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    72 views31 pages

    Business Administration Chapter 3

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    abdul rahman Almarzouqi
    business administration chapter 3

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    of 31
    In the previous chapter we saw that businesses have core activities. i However, ice cream or lipstick cannot be made in a factory, and police 1 cannot go out on the street, without support: + Factory workers at Ben & Jerry's and Revion and policemen will not go to work if the salary administrators who support them do not ensure that the right salaries are paid out monthly. + The work becomes more unpleasant if those responsible for determining work clothes have not made the correct choice. + The factory workers of Ben & Jerry's and Revlon can keep working only if someone has made sure that the machines are maintained, * The policemen can only hit the street if their pistols are in good working order, as well as their police cars. Without support, primary activities could probably still run for awhile, but they would quickly come to a standstill, This chapter is about those indirect, supporting actions that do not have to do primarily with the creation of the Product or service. In the first section we will explain what support activities are. In the sections after that we will treat the most important support activities within businesses and organisations, ll Scanned with CamScanner ‘© Noorahott Utgevery 88 pant 1 WHATIS A BUSINESS? ‘management PARCFILF juman resources 3.1 What are support activities in businesses? We cal the actions that do not directly have to do with the creation of a ve duct ora service (for example, the purchase of uniforms) Supporting f tions. The term for the systematic integration of ‘supporting functions is sppnt all activities necessary to support the ort activities. These comprise : nae may activities that add value to the product or service. Support activities do eet make a direct contribution towards the creation of the product or service, But they are still necessary fori. Think for example of a business canteen ora personnel department. One example of a support activity in a hospital is personnel administration or ICT. Education and training are also examples of Supporting activities in a hospital, unless it i a University hospital n that case the education and training of doctors and nurses belong to the primary ‘activities; education is then a core activity (primary activity). ‘Support activities are also called secondary activities. The actions that have to do with secondary processes are called supporting activities or secondary functions. In this chapter all secondary functions are discussed. 3.1.1 Supporting functions ‘Support activities are oriented towards delivering people and resources to primary activities. They feed the primary activities. The support activities deliver the resources (aids) to all primary activities. Secondary or support activities take care that the primary activities can be executed. Managing supporting activities is thus also called resource management. Resource management is, all about the primary question: What does the business have to do in order to optimise the commitment of resources? The general goals of resource management can then be simply derived, namely: ‘the timely provision of People and materials to all processes, in the desired quantities and with the desired quality. ‘We now want to zoom in on support activities. What support activities do we encounter in businesses, and how do these activities relate to the primary activities or functions? A handy abbreviation for remembering ll the supporting functions and associated processes in a business is PARCFILF. With this acronym you cover all the aos portant support activities, tasks, services and/or staff ‘departments within an organisation, The letters stand fore 1 Personnel; ; 2 Administration; 3 Research and development; 4 Communications; 5 Finance; 6 ICT; 7 Legal; 8 Facilities, item 1: Personnel The department that takes care of . personnel affairs is department. This function is therefore known as hun nan resources cere Iman resources management Scanned with CamScanner co noortot gerry 2 suprorr actives in ausesses 89 tem 2: Administration en a business must be controlled, since most stakeholders (parties prognoesa! sei it) expect this. Investors expect annual reports and expect financi government expects environmental reports. The tax authorities management ct financial reports. In addition, it is essential for management to gain information certain management information that enables it to direct processes. Stem 3: Research and development Businesses have to develop continuously. Standing stil means faling behind es for many firms. They need to develop new products, tap new markets, think of eet ‘new techniques and process innovations, and so forth. The department that (un) ‘occupies itself with this is research and development (R&D). RED must tap new markets through innovation tem 4: Communications ‘Communications offers important support for especially large and public businesses. The Communications Department at Shell keeps an eye on the image people have of the business, and tries to ensure that people have the tight information about it. A communication department often has close ties with the media. Item §: Finance ‘The finance department is on the one hand concerned with the administration of financial affairs. On the other, it occupies itself with the financing of the business itself. In many businesses the administration and finance departments ‘are one. In larger businesses they are often separate. enterprise Item 6: ICT resource planning {CT means computerisation. Large businesses have simplified many processes € ~ ‘of control how they run by means of computers and computer programs. Examples are the supply management system of a production firm, called ‘customer relations " ‘management enterprise resource planning (ERP); customer relations systems for service (crm) businesses, called customer relations management (CRM) systems; and Scanned with CamScanner 90 arts facilities ‘management ‘© NoordhottUtgevers by wnat 1s A