You are on page 1of 35

bUSINESS

sTUDIES
OVERALL sUMMARY
nOTES - bY nATHAN
rEIDY, 1ST IN THE STATE.

Publication By:

Evolutionary
Tutors
2 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

MUST READ: STUDY SMARTER,


NOT HARDER

Students are raised to believe that intellectual ability


is completely correlated to genetics. This is not true.

The brain is surprisingly malleable and significant


improvements can be made when learning
effectively.

Learning effectively does not mean re-reading these


notes.

Learning effectively means re-writing your own


notes, testing yourself after each page, quizzing with
a friend and applying knowledge to past papers.

Learning to study effectively is not easy. Private


tutoring can be very helpful for students trying to
learn smarter, not harder.

If you are interested shoot me a personal text at


0425 109 996 or visit evolutionarytutors.com.

- Nathan Reidy
Evolutionary Tutors 2017 3

TOPIC 1: OPERATIONS

Topic 1: Operations
Cost leadership lowest costs/most price competitive; Economies of
scale.
Good differentiation: features, quality, augmented.
Service differentiation: timve, expertise, qualifications + experience,
quality.

Goods in different industries:


1. Standardised goods: mass produced (assembly line), uniform in
quality, production focus.
2. Customised goods: varied acc. to the needs of customers, market
focus.
3. Perishable/non-perishable goods.

Influences: globalisation, technology, quality expectations, cost-based


competition, government policies, legal regulation, environmental
sustainability (Garen Thinks Quality Causes Good Legal Environments).
Quality expectations with goods: design, purpose, durability.
Quality expectations with services: professionalism, reliability, level of
customisation.

CSR: open + accountable business actions; respect for people + society;


reflects community concerns; going beyond legal compliance; places
value on financial returns as well as social resp. + env. sustainability.

CSR/ethical resp. = expensive.

Labour compliance and bus. Operations: labour law compliance,


environmental and public health compliance, taxation, trade practices,
migration/offshore skilled labour, IP, fin./accounting regulations.

A socially responsible business tries to achieve 2 goals simultaneously:


expanding the business; providing for the greater goods of society =
beneficial for reputation.
4 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 1: OPERATIONS

Socially responsible business continued...

Inputs labour, energy, raw materials, machinery + technology.


KPIs are specific criteria used to measure the efficiency and
effectiveness of the businesss performance.
Value-added: The difference between the cost of inputs and the value
or price of outputs. >transformation = >value added.
Lead time is the time it takes for an order to be fulfilled from the
moment it is made.

The influence of:


Volume: volume flexibility + lead times.
Variety: mix flexibility (product range)
Variation in demand: effects of increase/decrease in demand on inputs,
HR, energy, etc.
Visibility: customer contact direct contact/indirect feedback shape
what businesses produce.

Sequencing: order; Scheduling: time.

Scheduling tools:
1. Gantt chart (adv. of plan and monitor).
2. Critical Path Analysis (CPA): SHORTEST length of time it takes to
complete ALL TASKS necessary to complete the process or project. (adv.
of direction/organisation

Process layout, product layout, fixed position layout, office layout, plant
layout.

Monitoring is the process of measuring actual performance against


planned performance.
Control occurs when KPIs are assessed against predetermined targets
and corrective action is taken if required.
Improvement systematic reduction of inefficiencies improvement in:
time (minimisation of bottlenecks + lead times), process flows, quality,
cost, efficiency.
Evolutionary Tutors 2017 5

TOPIC 1: OPERATIONS

Performance objectives: quality, speed, dependability, flexibility,


customisation, cost (Quality Sometimes Differs for Caring Customers).

Quality of design, conformance, service.

Product design and development: consumer approach/due to changes


and innovations in technology.

Supply chain management (SCM) involves integrating and managing


the flow of supplies throughout the inputs, transformation processes
and outputs in order to best meet the needs of customers. Logistics,
e-commerce, global sourcing = LEG.

Recent trends in SCM: supplier rationalisation (reducing number of


suppliers), vertical integration (backwards)(purchasing through mergers
or acquisitions of suppliers supplier is owned by business), cost
minimisation, flexible/responsive supply chain processes.

E-Commerce: B2B/B2C.

Logistics: distribution, transportation, storage, warehousing/DCs,


materials handling + packaging.

Advantages of Outsourcing

Simplification
Efficiency and cost savings
Increased process capability
Increased accountability
Access to skills/resources lacking within the business
Capacity to focus on core business or key competencies
Strategic benefits (get around trade barriers, expertise)
Improvement to in-house performance
6 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 1: OPERATIONS

Disadvantages of outsourcing

Payback periods and cost


Communication and language
Loss of control of standards and information security
Hierarchies
Organisational change and redesign possible loss of domestic
employment
Loss of corporate memory and vulnerability
Information technology

Advantages of holding stock

Consumer demand can be met.


