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REVIEW
Unit 1 – Unit 8

ESP111

Instructor: Ms Le Thi Huyen

UNIT 1 - MANAGEMENT

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UNIT 1 - MANAGEMENT
KEYTERMS
Management: The process used to accomplish organizational goals through planning, organizing, leading, and
controlling people and other organizational resources.
Manager: An individual who isTitle
Add Contents in charge of a certain group off tasks, or a certain area or department of a
business.
Chief Executive Officer: The most senior manager responsible for the overall performance and success of a
company.
Planning: A management function that includes anticipating trends and determining the best strategies and
tactics to achieve organizational goals and objectives.
Organizing: A management function that includes designing the structure of the organization and creating
conditions and systems in which
Add Contents everyone and everything work together to achieve the organization’s goals
Title
and objectives.
Leading: Creating a vision for the organization and guiding, training, coaching, and motivating others to work
effectively to achieve the organization’s goals and objectives.
Controlling: A management function that involves establishing clear standards to determine whether or not
an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and
taking corrective action if they are not.

Main managerial positions in a business

Chief executive A CEO is the highest-ranking executive in a company. The primary responsibilities
officer (CEO) include: making major corporate decisions, managing overall operations, managing
company resources.
Add Contents Title

Director An appointed or elected member of the board of directors of a company who, with
other directors, has the responsibility for determining and implementing the
company’s policy. They report to the CEO.

Manager Any individual responsible for people, resources or decision-making can be termed a
manager. They have authority over other employees below them in the hierarchy.
Add Contents Title
They direct, motivate and, if necessary, discipline the employees in their section or
department.
Supervisors These are appointed by management to watch over the work of others. This is
usually not a decision-making role. They have responsibility for leading and
controlling a team of people in working towards pre-set goals.

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ROLES OF MANAGERS
Planning
Setting aims and targets for the organization. E.g. to increase market share by 2%.
Organizing Add Contents Title

Managing people and resources effectively towards achieving the aims of the organization;
Making sure staff do not perform overlapping task.
Coordinating
Bringing people and departments together so that they work towards common aims.
Commanding Add Contents Title

Managers are more like to guide, lead and supervise people than just tell them what to do.
Controlling
Checking that the original aims are being met and appraising workers/staff.

THE FUNCTIONS OF MANAGEMENT

Henri Fayol (1841–1925), one of the first management theorists, defined five functions of management. These five functions are necessary
to facilitate the management process. They focus on the relationship between employees and managers.
Planning
All managers need to think ahead. Senior management will establish overall objectives and these will be translated into tactical objectives
for less senior managers. The planning needed to put these objectives into effect is also important. For example, new production or
marketing objectives willAdd
require the planning
Contents Title and preparation of sufficient resources.
Organising resources to meet objectives
Employees need to be recruited carefully and encouraged, via delegation, to take some authority and accept some accountability. Senior
managers should ensure that the structure of the business allows for a clear division of tasks. Each functional department, such as
marketing, is organised to allow employees to work towards the common objectives.
Commanding, directing and motivating employees
This means guiding, leading and overseeing employees to ensure that business objectives are being met. Employee development will help
motivate employees to use all of their abilities at work. Managers should be capable of motivating a team and encouraging employees to
show initiative.
Coordinating activities Add Contents Title
As businesses grow there is a greater need to ensure consistency and coordination between different parts of the business. The goals of
each branch, division, region and employee must be welded together to achieve a common sense of purpose. At a practical level, this
avoids the situation where, for example, two divisions of the same company both spend money on researching into the same new product,
resulting in wasteful duplication of effort.
Controlling and measuring performance against targets
Establishing clear objectives for the business, and for each section within it, establishes targets for all groups, divisions and individuals. It is
management’s responsibility to appraise performance against targets and to take action if underperformance occurs. It is just as important
to provide positive feedback when things go right.

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WHAT’S MANAGEMENT IN BUSINESS?

Management: The process used to accomplish organizational goals through planning, organizing, leading,
and controlling people and other organizational resources.

Add Contents
Management is essentially Title
a matter of organizing people. Managers, especially senior managers, have to set
objectives for their organization, and then WORK OUT how to achieve them. Managers ANALYSE the activities
of the organization and the relations among them. They DIVIDE the work into distinct activities and then into
individual jobs. They SELECT people to manage these activities and perform the jobs. And they often need to
make the people responsible for performing individual jobs FORM effective teams.
Managers have to be good at communication and motivation. They need to COMMUNICATE the organization’s
objectives to the people responsible
Add Contents Title for attaining them. They have to motivate their staff to work well, to be
productive, and to contribute something to the organization. They make decisions about pay and promotion.
Managers also have to MEASURE the performance of their staff, and to ensure that the objectives and
performance targets set for the whole organization and for individual employees are reached. Furthermore,
they have to TRAIN and develop their staff so that their performance continues to improve.
Some managers obviously PERFORM these tasks better than others. Most achievements and failures in
business are the achievements or failures of individual managers

Manager vs Leader
Managers Leaders
Ø Carry out 4 functions: planning, organizing, Ø Do not hold a management position
leading and controlling
Add Contents Title
Ø Have no formal, tangible power
Ø Have a formal title
Ø Followed by followers
Ø Followed by subordinates
Ø Show passion and personal investment in the
Ø Aim to accomplish organizational goals success of his or her followers reaching their
goals
Ø Have authority and power to hire, promote,
discipline and fire employees Ø Have ability to motivate, inspire followership

Ø Management is about efficiency

Add Contents Title and getting
results though systems, processes, procedures,
controls and structure
Ø Managers look at the details, welcome stability,
are good at supervising, and work well as team
members.
Ø Leadership is about effectiveness through trust,
inspiration and people
Ø Leaders look at the big picture, welcome change,
are good at motivating and influencing, and work
well alone (or at the head of teams).

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UNIT 2 - MOTIVATION

UNIT 2 - MOTIVATION

TERMS DEFINITION
Motivation factors that influence the behavior of workers towards achieving business goals; can be increased by: monetary
rewards; non-monetary rewards; introducing ways to give job satisfaction.
Job satisfaction The enjoyment a worker gets from feeling that they have done a good job. There are three ways to motivate
Add Contents
workers Title
to be more committed to their job and work more effectively:
Job rotation (swapping workers round and only doing a specific task for a limited time before swapping round
again).
Job enlargement (extra tasks are added to the job to make it more interesting)
Job enrichment (adding tasks that require more skill and/or responsibility)
Theory X The average person does not like work. Workers must be constantly supervised so they will work. Motivation is
from external factors, e.g. pay schemes where the workers are paid more for increased output.

Theory Y The average person is motivated by internal factors. To motivate workers, you need to find ways to help workers
Add
take anContents
interest inTitle
their work, e.g. give rewards, incentives.
Maslow's A theory of motivation which states that five categories of human needs dictate an individual's behavior. Those
hierarchy of needs are physiological needs, safety needs, love and belonging needs, esteem needs, and self-actualization
needs needs.
Frederick Humans have two sets of needs: one is for the basic needs, which he called hygiene factors or needs, and the
Herzberg’s second is for a human being to be able to grow psychologically, which he called motivational needs or motivators.
motivation theory
Hygiene factors Factors that must be present in the workplace to prevent job dissatisfaction.

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In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human behaviour at work;
they are part of motivational theories. Both the theories, which are very different from each other, are used by managers
to motivate their employees. Theory X and theory Y follow different methodologies of keeping people motivated.