BUSINESS? for example). When ing (SAP, financial software programmes for bookkeeping ( nate Cr theresa lot of ICT ina business, it makes sent a creat department to ensure that everything works smoothly. : Legal ssa cues ave to deal with many legal matters. Big businesses offen ae a coparate legal department that occupies itso with these, ‘Activities for this department ae the drawing'up of contract, the setting of conditions, and the resolving of disputes such as lawsuits. Item 8: Facilities : 2. ‘The department that takes care of facilis questions isthe facities management department. This department ensures optimal supporting ist be able to work in a well maintained hout problems and have lunch at midday. how the office spaces facilities. Everyone in a business mu office, must be able to park his car wit The facilities management department also thinks about ccan be arranged in a more efficient manner. with regard to the foregoing itis true that there exist businesses or organisations that orient themselves specifically to one of the activities just named. For them, that particular activity is no longer a supporting department but belongs to the primary activities. In a scientific research institute R&D is the core activity and not a supporting process, and the same holds true for the conduct of administration at an administrative office. A second remark is that even in businesses that do not outsource some of these activities entirely, often they call in an external business on a temporary basis to help with less-common activities. Examples are hiring a lawyer temporarily to help the legal department take care of a rare environmental claim, or the temporary hiring of ‘communication experts by the communication department when there is a crisis that needs to be explained, such the major recall by Toyota when tens of thousands of cars turned out to have defective brakes. Of course, In the following sections the most important of the supporting departments named above will be further explored. But first of all we will explain in the following sub-section why the difference between primary and support activities is important. 3.1.2 Difference between primary and support activities Itis important to make a distinction between primary and support activities for the following reasons (among others): + Support activities are often organised differently. Support departments are ‘more independent within a business, while departments primary activities involved in primary activities are more related to each other and need more coordination, For support activities an entirely different sort of leadership is often provided. Between primary activities coordination among the different links is important in order for the process to operate efficiently and be more cost- aware. For secondary, support activities effectiveness (efficacy) is often of ‘more importance than efficiency. Support activities are often oriented towards achieving the goals they were created to fulfil. Some degree of Scanned with CamScanner ‘onoordhot itgeversby staff departments {evotes to itself or to 3 SUPPORT ACTIVITIES IN aUSINESsES 91 . ome ee ae are often clustered into staff departments, while the , ies are often structured in a li ae tured in a line. In Figure 3.1 you see a FIGURE 3.4 Simple line staff organisation Finance Purchasing for) ‘The support activity finance is depicted as a staff department in Figure 3.1 and not in the line with the primary functions purchasing, production and sales. (In Chapter 7 we explore organisation charts further) Purchasing, production and sales in this example add value directly to the product or service. The finance department is a supporting department and adds value only indirectly. Daa ECL INDICATORS in education, but also in many other sectors, attention ds. Overheads are resources that the organisation activities. This has to do with the relation between the Seneny Scanned with CamScanner | sourced to other almost neve" Of quialy. Take for example a 1s in a business are vretivtes this happens regularly. three workers. The owner can easily OWISOLTCE the ree . 6 : ‘do not belong to the primary activities: ty of a new store from experts; Primary activities businesses. With support vegetable store employing following activites, for they do. + Obtaining advice over the viabi ; + Greating a new look, a better impression; + Asking advice over: the organisational structure; + Cleaning the premises. jous examples the owner/entrepreneur hires in businesses to help fa Purchasing and wales are things the owner wil not soon outsource because through these processes he adds direct value and justifies his business's right to exist everything is as it should be, the vegetable store owner has a good understanding of these things; they are his primary activities. In the following section we further develop the various support activities in businesses. FROM PRACTICE ‘Any time, any place, anyhow’ ‘Any time, any place, anyhow’ so read the desires of performance and costs of these departments. The: ‘Martini customers, desires to which the current developments are: ‘customer oriented organisation has to listen to an + Increasing (indirect) costs; pore’ ‘degree. This desire is to have access to * Lack of insight into costs fea insufficient ts and servic pis i 2 a eer ‘moment, from every Performance measurement by management; ie Serena Soetin facility * Unclear value added by staff departments for nies operate ternal cf effectively. But are they also efficient, and can they + ates ofoni a top managers ‘measure their peormance? ‘wing Up budgets that are insufficiently funded, * Readiness to outsource, ‘Supporting departments have often been the neglected step-chidren when it comes to directo rd isight into performance and costs, Ofion thes éeparimonts ar regarded as costcentros, not belonging to the ‘core business! Scanned with CamScanner 8 support actives in ausinesses 93 3.2 Businesses communications Most big businesses have a communications department. The most important ‘communication task is providing information (as desired by the business) to interested parties. Communication supports the primary activities, for example the marketing and sales functions. A communications department makes a business's activities transparent and contributes to its image. 