Alternative product lines can be offered if one runs out generates
revenue/profit.
Reduces lead times.
Older stock can be sold at reduced prices - +ve cash flow attracts
customers.
Stocks are an asset reflect well on balance sheet.

Disadvantages of holding stock

Costs (storage, spoilage, insurance, theft, handling expenses)


Invested capital, labour and energy cannot be used elsewhere
Cost of obsolescence can occur if stock remains unsold.

Inventory valuation methods: LIFO, FIFO, WAC; Managing stock: JIT

LIFO: may overstate cost, understate gross profit, under value stocks at
end of period.

FIFO: may understate cost, overstate profit, over value stocks at end of
period.
Evolutionary Tutors 2017 7

TOPIC 1: OPERATIONS

Quality control: inspections.


Quality assurance: use of system to ensure set standards are achieved.
Quality improvement: TQM + continuous improvement. empowering
employees.

Overcoming resistance to change: financial costs, purchasing new


equipment, redundancy payments, retraining, reorganising plant layout,
inertia. (Fiona Purchased Robs Red Raincoat Instantly).

Successful managers are proactive they initiate change rather than


simply react to events, rather than reactive those who wait for a
change to occur and then respond to it.

Global Factors: global sourcing, economies of scale, scanning and


learning, research and development. (Global Economies Sometimes
Rise).
8 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 2: MARKETING

The strategic goal of marketing is to translate the financial goal of profit


maximisation into reality.

Marketing plan: aimed at achieving marketing outcomes; template for


future action aimed at reaching business goals.

Marketing concept: all business sections involved in satisfying a


customers needs and wants while achieving the businesss goals.

The production approach focused businesses on the production of


goods and services-mass prod.
The sales approach emphasised selling because of increased
competition.
The marketing approach focuses on finding out what customers want
through market research and then satisfying that need. (customer-
oriented)

Types of markets (Ryan Invested in Chinas Massive Navy) resource,


industrial, intermediate, consumer mass, niche.

Resource market: those indiv/groups engaged in all forms of primary


production.
Industrial market: industries/businesses that purchase products to use
in the production of other products or in their daily operations.
Intermediate market: consists of wholesalers and retailers who
purchase finished products and resell them to make a profit.

Factors influencing customer choice (PSEG)

Psychological: Perception, motives, attitudes, personality and self-


image, learning (Poly Made a Pink Lobster).
Sociocultural: Social class, cultural and subculture, family and roles,
reference (peer) groups (SC FR)
Economic: Boom/Recession (FPFL RU FIFQ)
Government: e.g Competition and Consumer Act 2010, Fair Trading Act
2010.
Evolutionary Tutors 2017 9

TOPIC 2: MARKETING

Consumer laws (DPIW): deceptive and misleading advertising, price


discrimination, implied conditions, warranties. E.g: ACL.

Deceptive and misleading advertising: Fine print, before and after


advertisements, tests and surveys (unsubstantiated claims), country of
origin, packaging, special offer (Frank Bought The Countrys Packaging
Special). E.g: bait and switch advertising, dishonest advertising.

Price discrimination is the setting of different prices for a product in


separate markets.

Ethical influences (TAPES): Truth, accuracy and good taste in advertising


(exaggerated claims/vague statements), products that may damage
health, engaging in fair competition, sugging (selling under the guise of
a survey).

Ethical criticisms (CSUP): creation of needs materialism, stereotypical


images of males and females, use of sex to sell products, product
placement.

Marketing plans should be realistic + achievable.

SWOT: internal strengths and weaknesses, external opportunities and


threats.

The product life cycle consists of the stages a product passes through:
introduction, growth, maturity and decline.

The market research process:

1. Determining information needs.


2. Collecting data from primary and secondary sources.
3. Analysing and interpreting data
10 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 2: MARKETING

Primary data (original sources/collected by the business itself):

1. The survey method


2. The observation method
3. The experiment method

Secondary data (info already collected by some other person/


organisation) internal/external data = info collected from inside the
business/published data from outside the business.

Marketing objectives: should be more customer oriented than the goals


for the entire business concerned with products and markets. E.g:

Increasing market share.


Expanding the produce range.
Maximising customer service.

High levels of customer service = improved customer satisfaction =


sound customer base possibility of repeat purchases.

The primary target market is the market segment at which most of the
marketing resources are directed. The secondary target market is usually
a smaller and less important market segment.

A mass marketing approach seeks a large range of customers.


Market segmentation occurs when the total market is subdivided into
groups of people who share one or more common characteristics.
A niche market is a narrowly selected target market segment.

