LSO can operate in isolation – there are surrounding conditions (environments) that affect the way an LSO functions.
These two environments are:
Internal – or micro, those things which the LSO has some degree of control over
External – those areas over which the business has very little or no control over.
INDUSTRY TYPE
Manufacturing, Retail, Tourism, etc
ACTIVITY TYPE
Manufacturing or Service

7. Contributions to the Economy
Provide employment
Taxation revenue for the government
LSO’s pay tax on profits
Assists economic growth
Employees spend money – buy goods and services
LSO’s spend money on goods and services
Build international relationships
Export goods overseas
Employee people overseas

8. Aids infrastructure growth Encourages competition
Undertake investment
Research new products and production methods
Improved quality of goods and services
Aids infrastructure growth
When LSO’s build new plants, infrastructure develops in support
Improves skill base
Provide training for employees
Fund education and training programs
Encourages competition
More competition lowers prices of goods and services
Can lead to improved quality

9. Removing unproductive sections of the organisation to improve profit
Downsizing
Having non-core activities supplied by another organisation rather than by own employees
Outsourcing
Outcomes of production that negatively impact upon society. Things such as pollution, environmental damage, etc.
Negative externalities

10. Operating Environment
Types of environments
Macro Environment
Operating Environment
Internal Environment
No LSO can operate in isolation – there are surrounding conditions (environments) that affect the way an LSO functions.
These two environments are:
Internal – or micro, those things which the LSO has some degree of control over
External – those areas over which the business has very little or no control over.

11. Macro environment 1. Political pressures 2. Economic pressures
3. Pressures for change
4. Legal issues
Forces acting in the macro environment are:
Political pressures – policies made by governments can affect how an LSO operates. Deregulation is an example of such a factor. The governments of the 1990’s had set deregulation as a means of improving efficiency and increasing competition. By removing government regulations, competition was encouraged which forced businesses to improve their productivity and competitiveness. The introduction of the GST in 2000 is another example of a government act that affected businesses.
Economic pressures – if an economy is in a recession ( ) demand for goods and services will fall. LSO’s must therefore make decisions on how best to navigate these times. Similarly, a booming economy creates issues for an LSO.
Pressures for change – Globalisation is the process of reducing barriers between countries and turning the world into a single market. This increases competition and markets for LSOs. It also means that forces impacting on one economy may flow on to affect our economy and hence an LSO.
Legal issues – changes in laws can affect LSo’s. Laws relating to OHS, industrial relations (by the Howard government and then by the Rudd government), discrimmination laws, environmental protection laws, etc, have affected how LSO’s go about their daily business.
Technology – a big influence on globalisation, technology changes the manner in which products are produced and services are provided. It improves communication which allows for overseas markets to be opened up. The internet, robotics are examples of technological changes that have worked to increase productivity.
Ethical and social responsibility – improved communication has increased people’s awareness of issues around the world (poverty, environmental issues, natural disasters, etc). This increases pressure on LSo’s to act as ‘good corporate citizens’ – produce goods and services using environmentally friendly materials, paying fair wages, contribute to society by returning some of their wealth to the communities they serve (eg; charity work, sponsorship, etc).
5. Technology
6. Ethical and social responsibility

12. Operating environment
1. Competition
2. Finance companies
3. Employees/Unions
4. Lobby Groups
The Operating environment is made up of 6 major stakeholders:
* Competition – these are other businesses (large and small) whose decisions will have an impact upon how you operate. Their decisions on price, packaging and promotion will cause an LSO to respond. They will compete for the same customers, sources of finance, employees and suppliers. They will be affected by the same elements of the macro environment as your LSO is and they will be affected by the decisions made by you.
Finance companies – organisations such as banks and credit unions provide finance to companies. LSO’s usually require finance when looking to expand their operations, purchase/replace assets or engage in a takeover of another company. The availability of funds and the cost of those funds (interest) are factors that will impact upon an LSO.
Employees/Unions – the people who work for an LSO contribute in many ways – productivity, development of the culture of the LSO, assist in the creation of the mission and vision statements. They are also an asset and an LSO should invest in its assets through training, performance appraisal, promotion possibilities, multiskilling, etc. How an employee views an LSO (how they are treated) will be reflected in their performance and loyalty.
Lobby Groups – are groups that have a particular interest and they put pressure on governments, LSOs and individuals to conform to their point of view. The National Farmers Federation, the Gun Lobby, Greenpeace, No Tolls group, the RACV, Save Albert Park are all examples of lobby groups. They work to have their views heard and laws enacted. If successful, their actions will impact upon how an LSO operates.
Suppliers – these people supply the raw materials for use in production. Their activities determine price, quantity and availability of resources for use. Their decisions affect the production and costs of LSOs.
Customers – the people who purchase the output of an LSO. They are affected by price, quality, availability, service and other non-financial factors. If an LSO can meet their needs they can develop loyalty which will assist an LSO during lean times. If their experience with an LSO is less than satisfactory, they may move to a competitor.
5. Suppliers
6. Customers