324 Communications ‘The communications department concems itself with, among other things, the following items: ‘Setting internal and external communication policy; Providing communication advice and support to management as well as Staff. After all, every employee communicates, and thereby contributes to the business's reputation; Producing intemal and external publications; + Maintaining contact with the media; + Answering questions from the publi + Translation; + Monitoring use of the visual identity of the business. c We illustrate this with official communication from a large bicycle maker, Trek. - There, communication is provided by a website that is always up to date, a s monthly newsletter and meetings with the public throughout the year. In addition, the department takes care of many collective tasks, above all in the area of (inter)national political lobbies, consultation with the national office for small and medium-sized businesses and several ministries, and providing representation to various commissions, clusters and working groups both in the bicycle industry and in society at large ~ all with the goal of supporting the primary activities. | Once the prevailing opinion was that internal and external communications is ‘Communications professionals had to work on the disappearing, the importance of internal 6 nage oftheir nterprise: that is, its external ‘communication is growing at an unprecedented rate. ad Buta strong image has to be based on identity. The culture of an organisation is __lssuing to the external world a message that is not fed as one ofthe most important factors accepted internally is going to cause problems. more and more the character | munication does not begin with the external of a network, with societal relations going horizontal, arance, but with the internal workings of an tt goes without saying that there are everfewer rise. Certainly now that the boundary between Scanned with CamScanner © Noordhot Vigo by 94 PART 1 WHATIS A BUSINESS? ii nce of communications : : eb does not have the same importance for all businesses. For ral resources, such as oil and gas, in er a ae ean important that it informs local residents, pie camer eee ae pase wa. The nage of such fms arses trough communication oer why do it and how they do it. Se atee a boseoss einai hove tbs lnersaned’ Ato the vast leaking of inthe Gul of Mexico, Bish Petroleum suddenly had much t explain. During such a calamity management has to be able to communicate effectively wih emergency senices, government and other stakeholders, cenmuntstons Businesses that run the risk of causing serous accidents frequently havea plan Communications plan ready in case such a calamity does happen, Business image Communication is also important for the image of a business and for businesses with other objectives than profit-related ones. A business's image, also called its corporate image or corporate identity, is an important valuo. It logical, for example, that businesses, which sponsor bioycle racing, ensure that competitors use no drugs. That could seriously damage the reputation of the bank, Because doping often occurs in bicycle racing, itis risky to sponsor this Sport. When it became known that Tiger Woods had been unfaithfl to his wife, various of his American sponsors dropped him. The Photocopy machine Scanned with CamScanner vy a | meee 3 supeorr actwmes in susinesses 95 aane 2.2 Communication Shell Nigeria @ re Job Search Seam Alert Foote Livewire UNEP Report socoligets Scholarships wreaton Environment csnntresseon Ol ‘Spill ata anteatmatcn NIDAR Reports and Publications Community Media Centre natwat 3.2.1 Development of communications policy Here we are going to describe step by step how a business develops its ‘communications p 1 Target group analysis; 2 Communication goals formulation; 3 Communication strategy; 4 Communication means; 8 Communication style; 6 Evaluation. Item 1: Target group analysis ‘Communications policy begins by identifying and analysing target groups. This means the intemal or external groups to which the business wants to direct the communication: employees, the works council, unions, customers in defined segments, governmental agencies, investors, the media, etc. Item 2: Communication goals formulation Here iti set o make a ditncton between ganeral goals such as: What is the level of service? What impression does the business wi (image)? What information must be made available Scanned with CamScanner © Noorhot Ugo, (9G parr 1 wHaris A BUSINESS? : ication strategy tm . ee ayabintee ‘ensures that the communication targets will be isis xd communication its target groups. In order to set a good communic ai ro rat trina wha ot of conmuncaon wang strategy, in ; direct at which target group. Does it want to: «+ Influence? Influencing a target group may . Panes bbe ‘an approach that applies to this basic strategy ~ when for example a business has an opinion of which it wants to convince be through mass communicationg others. . ; + Enter into a dialogue? Sometimes a business wants to enter into conversation with its target groups. The government often does that through consultation sessions. Shell does that when it hold discussions with environmental groups. = Send information? Sometimes a business is content to present as much information as it can and leave the forming of opinions as much as possible to other parties. tem 4: Communication means When a business has come up with a communication strategy, itis determine which communication means it wants to employ. As a business itis {900d policy to try for a fixed set of channels and means which can be employed according to the objectives and the strategy. It is important that the channels reinforce each other and that the message is focused upon the channel employed. You can classify communication channels as: * Direct mail: mailings, letters, brochures, in-house magazine(G), daily newspapers; * Online: website, intranet, e-newsletter, search engine optimization (so that you appear among the first ‘hits’ on the first page of Google search results) and website banners; + Telephonelemail, + Events: organising one's own events or