Marketing strategies are actions undertaken to achieve the businesss


marketing strategies through the marketing mix.
Evolutionary Tutors 2017 11

TOPIC 2: MARKETING

Developing a financial forecast requires two steps:

1. Cost estimate.
2. Revenue estimate.

Comparing actual and planned results: KPIs:

1. Sales analysis.
2. Market share analysis.
3. Marketing profitability analysis.

The consumer market can be segmented according to four main


variables (DG PB):

1. Demographic dividing the total market acc. to particular features of a


population.
2. Geographic dividing the total market acc. to geographic locations.
3. Psychographic dividing the total market acc. to personality
characteristics, motives, opinions, socioeconomic group and lifestyles.
4. Behavioural dividing the total market acc. to the customers
relationship to the product.

Points of differentiation

Customer service
Environmental concerns
Convenience
Social and ethical issues

Benefits of branding for consumers: helps them: identify products


they like, evaluate quality, reduce perceived risk of purchase, gain a
psychological reward.

Branding helps businesses: gain repeat sales, introduce new products


onto the market, encourage customer loyalty.
12 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 2: MARKETING

Packaging: preserves the product, protects the product, attracts


consumers attention, acts as a form of communication.

Pricing methods (CMC)

1. Cost-based derived from the cost of producing or purchasing a


product and then adding a mark up. Price = Cost + (Cost x Mark-up
Percentage).
2. Market-based setting prices acc. to the interaction between the
levels of supply and demand.
3. Competition-based where the price covers costs and is comparable
to the competitors price. below/equal/above that of competitors.

Pricing strategies (SPLP)

1. Price skimming occurs when a business charges the highest possible


price for the product during the introduction stage of its life cycle.
2. Price penetration occurs when a business charges the lowest possible
price for a product or service so as to achieve a large market share.
(disadv: more difficult to raise prices significantly than it is it lower them.)
3. A loss leader is a product sold at or below cost price. (attracts
customers- buy other products).
4. Price points (or price lining) is selling products only at certain
predetermined prices.

Elements of the promotion mix: advertising, personal selling and


relationship marketing, sales promotion, publicity and public relations
(Adam Purchased Seven Pencils).

Personal selling involves the activities of a sales representative directed


to a customer in an attempt to make a sale.

Relationship marketing is the development of long-term, cost-effective


and strong relationships with individual customers.
Evolutionary Tutors 2017 13

TOPIC 2: MARKETING

Sales promotion is the use of activities or materials as direct


inducements to customers. It aims to entice new customers, encourage
trial purchase of a new product, increase sales to existing customers, etc.
(e.g: coupons, premiums, refunds, samples, point-of-purchase displays).

Public relations are those activities aimed at creating and maintaining


favourable relations between a business and its customers. can assist a
business in achieving its objective of increased sales by:

1. Promoting a positive image


2. Effective communication of messages
3. Issues monitoring
4. Crisis management

Traditional distribution channels

1. Producer to customer (PC)


2. Producer to retailer to customer (PRC)
3. Producer to wholesaler to retailer to customer (PWRC)
4. Producer to agent to wholesaler to retailer to customer (PAWRC)

Channel Choice (ISE)

1. Intensive distribution this occurs when the business wishes to


saturate the market with its product.
2. Selective distribution this involves using only a moderate proportion
of all possible outlets.
3. Exclusive distribution this is the use of only one retail outlet for a
product in a large geographical area (usually expensive products).

The 7 Ps of marketing: product, price, promotion, place, people,


processes, physical evidence.
14 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 2: MARKETING

E-marketing technologies: web pages, podcasts, SMS, blogs, web 2.0.

Global marketing:

Global branding
Standardisation
Customisation
Global pricing (customised pricing, market-customised pricing,
standardised worldwide pricing)
Competitive positioning
Evolutionary Tutors 2017 15

TOPIC 3: FINANCE

Objectives of financial management (PGELS): profitability, growth,


efficiency, liquidity, solvency.

Liquidity is the extent to which a business can met its financial


commitments in the short term.
Solvency is the extent to which a business can meet its financial
commitments in the longer term. (>12 months).

Short term financial objectives: tactical (1 to 2 years); operational (day


to day).

Long-term financial objectives: strategic (generally >5 years).

Internal sources of finance: retained profits, owners equity.


External sources of finance:
- Debt short-term borrowing (overdraft, commercial bills, factoring-
with/without recourse), long-term borrowing (mortgage, debentures,
unsecured notes, leasing).
- Equity ordinary shares (news issues, rights issues, placements, share
purchase plans), private equity.

External finance=greater risk, however increased funds=increased


chance of greater profits/earnings.