Theory X Theory Y
Ø gives importance to supervision Ø stresses on rewards and recognition
Add Contents Title
Ø presents a pessimistic view of employees’ nature Ø presents an optimistic view of the employees’ nature and
and behaviour at work behaviour at work
Ø Key assumptions: Ø Key assumptions:
• the average employee doesn't like work and will do • employees take responsibility of their actions and work towards
anything to avoid it. achieving the goals of the organization without much supervision.
• the employees need to be threatened or forced to • the workers are more participative and try to solve problems on
work towards the organizational goals. They will their own without relying on supervisors for guidance. This type of
avoid responsibility and the managers have to management style is more common than theory X. In this type of
supervise them at every step. management style, even a small employee can participate in the
Add Contents Title
Ø the management follows an authoritarian style; decision-making process.
there is little delegation of authority from the Ø the management follows a more decentralized approach, which
management. means that the authority is distributed among employees. This
Ø Theory X works on the idea of punishing people to keeps them motivated.
keep the work going Ø In theory Y, promotions, rewards, and recognition play an
important part and these keep employees motivated to work hard
towards achieving goals of the organisation.

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Implications of Theory X and Theory Y

• Quite a few organizations use Theory X today. Theory X encourages use of tight control and supervision. It
Add Contents Title
implies that employees are reluctant to organizational changes. Thus, it does not encourage innovation.
• Many organizations are using Theory Y techniques. Theory Y implies that the managers should create and
encourage a work environment which provides opportunities to employees to take initiative and self-
direction. Employees should be given opportunities to contribute to organizational well-being.
• Theory Y encourages decentralization of authority, teamwork and participative decision making in an
Add Contents Title
organization.
• Theory Y searches and discovers the ways in which an employee can make significant contributions in an
organization. It harmonizes and matches employees’ needs and aspirations with organizational needs and
aspirations.

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Maslow’s Hierarchy of Needs Theory

• Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943.
This theory is a classical depiction of human motivation. This theory is based on the
assumption that there is a hierarchy of five needs within each individual. The urgency of
these needs varies.
Add Contents Title

• According to Maslow, individuals are motivated by unsatisfied needs. As each of these

needs is significantly satisfied, it drives and forces the next need to emerge.
• Maslow grouped the five needs into two categories: Higher-order needs and Lower-
order needs.
ØThe physiological and the safety needs constituted the lower-order needs. These lower-
Add Contents Title
order needs are mainly satisfied externally.
ØThe social, esteem, and self-actualization needs constituted the higher-order needs.
These higher-order needs are generally satisfied internally, i.e., within an individual.

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Maslow’s hierarchy of needs

Self-actualization Development needs

Esteem Respect, recognition

Belonging Friendship, caring

Safety Security, stability,

health

Physiological Food, sleep, air, water

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Implications of Maslow’s Hierarchy of Needs Theory

• The physiological needs: the managers should give employees appropriate salaries to purchase
the basic necessities of life. Breaks and eating opportunities should be given to employees.
• The safety needs: the managers
Add Contents Title should provide the employees job security, safe and hygienic
work environment, and retirement benefits so as to retain them.
• The social needs: the management should encourage teamwork and organize social events.
• The esteem needs: the managers can appreciate and reward employees on accomplishing and
exceeding their targets. The management can give the deserved employee higher job
rank/position in the organization.
• The self-actualization needs:
Add Contents Titlethe managers can give the employees challenging jobs in which the
employees’ skills and competencies are fully utilized. Moreover, growth opportunities can be
given to them so that they can reach the peak.
The managers must identify the need level at which the employee is existing and then those needs
can be utilized as push for motivation.

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Limitations of Maslow’s approach

Criticisms of Maslow’s hierarchy include:
• Not everyone has the same needs, as is assumed by the hierarchy.
Add Contents Title
• In practice it can be very difficult to identify the degree to which each need has been
met and which level a worker is on.
• Money is necessary to satisfy physical needs, yet it might also play a role in satisfying
the other levels of needs. High incomes can increase status and esteem.
• Self-actualisation is never permanently achieved. Jobs must continually offer challenges
Add Contents Title
and opportunities for fulfilment, otherwise regression will occur.

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Herzberg and the two-factor theory

Frederick Herzberg (1923–2000) developed the two-factor theory from research based around
questionnaires and interviews with 200 skilled employees. His aim was to discover:
• those factors that led
Add to them
Contents Title having very good feelings about their jobs; and,

• those factors that led to them having very negative feelings about their jobs.
His conclusions were that:
• Job satisfaction results from five main factors: achievement, recognition for achievement, the
work itself, responsibility and advancement. He called these factors the motivators. He considered
the last three motivators to be the most significant.
• Job dissatisfaction also resulted from five main factors: company policy and administration,
Add Contents Title

supervision, salary, relationships with others and working conditions. He termed these hygiene
factors. These were the factors that surround the job (extrinsic factors) rather than the work itself
(intrinsic factors). Herzberg considered that the hygiene factors had to be addressed by
management to prevent dissatisfaction. However, even if they were in place, they would not, by
themselves, create a well-motivated workforce.

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Herzberg and the two-factor theory

The motivators need to be in place for workers to be prepared to work willingly and to always give of their
best. Herzberg suggested that they could be provided by adopting the principles of job enrichment.
There are three main features of job enrichment and, if these are adopted, then the motivators exist:
Add Contents Title
Ø Complete units of work: Typical mass-production methods often lead to worker boredom. The work
involves the assembly of one small part of the finished product. Herzberg argued that complete and
identifiable units of work should be assigned to workers. This might involve teams of workers rather than
individuals on their own. These complete units of work could be whole sub-assemblies of manufactured
goods, such as a complete engine in a car factory. In service industries, it could mean that a small team of
multi-skilled people, such as waiters, chefs and IT technicians, provide all of the conference facilities in a
hotel. ‘If you wantAdd
people motivated to do a good job, give them a good job to do,’ as Herzberg put it.
Contents Title
Ø Feedback on performance: Regular two-way communication between workers and managers should give
recognition for work well done and could provide incentives for workers to achieve even more.
Ø A range of tasks: To challenge and stretch a worker, a range of tasks should be given. Some of these may,
at least initially, be beyond the worker’s current experience. This fits in well with the self-actualisation
level in Maslow’s hierarchy

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Implications of Herzberg’s two-factor theory

The Two-Factor theory implies that the managers must stress upon guaranteeing the
adequacy of the hygiene factors to avoid employee dissatisfaction. Also, the managers
must make sure that the work
Add Contents Title is stimulating and rewarding so that the employees are
motivated to work and perform harder and better.

This theory emphasize upon job-enrichment so as to motivate the employees. The job
must utilize the employee’s skills and competencies to the maximum. Focusing on the
motivational factors can improve work-quality.
Add Contents Title

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UNIT 3
COMPANY STRUCTURE

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Unit 3 – Company Structure

Organizational The levels of management and division of responsibilities within an organization.
structure
Hierarchy The levels of management in any organization, from the highest to the lowest. A level of hierarchy
refers to managers/ supervisors, other employees who are given a similar level of responsibility in an
Add Contents Title
organization.
Chain of The structure in an organization which allows instructions to be passed down from senior management
Command to lower levels of management.
Span of Control The number of subordinates working directly under a manager.
Directors Senior managers who lead a particular department or division of a business.
Line managers People who have
Add Contents responsibility for people below them in the hierarchy of an organization.
Title

Supervisors Junior managers who have direct control over the employees below them in the organizational
structure.
Staff managers Specialists who provide support, information and assistance to line managers.
Delegation Giving a subordinate the authority to perform a particular task.
Decentralization Taking decision away from the centre of an organization- way from the Head Office.