participating in existing events; * Personal: advisers, workshops and presentations, and customer suppoi: ‘tem 5: Communication style We can distinguish a numberof dimensions of communication style: * Language: adjusting the level of language to each target group. A large financial institution has tobe able to explain a complex financial product t> less educated people as well as co-workers. Itis obvious that that forme: {arget group has less financial knowledge and so less. familiarity with financial jargon, so the level of language should be adjusted, * Figurative language: determining the images the business wants to use and the colours, Albert Hejn always uses the same actor to Portray a friendly Supermarket manager, who above all has to show that he is just as ordinary mer, S0 that he does not project any sort of expensive Visca oy Consistently employing a tightly controlled visual identily house ei an esional and recognisable character. Recurrent elements in @ ‘use style are logo, specific colours, illustrative ‘material, form and typeface. Scanned with CamScanner qnooatotf Utgever bv 2 suppor acrivmes in eusinesses 97 tem 6: Evaluation 'n order continuously to en: Points set out in the list of regularly evaluate it, ‘sure that the commur et nication satisfies the prescribed objectives and the s strategy, a business must Pment of the communications policy i ‘schematically, lunications policy is depicted rave 33 Process scheme for communications polcy 33 Research and development in businesses research and Research and development is a supporting staff department that is often development abbreviated to R&D. This department ‘occupies itself with the development and design of new products and process innovations. We encounter this department in most larger businesses. Above all in those businesses which operate in sectors that change quickly, itis important to constantly review the design and range of products on offer, in order to always be able to react to technological change and (international) competition. Large technological firms ‘such as Philips, Shell and Unilever have quite big R&D departments. For these businesses these supporting departments are of strategic importance. For Philips and Unilever, in fact, i they stopped innovating and developing new products, they would probably cease to exist after a few years, since they would only be able to offer for sale older products, produced by old (expensive) methods, for which there is no longer any demand, FROM PRACTICE outsourcing of R&D by American industry development has been the outsourcing of more and in the 1980s. Since that time large central more R&D activities to emerging countries, such as laboratories in businesses have transferred India, China and Korea, because the costs are lower © Part oftheir programmes to specific business (sve Table 3.4). The expectation is that this ‘and subcontractors in the US and overseas. _ development will contin various reports it is also apparent that ever ’&D is outsourced to independent research Ons, such as universities and national the coming years. Itis difficult to quantify the migration of R&D activities ‘overseas because the involve sensitive information that businesses prefer not to release. Scanned with CamScanner 98 pant WHATIS ASUSINESS? Partner from US ee 146 270 Canad aie 493 a ty dee 0.04 0,04 Milo East 083 oe ee 2265 18,15 29702688 specialised staff departments we balance of R&D activities 9 er Ce cation otras Ditference uso billions 3.3.1 _ Research and development Research and development is important not just for businesses, but also for countries and regions. Businesses are also often supported in their R&D efforts in different countries by the government. By supporting research and development they try to raise the attraction of their country or area for businesses (see Table 3.5). In many large businesses, R&D activities are supervised by specialised staff departments. Many technological novelties are of strategic value for businesses and so are worth money. R&D is outsourced by some businesses while others ‘work with other firms, knowledge centres, universities and research bureaus. The reason for this is on the one hand the high costs associated with research and development, and on the other hand that businesses and knowledge Centres choose to share their knowledge because that delivers greater retv"ns on the research effort. What is developed in business A, business B can => aS input for its research process, and vice-versa. Cross-pollination in resea' delivers more results, TABLE 3.5 The top eight countries in terms of R&D stimulation (as percentage of GOP) one. ee Comey _toteoe —eetsee 1 tea eS 2 Sneden 3.73 3. Firand Bi 4 Japan : a9 8 South Korea a 8 Switserland oon $ : die 78 7 ee te ee Countries i S and businesses keep many statistics about their research and po ms : lopment activites, Intensive research and development is often ress. Thanks to new products, processes and Scanned with CamScanner 2 e ~ 3 support activities in susinesses 99 techniques society advances. The quantity of R&D of a country can be measured by: + the number of patent applications; + R&D budgets; * the number of scientific publications. In Western countries around 3.5% of a business's revenue is spent on research and development. For a high-tech business, such as a chip-maker or a biotechnical business, the figure is many times higher. ‘One sector where large amounts are traditionally spent on research and pharmaceutical development is the pharmaceutical industry (medicines). Other areas where in research and development spending is high are aerospace, medicine, scientific instruments and armaments. The reason firms in these sectors can spend so ‘much on research is their high gross margins of sometimes 60 to 90%. These high margins justify the high risks of failure that this sort of business runs. These high gross margins mean that the cost of production for this sort of Product is often just 10 to 40% of its total price. COE art) eh 1 wae Canon Océ: Océ’s VarioPrint 6000 success story from its | own R&D in Venlo The successful Océ VarioPrint 6000 family of ‘multifunctional copiers was developed by Canon (Océ completely in-house. The R&D centre in Venlo | got