Area of Study 1: Large Scale Organisations in Context

Question 1

Define the ‘Triple Bottom Line’

Answer 1

When an organisation includes social responsibility as part of its financial reporting analysis, meaning that not only is to recording income and expenses but also the environmental and social costs of its business activities.

Question 2

Define ethical management:

Answer 2

Ethical management refers to abiding by moral guidelines and “doing the right thing” in the interest of all stakeholder.

Question 3

Define ‘social responsibility’

Answer 3

Managing an organisation in such a way by going beyond the legal requirements to affect the broader community in a positive way.

Question 4

What are some benefits of corporate social responsibility?

Answer 4

Fostering new relationships with stakeholders, improving the position of the organisation in the community, enhancing its reputation and increased staff productivity.

Question 5

What are the three essential characteristics used to define an LSO?

Answer 5

Employing more than 200 people, more than $200 Million is assets and millions of revenue

Question 6

Indicators used to define an LSO:

Answer 6

Market value (on the share market), market share, amount of stores, geographical distribution/global presence (number of countries it distributes its products to)

Question 7

Define the term ‘multinational organisation’

Answer 7

A corporation that has its facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralised head office where they co-ordinate global management.

Question 8

Define ‘corporation’ and give examples:

Answer 8

A form of business operations that declares the business as a separate, legal entity guided by a group of offices known as the board of directors. Examples are Apple, Microsoft and Coca-Cola.

Question 9

Define ‘government business enterprise’ and provide examples

Answer 9

A government business enterprise is government owned and operated. The government had delegated the financial and operational authority of the business. Examples include Metro Trains, Australia Post

Question 10

Define ‘government departments’ and give an example

Answer 10

A sector of a national or state government that deals with a particular area of interest. For example; the Health Department, Police Department, Centrelink, Education Department.

Question 11

Define ‘not for profit organisation’ and provide examples

Answer 11

A type of organisation that does not earn profit for its owners. All of the money earned by of donated is used in pursuing the organisations objectives. Examples include; the Salvation army, UNICEF and the Museum of Modern Arts.

Question 12

Define ‘public private partnerships (PPP)’ and give an example

Answer 12

A constructed agreement between a public agency (federal, state or local) and a private sector entity. The skills and assets of each sector are shared in delivering a service or facility for the use of the general public. E.g Glen Eira Council or Public Parks.

Question 13

What are the similarities and differences between public and private companies?

Answer 13

They are both owned by shareholders. Public can have more than 5 owners, private can only have 2 - 50. Public’s are listen on the stock exchange and have Ltd at the end of their name, Private’s have Pty Ltd.

Question 14

Define ‘objective’

Answer 14

An objective is a desired goal, outcome of specific result that an organisation intends to achieve.

Question 15

Define ‘vision statement’

Answer 15

The vision statement states what the organisation aspire to become

Question 16

Define ‘mission statement’

Answer 16

The mission statement expresses why an organisation exists, its purpose and how it will operate

Question 17

List some objectives many organisations would like to achieve:

Answer 17

Increased profits, increased market share, improved customer service, community involvement and protecting the environment

Question 18

Define the term ‘strategies’ and describe some strategies that would be common to many LSO’s

Answer 18

Strategies are the actions that an organisation take to achieve specific objectives. For example, a marketing objective might be to increase market share by 10%. They will achieve this by targeting a new group of customers, increasing sales by using a new promotional campaign, increasing the number of distribution outlets or improving the performance of quality of the existing product.

Question 19

Identify and Explain the 5 management functions

Answer 19

Human resources: deals with the management of people within an organisation
Marketing: relates to the promotion of the organisation of its products and services
Operations: deals with the day-to-day core activities of the organisation
Finance: includes accounting and all financial management of the organisation
Research and Development: involves developing new ideas and ensuring the organisation remains current

Question 20

How do LSO’s contribute to economic growth?

Answer 20

They provide a huge amount of goods and services which contribute to our GDP.

Question 21

Define ‘GDP (Gross Domestic Product)’

Answer 21

GDP refers to the total monetary value of all goods and services produced in a country over one year.

Question 22

Define ‘balance of payments (BOP)’

Answer 22

The balance of payments is a record of a country’s trade and financial transactions with the rest of the world.

Question 23

How do LSO’s contribute to employment?