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Unit 3 – Company Structure

Functional structure
- specialized production, finance, marketing, sales, and human resources departments.
- the production and marketing departments cannot take financial decisions without consulting the finance department.
- Disadvantage: people are often more concerned with the success of their own department than that of the company as a
whole, so there areAddconflicts between,
Contents Title say, finance and marketing or marketing and production over what the objectives are.
Flattening hierarchies and delegating responsibility
- Reduce the chain of command, take out layers of management, and make the organization much flatter. Advanced IT
systems have reduced the need for administrative staff and enabled companies to remove layers of workers from the
structure.
- Typically, the owners of small firms want to keep as much control over their business as possible, whereas managers in
larger businesses who want to motivate their staff often delegate decision making and responsibilities to other people.
Matrix management
- People report to more than one superior (a product manager with an idea could deal directly with the managers responsible
Add Contents Title
for a certain market segment and for a geographical region, as well as managers in the finance, sales and production
departments).
- Matrices involving several departments can become quite complex, so it is sometimes necessary to give one department
priority in decision making.
Teams
- autonomous, temporary groups or teams being responsible for an entire project, and are split up as soon as it is successfully
completed.
- disadvantage: teams are not always very good at decision making, and usually require a strong leader.

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Hierarchical org. structure

The hierarchical structure (Mô hình tổ chức phân quyền)
In a hierarchical structure, there are different layers of the
organisation with fewer and fewer people at each higher
level. In general terms, this structure is often presented as a
Add Contents Title
pyramid.

Add Contents Title

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Features of a hierarchical structure

The main features of a hierarchical structure are levels of hierarchy, chain of command and span of control.
Levels of hierarchy
- Each level in the hierarchy represents a grade or rank of staff.
- Lower levels are subordinate to superiors on a higher level.
Add Contents Title
- The greater the number of levels, the greater the number of different grades or ranks in the organisation.
- A narrow (or tall) organisational structure has many levels of hierarchy and this creates three main problems:
+ Communication through the organisation can become slow, with messages becoming distorted or filtered in some
way.
+ Spans of control are likely to be narrow as there is a clear relationship between the number of levels in a hierarchy
and the average span of control (see Spans of control below).
+ Those on lower levels can feel remote from the decision-making power at the top.
Chain of command Add Contents Title
- Instructions are passed down the hierarchy. Information, for example about sales or output levels, is sent upwards.
- The taller the organisational structure, the longer will be the chain of command, thus slowing down communications.
Spans of control
Spans of control can be either wide (with a manager directly responsible for many subordinates) or narrow (a manager
has direct responsibility for a few subordinates). This difference can be illustrated as a flat organisational structure and
as a tall organisational structure.

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Features of a hierarchical structure

Narrow span of control of three, which is

likely to lead to close control of
Add Contents Title
subordinate employees

Wide span of control of eight, which

is likely to encourage delegation
Add Contents Title

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Features of a hierarchical structure

Advantages of a hierarchical structure
Many businesses are still organised in a hierarchical structure as decision-making power starts at the top,
but may be passed down to lower levels. The rungs on the career ladder for a keen and ambitious
employee are illustrated by theTitle
Add Contents different levels of hierarchy. The role of each individual will be clear and
well-defined. There is a clearly identifiable chain of command. This traditional hierarchy is most
frequently used by organisations based on a role culture, where the importance of the role determines
the position in the hierarchy.

Disadvantages of a hierarchical structure

A hierarchical structure tends to indicate that one-way (top downwards) communication is standard
practice. This is rarely
Add the mostTitle
Contents efficient type of communication. There are no horizontal links between
the departments or the separate divisions, and this can lead to lack of coordination between them.
Managers are often accused of having a narrow vision because they are not encouraged to look at
problems in any other way than through their experience of their own department. This type of structure
is very inflexible and often leads to change resistance. This is because all managers tend to defend both
their own position in the hierarchy and the importance of their own section or department.

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Features of a hierarchical structure

The pyramid-shaped organizational chart is known as a hierarchical org chart. It’s the most
common type of organizational structure - the chain of command goes from the top (e.g., the
CEO or manager) down (e.g., entry-level and low-level employees), and each employee has a
supervisor. Add Contents Title

Pros
• Better defines levels of authority and responsibility
• Shows who each person reports to or who to talk to about specific projects
• Motivates employees with clear career paths and chances for promotion
• Gives each employee a specialty
• Creates camaraderie between
Add Contents Title employees within the same department
Cons
• Can slow down innovation or important changes due to increased bureaucracy
• Can cause employees to act in interest of the department instead of the company as a whole
• Can make lower-level employees feel like they have less ownership and can’t express their
ideas for the company

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Functional organizational structure

A typical business structure is one that is based on departments or functions. These departments are divided
according to the type of work carried out. Structures can be illustrated by means of an organisation chart. A
traditional one, showing functional structure, displays a number of important points about the internal
organisation of this business.
Add Contents Title

Add Contents Title

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Functional organizational structure

Mô hình cơ cấu theo chức năng

Add Contents Title

Add Contents Title

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Functional structure
A functional structure splits an organisation into departments based on their major area of responsibility. The
most common departments in a business are marketing, production (or operations), finance and human resources.
Each of these departments is led by a functional manager. All authority rests with this departmental head. Other
employees are grouped according
Add Contents Titleto their role. For example, in the marketing department there might be sales
managers, market researchers and promotions managers. This type of structure is usually also organised
hierarchically.
Advantages of functional structure
• Employees often display a high level of departmental loyalty and pride in the work of their department.
• It encourages employees to become specialists and this can increase efficiency and productivity.
• Departments are led by managers who are specialists in the functional area.
Disadvantages of functional structure
• The structure is a vertical one and
Add Contents Titlethis often does not allow for good connections between departments.

• Coordination between departments is therefore difficult, for example, when developing a new major project.
• Communication flows through the department heads to the top management, so employees may feel remote
from senior management.
• There might be competition between departments, which may not benefit the whole organisation. For example,
competition for financial resources is based on getting the most for the department and not necessarily
considering what is best for the business as a whole.

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Functional structure

Similar to a hierarchical organizational structure, a functional org structure starts with positions
with the highest levels of responsibility at the top and goes down from there. Primarily, though,
Add Contents Title
employees are organized according to their specific skills and their corresponding function in the
company. Each separate department is managed independently.
Pros
• Allows employees to focus on their role
• Encourages specialization
• Help teams and departments feel self-determined
• Is easily scalableAdd
in any sized
Contents company
Title

Cons
• Can create silos within an organization
• Hampers interdepartmental communication
• Obscures processes and strategies for different markets or products in a company

31

Add Contents Title

Add Contents Title

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Horizontal or flat structure

Mô hình cấu trúc phẳng

Add Contents Title

Add Contents Title

33

A horizontal or flat organizational structure fits companies with few levels between upper management and staff-
level employees. Many start-up businesses use a horizontal org structure before they grow large enough to build out
different departments, but some organizations maintain this structure since it encourages less supervision and more
involvement from all employees.
Pros
• Gives employees more responsibility
Add Contents Title
• Fosters more open communication
• Improves coordination and speed of implementing new ideas
Cons
• Can create confusion since employees do not have a clear supervisor to report to
• Can produce employees with more generalized skills and knowledge
• Can be difficult to maintain once the company grows beyond start-up status
The benefits of a flat organisational structure with wide spans of control:
Add Contents Title
• Each worker is delegated more authority as there is less direct control from a manager who is responsible for many
other employees. 34
• Employee empowerment can be an important motivational force.
• A short chain of command results in better communications: there is a clear link between the number of hierarchy
levels and the spans of control.
• There are few levels of hierarchy so fewer middle managers are needed, reducing business costs. This increases the
average size of each span of control. This helps to demonstrate the clear link between the number of levels of
hierarchy and spans of control.