to work in 2000 with the idea of launching the fastest back-and white printer in the world six years |_ later on at the Océ Open House 2006 and Ipex 6250 the business claimed to have won a ical solution naturally have to come placement share with this printer series of circa, ‘precisely at the right moment. It allhas to _one-half.'A prominent place, emphasizes Louis van ‘And that ie what happened, Theee years _—_der Linden, ‘in a market where before we were really hardly present. And we continue to grow! 3.3.2 Fundamental vs. applied research By research one frequently thinks of fundamental research — of new discoveries, new chemical bonds, new theories and new formulas. For business these are often not so interesting, The most interesting things are, applications of new techniques and new procedures. For e scientist in a laboratory discovers a new polymer (a so interesting for the scientists in chemical an Scanned with CamScanner 100 pant : WHAT 1s A BUSINESS? CNeot Un, this produc, for example for a shock-absorbing dashb, then discovered for ply that invention in practice, for cars, then it becomes interesting t0 apr RAD departments of large firms always keep track z int te stat ot technology is, what sort of discoveries are being ma 2 = new ications there are. When a certain discovery has the potential to be taken ine production or to develop further, these businesses buy licences. In the us and in Europe businesses often buy or rent licences from Universities and/or research bureaus when a certain product or application is commercially interesting. 3.3.3. _ Different phases of the development process The research and development process for new products or services within businesses consists of six phases. In Table 3.6 these six phases are distinguished. This table also shows the various actions that need to be carried ‘out by the marketing, R&D and production departments and the project manager. ‘BLE 2.8 Phases in the research and development process Development phases Marketin Research Production Project Pk 9 and Sales, and Development and Operations + management and Engineering Phase 1 Target setting Exploration Technical Project- Preliminary research ‘feasibility evaluation _itemisation Phase ‘Target group Function structure Technologies Definitive plan Analysis Phase 3 Usability study Concept Functional Definitive Design draft development specifications choice of c= sept Phase 4 ‘Market preparation Detailed design Dosign and Execution Detailed design production process Phases Market introduction Implementation Production Realisation Realisatior ot Preparation ‘and initiation Phase 6 Customer satis: Product evaluation Pro} i A eee ‘tion Project termination Project evalution {action evaluation Bron: estriol way ronda We will now further clay these six phases: . pa Enea peI2h. In phase 1 a project team needs to be put and some preliminary, explorator ~ tesponsbiliy structure of the project has ne aoe ee ee one responsible for what and who re i Ports to wh i be fixed and a plan needs to be made, a ee Phase 2 Analysis. What is the is the target group? Gommitted? What is the programme ofecuees coo ree ime of requir 0 does the new technology satiye ments? What need or desi Scanned with CamScanner voor Ungerer 2 support acrmes in susinesses 101 Phase 3 Design draft In this phase a use study is done and a concept is developed on the basis of a draft design. In this phase management should start looking for financiers and investors. Phase 4 Deiailed design. In this phase market preparation, optimisation and the production process are all considered. The concept is also evaluated and tests are carried out. Production sketches are made, as well as a production plan, Phase 5 Realisation. In this phase the market introduction of the product is carried out and production started. Management here has to think about packaging, the distribution plan, the sale price, and so forth. Phase 6 After-sales. Items that fall under after-sales are: customer satisfaction, product evaluation, business case evaluation and possibly a plan to improve on the next product introduction. CEC yh 3 Sourve: www.sciencemag.org | Accelerated medicine development through | crowdsourcing | The pharmaceutical industry will try to keep it quiet, | but they are facing hard times. There are too few | drugs in the ‘pipeline’, so that future sources of | income are drying up. Developing and | commercialising a new medicine costs between | EUR 500 milion and EUR 2 billion, Moreover, the | average tumaround time for new medicine approval by the registration authorities is 15 years. In short, it is time for radical changes. This week an article appeared in Science Magazine entitled ‘Repurposing with a Difference! A team led by Mark S. Bogusky (Harvard Business/Medical Schoo!) advocates a radical change in the drug research and evelopment regime. _} How should it work, then? parties. (3) There has been an emergence of sickness-oriented social networks on the Intemet _Inthe Science Magazine article a number of radical _ which assist in the translation of research results "developments are described. (1) Patients and their into new methods of treatment. The convergence of families are prepared to invest time and money these three developments has led to radical new hemselves to initiate and design drug research Possibilities for drug research on a worldwide basis. Grammes. (2) DNA research is affordable and _Jeff Howe (Wired) calls this form of consumer [be brought onto the market by commercial activism ‘crowdsourcing’ Scanned with CamScanner —— 102. parr + WHAT IS A BUSINESS? and development department wok produces fine ; , Inaction, sno quarantoe of commercial auooess ts impr fr research rsults aoe that they also be in a position to Bring a cigs oo a jcky and effectively. THe speed ofthis Pra - conto the mar tomaret, ands important because Ne often is there ready to follow the old. good research he next technology and/or application Figure 3.7. ioune 3.7 Duration from invention to profit PT ee en eG uli Bj BLUNDER / [] SUCCESS ny Philips fails to create a standard! Creating standards is important in industry Unfortunately, only a few businesses are successful | _at setting standards. Take for example the business Philips, which 25 years ago was busy with a technology for playing fims at home, the video recorder. At that time there were a number of technologies being developed simultaneously by various businesses. Philips had its system, called Video 2000, there was the Betamax system and ‘Sony had developed the VHS system. Experts and scientists were all convinced that Philips had developed the best system. But due to aggressive ‘marketing by Sony Phils lost the struggle to become the standard. Philips did succeed later in setting the standard ‘: ‘music playback equipment. The CD is a Philips invention. 