Kaplan F1 pg4-633.pdf

freeaccastudymaterial.blogspot.com


freea

ccas

tudym

ateria

l.blog

spot.

com

ACCA

PaperF1

and

FIA

DiplomainAccounting

and

Business

AccountantinBusiness(AB/FAB)

StudyNotes



freea

ccas

tudym

ateria

l.blog

spot.

com

hwiseMyKaplan button

HWiseKaplan QR

hwiseF1

British library cataloguinginpublication data

AcataloguerecordforthisbookisavailablefromtheBritishLibrary.

Publishedby:KaplanPublishingUKUnit2TheBusinessCentreMollyMillarsLaneWokinghamBerkshireRG412QZ

KaplanFinancialLimited,2013

ThetextinthismaterialandanyothersmadeavailablebyanyKaplanGroupcompanydoesnotamounttoadviceonaparticularmatterandshouldnotbetakenassuch.Norelianceshouldbeplacedonthecontentasthebasisforanyinvestmentorotherdecisionorinconnectionwithanyadvicegiventothirdparties.Pleaseconsultyourappropriateprofessionaladviserasnecessary.KaplanPublishingLimitedandallotherKaplangroupcompanies expresslydisclaimallliabilitytoanypersoninrespectofanylossesorotherclaims,whetherdirect,indirect,incidental,consequentialorotherwisearisingin relationtotheuseofsuchmaterials.

PrintedandboundinGreatBritain.

Acknowledgements

WearegratefultotheAssociationofCharteredCertifiedAccountantsandtheCharteredInstituteofManagementAccountantsforpermissiontoreproducepastexaminationquestions. TheanswershavebeenpreparedbyKaplanPublishing.

Allrightsreserved.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmitted,inanyformorbyanymeans,electronic,mechanical,photocopying,recordingorotherwise,withoutthepriorwrittenpermissionofKaplanPublishing.

ii KAPLAN PUBLISHING



freea

ccas

tudym

ateria

l.blog

spot.

com

Contents

Page

Chapter 1 Thebusinessorganisation 1

Chapter 2 Businessorganisationandstructure 17

Chapter 3 Organisationalcultureinbusiness 51

Chapter 4 Informationtechnologyandinformationsystemsinbusiness

67

Chapter 5 Stakeholdersinbusinessorganisations 89

Chapter 6 Externalanalysispoliticalandlegalfactors 103

Chapter 7 Externalanalysiseconomicfactors 127

Chapter 8 Externalanalysissocial,environmentalandtechnologicalfactors

189

Chapter 9 Competitivefactors 213

Chapter 10 Professionalethicsinaccountingandbusiness 231

Chapter 11 Governanceandsocialresponsibilityinbusiness 257

Chapter 12 Lawandregulationgoverningaccounting 285

Chapter 13 Accountingandfinancefunctionswithinbusiness 305

Chapter 14 Financialsystemsandprocedures 327

Chapter 15 Therelationshipbetweenaccountingandotherbusinessfunctions

363

Chapter 16 Auditandfinancialcontrol 379

Chapter 17 Fraud,fraudulentbehaviour,andtheirpreventioninbusiness

405

Chapter 18 Leadership,managementandsupervision 427

Chapter 19 Recruitmentandselectionofemployees 455

Chapter 20 Individual,groupandteambehaviour 485

Chapter 21 Motivatingindividualsandgroups 507

KAPLAN PUBLISHING iii



freea

ccas

tudym

ateria

l.blog

spot.

com

Chapter 22 Learningandtrainingatwork 529

Chapter 23 Reviewandappraisalofindividualperformance 553

Chapter 24 Personaleffectivenessatwork 575

Chapter 25 Communicatinginbusiness 603

iv KAPLAN PUBLISHING



freea

ccas

tudym

ateria

l.blog

spot.

com

PaperIntroduction

v

chapterIntroduction



freea

ccas

tudym

ateria

l.blog

spot.

com

How to Use the Materials TheseKaplanPublishinglearningmaterialshavebeencarefullydesignedtomakeyourlearningexperienceaseasyaspossibleandtogiveyouthebestchancesofsuccessinyourexaminations.

Theproductrangecontainsanumberoffeaturestohelpyouinthestudyprocess.Theyinclude:

Thesectionsonthestudyguide,thesyllabusobjectives,theexaminationandstudyskillsshouldallbereadbeforeyoucommenceyourstudies.Theyaredesignedtofamiliariseyouwiththenatureandcontentoftheexaminationandgiveyoutipsonhowtobesttoapproachyourlearning.