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Matrix structure

Add Contents Title

Add Contents Title

35

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Matrix structure
This approach to organising businesses aims to eliminate many of the problems associated with the
hierarchical structure. The matrix structure cuts across the departmental lines of a hierarchical chart and
creates project teams made up of people from all departments or divisions
Advantages of a matrix structure
• It allows good communication between all members of the team.
• It cuts across traditional
Add Contents Title between departments in a hierarchy.
boundaries
• There is less chance of people focusing on just what is good for their department as the aim is to focus on the
project and the business as a whole.
• Crossover of ideas between people with specialist knowledge in different areas tends to create more successful
and innovative solutions.
• New project teams can be created quickly so this system is well-designed to respond to changing markets or
technological innovations.
Disadvantages of aAdd matrix structure
Contents Title
• There is less direct control from senior managers as the teams may be empowered to undertake and complete a
36
project.
• Passing down of authority to more junior employees can be difficult for some senior managers to accept.
• Reduced bureaucratic control may be resisted by some senior managers.
• Team members may have two managers to report to. If the business retains levels of hierarchy for departments
but allows cross- departmental teams to be created, each team member has two bosses. This could cause a
conflict of interests.

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Matrix structure

A matrix organizational chart looks like a grid, and it shows cross-functional teams that
form for specialAdd
projects. For example, an engineer may regularly belong to the engineering
Contents Title

department (led by an engineering director) but work on a temporary project (led by a

project manager). The matrix org chart accounts for both of these roles and reporting
relationships.
Pros
• Allows supervisors to easily choose individuals by the needs of a project
• Gives a more dynamic
Add Contentsview
Title of the organization

• Encourages employees to use their skills in various capacities aside37 from their original
roles
Cons
• Presents a conflict between department managers and project managers
• Can change more frequently than other organizational chart types

37

Team-based organizational structure

Add Contents Title

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38

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Team-based organizational structure

A team organizational structure is meant to disrupt the traditional hierarchy, focusing

more on problem-solving, cooperation, and giving employees more control.
Pros Add Contents Title

• Increases productivity, performance, and transparency by breaking down silo mentality

• Promotes a growth mindset
• Changes the traditional career models by getting people to move laterally
• Values experience rather than seniority
• Requires minimal management
• Fits well with Add
agile companies
Contents Title with Scrum or tiger teams
Cons 39
• Goes against many companies’ natural inclination of a purely hierarchical structure
• Might make promotional paths less clear for employees

39

Most organizations have a hierarchical or pyramidal structure, with a single person or a group of people at
the top, and an increasing number of people below them at each successive level. A clear line or chain of
command runs down the hierarchy, so that all employees know who their superior or boss is, to whom they
report, and who their immediate subordinates are, to whom they can give instructions. Some people in an
organization have an assistant who helps them, this is an example of a staff position: its holder has no line
authority, and is not integrated into the chain of command. Yet the activities of most large organizations are
too elaborate to be organized in a single hierarchy, and require functional organization, usually with
production or operations, finance, marketing and personnel departments. Large companies manufacturing a
wide range of products, e.g. General Motors, are normally decentralized into separate operating divisions,
each with its own engineering, production and sales departments. Businesses that cannot be divided into
autonomous divisions with their own markets can simulate decentralization, setting up divisions that use
internally determined transfer prices when dealing with each other. An inevitable problem with hierarchies
is that people at lower levels are unable to make important decisions, but are obliged to pass on
responsibility to their boss, unless responsibilities have been explicitly delegated. One solution to this
problem is matrix management, in which people report to more than one superior: e.g. a brand manager
with an idea can deal directly with the appropriate managers in the finance, manufacturing and sales
departments. Another, more recent, idea is to have a network of flexible groups or teams instead of the
traditional departments, which are often at war with each other; they are formed to carry out a project,
after which they are dissolved and their members reassigned.

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UNIT 4
BUSINESS CULTURE

41

Business Culture
Glocalization a combination of the words "globalization" and "localization." The term is used to describe a
product or service that is developed and distributed globally but is also adjusted to
accommodate the user or consumer in a local market.
Culture the complex system of values, traits, morals, and customs shared by a society
Add Contents Title
Context the stimuli, environment, or ambience surrounding an event

The Lewis developed by linguist and leading cross-cultural specialist Richard D. Lewis. The model divides
Model humans into 3 clear categories, based not on nationality or religion but on BEHAVIOUR,
namely, Linear-active, Multi-active and Reactive
High-context a culture by which the rules of communication are primarily and dominantly transmitted through
culture the Add
useContents
of contextual elements. These include specific forms of body language, the social or
Title
familial status of an individual, and the tone of voice employed during speech. High-context
cultures usually do not have rules that are explicitly written or stated.
42

Low-context a culture whereby most communications take place through verbal language and rules are
culture directly written out or stated for all to view
Power the distribution of power among individuals within a culture and how well unequal levels of
distance power are accepted by those with less power

42
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The Lewis Model was

developed in the 1990s and
articulated in Richard Lewis’s
blockbuster, When Cultures
Add Contents Title
Collide (1996), which won the
US Book of the Month Award
in 1997. Lewis, after visiting
135 countries and working in
more than 20 of them, came
to the conclusion that humans
can be divided into 3 clear
Add Contents Title
categories, based not on
nationality or religion but on 43
BEHAVIOUR. He named his
typologies Linear-active,
Multi-active and Reactive.

43

The Lewis Model

Type Description Needed to
LINEAR- task-oriented, highly- organized planners, organise, plan, see problems, analyse
ACTIVE who complete action chains by doing one consequences, follow consistent policies,
thing atContents
Add a time,Title
preferably in accordance access rational thought, generate data,
with a linear agenda and challenge us objectively
MULTI- emotional, loquacious and impulsive generate enthusiasm, motivate,
ACTIVE people who attach great importance to persuade, create a positive social
family, feelings, relationships, people in atmosphere, access emotions, generate
general. They like to do many things at the dialogue, and challenge us personally
same
Addtime andTitle
Contents are poor followers of
agendas 44

REACTIVE good listeners, who rarely initiate action or harmonise, act intuitively, be patient and
discussion, preferring first to listen to and see the big picture, think and act long-
establish the other's position, then react to term, access feelings, listen, empathize
it and form their own opinion and challenge us holistically

44
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Add Contents Title

45

45

Add Contents Title

Add Contents Title

46

46
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High-context and Low-context Cultures

Depending on the amount of information conveyed, cultures are classified as being high-context and low-
context. These terms were presented by the American anthropologist, Edward T. Hall, in 1976, in his book titled
“Beyond Culture”. He put forth how various cultures function and interact with each other as well as within
themselves. High context and low context are concepts to describe the level of explicit information and the
importance of context Add in a culture’s
Contents Title communication.

- High-context cultures rely heavily on nonverbal and implicit communication.

- Low-context cultures depend on verbal communication and explicit statements. The meaning of their
communication is much more straightforward and less dependent on the context (shared history, cultural norms,
etc.). This is why it is easier for outsiders to enter into a low-context culture; it doesn’t necessitate an in-depth
understanding of cultural norms & values.
- Low-context cultures prioritize the individual over the group and champion values like individualism. This is
again in line with the nature
Add of Title
Contents their communication: meaning is not grounded upon group values, so individuals
can communicate independently.
47
- Because there is no shared group history or values, communication has to be very explicit & precise in low
context cultures, which helps reduce uncertainty. This is also why they often use written agreements, which can
make it seem slightly more formal. Moreover, the rational & task-oriented outlook of these cultures further adds
to the formality.
The terms “high-context” and “low-context” usually refer to nations or language groups, but we can also use
them to talk about smaller groups or settings, such as corporate cultures, international airports, etc.