34 Management of businessea = °f Personnel / staff in management, of personnel policy and often advises line Scanned with CamScanner Noordhoff Uitgevers by setting labour making union agreements, 'n the following sub-secti cae rces management (HRM) M is that people in businesses are not cost centres; ns. A better use of employees! the organisation. It is a misconception to rather, they Potential leads to better results for think that employees only represent a bring return revisionism Cost. The idea that people are the most important asset of a businese comes human relations Out of revisionism, a management trend of the mid-20th century that wos a movement Predecessor to the human relations movement. Source: www zasestudyne.com Hiring at McDonald’s - 50,000 McJobs in a day McDonald's announced April 19, 2011 as National Hiring Day in the U.S. McDonald's has 14,000 ‘estaurants in the U.S. and has 650,000 employees. ‘On April 19, this figure will be 700,000 employees 'e. roughly four people per restaurant. (McDonald's | has around $2,000 restaurants globally in 117 Countries.) McDonald's will hire 60,000 new employees in ‘Various parttime and full-time positions at crew and | Management levels. The starting wage wil typically i a bemore than $8 an hour. Restaurant managers can the term Mclobs with this effort and teaching its ‘am up to $60,000 a year. McDonald's was also ‘workers important skills, recently selected by Working Mother magazine as x jah nef the best businesses inthe county forhourly Around 7% of restaurant managera and 40% o “empl corporate employoes at McDonald's stated as ae restaurant crow members. And 50 percont of Mclobs - Changing Perception : s ord English Dictionary defines Mclobs as ‘an non. lulating, low-paid job with few prospects! nald's fs looking to change the perception of Scanned with CamScanner Horio Uae 104 PART 1 WHATIS A BUSINESS? y = = ‘McDonald's urges applicants to apply in person at i also be good news fr the American econo tho local restaurant or online. The biggest hing | the national US unemployment rate fs around intate in business history comes in tho wake of | ‘growing number of 24-hour stores. ss Labour is important in the See ah titA butiioce can ise Without labour it is impossible to add sah pete SHOEM’ oad te all sorts of expensive and fancy machines to a ae itis uli ho has to come up wit feato Sioa eae rocosa tis ultimately a person who has to ng machines into the business pr me baja tata, and itis a person who has to regulate and ee 7 agricultural businesses as well it is ultimately people who have to pick the apples and service the thresher for the grain harvest. a But in contrast to machines (fortunately), people have their own opinions an thoy are harder to manage than machines. No wonder that in addition to Production management (the area of specialisation that supervises (automatic) production processes) personnel policy is an area of specialisation within business administration. Personnel policy or personnel management is also called human resources management. The human resources management Specialisation studies everthing to do with people in organisations. This includes human behaviour in organisations, group processes, supervising people, evaluating them, work motivation and experience. All human aspects within the organisation fall under the responsibilty of a human resources manager. HRM is important in businesses with well educated personnel ‘The collected thinking power of well- educated and trained people (such as « ‘an accountancy firm) ensures that businesses can add value to complex Products via complex processes. Especially for these businesses, employees axe an important asset, although they are not on the balance sheet under ‘Assets’ lke a business's buildings. 342 HRM instruments HRM can be divided into a number of areas, namely: * Intake, Matters that HRM professionals deal with in the area of intake are: {Ceruitment and selection, introducing new employees, internships and bringing in temporary workers. Internal mobility. By means of: development, education, functic education, * Outplacement. Things that come into play hore are: assistance to transition (Rother work, outplacement, and dismissal and exit interviews. * Compensation packaging. By means of: ‘compensation policy, work Conditions and evaluation policy. . : Function structuring, Co about labour conditions, function man: {function evaluation), labour condition * Personnel planning. An HRM profe. employees need to be assigned to Career development, management 'on designation, personnel evaluation and 8, sick-leave policy and health policy. “ssional must make plans detailing which € task, when and for what Scanned with CamScanner anor Urges by 2 suproRr acres I eusiNesses 105 + Personnel administratc + Communication ana ioe 21 outs al the preceding must be administered. cat count ye | Human relations Human relations approach to organisations arose ‘ound 1930 and was a reaction to the scientific management approach, or scientific management, ‘After managers within businesses had dissected and classified all production processes with cintifc precision and produced very efficient but ‘monotonous actions for workers to perform, often at "conveyor belt, the Australian researcher Elton Mayo discovered that human relations and the social needs of employees were important for a business. By changing the intensity of the light in a factory you could raise production volumes. Resoarchers noted that it did not matter whether the light was made _ batter or worse. Performance invariably rose. They itimately concluded that performance rose because | | 1910 1920 1930 1940 1950 eaalOn and information. Here itis about relations with the works ‘Peration between departments, union negotiations and so forth. My TRENDS IN BUSINESS oS) esata xd ‘employees felt that attention was being paid to them, Human relations approach put emphasis on the ‘Working person himself. Much attention was also paid to his rights and to further expansion of social legislation, Work could be better organised if the ‘working person could be more independent, more ‘self aware, and could be given more responsibility. ‘Aspects such as having a say and education are Central to this concept. Human relations has devoted extensive attention to various forms of work. structuring (task expansion) and to functional participation forms (including work consultation). 