Answer 23

LSO’s provide many employment opportunities within the organisation. This helps the economy because if more people are earning money, more people are spending money rather than relying on welfare. Therefore more people are paying off taxes to the government and more money can be spent on public services.

Question 24

How do LSO’s contribute to exports?

Answer 24

LSO’s are commonly large exporters and this assists Australia’s balance of trade (export and import ratio). This is particularly relevant in the manufacture of goods as it also lowers the imports rate and provides for the export of secondary produce.

Question 25

How do LSO’s contribute to research and development?

Answer 25

LSO’s often implement state of the art technology, work practices and management ideas that can have a positive impact throughout industries.

Question 26

How do LSO’s contribute to infrastructure growth?

Answer 26

An LSO cannot operate without facilities such as transport, communications, electricity, gas and water. Governments are encouraged by this to plan infrastructure/public services to support these key industries.

Question 27

Define ‘infrastrcture’

Answer 27

Infrastructure refers to highways, railways, airports, communications systems, education and health facilities, water, gas and electricity supplies.

Question 28

Explain downsizing

Answer 28

Downsizing is when an organisation seeks to reduce the number of staff. It results in the loss of jobs which can harm the economy.

Question 29

Explain outsourcing

Answer 29

Outsourcing often results in job losses, as part of the organisation contracting non-core operations to outside businesses. This often means jobs are lost from the local community to overseas.

Question 30

Explain the effect damage to the environment has on the economy

Answer 30

Activities such as mining, agriculture and manufacturing can have a long term impact on the environment. LSO’s are often major polluters and contribute to greenhouse gases. The government need to use resources to protect the environment and use their tax revenue to repair damage caused by LSO’s. It can also harm the country’s tourism industry.

Question 31

Identify and explain the main parts of the internal environment

Answer 31

The internal/micro environment includes all those things over which the organisation has some degree of control. It refers to the conditions inside the organisation that affect its performance such as management, employees, policies and processes.

Question 32

Identify and explain the parts of the external environment

Answer 32

The external environment includes the things over which the business has little control. It is divided into the operating and macro environment.

Question 33

Explain the ‘operating environment’

Answer 33

An organisation’s operating environment refers to the outside factors which the organisation directly interacts in the course of conducting its business. These include: customers, competitors, suppliers, creditors and lobby groups.

Question 34

Define and then explain ‘customers’

Answer 34

Customers are the buyers and users of the products of an LSO. Organisations must respond to the needs of customers, making sure that the right product is delivered at the right time. High levels of customer service result in improved customer satisfaction.

Question 35

Define, then explain ‘suppliers and creditors’

Answer 35

Suppliers are the people and businesses that supply resources to an organisation, so that it can conduct its operation. Finance is sourced from creditors such as banks, finance companies or other businesses.

Question 36

Define and explain ‘competitors’

Answer 36

Competitors refer to the organisations that offer rival products or services. No only do organisations need to be aware of existing competitors, but they also have to monitor the environment for potential newcomers. Organisations have to monitor any changes in the actions of competitors and respond to them.

Question 37

Define and explain ‘lobby groups’ and the different types (with examples)

Answer 37

Lobby groups are groups of people who attempt to directly influence or persuade an organisation to adopt particular policies. There are: trade unions (employees who want to improve their pay and conditions), consumer groups (ACA - monitor safety, packaging, pricing and advertising) and specific issue groups (e.g youth unemployment, enviro-protection and civil liberties)

Question 38

Define and identify the parts of the macro environment

Answer 38

The macro environment is made up of the broad factors in the economy and society within which the organisation operates. Changes within the macro environment make it necessary for managers to make adjustments to the organisations operations. It includes political, economic and legal influences, social attitudes and technological developments.

Question 39

Explain globalisation

Answer 39

Globalisation is the effect of hi-tech communications, lower transport costs and unrestricted trade and financial flows turning the whole world into a single market, producing a more integrated global economic system

Question 40

Explain political influences and provide an example

Answer 40

Both state and federal government policies impact on organisations. An example of a dominant political issue affecting Australian organisations is the introduction of a goods and services tax (GST) in July 2000. It had a major impact on many aspects of organisational operations, because businesses became responsible for collecting tax on behalf of the government.