13. The Internal Environment
Corporate culture
Organisational structure
Policies
Management roles
Management styles
Ethical and social responsibility
The Internal environment is made up of a number of factors (8).
These items will be discussed in more detail after we have viewed the External environment.
Management skills

14. Performance indicators
LSO’s are continually engaged in evaluation of their performance.
With LSO’s being affected by forces outside their control, they are required to evaluate how a ‘factor’ has affected their performance
For example, has the credit crisis affected our cash flow – are we able to meet our financial commitments? Is now the best time to expand? Etc.
There are 10 Performance indicators that students can be examined on and/or use in a response to an exam question. Can you name them?
1. Percentage of market share
2. Net profit figures
3. The rate of productivity growth

15. 4. The number of sales,
5. Results of a staff satisfaction survey
6. Results of a customer satisfaction survey
7. The level of staff turnover
8. Level of wastage
9. Number of customer complaints
10. Number of workplace accidents
These performance indicators measure the efficiency and effectiveness of the business

16. Stakeholders
A stakeholder is any person/group that interacts with an LSO and have an interest in the activities of the LSO
Shareholders
Management
Employees
Customers
Suppliers
Society/community as a whole

17. Organisational Objectives
An objective is a desired goal, outcome or result that an organisation would like to achieve.
Organisational objectives may include:
* Profit
* Expansion of the organisation
* Increased market share
* Providing excellent customer service
* Providing services to the community.
Objectives can be:
Strategic
Tactical
Operational

18. Who we are What we do Where are we going Aspirations Future orientated
Organisational Objectives
Organisational Objectives often involve the creation of a Mission and Vision Statement
Mission Statement
Who we are
What we do
Where are we going
Vision Statement
Aspirations
Future orientated

19. Ethical & Social Responsibility
Society has developed a notion that all LSO’s should act in an ethical and socially responsible manner to all stakeholders
Social responsibility is the obligations of an LSO over and above its legal responsibilities
Ethical management is the process of abiding by moral standards and ‘doing the right thing’ in the interests of all stakeholders
Can be measured by the ‘triple bottom line’ – economic, social and environmental performance of an LSO
Situations where E & SR is a consideration?

20. Environments of Large Scale Organisations

21. 1. Organisational Structure
Organisational structure looks at how the various levels of management are arranged within an LSO. They tend to be hierarchical.
An organisational structure provides:
1. Chain of command
2. Lines of communication
3. Positions of accountability
4. Positions of responsibility

22. Organisational Structure
Executive Management
Upper Middle Management
Middle Management
Lower Management
Frontline Management
More
Communication
Authority
Accountability
Responsibility
Less

23. TYPES OF ORGANISATIONAL STRUCTURE
MAIN TYPES OF ORGANISATIONAL STRUCTURE
1. FUNCTIONAL
2. DIVISIONAL
3. MATRIX
FUNCTIONAL
THE FUNCTIONAL STRUCTURE IS THE MOST BASIC ORGANISATIONAL FORM
EMPLOYEES ARE GROUPED TOGETHER IN SEPARATE DEPARTMENTS ON THE BASIS OF COMMON TASKS, SKILLS OR ACTIVITIES ie: A HIGH LEVEL OF SPECIALISATION

24. Organisational Structure
Advantages of a Functional Structure
* Career pathways can be easily identified
* Staff can become experts in their field through task specialisation
* Opportunities for skill and knowledge development
* Efficient use of resources
* Ability to develop as a team and enhance goal congruence