47

High-context and Low-context Cultures

High-context Cultures
• do not explicitly state their message in words;
instead much of their information is embedded in the
context. This context
Add includes the shared history, the
Contents Title
relationships, and the cultural norms/values shared
by the individuals communicating.
• prioritize the group over the individual, and they
value collectivism. This is also why it is harder for an
outsider to enter into a high-context culture. One
needs to be familiar with the cultural norms and
values of the community so that they don’t miss out
on the important information
Add Contentsshared
Title in the context.
• can seem relatively less formal than low-context
cultures because of the implicit nature of their
communication. Communication is not always
guided by rational or task-oriented decision-making
but is often shaped by emotions, traditions, etc.
Low-context Cultures
• depend on verbal communication and explicit
statements. The meaning of their communication is
much more straightforward and less dependent on
the context (shared history, cultural norms, etc.).
This is why it is easier for outsiders to enter into a
low-context culture; it doesn’t necessitate an in-
depth understanding of cultural norms & values.
• prioritize the individual over the group and champion
values like individualism. This is again in line with
the nature of their communication: meaning is not
grounded upon group values, so individuals can
communicate independently.
48
• communication has to be very explicit & precise in
low context cultures, which helps reduce uncertainty.
This is also why they often use written agreements,
which can make it seem slightly more formal.
Moreover, the rational & task-oriented outlook of
these cultures further adds to the formality.

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High-context and Low-context Cultures

Add Contents Title

Add Contents Title

49

49

Dimension Characterics Strategies

- Help people understand how their work ties into their values and
People place a high importance on laws, beliefs.
rules, values, and obligations. They try - Provide clear instructions, processes, and procedures.
Universalism to deal fairly with people based on - Keep promises and be consistent.
these rules, but rules come before - Give people time to make decisions.
relationships. - Use an objective process to make decisions yourself, and explain
Add Contents Title your decisions if others are involved.
People believe that each circumstance,
- Respect others' needs when you make decisions.
and each relationship, dictates the rules
- Be flexible in how you make decisions.
that they live by. Their response to a
Particularism - Take time to build relationships and get to know people so that
situation may change, based on what's
you can better understand their needs.
happening in the moment, and who's
- Highlight important rules and policies that need to be followed.
involved.
Praise and reward individual performance.
PeopleAdd Contents Title
believe in personal freedom and
Give people autonomy to make their own decisions and to use
achievement. They believe that you
Individualism their initiative. 50
make your own decisions, and that you
Link people's needs with those of the group or organization.
must take care of yourself.
Allow people to be creative and to learn from their mistakes.
People believe that the group is more
Praise and reward group performance.
important than the individual. The
Communitariani Don't praise individuals publically.
group provides help and safety, in
sm Allow people to involve others in decision making.
exchange for loyalty. The group always
Avoid showing favoritism.
comes before the individual.
50
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UNIT 5
RECRUITMENT

51

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52

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Term Description Examples

Job analysis Identification of the tasks and responsibilities to be A receptionist leaves a company and when Human Resources looks at the job
carried out by the person doing the job. description, it is realised that some of the tasks are no longer needed. However, the
business does need someone with more IT skills. The receptionist's job description
therefore needs to be rewritten.
Job description The tasks, duties and responsibilities someone will need The receptionist's job description now includes processing orders onto the computer.
to carry out as part of a specific job. The receptionist is not required to answer as many queries because a new telephone
system now does this.
Job (person) Add Contents
The required qualifications, Title
skills, personal qualities, etc. The receptionist's job specification will need to include IT skills in addition to the
specification for a specific job. usual qualifications and skills of a receptionist.
Internal Vacancy is filled by a person who is an existing employee. Shop assistant is promoted to supervisor. The job is advertised on the company notice
recruitment board or a large business may have a company newspaper or intranet.
External Vacancy is filled by a person who is not an existing A new store manager has been appointed who currently works for another shop. The
recruitment employee and will be new to the business. job was advertised in local newspapers, national newspapers, specialist magazines
and journals, recruitment agencies or centres run by the government (job centres).
Induction An introduction to the business for a new employee. New employee is shown round the business, introduced to other workers, given
training Health &Safety instructions, given information on rules and regulations of the
Add Contents Title business.
On-the-job Training is given at the place of work by watching A production line worker is shown what to do by another experienced production line
53
training another, more experienced employee doing the job. worker.
Off-the-job Training is given away from the place of work itself; can In a classroom using lecture, role play, case studies, or computer simulations.
training be at a different place such as a college or could be at the
business's site, but in a different building.
Redundancy The shedding of employees because the business The business introduces new technology or closes a factory, therefore fewer workers
/retrenchment changes. are needed.
Dismissal The employee is no longer employed because he or she An employee is sacked because he or she is caught stealing stock.
is unsatisfactory in some way.

53

Add Contents Title

Add Contents Title

54

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RECRUITMENT
Ø job analysis - study the tasks and activities to be carried out by the new employee
Ø job description - functions:
• applicants know exactly what the job entails.
Add Contents Title
• allow a job specification to be drawn up, to see if the applicants ‘match up to the job’, so that people
with the right skills will be employed.
• once employed, it shows whether they are carrying out the job effectively. If a dispute occurs about the
employee’s tasks, the job specification can be referred to in order to settle these questions.
job descriptions - contain information about:
• the conditions of employment: salary, hours of work, pension scheme and staff welfare
• training that will be offered
• opportunitiesAddfor promotion
Contents Title
Ø job specification: list of desirable and essential requirements for the job, usually55include:
• the level of educational qualifications
• the amount of experience and type of experience
• special skills, knowledge or particular aptitude
• personal characteristics, such as type of personality.

55

RECRUITMENT
Job description (Mô tả CV) Job specification (Đặc điểm/Tiêu chuẩn CV)
Content lists out the job title, location, job summary, lists out the qualifications, experience,
working environment, duties to be training, skills, emotional attributes,
Add Contents Title
performed on the job, etc. mental capabilities of an individual to
perform the job.
Measures the tasks and responsibilities attached to the the capabilities that the job holder must
job. possess to perform the job
Usefulness offers ample information about the job helps the candidates who are applying for
which helps the management in evaluating a job to analyse whether they are eligible
the jobContents
Add performance
Title and defining the for a particular job or not
training needs of an employee 56

Benefit helps the organisation to be clear about helps the management to make decisions
'Who should do what'. regarding promotion, bonuses, internal
transfers, and salary increases