Thecomplete text or essential textcomprisesthemainlearningmaterialsandgivesguidanceastotheimportanceoftopicsandwhereotherrelatedresourcescanbefound.Eachchapterincludes:

(1) Detailedstudyguideandsyllabusobjectives(2) Descriptionoftheexamination(3) Studyskillsandrevisionguidance(4) Completetextoressentialtext(5) Questionpractice

Thelearning objectivescontainedineachchapter,whichhavebeencarefullymappedtotheexaminingbody'sownsyllabuslearningobjectivesoroutcomes.Youshouldusethesetocheckyouhaveaclearunderstandingofallthetopicsonwhichyoumightbeassessedintheexamination.

Thechapter diagramprovidesavisualreferenceforthecontentinthechapter,givinganoverviewofthetopicsandhowtheylinktogether.

Thecontentforeachtopicareacommenceswithabriefexplanationordefinitiontoputthetopicintocontextbeforecoveringthetopicindetail.Youshouldfollowyourstudyingofthecontentwithareviewoftheillustration/s.Theseareworkedexampleswhichwillhelpyoutounderstandbetterhowtoapplythecontentforthetopic.

Introduction

vi KAPLAN PUBLISHINGvi KAPLAN PUBLISHING



freea

ccas

tudym

ateria

l.blog

spot.

com

Test your understandingsectionsprovideanopportunitytoassessyourunderstandingofthekeytopicsbyapplyingwhatyouhavelearnedtoshortquestions.Answerscanbefoundatthebackofeachchapter.

Summary diagrams completeeachchaptertoshowtheimportantlinksbetweentopicsandtheoverallcontentofthepaper.Thesediagramsshouldbeusedtocheckthatyouhavecoveredandunderstoodthecoretopicsbeforemovingon.

Question practiceisprovidedatthebackofeachtext.

Icon Explanations

Definition Keydefinitionsthatyouwillneedtolearnfromthecorecontent.

Key PointIdentifiestopicsthatarekeytosuccessandareoftenexamined.

Expandable textExpandabletextprovidesyouwithadditionalinformationaboutatopicareaandmayhelpyougainabetterunderstandingofthecorecontent.Essentialtextuserscanaccessthisadditionalcontentonline(readitwhereyouneedfurtherguidanceorskipoverwhenyouarehappywiththetopic)

IllustrationWorkedexampleshelpyouunderstandthecorecontentbetter.

Test Your UnderstandingExercisesforyoutocompletetoensurethatyouhaveunderstoodthetopicsjustlearned.

Tricky topicWhenreviewingtheseareascareshouldbetakenandallillustrationsandtestyourunderstandingexercisesshouldbecompletedtoensurethatthetopicisunderstood.

Formoredetailsaboutthesyllabusandtheformatofyourexam,pleaseseeyourCompleteTextorgoonline.

Online subscribers

Paper background

Objectives of the syllabus

Core areas of the syllabus

KAPLAN PUBLISHING vii



freea

ccas

tudym

ateria

l.blog

spot.

com

Syllabus objectives and chapter references

The examination

Examination format

Paperbased examination tips

Computerbased examination (CBE) tips

Study skills and revision guidance

Preparing to study

Three ways of taking notes

Revision

Further reading

YoucanfindfurtherreadingandtechnicalarticlesunderthestudentsectionofACCAswebsite.

Introduction

viii KAPLAN PUBLISHING



freea

ccas

tudym

ateria

l.blog

spot.

com

ThebusinessorganisationChapter learning objectives

Uponcompletionofthischapteryouwillbeableto:

definebusinessorganisationsandexplainwhytheyareformed describecommonfeaturesofbusinessorganisations outlinehowbusinessorganisationsdiffer listtheindustrialandcommercialsectorsinwhichbusiness

organisationsoperate identifythedifferenttypesofbusinessorganisation:commercial,

notforprofit,publicsector,nongovernmentalorganisations,cooperatives.

1

chapter

1



freea

ccas

tudym

ateria

l.blog

spot.

com

1Business organisations and the reason they are formed 1.1 What is a business organisation?

Defininganorganisationisdifficultastherearemanytypesoforganisationswhicharesetuptomeetavarietyofneeds,suchasclubs,schoolscompanies,charitiesandhospitals.

WhattheyallhaveincommonissummarisedinthedefinitionproducedbyBuchanan and Huczynski.

Organisationsaresocialarrangementsforthecontrolledperformanceofcollectivegoals.