25. Organisational Structure
Disadvantages of a Functional Structure
* Departments can become inflexible and overly bureaucratic
* Departments can become narrow in their focus and move away from broader organisational goals
* Managers can become more concerned about ‘empire-building’
* Hoarding of resources for future use rather than ‘sharing’ excess resources.
When adapting a functional structure to specific purposes (such as geographic), there are additional advantages and disadvantages.
Advantages:
Expertise can be further developed in terms of geographic specifics, client requirements and products
Ability to adapt to local conditions and changes
Encouragement of cooperation between departments
Disadvantages
Economies of scale can be lost as some duplication of tasks can occur
Departments can become rivals for sales, resources and staff

26. Manager - Confectionery
Divisional Structure
Product structure
Products manager
Manager – Canned food
Manager - Confectionery
Manager – Diet goods
Manager – Soft drinks
Manager – Dry goods
Geographic structure
Global manager
Manager - Europe
Manager - Asia
Manager – Nth America
Manager - Australia
Manager – Sth America

27. Divisional Structure Customer structure Client services manager
Manager – Corporate clients
Manager – Private clients
Manager – Government clients
Process structure
Operations manager
Manager - Production
Manager - Purchasing
Manager – Warehouse
Manager – Quality control

28. Matrix Structure
THE MATRIX STRUCTURE IMPLEMENTS FUNCTIONAL AND PROCESS ORGANISATION SIMULTANEOUSLY
EACH DEPARTMENT IS SUPERVISED BY TWO MANAGERS HAVING EQUAL AUTHORITY FUNCTIONAL MANAGER RESPONSIBLE FOR THE SPECIALIST DEPARTMENT PROCESS MANAGER (PROJECT MANAGER)IS RESPONSIBLE FOR INTEGRATING THE ACTIVITIES OF THE SPECIALISTS ACROSS THE FUNCTIONAL DEPARTMENTS
WHEN THERE IS A NEED FOR DUAL FOCUS
LARGE AMOUNTS OF INFORMATION MUST BE PROCESSED
EFFICIENCY OF RESOURCES IS NEEDED

29. Organisational Structure
Advantages of a Matrix Structure
* Enhanced flexibility – operations can be altered quickly to suit circumstances
* Ability to trouble-shoot – if an area has a problem, a project team can be created to solve the problem
* Enhanced communication, cooperation and teamwork
* Pooled expertise allows better conditions for problem solving

30. Organisational Structure
Disadvantages of a Matrix Structure
* Decisions in one department can undermine line authority in that department
* This can challenge the ‘unity of command’ principle
* Employees may find themselves reporting to two managers which can effect communication and goal congruence

31. Organisational Structure
Team structure
General Manager - Products
Manager – Diet goods
Manager- Confectionery
Manager – Dry goods
Manager – Soft drinks
Manager- Canned food
In a team structure, personnel begin in their functional department but are often required to move (on a full or part time basis) to another department to work on a specific activity.
There must be flexibility of personnel to make such a move.
Marketing
team
New products team

32. 2. Corporate Culture
Corporate culture is a set of unwritten or informal rules that dictate how people in an organisation should behave in any given circumstance.
These rules are based on the beliefs, values, ideas and expectations shared by the members of the LSO.
Knowing these rules makes it easier for managers to get things done and/or initiate change.
An understanding of an LSO’s corporate culture by employees can create a positive and personalised environment leading to a more successful LSO.
A corporate culture generally consists of 4 essential elements:
1. Values
2. Symbols
3. Rituals, rites and celebrations

33. 3. Management Roles
There are generally considered to be 4 roles that managers perform.
These roles are referred to as POLC:
PLANNING
ORGANISING
LEADING
CONTROLLING

34. Management Roles - Planning
Planning is seen as the most important or primary management role.
Planning provides for the short- and long-term success of an LSO.
Planning occurs once an LSO has identified its organisational objectives.
Planning involves making the decisions on how to achieve the organisational objectives.
Planning must involve all activities at all levels of the organisation.
This requires 3 levels of planning:

35. Management Roles - Planning
1. Strategic (long-term) planning
* Respond to emerging trends, events, challenges and opportunities within the context of the LSO vision and mission.
* Provide direction towards achieving goals and targets.
* Plan for and anticipate the future.
* Concentrate on an idea and vision.
* Create a framework for achieving competitive advantage by analysing the potential of the LSO and its internal and external environments.
* Guide management of the human, financial, technical and social resources.