56

Job Description
Job description includes basic job-related data that is useful
to advertise a specific job and attract a pool of talent.
It includes information such as job title, job location,
reporting to and of employees, job summary, nature and
objectives of a job, tasks and duties to be performed, working
Addand
conditions, machines, tools Contents Title to be used by a
equipment
prospective worker and hazards involved in it.
The main purpose of job description is to collect job-related
data in order to advertise for a particular job. It helps in
attracting, targeting, recruiting and selecting the right
candidate for the right job.
Add Contents Title
It is done to determine what needs to be delivered in a
particular job.
It clarifies what employees are supposed to do if selected for
that particular job opening.
It gives recruiting staff a clear view what kind of candidate is
required by a particular department or division to perform a
specific task or job.
It also clarifies who will report to whom.
57
RECRUITMENT
If the selected candidate already works for the organisation, this is referred to as internal recruitment.
External recruitment is when the successful applicant does not currently work for the business. Internal
recruitment and external recruitment have different advantages
Add Contents Title
Advantages of internal recruitment
• Applicants may already be known to the selection
team.
• Applicants will already know the organisation and its
internal methods so there is no need for induction
training.
• The culture of the organisation will be well
understood by the Addapplicants.
Contents Title
• It is often quicker than external recruitment.
• It is likely to be cheaper than using external
advertising and recruitment agencies.
• It gives internal staff a career structure and a
chance to progress.
• If the vacancy is for a senior post, workers will not
have to get used to a new style of management.
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Job Specification
Job specification is a written statement of educational
qualifications, specific qualities, level of experience, physical,
emotional, technical and communication skills required to
perform a job, responsibilities involved in a job and other
unusual sensory demands.
It also includes general health, mental health, intelligence,
aptitude, memory, judgment, leadership skills, emotional
ability, adaptability, flexibility, values and ethics, manners and
creativity, etc.
Described on the basis of job description, job specification
helps candidates analyze whether are eligible to apply for a
particular job vacancy or not.
It helps recruiting team of an organization understand what
level of qualifications, qualities and set of characteristics
should be present in a candidate57 to make him or her eligible
for the job opening.
Job Specification gives detailed information about any job
including job responsibilities, desired technical and physical
skills, conversational ability and much more.
It helps in selecting the most appropriate candidate for a
particular job.
Advantages of external recruitment
• External applicants will bring new ideas and
practices to the business, which helps to keep
existing employees focused on the future rather
than the past.
• There is a wider choice of potential applicants, not
just limited to internal staff.
• It avoids the resentment sometimes felt by existing
staff if one of their colleagues is promoted above
58
them.
• The standard of applicants could be higher than if
the job is open only to internal applicants.
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1. What are the advantages and disadvantages of internal recruitment?

Advantages
• It is quicker and cheaper than external recruitment, which may involve expensive advertising.
• The person is already known to the business and their reliability, ability and potential are known.
• The person also knows how the organisation works, its structure and what is expected from its employees.
• It can be very motivating for employees to see their fellow workers being promoted – it makes them work harder if they
consider that promotion is possible
Add Contents Titlefor them too.
Disadvantages
• No new ideas or experience come into the business. Other companies may have different ways of working and these
ways may be better in some respects, including making the business more efficient. Internal recruitment does not allow
for these working practices to be brought into the business and this is a major limitation when the industry is changing
rapidly.
• There may be rivalry among existing employees and jealousy towards the worker who gains promotion.
• The quality of internal candidates might be low.
2. What are the advantages and limitations
Add Contents Title of external recruitment?
The benefits of external recruitment include:
59
• External applicants might bring new ideas and this can improve the effectiveness and efficiency of the business.
• There will be a wider choice of applicants with different skills and experience.
• It avoids the risk of upsetting workers when someone who is internal is promoted.
The limitations of external recruitment include:
• It takes longer to fill the vacancy.
• It is more expensive than internal recruitment because of advertising costs and the time spent interviewing candidates.

59

Training is used to:

• introduce a new process or new equipment
• improve the efficiency of the workforce
Add Contents Title
• provide training for unskilled workers to make them more valuable to the company
• decrease the supervision needed
• improve the opportunity for internal promotion
• decrease the chances of accidents.
Training is to achieve one or more of the following:
Add Contents Title
• To increase skills.
60
• To increase knowledge.
• To improve employees’ attitudes to encourage them to accept change and raise awareness, for example, a
need to improve customer service.

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Impact of training on a business and its employees

Training can be expensive. It can also lead to well-qualified employees leaving for a better-paid job once
they have gained qualifications from a business with a good training programme. When one business seeks
to employ well-trained workers from another business, it is sometimes referred to as ‘poaching’.
Add Contents Title
These factors can discourage some businesses from setting up expensive training programmes. In addition,
workers may be less productive during the training programme, especially if off-the-job training is used.
The costs of not training are also substantial. Untrained employees will be less productive, less flexible and
less adaptable. Poorly trained workers often give unsatisfactory customer service. Accidents are likely to
result from workers untrained in health and safety matters, especially in manufacturing businesses or in the
food industry.
There is a significant
Add link between
Contents Title the importance given to the training and development of employees in a
business and the levels of employee satisfaction and motivation. The link between training and the sense of
61
achievement that can result from it was identified by motivational theorists. Without being pushed to
achieve a higher standard or more skills, workers may become bored and demotivated.
The multi-skilling of workers can be a great benefit to a business, especially in times of rapid economic and
technological change.

61

Types of training

Induction training (Đào tạo nhân viên mới)

This should be given to all new recruits. It aims to introduce them to the people they will be working with
most closely, to explain the internal organisational structure, outline the layout of the premises and make
clear essential health and safety issues, such as procedures during a fire emergency.
Add Contents Title
For example: when a person starts a new school, they are shown round, introduced to teachers and told
about their lessons – this is the same type of information you would need to know if you had just joined a
new company.
On-the-job training (Đào tạo trong công việc)
This involves instruction at the place of work. This is often conducted by either the HR managers or
departmental training officers. Watching or working closely with existing experienced members of staff is a
frequent component of this form of training. It is cheaper than sending recruits on external training courses
and the content of Add
the Contents
trainingTitle
is controlled by the business itself. This method of training is only suitable for
unskilled and semi-skilled jobs. 62
Off-the-job training (Đào tạo ngoài công việc)
This covers any course of instruction away from the place of work. This could take place in a specialist training
centre belonging to the company itself or it could be a course organised by an outside body, such as a college,
university or computer manufacturer. Outside training has the added potential of being a source of new
ideas. These courses can be expensive but may be indispensable if the business lacks anyone with the
required degree of technical knowledge.

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Types of Advantages Disadvantages

training
induction - helps new employees to settle into their job quickly - is time-consuming
training - may be a legal requirement to give health and safety training at - means wages are paid but no work is being done
the start of a job by the worker
- means workers are less likely to make mistakes. - delays the start of the employee commencing
their job.
on-the-job - individualAddtuition is given
Contents and it is in the workplace so the
Title - the trainer will not be as productive as usual
training employee does not need to be sent away (travel costs are because they are showing the trainee what to
expensive) do instead of getting on with their job
- it ensures there is some production from the worker while they - the trainer may have bad habits and they may
are training pass these on to the trainee
- it usually costs less than off-the-job training - it may not lead to training qualifications
- it is training tailored to the specific needs of the business. recognised outside the business.
off-the-job - a broad range of skills can be taught using these techniques - costs are high
training - if these courses are taught in the evening after work, they - it means wages are paid but no work is being
are cheaper Add
forContents Title because the employee will still
the business done by the worker
carry out their normal duties during the day - the additional qualifications mean it is easier
63
- the business will only need to pay for the course and it will for the employee to leave and find another job.
not also lose the output of the employee
- employees may be taught a variety of skills, becoming
multi-skilled, and this makes them more versatile – they can
be moved around the company when the need arises
- it often uses expert trainers who have up-to-date knowledge of
business practices.