Factoring is the selling of accounts receivable for a discounted price to a


finance of factoring company.

With recourse means that bad debts will still be the responsibility of
the business, without recourse = converse.
16 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 3: FINANCE

Leasing Advantages

It provides L.T financing without reducing control of ownership of the


business.
It permits 100% financing of assets.
Repayments of the lease are fixed for a period so cash flow can be
monitored easily.
Lease payments are a tax deduction.

Leasing Disadv.

Interest charges may be higher than for other forms of borrowing.

Financial institutions (Barry Invested Finance So Larry Unemployed


Adam) banks, investment banks, finance companies, superannuation
funds, life insurance companies, unit trusts and the Australian Securities
Exchange.

The ASX operates as a primary/secondary market.

Influence of government (AC) Australian Securities and Investments


Commission, company taxation.

The aim of ASIC is to assist in reducing fraud and unfair practices in


financial markets and financial products.
Company taxation on profits = 30%.

Global market influences (EAI) economic outlook, availability of funds


(depends on risk, demand and supply, domestic economic conditions),
interest rates (risk=exchange rate volatilities if borrowing from overseas).
Evolutionary Tutors 2017 17

TOPIC 3: FINANCE

Planning and implementing (Financial Budgets Record 54) financial


needs (info), budgets (operating, project, financial), record systems,
financial risks (greater risk=greater expectation of profits), financial
controls (responsibility for tasks, separation/rotation of duties, control of
cash, protection of assets).

Financial info is needed to show that the business can generate an


acceptable return for the investment being sought.

Operating budgets relate to the main activities of a business and may


include budgets relating to sales, production, raw materials, direct
labour, expenses, COGS, etc.
Project budgets relate to capital expenditure and research and
development.
Financial budgets relate to the financial data of a business and include
the budgeted income statement, balance sheet and cash flows.

Advantages of debt financing (FIT)


Funds are usually readily available.
Increased funds should lead to increased earnings and profits.
Tax deduction for interest payments.

Disadvantages of debt financing (ISRL)

Increased risk (interest and the principle have to be repaid).


Security is required by the business.
Regular repayments have to be made.
Lenders have first claim on any money if the business ends in
bankruptcy.
18 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 3: FINANCE

Advantages of equity financing (DCTLL)


Does not have to be repaid unless the owner leaves the business.
Cheaper than other sources of finance as there are no interest
payments.
The owners who have contributed the equity retain control over how
that finance is used.
Low gearing (use resources of the owner and not external sources of
finance).
Less risk for the business and the owner.

Disadvantages of equity financing (LE)


Lower profits and lower returns for the owner.
The expectation that the owner will have about the return on
investment (ROI).

Matching the terms and sources of finance to business purpose (Sean


Invented A Fairly Light Surfboard)

Set-up costs.
Interest costs.
Availability of funds.
Flexibility of funds.
Level of external control.
Structure of the business.

Monitoring and controlling (CIB): cash flow statement (operating/


investing/financing activities), income statement (operating income/
expenses), balance sheet (A=L+O).

Current assets/current liabilities = <12 months.


Non-current assets/non-current liabilities = >12 months.
Evolutionary Tutors 2017 19

TOPIC 3: FINANCE

Financial ratios

- Liquidity current ratio (current assets current liabilities). Rule of


thumb: 2:1.
- Gearing (determines solvency) debt to equity ratio (total liabilities
total equity). Rule of thumb: 1:1. More highly geared = less solvent =
higher risk=less financial stability. Less highly geared = more solvent =
less risk=greater financial stability.
- Profitability gross profit ratio (gross profit sales); net profit ratio (net
profit sales); return on equity ratio (net profit total equity).

Gross profit = Sales COGS.


COGS = opening stock + purchases closing stock.
Net profit = gross profit expenses.
The return on equity ratio shows how effective the funds contributed
by the owners have been in generating profit, and hence a return on
their investment.

- Efficiency expense ratio (total expenses sales), accounts receivable


turnover ratio (sales accounts receivable).

Efficiency is the ability of the firm to use its resources effectively in


ensuring financial stability and profitability of the business.
The more efficient the firm, the greater its profits and financial stability.
A/C turnover ratio measures the effectiveness of a firms credit policy
and how efficiently it collects its debts.
365 A/C turnover ratio gives the average length of time it takes to
convert the accounts receivable balance into cash from sales.

- Comparative ratio analysis (OCW) over different time periods, against


standards, with similar businesses.

Limitations of financial reports (Nathan Chased Vegas Three Debt


Notes) normalised earnings, capitalising expenses, valuing assets,
timing issues, debt repayments, notes to the financial statements.
20 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 3: FINANCE

Normalised earnings: This is the process of removing one time or


unusual influences from the balance sheet to show the true earnings of
a company. (e.g removal of a land sale).