36. Management Roles - Planning
2. Tactical (medium-term) planning
* Formal medium-term planning undertaken by middle management to implement the organisation’s strategic plan.
* Respond to changes caused internally and externally.
* The allocation of resources in order to achieve the organisation’s objectives.
3. Operational (short-term) planning
* The planning of day-to-day operations by the lower level supervisors and managers within an organisation.
* The implementation of the strategic plan against specific objectives.

37. Management Roles - Planning
To work effectively – all levels of planning must ‘fit’ together
Strategic Plan
Tactical Plan
Tactical Plan
Tactical Plan
Tactical Plan
Operat Plan
Operat Plan
Operat Plan
Operat Plan
Operat Plan
Operat Plan
Operat Plan
Operat Plan

38. Management Roles - Planning
The basis of the planning process is a SWOT analysis.
Internal assessment
External assessment S
Strengths W
Weaknesses O
Opportunities T
Threats
What does the LSO do well?
Are we financially sound?
Do our processes reflect best practice?
Are our staff performing to the level expected?
Is our equipment the most modern and efficient?
Is the economic climate right?
What new markets are available to us?
Is there new competition emerging?
What new laws affect us?
Is our market share declining?
In preparing a plan, managers must conduct an assessment of the LSO. This assessment will comprises two components:
Internal assessment of the LSO, identifying its strengths and weaknesses; and
External assessment of the opportunities and threats posed to the LSO.

39. Management Roles - Organising
Organising – managers need to make decisions that reflect the mission statement, objectives and goals that have developed from the planning process.
Managers organise a variety of people and tasks and systems to ensure the LSO operates efficiently and effectively.
Organising involves the following activities:
1. Division of labour – divide jobs between individuals and/or groups who are then assigned responsibility for performing them.

40. Management Roles - Organising
2. Delegation of authority – distribute authority to employees. How much authority to give to each employee.
3. Span of control – in organising employees and delegating authority, managers must determine the ‘span of control’ for each employee with management responsibilities.
4. Coordination – organising the various sections/departments/work units so that all employees are working together and aiming to meet LSO objectives.

41. Management Roles - Leading
Leading – the ability to influence others so as to achieve goals.
Leading is a dynamic process that helps to define and shape the LSO’s culture and is primarily a process of influence.
Power is the focal point of leadership. There are four categories of power:
1. Legitimate power – the power that is confirmed on a manager by the very structure in place at the LSO. It is accepted by all and is not disputed.

42. Management Roles - Leading
2. Expert power – the employment of expert skills, knowledge and information allows a person to influence others.
3. Reward or coercive power – the power to reward or punish people as a means of influencing them so they comply to the way of thinking required.
4. Referent power – power achieved through being liked and respected by subordinates, peers and supervisors.

43. Management Roles - Controlling
Controlling – a continuous process that ensures plans are being implemented appropriately and alerts managers to any deviations from the plan so corrective action can be instigated.
There are a number of types of controls:
1. Cost controls
2. Time controls
3. Financial controls
Most LSO’s develop a control process:

44. 2. Measure performance and make comparisons against standards.
Management Roles - Controlling
The control process
1. Establish performance standards in line with LSO objectives and influences from employees, government, industry & management.
2. Measure performance and make comparisons against standards.
3. Take corrective action – changing processes, personnel and activities to ensure plan is ‘back on track’.

45. 4. MANAGEMENT STYLES
How a manager interacts with stakeholders in an effort to achieve the LSO goals will in some way depend upon the style of management they adopt.
A management style is the manner and approach of providing direction, implementing plans and motivating people.
There are 5 broad management styles
Most managers will use all 5 broad management styles at some point, however, most long term managers will develop a style that will become more dominant.

46. 4. MANAGEMENT STYLES Task orientated hierarchical structures
Employee orientated flatter structures
Management control
More
Less
Autocratic
Laissez-faire
Consultative
Participative
Persuasive

47. Autocratic
An autocratic manager likes to be in control – the POLC functions are centralised around the manager.
Decision making is centralised with a strict hierarchical chain-of-command.
An autocratic manager has a high regard for production and efficiency (task orientated.
An autocratic manager expects team members to comply with their decisions and are not concerned with the attitude or thinking of the group.
This type of management style results in passive resistance and requires continual pressure and direction to get things done.
This type of management style uses rewards and punishments to achieve objectives.