Notethethreekeyaspectsofthisdefinition:

collectivegoals socialarrangements controlledperformance

Afootballteamcanbedescribedasanorganisationbecause:

Ithasanumberofplayerswhohavecometogethertoplayagame. Theteamhasanobjective(toscoremoregoalsthanitsopponent). Todotheirjobproperly,themembershavetomaintainaninternal

systemofcontroltogettheteamtoworktogether.Intrainingtheyworkouttacticssothatinplaytheycanrelyontheballbeingpassedtothosewhocanscoregoals.

The business organisation

2 KAPLAN PUBLISHING2 KAPLAN PUBLISHING

What is an organisation?

Illustration 1 Football team



freea

ccas

tudym

ateria

l.blog

spot.

com

Eachmemberoftheteamispartoftheorganisationalstructureandisskilledinadifferenttask:thegoalkeeperhasmoreexperienceinstoppinggoalsbeingscoredthanthoseintheforwardlineoftheteam.

Inaddition,theremustbeteamspirit,sothateveryoneworkstogether.Playersareencouragedtodotheirbest,bothonandoffthefield.

Whichofthefollowingwouldbeconsideredtobeanorganisation?

(i) Asoletrader(ii) Atennisclub(iii) AhospitalA (i),(ii)and(iii)B (i)and(ii)onlyC (ii)and(iii)onlyD (i)and(iii)only

1.2 Why do we need organisations?

Organisationsenablepeopleto:

Thisresultsinsynergywhereorganisationscanachievemorethantheindividualscouldontheirown.

Share skills and knowledgethiscanenablepeopletoperformtasksthattheywouldbeunabletoachieveontheirown.Knowledgecanalsobesharedbetweenallthepeoplewithintheorganisation.

Specialiseindividualworkerscanconcentrateonalimitedtypeofactivity.Thisallowsthemtobuildupagreaterlevelofskillandknowledgethantheywouldhaveiftheyattemptedtobegoodateverything.

Pool resourceswhethermoneyortime.

chapter 1

KAPLAN PUBLISHING 3

Test your understanding 1



freea

ccas

tudym

ateria

l.blog

spot.

com

Jaredisorganisingasocialevent.Whichofthefollowingwouldbebenefitsofhimformingacommitteetomanagetheplanningprocessandtheeventitself?

(i) Itwouldhelptoovercomehislimitations,bybringingonboardotherpeoplewithdifferentskillstohim.

(ii) Itwouldsavetimethroughthejointeffortsofeveryoneonthecommittee.

(iii) ItwouldhelptosatisfyJaredssocialneeds.(iv) Allmembersofthecommitteewouldhavetobeskilledinallaspects

ofmanagingthesocialevent.A (i),(ii)and(iii)onlyB (i),(iii)and(iv)onlyC AlloftheaboveD Noneoftheabove

2Different types of organisation

Aswehavediscussed,differentorganisationshavedifferentgoals.Wecanthereforeclassifythemintoseveraldifferentcategories.

2.1 Commercial versus notforprofit

Commercial organisations

Commercial(orprofitseeking)organisationsseetheirmainobjectiveasmaximisingthewealthoftheirowners.

Therearethreecommonformsthatacommercialcompanycantake:

Notethatinbothoftheseorganisations,theownerofthebusinessisnotlegallyseparatefromthebusinessitself.Ifapartnershipissuedbyacustomer,thecustomerisactuallysuingtheownerofthebusiness.

Sole traderstheorganisationisownedandrunbyoneperson. Partnershipstheorganisationisownedandrunbytwoormore

individuals.

Limited liability companiesacompanyhasaseparatelegalidentitytoitsowners(whoareknownasshareholders).Theownersliabilityislimitedtotheamounttheyhaveinvestedintothecompany.


4 KAPLAN PUBLISHING




freea

ccas

tudym

ateria

l.blog

spot.

com

IntheUK,therearetwotypesoflimitedcompany:

Private limited companies(withLtdaftertheirname)thesetendtobesmallerbusinesses,oftenownedbyafewshareholders.Sharescannotbeofferedtothegeneralpublic.

Public limited companies(withplcaftertheirname)thesecanbemuchlargerbusinesses.Sharescanbeofferedtothegeneralpublic,meaningthattherecanbemillionsofdifferentshareholders.Thismakesiteasierforthecompanytoraisefinance,enablingfurthergrowth.

Not for profit organisations

Notforprofitorganisations(NFPsorNPOs)donotseeprofitabilityastheirmainobjective.Instead,theyseektosatisfytheparticularneedsoftheirmembersorthesectorsofsocietythattheyhavebeensetuptobenefit.