Capitalising expenses: This is the process of adding a capital expense to


the balance sheet that is regarded as an asset (because it adds value to
the company) rather than an expense. (e.g R & D)

Ethical issues related to financial reports: audited accounts, record


keeping (tax evasion), GST obligations, valuing assets-working capital,
overestimating expenditures to allow for unexpected events, reporting
practices.

Financial management strategies

Cash flow management (DDF): distribution of payments, discounts for


early payment, factoring.

Working capital management (CCS) (working capital = current assets


current liabilities)

- Control of current assets (CRI) cash (put money in bank and earn
interest, invest in short term securities), receivables (discounts for early
payment, factoring, have a credit policy), inventories (JIT for quick
inventory turnover, alternative to stock=consignment).
- Control of current liabilities (PLO) payables (pay by due date to avoid
extra charges, talk to supplier to seek a discount for early payment),
loans (seek the lowest possible interest rate on the loan), overdrafts
(should be minimised however often help seasonal businesses bridge
short term problems with cash).
- Strategies leasing, sale and leaseback.
Evolutionary Tutors 2017 21

TOPIC 3: FINANCE

A high current (working capital) ratio may indicate the business has
invested too much in current assets that bring in a small return = lower
profits due to lower risk.
A low current (working capital) ratio may mean that the business is
more profitable if it is investing its resources in longer term assets and
generating more profits = increased productivity however increased risk
of not being able to pay current liabilities.

Profitability management (CR).

- Cost controls fixed and variable (source new supplier at a lower price),
cost centres, expense minimisation (general expenses-try pay less rent
(e.g by moving business location), leasing; sales expenses-commission
+ lower base salary rather than just a higher base salary; financial
expenses-try decrease interest repayments).
- Revenue controls marketing objectives (sales mix, pricing policy-
increase prices if market will cope/decrease prices in a high volume
rapid turnover good).
Could potentially improve return on equity by increasing debt.
Increased risk = increased potential for profitability through greater
returns/revenue.

Global financial management (EIMHD)

- Exchange rates.
- Interest rates.
- Methods of international payment (People Like Clean Bills) payment in
advance, letter of credit, clean payment, bill of exchange (document (bill)
against payment-importer can collect goods only after paying for them,
document (bill) against acceptance-importer can collect goods before
paying for them).
- Hedging- the process of minimising the risk of currency fluctuations.
- Derivatives (forward exchange contracts, option contracts, swap
contracts).
22 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 4: HUMAN RESOURCES

Human resource management refers to the management of the total


relationship between an employer and employee.

Outsourcing reduce costs, focus on core, improve quality, etc.

Using contractors- A contractor is an external provider of services to a


business. They are used to create cost savings, access greater expertise,
improve competitiveness, etc. Risks: loss of quality, difficulty coordinating
activities.

Domestic subcontracting potential to improve quality and


productivity with less resources. Risk: potential loss of direct customer
contact, worsened communication.
Global subcontracting process outsourcing: repetitive, easily measured
and documented work. Project outsourcing: involves much greater use
of intellectual property and strategic business knowledge-long time
frame, quality cannot be fully anticipated-more risk-more difficult to
measure.

Stakeholders (Ellie Employs Ethan Using Government Savings)


employers, employees, employer associations, unions, government
organisations, society.

Businesses hoping to retain and motivate skilled staff need to put


extra effort into developing staff career and training plans, rewards, and
opportunities for greater employee involvement.
Employer associations- provide advice on awards, unfair dismissals,
discrimination issues, etc.
Conciliation and Arbitration Act 1904 gave the Conciliation and
Arbitration Commission power to prevent and settle industrial disputes
extending beyond the limits of the state; Racial Discrimination Act 1975;
Affirmative Action (Equal Opportunity for Women) Act 1986; Fair Work
Act 2009.
Evolutionary Tutors 2017 23

TOPIC 4: HUMAN RESOURCES

Roles of gov/gov organisations (LERAR): Legislator, employer, responsible


economic manager, administrator of gov policies on industrial relations,
representative of Aus in the international arena, etc.
Statutes are laws made by federal and state parliaments.
Since January 2010, Aus has shifted from a dual federal and state
industrial relations system to a national industrial relations framework
standardised system = increased efficiency. same workplace
rights regardless of state in which one works. Contains: ten National
Employment Standards, collective bargaining, modern awards,
protection from unfair dismissal, etc.
Awards legally enforceable, formal agreements made collectively
between employers and employees set out minimum wages and
conditions of employees.
FWA-settles disputes, supervises making of agreements/awards,
handles unfair dismissals.
Gov agencies: Safe Work Australia (OHS); the Equal Employment for
Woman Agency, etc

Legal the current legal framework

- The employment contract (Connor Made Michael An Excellent Oven):


common law (rights and obligations of employers and employees),
minimum employment standards, minimum wage rates, awards,
enterprise agreements, other employment contracts.
- Occupational health and safety and workers compensation.
- Antidiscrimination and equal employment opportunity

Australia has shifted from a strongly centralised industrial relations


system in the 1980s to a decentralised and more fragmented system
today, based increasingly on bargaining at the workplace (enterprise)
level.