48. Persuasive
A persuasive manager uses their ability to interpret a situation, people’s actions and dialogue, and then convince them to do a task their way
Decision making is made by the manager who then tries to convince others it is in the best interests of subordinates to agree..
A persuasive manager lets their intentions be known.
A persuasive manager operates a centralised system as communications are still one-way and reflects a hierarchical system.
This type of management style does not encourage initiative and commitment from employees.
This type of management style is task orientated.

49. Consultative
A consultative manager likes to gather the opinion of staff members before making a decision.
While seeking ideas and suggestions from employees, the manager ultimately makes the decision.
The power of a consultative manager is more employee-based and less centralised than the previous mentioned styles..
The level of communication (or consultation) and employee involvement means employees are task-orientated, motivated and perform at their best in achieving the LSO’s goals and objectives.
Communication is more two-way.

50. Participative
A participative manager will share the decision-making with employees and team members.
The participative management style engages employees by asking for their opinions and sharing information and agendas openly in order to gain the best performance from the team.
Communication is open and two-way, there is high employees involvement and generally a flatter organisational structure.
This type of management style empowers employees be being a leader and a coach. Allows the team to decide how a task will be tackled and by whom
This type of management style encourages employees to design their own work and involves a decentralised system.

51. Laissez-faire
A laissez-faire manager exercises little control over their team, leaving the team to determine their roles and carry out their work, without participating in the process themselves.
Decision making is highly decentralised and so is power and the organisational structure.
A laissez-faire manager has little or no role in the day-to-day running of the organisation.
This type of management style involves management setting the objectives but employees take full responsibility to implement their achievement.
This type of management style is most effective in creative or research work environments.

52. 5. MANAGEMENT SKILLS
Skills are the abilities of a manager to produce an outcome that meets or exceeds the standards required by the LSO in order to meet goals and objectives.
Each management level requires a set of skills. As a manager moves up the hierarchy, they are required to build on existing skills as well as develop new skills.
Skills that a manager may have include:
* Communication skills
* Delegation skills
* Problem-solving skills
* Negotiation skills
* Teambuilding skills
* Decision-making skills
* Visionary/Creative thinking skills
* Technical skills
* Emotional intelligence
* Time management skills

53. 5. MANAGEMENT SKILLS * Communication skills
The ability to clarify with employees the tasks that they are required to complete.
Communication movement will reflect the organisational structure and management style.
Communication can be:
Written
Verbal
Non-verbal
Listening is an important part of communicating
Poor communication can lead to:
* Staff frustration
* Lack of motivation
* Loss of direction

54. 5. MANAGEMENT SKILLS * Delegation skills * Negotiation skills
Delegation -manager gives authority to an employee to complete a set task.
Delegation allows employees to use/develop their skills/knowledge to their potential
Managers who can delegate effectively will train the delegates to apply appropriate criteria to avoid losing control of their employees.
Managers who can delegate are showing their employees that they trust them and see a future for them within the LSO.
* Negotiation skills
Managers who can resolve a dispute or produce an agreement that satisfies the majority of stakeholders

55. 5. MANAGEMENT SKILLS * Problem-solving skills
Problem solving involves identifying problems, then devising and implementing an action plan.
To competently solve problems, a good manager will seek help, think critically, creatively, reflectively and be able to adapt.
Managers must be open and honest in their communication with those involved and recognise that quick, easy solutions to complex problems will not work.
The problem-solving process:
1. Identify
2. Gather
3. Develop
4. Rank
5. Implement
6. Evaluate

56. 5. MANAGEMENT SKILLS * Decision-making skills
Decisions made by managers affect the LSO’s ability to meet its objectives.
Managers are required to look at and evaluate alternatives, consider the short- and long-term risks and then select the best alternative.
Managers may make decisions individually or may involve team involvement . This will depend upon the style of management used.
There is a strong connection between decision-making and problem-solving as decisions are made to solve problems identified.

57. 5. MANAGEMENT SKILLS * Teambuilding skills * Technical skills
Teamwork -a set of behaviours which two or more people demonstrate when working on a common task.
Employees who are part of or encouraged to be part of a team are more likely to share the vision of the LSO and management.
Teamwork encourages open communication, improves morale and workplace co-operation, productivity and develops a positive corporate culture.
The skill is putting the ‘right’ team together
* Technical skills
Managers need to be constantly updating their technical skills – particularly in IT.
Managers need to be make technical decisions, advise on technical matters and give technical instructions to employees.
Good technical skills allow managers to establish procedures for equipment usage and allow them to gain respect from staff.