63

1. Suggest three reasons why employees might leave their job.

2. If a lot of employees left every year, why might this be a problem for the business?
3. Why do businesses carry out induction training?
4. The Royal Garden is a hotel in the centre of a city. It employs many workers in the restaurant and the
Add Contents Title
department which cleans and services rooms. Most of these workers have few skills. In the restaurant
there are also trained employees who work in the kitchens preparing food.
i) The Royal Garden wants to increase the number of restaurants it has and therefore needs to employ more
staff to work in the kitchens. Discuss whether it should use internal or external recruitment for the new chefs
to work in the restaurants.
ii) The Royal Garden has recruited several waiters and waitresses to work in the new restaurants. What type
of training would you suggest the management use to train them? Justify your choice.
Add Contents Title

64

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UNIT 6
BUSINESS SECTORS

65

The primary sector of industry extracts and uses the natural resources of Earth to produce raw materials used by
other businesses.
The secondary sector of industry manufactures goods using the raw materials provided by the primary sector.
The tertiary sector of industry provides services to consumers and the other sectors of industry.
A mixed economy has both a private sector and a public (state) sector.
Add Contents Title
Public sector: the sector of the economy in which organisations are owned and controlled by the state
(government)
Private sector: The sector of the economy in which organisations are owned and controlled by individuals.
Privatisation: The sale of state-owned assets such as public corporations to the private sector.
Sole trader: a business owned and operated by one person.
Limited liability: the liability of shareholders in a company is limited to only the amount they invested.
Unlimited liability: Addthe Contents
owners Title
of a business can be held responsible for the debts of the business they own.
Their liability is not limited to the investment they made in the business.
66
Partnership: a form of business in which two or more people agree to jointly own a business.
Shareholders: the owners of a limited company. They buy shares which represent part-ownership of the company.
Private limited companies: businesses owned by shareholders but they cannot sell shares to the public.
Public limited companies: businesses owned by shareholders but they can sell shares to the public and their shares
are tradeable on the Stock Exchange.

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Term Definition Examples

Primary production Industries that extract and exploit the natural
resources of the earth.
Secondary Industries that manufacture goods made from the
production raw materials provided by the primary sector.
Tertiary production Industries that provide services to consumers and
other sectors of industry.
Add Contents Title
Public sector The sector of the economy in which organisations
are owned and controlled by the state (government). services are in the public sector.
Private sector The sector of the economy in which organisations
are owned and controlled by individuals.
Free market economy All resources are privately owned. Prices are
determined by supply and demand.
Add Contents Title
Planned economy All resources are owned by the government, which
also takes all major economic decisions.
Mixed economy Has both a private and a public sector.
Privatisation The sale of state-owned assets such as public
corporations to the private sector.
Mining, agriculture, forestry and fishing.
Car production, computer assembly, food canning and
steel making.
Travel agents, banking, insurance, health services and
transport.
In most mixed economies, health services and railway
In most mixed economies, retailing and farming
businesses are in the private sector.
There are no 'pure' free market economies but the USA
and South Korea, for example, have very large
private sectors compared to the whole economy.
Former communist countries in Eastern Europe had
planned (or command)
67 economies.
Nearly all countries have mixed economies, but the
balance between private and public sectors is not always
the same.
In many countries, for example, the UK and Germany,
water, telephone and electricity industries have been
privatised.

67

Add Contents Title

Add Contents Title

68

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Types of Business Organisation

Sole trader: the most common form of business organization; owned and operated by just
one person – the Add
owner is the
Contents Title sole proprietor; there are so few legal requirements to set it up.

A partnership: a group or association of at least two people who agree to own and run a
business together; the partners contribute to the capital of the business, usually have a say in
the running of the business and share any profits made.
Franchising: widespread form of business operation; franchisor is a business with a product
or service idea that it does not want to sell to consumers directly; it appoints franchisees to
Add Contents Title
use the idea or product and to sell it to consumers (McDonald’s restaurants and The Body
Shop). 69

A joint venture: two or more businesses agree to start a new project together, sharing the
capital, the risks and the profits.

69

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Add Contents Title

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UNIT 7
PRODUCTION

73

KEY TERMS
Production: the process of converting inputs such as land, labour and capital into saleable goods, for
example shoes and cell phones.
Add Contents Title
Inventories: the stock of raw materials, work-in-progress and finished goods held by a business.
Lean production: the production of goods and services with the minimum waste of resources.
Job production: the production of items one at a time.
Batch production: the production of goods in batches. Each batch passes through one stage of production
before moving onto the next stage.
Flow production:Add theContents
production
Title
of very large quantities of identical goods using a continuously moving
process.
74
Just-in-time (JIT) is a production method that involves reducing or virtually eliminating the need to hold
inventories of raw materials or unsold inventories of the finished product.

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Businesses providing goods can choose from three different types of production process.
These are job production, batch production and flow production.

Add Contents Title

Add Contents Title

75

75

Job production Batch production Flow production

Job production is when individual Batch production involves making a Flow production involves
products are made one at a time to set quantity of identical products. continuously making identical
meet specific customer preferences. This quantity is known as a ‘batch’. products. This allows the production
The batch size could be ten, 10,000 process to be heavily automated.
Add Contents Title
An example would be tailor-made or a million identical products.
suits, which are made specifically to
each customer’s measurements and An example would be a bakery
tastes. making a batch of 100 white bread
rolls and then making a batch of 50
wholemeal bread rolls.

Individual products are made one at

Add Contents Title
Where one group of identical Where identical, standardised
a time to meet specific customer products is made at the same time, products are produced on an
needs. before moving onto producing the assembly
76 line.
next group.

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Add Contents Title

Add Contents Title

77

77

Type of
Advantages Disadvantages
production
Highly skilled staff are required, which increases
Job High profit margins for bespoke products
costs
Employees may gain enjoyment from using their Highly skilled staff may not be available, which
specialist skills can make training staff very expensive
Add Contents Title
Customers get exactly what they want

Not as flexible regarding customers’ tastes as job

Batch Able to make a variety of sizes or flavours
production
As batch production is not fully automated, costs
Can be partially automated
may be higher than in flow production

Can produce more products than job production

Add Contents Title

In competitive markets for similar mass-produced

Flow Able to make far larger quantities 78
goods, profit margins can be very low

Consistency in production means products are identical,

Customers like products that are tailored to their
which means customers know exactly what they are
specific preferences
buying
Expensive to buy all the machinery needed for
Highly automated process
automation

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Type of
Advantages Disadvantages
production
• Skilled labour is often used.
• It is most suitable for personal services or 'one-off' products.
• The costs are higher because it is often labour intensive.
• The product meets the exact requirements of the customer.
• Production often takes a long time
• The workers often have more varied jobs (they don't carry out just one task).
Job • Products are specially made to order and so any errors
• More varied work increases employee motivation - giving them greater job
Production can be expensive to
satisfaction.
correct.
• It is flexible and often used for high-quality goods and services meaning that a
Add Contents Title • Materials may have to be specially purchased leading to
higher price can be charged.
higher costs.
• It can be expensive as semi-finished or finished products
• It is a flexible way of working and production can easily be changed from one
will need moving about.
product to another.
Batch • Machines have to be reset between production batches
• It still gives some variety to workers' jobs.
Production which means there is a delay in production and output is
• It allows more variety to products which would otherwise be identical. This
lost.
gives more consumer choice (for example, different flavours of ready-meals).
• Warehouse space will be needed for stocks of raw
• Production may not be affected to any great extent if machinery breaks down.
materials and components. This is costly.
• There is a high output of a standardised product.
Addand
• Costs are kept low Contents Title
therefore prices are also lower.
• It is a very boring system for the workers, so there is little
• It is easy for capital-intensive production methods to be used - reducing
job satisfaction, leading
79 to a lack of motivation for
labour costs and increasing efficiency.
• Capital-intensive methods allow workers to specialise in specific, repeated employees.
• There are significant storage requirements - costs of
tasks and therefore the business may only need relatively unskilled workers -
Flow inventories of raw materials/ components and finished
little training may be needed.
Production products can be very high.
• It may benefit from economies of scale in purchasing.
• The capital costs of setting up the production line can be
• Low average costs and therefore low prices usually mean high sales.
• Automated production lines can operate 24 hours a day. very high.
• If one machine breaks down the whole production line will
• Goods are produced quickly and cheaply.
have to be halted.
• There is no need to move goods from one part of the factory to another as
with batch production, so time is saved.