A centralised industrial relations system is a collectivist approach in


which disputes are referred to industrial tribunals, such as FWA, for
conciliation and arbitration.
24 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 4: HUMAN RESOURCES

In a decentralised industrial relations system, employers and


employees negotiate wages and working conditions in the individual
workplace, through collective or individual bargaining and without the
involvement of tribunals.

The common law is developed by courts and tribunals.

Employer obligations (PPMD)

Providing work.
Payment of income and expenses.
Meeting requirements of industrial relations legislation.
Duty of care.

Employee obligations (OUA)


Obey lawful and reasonable commands.
Use care and skill in the performance of their work activities.
Act in good faith and in the interests of the employer.

From 2010, the employees base rate of pay for ordinary hours worked
has been determined by:

The award of agreement that covers the employee (cannot be less than
the minimum wage).
The national minimum wage (applies to employees not covered by
awards or agreements).

Enterprise agreements are collective agreements made at a workplace


level between an employer and a group of employees about terms and
conditions of employment.

Collective agreements are made between a group of employees (or one


or more unions representing employees) and an employer or group of
employers.
Evolutionary Tutors 2017 25

TOPIC 4: HUMAN RESOURCES

Three types of enterprise agreements:

Single-enterprise agreements: made between a single employer and a


group of employees.
Multi-enterprise agreements: made between two or more employers
and groups of their employees.
Greenfields agreements: single-enterprise/multi-enterprise agreements
relating to a new enterprise of the employer-made before any employees
to be covered by the agreement are employed.

Other employment contracts: individual contracts, independent


contractors, contracts for casual work, part-time contracts.

National Occupational Health and Safety Commission Act 1985; Work


Health and Safety (WHS) Act 2011.

A six-step approach to WHS/OHS (PCT HRF)

1. Develop a WHS policy.


2. Set up a consultation mechanism with employees.
3. Establish a training strategy for new and existing staff at all levels.
4. Establish a hazard identification and workplace assessment process.
5. Develop and implement risk control.
6. Gain regular feedback and advice from staff.

Workers compensation provides a range of benefits to an employee


suffering from an injury or disease related to their work.

Equal employment opportunity (EEO) refers to equitable policies and


practices in recruitment, selection, training and promotion.ensures best
person for job is chosen-business gains person with most skills required-
encourages positive working environment.

Economic influences: labour has a derived demand- consider effect


due to economic upturns/downturns.
26 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 4: HUMAN RESOURCES

Technological: communications technology, work-life balance, creation


of new jobs, redundancy of others.
Social: changing work patterns: labour fragmentation (increase
in casual work), career flexibility and job mobility, rising female
participation rate, ageing of the workforce, early retirement; living
standards.

Ethics and corporate social responsibility: help to create positive


working environment, motivate and retain staff, create good working
relationships and teamwork, gain customer/community support,
increase reputation-code of conduct and code of ethics-, increased
staff retention rates, improved absenteeism rates, enhanced business
performance, empowerment of staff, improved communication.

Acquisition

The internal and external environment.


Job analysis and job design are required to meet the needs of new
positions. These are undertaken through staff interviews, observations,
and reports from performance appraisals and evaluations. Job
specifications and descriptions can then be developed and prepared for
applications through external or internal recruitment.
Recruitment is the process of locating and attracting the right quantity
and quality of staff to apply for employment vacancies or anticipated
vacancies at the right cost.
Employee selection involves gathering information about each
applicant and using that information to choose the most appropriate
applicant.
Placement involves locating the employee in a position that best
utilises the skills of the individual to meet the needs of the business.
Evolutionary Tutors 2017 27

TOPIC 4: HUMAN RESOURCES

Development

Effective development programs=staff retention, enhanced employee


motivation and commitment, higher performance levels, etc.
Induction: shapes positive attitude of employee, builds employee
confidence, explains job, helps establish good working relationships.
Training: Aim: to seek a L.T change in employees skills, knowledge,
attitudes and behaviour in order to improve work performance in the
business. essential in maintaining staff commitment.-helps a business
stay ahead of the competition.