58. 5. MANAGEMENT SKILLS * Creative thinking skills * Visionary skills
The ability to ‘think outside the square’
Managers are often required to come up with creative solutions to new problems.
Managers with creative thinking skills are often generating new ideas.
Managers with creative thinking skills are constantly looking for better ways to overcome problems and achieve their goals in changing macro and operating environments.
* Visionary skills
The ability to ‘see the big picture’
Managers with visionary skills are often able to look forward and identify future opportunities/problems and come up with solutions/plans so as to be ready to meet the challenges or take advantage of the opportunities.

59. 5. MANAGEMENT SKILLS * Time management skills * Emotional intelligence
Time management allows managers to allocate their time between tasks so a greater majority of tasks can be completed.
Time management is also about setting realistic timelines for tasks to be completed and meeting deadlines imposed upon them.
Good time management ensures each decision and each problem is given the proper consideration and all alternatives are properly evaluated – nothing is rushed.
* Emotional intelligence
The skill of identifying, assessing and managing the emotions of yourself and others – particularly staff
Also known as people skills – being empathic to the needs of staff

60. 6. POLICY DEVELOPMENT & ITS APPLICATION
An LSO should establish a set of policies and procedures that is communicated to all employees so they are aware of what is expected of them.
Where policies and procedures are known, there is a greater chance of success for the LSO in meeting its objectives.
Without such policies and procedures an LSO would be in chaos with little chance of meeting its objectives.
There are a number of legislative policies that an LSO must follow and policies the LSO creates for it’s own environment

61. 6. POLICY DEVELOPMENT & ITS APPLICATION
A policy is an established set of broad guidelines to be followed by all employees when dealing with decision-making issues.
A procedure is a process that describes what actions are to be taken to ensure a policy is followed or what to do in the case of a breach of a policy.
Both policies and procedures provide a level of consistency for all stakeholders of an LSO as there is certainty as to how certain issues will be dealt with.
Policy development requires a process:
1. Identify the need for a policy
2. Research business environments
3. Consult stakeholders
4. Develop draft policy
5. Gather feedback and revise draft
6. Implement policy
7. Evaluate

62. OPERATIONS MANAGEMENT
Operations Management can be defined as the design, operation and control of the transformation process that converts resources into products or services.
Operations Management establishes:
A level of quality of good or service
Overall cost of production
Ability to meet consumer demand

63. Key Elements
Inputs
Raw Materials, Financial Resources, Human Resources, Time, Capital Equipment, Information
Processes
Inputs are converted by a series of processes to produce the output. Becomes a value adding process.
Output
Finished products (goods or services) for sale

64. The Aim of Operations Management
The systematic planning and control of all the production activities.
Maximizing productivity.
Maximizing the use of resources; labour, equipment.
Maximising stock, layout and information systems.
Minimising manufacturing, inventory, maintenance and distribution costs.
 Managing projects in accordance with the planned timetable.
Multi skilling of staff via training.
 Increase the motivation and commitment of staff.
 Making use of the latest technology.

65. The Operations Manager
The Operations Manager is involved in decision-making at the strategic level, operational level and front line level and therefore needs various skills to perform these tasks.
Strategic Planning
Tactical Planning
What to produce
What stock levels are optimal
Production capacity required
How do we conduct equipment maintenance
How to produce
Sequencing of orders
How do we manage quality
How do we establish our production process

66. Operations Strategies
Technology
Quality
Materials Management
Facilities Design and Layout/Production Processes

67. Technology Strategies
offer efficiency savings (productivity) -
time and cost
quality improvements and safety benefits.
Organisations that fail to keep up with technological innovations will lose the competitive edge.

68. Technology Strategies
Computer Aided Manufacturing (CAM):
Involves the control of machinery, tools and equipment through a computer program.
Computer Aided Design (CAD):
This is a computer program that facilitates the creation and modification of product designs.
Allows simulations

69. Technology Strategies
Computer Integrated Manufacturing: (CIM):
CIM can utilise CAM, CAD, MRP (Materials Requirements Planning inventory management) together in one computerised system. A CIM facility can take a product idea from general concept to actual production in a very short time.