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Lean production covers a variety of techniques used by businesses to cut down on waste of resources,
including time, and therefore increase efficiency. It aims to reduce the time it takes for a product to be
developed and become available in the shops for sale. Lean production cuts out any activities which do not add
value for the customer and this can apply to services as well.

Lean production canAdd

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achieved by using the following methods:
Title

Kaizen means ‘continuous improvement’ in Japanese and its focus is on the elimination of waste. The
improvement does not come from investing in new technology or equipment but through the ideas of the
workers themselves. Small groups of workers meet regularly to discuss problems and possible solutions. This
has proved effective because no one knows the problems that exist better than the workers who work with
them all the time, so they are often the best ones to think of ways to overcome them.
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Kaizen eliminates waste, for example, by getting rid of large amounts of inventory
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or reducing the amount of
time taken for workers to walk between jobs so that they eliminate unnecessary movements. When Kaizen is
introduced, the factory floor is re-organised by repositioning machines tightly together in cells, in order to
improve the flow of production through the factory. The floor will be open and marked with colour-coded lines
which map out the flow of materials through the production process.

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The advantages of Kaizen might be:

• increased productivity
• reduced amount of space needed for the production process
• work-in-progress is reduced
• improved layout of the factory floor may allow some jobs to be combined, thereby freeing up
employees to carry out some other job in the factory.
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Just-in-time or JIT is a production method which focuses on reducing or virtually eliminating the need to hold inventories of raw
materials or components and on reducing work-in-progress and inventories of the finished product. The raw materials or
components are delivered just in time to be used in the production process, the making of any parts is undertaken just in time to
be used in the next stage of production and the finished product is made just in time to be delivered to the customer.
- All this reduces the costs of holding inventory, as no raw materials and components are ordered to keep in the warehouse just
in case they are needed.
- Warehouse space is not needed, again reducing costs.
- The finished productAdd Contents Title
is sold quickly and so money will come back to the business more quickly, helping its cash flow.
To operate just-in-time, inventories of raw materials, work-in-progress and finished products are run down and no extra inventory
is kept. The business therefore needs very reliable suppliers and an efficient system of ordering raw materials or components.
Cell production is where the production line is divided into separate, self- contained units (cells), each making an identifiable part
of the finished product, instead of having a flow or mass production line. This method of production improves the morale of the
employees and makes them work harder so they become more efficient. The employees feel more valued and are less likely to
strike or cause disruption.

Benefits of lean production: Costs areTitle

Add Contents saved through:
• less storage of raw materials or components
• quicker production of goods or services 82

• no need to repair defects or provide a replacement service for a dissatisfied customer

• better use of equipment
• cutting out some processes which speeds up production
• less money tied up in inventories
• improved health and safety leading to less time off work due to injury.
Reduced costs can lead to lower prices for customers, businesses being more competitive and possibly also increased profits.

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UNIT 8
LOGISTICS

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Logistics
§ All organizations move materials.
o Manufacturers build factories that collect raw materials from suppliers and
Add Contents Title
deliver finished goods to customers;
o A television news service collects reports from around the world and
delivers them to viewers.
§ Logistics is the function that is responsible for this movement: transport
and storageAddofContents
materials
Title on their journey between suppliers and customers.
§ Millions of people are involved in logistics, and it costs billions
84 of dollars a
year to keep everything moving.

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Logistics
Council of Logistics Management definition:
“Logistics is part of the supply chain process that plans, implements, and controls the
efficient, effective forward and reverse flow and storage of goods, services, and related
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information between the point of origin and the point of consumption in order to meet
customers’ requirements.”

“Logistics là quá trình hoạch định, tổ chức thực hiện và kiểm soát một cách có hiệu quả
quá trình lưu chuyển, dự trữ hàng hóa, dịch vụ và những thông tin liên quan từ điểm
xuất phát đầu tiên đến điểm tiêu dùng cuối cùng nhằm đáp ứng yêu cầu của khách
hàng” Add Contents Title

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Điều 233 luật Thương mại năm 2005 của Việt Nam: “Dịch vụ Logistics là hoạt động
thương mại, theo đó thương nhân tổ chức thực hiện một hoặc nhiều công đoạn bao
gồm nhận hàng, vận chuyển, lưu kho, lưu bãi, làm thủ tục hải quan, các thủ tục giấy tờ
khác, tư vấn khách hàng, đóng gói bao bì, ghi ký mã hiệu, giao hàng hoặc các dịch vụ
khác có liên quan đến hàng hóa theo thỏa thuận của khách hàng để hưởng thù lao.”

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DEFINITIONS
Logistics
Ø Logistics is the function responsible for the flow of materials from suppliers into an organization, and then out to
customers.
Ø Logistics is responsible for moving raw materials, components, finished products, people, information, paperwork,
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messages, knowledge, Title
consumables, energy, money and anything else needed by operations.
Ø Inbound logistics - the area of logistics that involves bringing raw materials, packaging, other goods and services,
and information from suppliers to producers.
Ø Outbound logistics - the area of logistics that involves managing the flow of finished products and information to
business buyers and ultimate consumers (people like you and me).
Materials
Ø Materials are all the things that an organization moves to create its products.
Ø Materials can be both tangible (e.g. raw materials) and intangible (e.g. information or message).
Ø Materials handling - the movement
Add Contents Title of goods within a warehouse, from warehouses to the factory floor, and from
the factory floor to various workstations.
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Products
Ø Every organization delivers products (goods or services) to its customers.
Ø Every product is really a complex package that contains both goods and services.
Pull and Push strategies
Ø Push strategy - Forecast-led: A push strategy aims to keep products in stock even before the customers order them.
Ø Pull strategy – Real-time: A pull strategy produces goods in accordance with the actual demand of the customers

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Control Over the Flow of Inbound and Outbound Movements

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The role of logistics

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The area of logistics that involves bringing goods back to the manufacturer
because of defects or for recycling.

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Activities of Logistics
1. Procurement or purchasing: the flow of materials through an organization is usually initiated when procurement sends a
purchase order to a supplier.
2. Inward transport or traffic actually moves materials from suppliers to the organization’s receiving area.
3. Receiving makes sure that materials delivered correspond to the order, acknowledges receipt, unloads delivery vehicles,
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inspects materials for damage, Title them.
and sorts
4. Warehousing or stores moves materials into storage, and takes care of them until they are needed.
5. Stock control sets the policies for inventory.
6. Order picking finds and removes materials from stores.
7. Materials handling moves materials through the operations within an organization.
8. Outward transport takes materials from the departure area and delivers them to customers.
9. Physical distribution management is a general term for the activities that deliver finished goods to customers,
including outward transport.
10. Recycling, returnsAdd andContents Title
waste disposal. Activities that return materials back to an organization are called reverse
logistics or reverse distribution.
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11. Location. Some of the logistics activities can be done in different locations. Stocks of finished goods, for
example, can be held at the end of production, moved to nearby warehouses, put into stores nearer to customers,
passed on to be managed by other organizations, or a range of alternatives.
12. Communication. Alongside the physical flow of materials is the associated flow of information. This links
all parts of the supply chain, passing information about products, customer demand, materials to be moved,
timing, stock levels, availability, problems, costs, service levels, and so on.

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In a manufacturing or retail business, what are the advantages and

disadvantages of:
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-simply satisfying current demand?
-planning to meet (possible) future demand?

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