Key features of an effective training program:

1. Assess the needs.


2. Determine the objectives.
3. Consider the internal and external influences.
4. Determine the process (content of training program, learning methods
to be applied, etc).
5. Evaluate the training program. (tests and surveys, observation,
benchmarking).

Organisational structure: Today organisational structures are less


hierarchical and falter in structure (smaller chain of command,
wider span of control). improved efficiency, effectiveness, employee
autonomy, etc.

Strategies to help motivate and retain talented staff:

Job enlargement increasing the breadth of tasks in a job.


Job rotation (multiskilling) moving staff from one task to another over
a period of time.
Job enrichment increasing the responsibilities of a staff member.
Job sharing where two people share the same job.
Self-managing teams.
28 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 4: HUMAN RESOURCES

Mentoring and coaching where a leader or more experienced


member of staff provides advice and support to another person
developing skills in the area.

Performance appraisal is a process of assessing the performance of an


employee, generally against a set of criteria or standards. assessing
their strengths, weaknesses and opportunities for development. (it
provides feedback, acts as a measurement, helps the business monitor
employee selection, enables business to identify employees training and
development needs).

Performance appraisal tools (BIMC GEP3): behaviour observation scales,


interview, management by objectives, critical incident method, graphic
rating scale, essay evaluation method, performance ranking method,
360-degree feedback.

Maintenance (Communication and workplace culture, employee


participation, benefits, flexible and family-friendly work arrangements,
legal compliance and corporate social responsibility)

Maintenance focuses on the processes needed to retain staff and


manage their wellbeing at work.
Involves looking after staff wellbeing, safety and health, managing
communications effectively, complying with industrial agreements and
legal responsibilities, etc.
Staff wellbeing is maximised through encouraging staff to participate
in decision making.
Effective communication strategies support employee participation
and a strong workplace culture.
Offering family-friendly programs that support work-life balance is
critical.
Poor communication is often reflected in workplace conflict and high
turnover rates.
Methods of communication: team meetings, staff newsletters, social
functions, email.
Evolutionary Tutors 2017 29

TOPIC 4: HUMAN RESOURCES

Recognition of staff achievements is critical in building a positive


workplace culture.
Firms encourage employee participation to improve communication,
empower employees and develop their commitment to improving
quality and efficiency.
Benefits: monetary or non-monetary e.g flexible working
arrangements, health insurance, housing and company car.
Flexible and family-friendly working arrangements. to attract+retain
talented staff.
Creating a workplace where staff treat each other in a respectful,
professional, fair and considerate manner is essential for employee
wellbeing and retention of productive staff.

Separation

Voluntary separation may take the form of resignation, relocation,


voluntary redundancy or retirement.
Involuntary separation may take the form of contract expiry,
retrenchment or dismissal.

Redundancy and retrenchment refer to employees losing their jobs,


where the employees job or work no longer needs to be done. It may
be necessary due to a lack of work, as in the case of a fall in demand
for a product or service, or the position may have been restructured or
replaced by technology.

Dismissal

Summary dismissal is an instant form of dismissal that applies to


employees involved in gross or serious misconduct, such as theft.
Dismissal can also be based on poor performance or redundancy due
to organisational restructuring, a downturn in business or technological
change making a job redundant.
Unfair dismissal occurs where an employee is dismissed by their
employer and they believe the action is harsh, unreasonable or unjust.
30 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 4: HUMAN RESOURCES

The main features of basic management approaches:

The classical authoritative, autocratic (directive) approaches.


The behavioural approach.
The contingency approach.

Leadership styles (DVA PPC)

Directive.
Visionary.
Affiliative.
Participative.
Pacesetting.
Coaching.

Job design is the process of designing the content of a job and how it
will interact with other jobs and employees, so as to motivate and retain
an employee and achieve the businesss goals.

Job analysis is an ongoing process, which is a detailed analysis of all the


tasks, responsibilities, personal attributes and reporting relationships
needed in a position.

Common methods of job design

Job rotation.
Job enlargement.
Job enrichment.
Semi-autonomous work groups.
Cross-functional, team-based matrix structures.
Flexible work structures.
Evolutionary Tutors 2017 31

TOPIC 4: HUMAN RESOURCES

Internal recruitment Advantages

Motivational for staff.


Builds commitment and loyalty.
Employees know the culture + operations productivity maintained.
Cheaper than external recruitment + less chance of failure.

Internal recruitment Disadvantages

Can reinforce negative culture.


Can lead to rivalry for positions.
Little value added, no new skills.

External recruitment Advantages

Wider applicant pool.


Get specific skills needed, saves on training.
More diversity in employment equal employment opportunity.

External recruitment Disadvantages

Risk of unknown staff.