70. Technology Strategies
Robotics
Robots are used to undertake simple and repetitive tasks and usually deliver greater strength, speed, precision and safety. Robotics can be used to replace manual labour and can achieve efficiency improvements in the operations of LSO’s.
Office Technology:
Allows tasks to be completed in less time (efficiency) and often more accurately.

71. Quality Strategies Quality Control TQM Quality Assurance
An inspection approach involving checking the final products for defects and faults.
Method:
removing samples from production line,
visually inspecting or testing. Places responsibility for quality on the Quality Control Manager or inspection team.
Defective products are rejected and sometimes sold as ‘seconds’

72. Quality Control Advantages:
Immediate recognition of defects by trained specialists,
Identifies issues in production process
Accountability for Quality rests with manager,
Clearly defined roles
Disadvantages:
Defects may be missed
Limited focus on production
General workers avoid responsibility for quality and may not feel encouraged to make suggestions for improvement
Lack of ownership for quality (Them vs Us mentality)

73. Total Quality Management
Main Features:
Holistic approach
All workers equally participate in ongoing improvements in quality
Emphasis is on proactively detecting and rectifying potential flaws/errors before they occur
Time is given to work teams (quality circles) to detect errors or suggest improvements to quality

74. Total Quality Management
Advantages:
All workers and management have ownership and responsibility for Quality
Every aspect of organisation continually assessed
Disadvantages:
Difficult to allocate responsibility for errors
relies on all staff being motivated and highly skilled to contribute
good communication skills needed

75. Quality Assurance Builds quality into work processes
The emphasis is on eliminating defects and reducing waste during the production process.
An external organisation (Certification body) can audit the organisation’s processes against published national or international standards.
Employees and management are encouraged to share responsibility for improving quality.
A widely used international standard is the ISO 9001

76. Materials Management
Is the control of the raw materials necessary to the production of a good or service. Adequate and timely supply of stock or materials is crucial to the success of a business.
Materials management involves:
Receiving and safely storing materials
Controlling the release of materials into the production process
Minimising the holdings of surplus stock
Forecasting and controlling the acquisition of stock
(Materials Handling, Stock Controller)

77. Materials Management
JIT receiving materials needed for production precisely when needed. Avoids storage costs, reduces capital investment and avoids obsolescence and waste.
MPS Master Production Scheduling: What is to be produced and when.
MRP Materials Requirements Planning: A computer program that lists all materials involved in production to meet scheduled production.

78. Materials Management
Inventory Control: Physical Stocktakes, Barcoding, Computerised inventory recording, Security cameras, Restricted Access.
Supply Chain: Those suppliers that provide the materials necessary to production must be able to deliver quality materials, adapt to varying production schedules, guarantee delivery at a reasonable cost.

79. Facilities Design and Layout
Considerations:
Space
Equipment
Safety
Volume of production, size of product
Storage, delivery of raw materials
Work flows, movement of workers, raw materials and
Customer Interactions, privacy, efficiency of service provision
Toilets, lunchroom/recreational facilities, childcare
Potential for expansion in the future (Flexibility)

80. Main Facilities Layouts
Fixed Position
Product Layout (Assembly Line Production)
Process Layout
Retail Layout
Office Layout
Fixed Position
The product is in one place and workers and equipment come to that work area.
Examples: Ship or Aircraft building, Roadworks, Bridge or Commercial building

81. Product Layout (Assembly Line Production)
Main Facilities Layouts
Product Layout (Assembly Line Production)
A sequential line is established that supports a repetitive or continuous flow of production. High volume of a standardised product with production runs generating large volumes of outputs.
Eg. Motor Vehicle manufacturing, Milk processing plant.
Process Layout (Batch Production)
Facilities are designed to handle a variety of processes and resources are organised according to their function. Production is in batches with relatively low volume and varied goods being produced.
Eg. Hospital, Bank, Ripcurl T-Shirts, Soft drink manufacturing.

82. Retail Layout
The aim of retail layout is to maximise customer exposure to products.
Considerations include:
Worker and Customer Safety
Customer flow and access to goods
Worker movement and positioning
Product security
Lighting, privacy, change rooms, toilet faciltities, customer assistance, noise.

83. Office Layout
Offices deal with flows of information and must effectively support the operations or core business.
Considerations include:
Worker movement and access to equipment
Safety
Privacy, noise transfer, security of information
Ventilation, Lighting, Climate control, Ergonomics