1960 1970 1980 1990 2000 2010 2020 Scanned with CamScanner © Noordhott Uitgever by PART 1 WHATIS A BUSINESS? 106 A quarter of businesses take back outsourced HR tasks ‘Against expectations, the growth in outsourced work fas stale. A qutor of cnt re going fo ake ‘back outsourced recruitment and other HR tasks because the quality of the outsourced work was not sufficient. That is the finding ofthe latest (CT Barometer from Emst & Young. One year ago the ‘consulting fim expressed the expectation that both the volume and the quality of outsourced services ‘would increase. But, above all with HRM and ‘recruitment, there have been surprising developments. The need for outsourcing turns out to have significantly decreased inthe past year. The question of whether they would extend their contract with the outsourcing partner, a quarter of managers | outsourcing of software development and hardware | maintenance is still ising, but call centre growth is asserted that they would again carry out HRM and recruitment themselves. The majority (56%) extended the contract with the current party and 18% switched to a competitor, while 19 were going to allocate the task to a shared service centre. faltering, and for marketing and communication there Is even talk of a decrease. Satisfaction with keeping HRM and recruitment in ‘one’s own hands is clearly higher than satisfaction a soto El] ERNST& YOUN¢ with a 71. Outsourced HR and recruitment activities ‘scored significantly lower, receiving a 6,4. To the Quality In Everything We D. 35 Finance and accounting in business In the abbreviation PARCFILF that we used at the beginning ofthis chapter 8 an acronym for remembering all support activities in a business or oration, ‘ministration and finance were two separate things. And they 7 ; ae = eatanee both these support activities are organised within cs ae rey these ‘Support activities are often clustered in ie eat ‘ost administrative processes have a financial ;Ponent. We will deal frst with administration and then finance, 351 Accounting " A saees or or deliver senices or engage in trade. During these ater 3 a and so ultimately send their customers a bill In their ieee ey bills of their suppliers, take care of the maintenance of aa ‘© sure that their employees are paid and that profits are shin natcholders. In order to provide insight into this process for Scanned with CamScanner ee rrenagement information contol function 8 suPPoRT Activities in usinesses 107 Third parties who also have an interest in lude the tax authorities, shareholders and re financial accounting and stock accounting. ee ia ae administration, But for businesses with largo schubdatvetan, ines — business ~ itis useful to have a soparate stock aod manages . One also speaks in this case of the {Control function within a business. Control has to do with management knowing how to lead and supervise processes along the right ines. Forti, ‘management needs all sorts of data, which ultimately has to be fixed or administered somewhere in the business. For example, think of customer information. ‘operator like British Telecom itis important to know how many customers have been added in the past month and what the level of customer satisfaction is. ‘Why do customers leave? Management also wants to have insight into market information: What is the size of the total mobile Internet market? Or process administration: Through which service businesses is a connection made? How can this process be made more efficient? How often do machines break down? For the management of a telephone 3.5.2 Finance finance department is important for businesses. Finances (capital) are together with personnel an essential factor of production, However, financial management almost never belongs to the primary activities (except for financial institutions). In order to be able to invest, a business needs money, or capital. ‘Afinance department takes care of this in a business, The department is thereby supporting the primary activities. In the economic sense one speaks of capital when one speaks of goods for the continuance, expansion or improvement of production which demand long-term investment. Capital goods are used to produce goods and services, such as machines for manufacturing and trucks for delivering, In order for that capital to be obtained, a business needs capital providers. These can be investors, a bank or shareholders. In the following the most important methods of finance are discussed, namely: banks, investors, leasing arrangements and the stock ‘exchange. it provis : mentite Bisse ‘owes the bank interest, The business ere money it. A loan has a fixed term. The ter the bank a compensation for \ Soterminos how long the loan lasts and by when it should be re repay a loan at the end of the term, or you can pay it back g form of loan is a mortgage. A mortgage is often used to Scanned with CamScanner loan. As long a8 a busing, loan. Itis often annoying ‘goods can be put up as security hen it often looks at what the business ing business to ask a bank to ye and that means that a business doos tain period, while it does have to pay ess costs. A bank often finances smaller ble with an current account. This is nothing more pent f ‘one’s current account. This is financing that grows along with financing needs. Machines are by means of medium-term loans. This means that a machine that at ; also must be paid off within five years ifitis a bank extends long-term loans, for