Lost productivity in initial phases of orientation and induction phase.
New employee may not fit culture and may not be accepted by internal
rivals.

General skills: e.g: flexibility, social confidence, motivation, ability to work


as a team or independently.

Objectives of performance management:

Evaluating an individuals performance.


Using that information to develop the individual.
32 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 4: HUMAN RESOURCES

Performance management

Developmental: focused on using data to develop the individual skills


and abilities of employees.
Administrative: provides info, often following an annual appraisal,
which can be used by management for planning in HR functions such as
training development, rewards, etc.
Rewards (MIP) monetary and non-monetary (extrinsic/intrinsic),
individual or group, performance pay.

Global (CSS) costs, skills, supply.

A polycentric staffing approach uses host country (overseas) staffing


with parent country (home) staff in corporate management at its
headquarters.
A geocentric staffing approach uses the staff with the most appropriate
skillset for a particular role and location, and builds a pool of managers
with global experience.
An ethnocentric approach uses parent-country staff in its organisation.

Workplace disputes strikes/lockouts.

Major causes of disputes: disputes relating to negotiation of awards and


enterprise agreements (e.g remuneration, employment conditions, job
security issues).

Resolution of disputes (Memory trick - Natalie Made Gabe Involved)


negotiation, mediation, grievance procedures, involvement of courts
and tribunals.

Negotiation is a method of resolving disputes when discussions


between the parties result in a compromise and a formal or informal
agreement.
Mediation is the confidential discussion of issues in a non-threatening
environment, in the presence of a neutral, objective third party.
Evolutionary Tutors 2017 33

TOPIC 4: HUMAN RESOURCES

Grievance procedures are formal procedures, generally written into an


award or agreement, that state agreed processes to resolve disputes in
the workplace.
Conciliation is a process where a third party is involved in helping two
other parties reach an agreement.
Arbitration is the process where a third party hears both sides of a
dispute and makes a legally binding decision to resolve the dispute.

Benefits and costs of industrial conflict: financial, personal, social,


political, international.

Indicators are performance measures that are used to evaluate


organisational or individual effectiveness.

Indicators (Christian Brothers Chatswood And Aloysius Like Working):

- Corporate culture. the values, ideas, expectations and beliefs shared


by members of the business.
- Benchmarking key variables. informal/performance/best practice/
balanced scorecard benchmarking. Quantitative (e.g variances in labour
budgets, time lost/costs of injuries and sickness, performance appraisals
completed compared with targets, % of goals achieved, levels of labour
turnover)/Qualitative measures (e.g feedback from middle management,
surveys and focus groups about workplace culture, relationships at work,
and the quality of customer service and leadership).
- Changes in staff turnover. increased staff turnover = increased costs,
lost productivity and service quality, lost corporate skills and knowledge,
lack of focused workplace culture in such an environment reduces
employee commitment and loyalty.
- Absenteeism. reflects employee dissatisfaction/conflict. Firms need
to have much higher staffing levels to cope with high absentee levels
therefore revenue is lost as work is disrupted and can lead to lower
productivity and higher labour costs.
- Accidents. direct costs (medical bills, compensation and insurance),
indirect costs (wages and time lost, contamination, wastage, production
delays, repairs, fines, lower morale).
34 Nathan Reidy, Co-Founder of Evolutionary Tutors & 1st in the
State 2014

TOPIC 4: HUMAN RESOURCES

The Lost Time Injury Frequency Rate (LTIFR) = (Number of lost time
injuries x 1,000,000)/(Total hours worked in accounting period). The
LTIFR is the number of lost-time injuries per million hours worked. A lost-
time injury is an event that results in a fatality, permanent disability or
time of one day/shift or move lost from work.

- Levels of disputation. types of industrial conflict: overt manifestations


(strikes, work bans, work-to-rule, lockouts, stand-downs, dismissals,
retrenchments); covert manifestations (absenteeism, high labour
turnover rates, theft and sabotage, reduced productivity (go slow), lack
of cooperation, discrimination, harassment, exclusion from decision
making).
- Worker satisfaction. pay, good relationships with co-workers, enjoy
their work activities, receive relevant training, gain opportunities to grow,
effective leadership, recognised and encouraged, honest and respectful
communication, family-friendly culture, adequate breaks, rewards,
support = employees more satisfied + likely to stay with business.
Evolutionary Tutors 2017 35

Evolutionary
Tutors

We hope you enjoyed these HSC


Business Studies notes!

Remember that learning effectively is not


easy and teaming up with a parent, teacher
and friend is often helpful.

If you are interested in private tutoring for


assistance in learning smarter, not harder,
please shoot me a personal
text at 0425 109 996 or visit
evolutionarytutors.com