Question 41

Explain technological influences and provide examples

Answer 41

Global technological innovation has revolutionised the workplace and every aspect of daily life. Technology can increase efficiency and productivity within a business. It can reduce operating costs and eliminate many boring and repetitive tasks. New communication technologies allow information to be transmitted rapidly to customers.

Question 42

Explain economic influences and provide examples

Answer 42

Changes in economic activity impact on the performance of all LSO’s. When an economy is in downturn, it will most likely mean that customers are not spending as much. Reduced spending translates to reduced profits for business. Another economic influence is the exchange rate. When the exchange rate falls, organisation will find it more expensive to import materials from overseas. Other economic factors include inflation and unemployment.

Question 43

Explain social attitudes and give examples

Answer 43

Society’s attitudes to what is right and wrong are constantly changing and this affects the ways LSO’s operate. Increased access to rapid communications has made the world’s population more acutely aware of what organisation are doing. Pressure from society has forced organisations to implement procedures to preserve and protect the natural environment. Examples include treating all staff with respect and giving back to the community

Question 44

Explain legal influences

Answer 44

Organisations are required to comply with laws made by parliament and rulings set down by courts. Changes in legislation regarding environmental and consumer protection, occupational health and safety, industrial relations and trade practices reform will affect organisations.

Question 45

Define effectiveness

Answer 45

Effectiveness is the degree to which an organisation has achieved its stated objectives.

Question 46

Define efficiency

Answer 46

Efficiency refers to how well an organisation uses resources to achieve objectives. The most efficient use of resources occurs when benefits are greater than the costs of resources employed.

Question 47

Define and identify performance indicators

Answer 47

Performance indicators (PI’s) are specific criteria used to measure the efficiency and effectiveness of the organisations’s performance. PI’s draw informations taken from a variety of sources, such as accounting reports, statistics, data gathered from customer or employee feedback from observation.

Question 48

Define net profit

Answer 48

Net profit, a.k.a ‘the bottom line’, is what remains when expenses are deducted from the revenue earned.

Question 49

Define number of sales

Answer 49

Number of sales measure the number of products sold

Question 50

Define market share

Answer 50

Market share is the proportion of the total market that a business has, often expressed as a percentage, compared to its competitors.

Question 51

Define and explain the ‘rate of productivity growth’ and ‘productivity’

Answer 51

The rate of productivity growth measure the change in productivity in one year compared to the previous year. Productivity is a measure of efficiency that is used by the operations and human resources functions. Productivity will improve if an organisation used fewer inputs to obtain the same level of output, or if more output if produced from the same input.

Question 52

Define a customer satisfaction survey:

Answer 52

A customer satisfaction survey measures how satisfied customers are with the organisations performance. A highly satisfied customer will remain loyal to the organisation, make repeat purchases and generate word-of-mouth business.

Question 53

Define a staff satisfaction survey:

Answer 53

A staff satisfaction survey measures how satisfied staff are within the organisation. Members of staff with positive attitudes towards their job will be more motivated to work more productively.

Question 54

How can staff satisfaction be improved?

Answer 54

Staff satisfaction can be improved by the provision of training and a flexible workplace, management style, corporate culture or by empowering staff to be involved in making decisions.

Question 55

What is ‘level of staff turnover’

Answer 55

Staff turnover measures the number of staff who are leaving the organisation. It can be used as an indicator of the degree of staff satisfaction. Staff turnover means that staff will need to be replaced, resulting in recruiting and training costs and the loss of productivity and knowledge. A decrease in staff turnover = fewer employees leaving.

Question 56

Define ‘number of customer complaints’

Answer 56

Customer complaints indicate whether or not customers are satisfied with the performance of the organisation.

Question 57

Define ‘level of wastage’

Answer 57

The level of wastage measures the amount of waste created by the production process. An organisation manages resources more efficiently by reducing waste, which can cut production costs.

Question 58

Define ‘number of workplace accidents’

Answer 58

The number of workplace accidents indicates how safe the workplace is for employees. Staff members who feel unsafe may not be motivated to perform harder and accidents can stop production.

Question 59

Define stakeholders

Answer 59

Any group or individual that is impacted by or has a vested interest in the activities and future success of an organisation.

Question 60

Define shareholders

Answer 60

Shareholders purchase shares in a company, so they are partial owners. Shareholders want the organisation that they have invested in to be profitable as they receive a proportion of the profits (called dividends)