example for ce the purchase of a property with the security of a Leasing arrangements, i Durable capital goods are often leased by businesses these days. Nearly every tal goods can be leased. Transport businesses can lease cks, airlines their aeroplanes arid production businesses their ma re are two types of leasing “1. Financial ‘th a financial lease, the cost of what is to be bought (e.g, a car or machi anced by the lez sing business. This way it is possible to have use of the ight item without first having to save up the purchase amount, Via a monthly vase amount plus interest is either completely or partially od you are therefore not the owner of the bought reantnership only when, at the end of the lease period, the mourt has been paid off. f the entire purchase amount has not been bought item can often be taken over for a price usually not ‘in advance, Financial leasing is therefore best compared with uy SUSE: oi Scanned with CamScanner Item 2: Operational lease With an operational lease the busin« }e8S pays a monthly amo the business 2 monthly to cover all costs, incl reting Operational leasing is therefor The stock exchange Large firms have another and medium-sized busin | How does Coca-Cola integrate sustainability into their operations? For several years its facility in "Brampton, Ontario, one ofits largest in North __ America, has been transforming its manufacturing __ and distribution to save energy, reduce carbon footprint, water usage, and material usage. In this case study we look at the goals, implementation, and progress of the programs put in place by this "$20 billion food and beverage giant. | Coca-Cola's 600,000 equare foot facility in Brampton houses the plant, management team, and. “Warshouse. It has three plastic bottling lines, Including a Dasani ine; one bag-n-box line _ Producing syrup for national accounts; one pre-mix _ The forthe restaurant business, and one canning _ ne. There are 650 plant operators, sales and ‘atipment service representatives, truck drivers, “Warehouse employees, management and staff. ecated within the eco-business zone around Pronto Pearson Intemational Airport, Coca-Cola in ship of Partners in Project Green, Participate in programs to reduce eneray costs, uncover new business lies, and address everyday operational ®8 in a green and cost-effective manner. 30s in this program include Xero, Hewlett-Packard, Walmart, Kraft, 8 suPPorT acriimies IN Businesses 109 Purchase amount is also advanced. Also here the unt of ar 'mortisation and interest. But in addition, }ount for maintenance, insurance and re best compared to renting. Possibility for obtaining money that is closed to small 'esses, They can attract capital via the stock exchange. Xa ie att eed May Social and environmental risks are now one of seven business risk categories and are formally embedded into Coca-Cola's enterprise risk management process. This in tun guides the business processes, including annual planning, three-year business Planning, and internal audit planning. As a result, sustainability decisions are becoming an integral par of the business decision making, ‘commercialization and capital management. Scanned with CamScanner 110. pants wnarts A BUSINESS? ion and comm unications technology Informati 36 in businesses is offen used as a synonym logy (ICT) is oF : munication technol iz wuters and so! information and information ad (17), but itis more than just Se ee communion fr information tori afrs othe integration of (tele)on with technology (C7) The C of Communicatios television and all sorts of audio computers. This means and video processing at included under ICT. ICT is an important suppo! this is that information and commt primary activities in modern bus marketing, sales, all these primary activities ar businesses. Businesses and organisations wit therefore often have part-time staff that telephone, ra nd the associated networ rk supervision are also .t activity for nearly every business. The reason for nication technology supports nearly every ‘ess, Purchasing, production, logistics, are supported by ICT in modern h more than 10 employees running their computers and their infrastructure and software. That ICT is important for supporting primary activities of a webshop in like Lufthansa is fully dependent customer contacts and financial the travel branch sounds logical. But also a business on ICT for all bookings, logistical flows, administration. Most automated production processes in modem businesses are directed by computer. The Internet in modern organisations, just like the telephone, is essential. If the Internet connection fails in a modern business, most employees cannot work any more and might as well be sent home. running of a modern business. The Accounting Software Installation Project started four months ago and is managed by Karin Chung, Karin thought she had everything planned before the Project started. Each business division had trained and informed task force members and six Contractors involved in the project contributed to the work breakdown structure, cost, timeframes and specifications of the project. Karin got all he important role players togethor at the begining ofthe project and conducted a one is Partnoring workshop where all tho major _ S¢counting heads ofthe different divisions, one F Of each task grou : Pandey pe concer ee a ante reason Oi vas to improve team building a ® diferent civsions with its task groups ele The Accounting Software Installation Project Case Study . ICT is thus an important process in the PCY att ‘Two months after the start of the project the firs” »f several problems occurred that should have be: > major concem to Karin as the project manager.» did not address the problems and because o! actions the project was falling apart after four months. No integration of project activities toc! Place and that was the main reason why contrac > ‘were blaming each other and the project was tw: ‘months behind schedule. Although problems have been identi fied that should have been a major concern to Karin, there was no ‘isk scheduling in place from her side. Lack of leadership and poor project management by Karin ‘was a big concern, There was no m

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