NFPsincludethefollowing:

governmentdepartmentsandagencies(suchasHMRevenueandCustoms)

schools hospitals charities(suchastheRedCross,OxfamandDoctorsWithout

Borders) clubs.

TheobjectivesofdifferentNFPswillvarysignificantly:

Hospitalsexisttotreatpatients. Councilsmayseetheirmissionascaringfortheircommunities. Governmentorganisationsusuallyexisttoimplementgovernment

policy. Acharitymayhaveprovisionofrelieftovictimsofdisastersasitsmain

objective.

chapter 1

KAPLAN PUBLISHING 5

Illustration 2 NFP examples



freea

ccas

tudym

ateria

l.blog

spot.

com

2.2 Public versus private sector organisations

Public sector organisations

Thepublicsectoristhepartoftheeconomythatisconcernedwithprovidingbasicgovernmentservicesandiscontrolledbygovernmentorganisations.

Theorganisationsthatmakeupthepublicsectorvaryfromcountrytocountry,butgenerallyinclude:

police military publictransport primaryeducation healthcareforthepoor

Private sector organisations

Theprivatesectorconsistsoforganisationsthatarerunbyprivateindividualsandgroupsratherthanthegovernment.

Theprivatesectorwillthereforenormallyinclude:

Withinthesewillbebothprofitseekingandnotforprofitorganisations.

businesses charitiesand clubs.


6 KAPLAN PUBLISHING

Illustration 3 Public sector organisations

Illustration 4 Private sector



freea

ccas

tudym

ateria

l.blog

spot.

com

Manyschoolsrunfundraisingeventssuchasftes,wheretheintentionistomakeaprofit.Thismakesthemprofitseeking.

Isthisstatement:

A TrueB False

Nongovernmental organisations (NGOs)

Anongovernmentalorganisationisonewhichdoesnothaveprofitasitsprimarygoalandisnotdirectlylinkedtothenationalgovernment.

NGOsoftenpromotepolitical,socialorenvironmentalchangewithinthecountriestheyoperate.

NGOsinclude:

theRedCross DoctorsWithoutBorders Greenpeace AmnestyInternational.

2.3 Cooperatives

Cooperativesareorganisationsthatareownedanddemocraticallycontrolledbytheirmembersthepeoplewhobuytheirgoodsorservices.

Theyareorganisedsolelytomeettheneedsofthememberowners,whousuallyshareanyprofits.

IntheUK,thelargestexampleofacooperativeistheCooperativeGroup,whichhasover5.5millionmembersandoperatesindiversemarkets,suchasbanking,travelandgroceries.

chapter 1

KAPLAN PUBLISHING 7

Illustration 5 NGOs

Illustration 6 Cooperatives




freea

ccas

tudym

ateria

l.blog

spot.

com

Whichofthefollowingareusuallyseenastheprimaryobjectivesofcompanies?

(i) Tomaximisethewealthofshareholders(ii) Toprotecttheenvironment(iii) TomakeaprofitA (i),(ii)and(iii)B (i)and(ii)onlyC (ii)and(iii)onlyD (i)and(iii)only

Whichofthefollowingorganisationsismostlikelytobeclassifiedaspartofthepublicsector?

A AcharityB AsocialclubC AschoolD Apubliclimitedcompany

3Sectors in which organisations operate

Afurtherdifferencebetweenorganisationsisthemarketinwhichtheyoperate.Therearealargenumberofdifferentsectors,whichinclude:

Thisisnotanexhaustivelist,butitshouldgiveyousomeideaofthewiderangeofactivitiesthatsupportorganisations.

Agriculture production,processingandpackagingoffoodstuffs. Mining extractionandprocessingofminerals. Financethisincludesbanksandothercompaniesthatprofitthrough

investmentsandthelendingofmoneytoothers. Retailerssaleofgoodsproducedbymanufacturerstoconsumers. Serviceproductionofintangiblegoodsandservices. Transportationmovementofgoodsbetweenlocations.


8 KAPLAN PUBLISHING





freea

ccas

tudym

ateria

l.blog

spot.

com

4Summary

Insummary,thereareanumberofkeydifferencesbetweenthevarioustypesof organisations.Theseinclude(butarenotlimitedto):

Inspiteofthesedifferences,thedifferenttypesoforganisationsoftenfacesimilarissuestoeachother.Forinstance,mostwillhaveemployeesthatneedtobemotivated.Manyorganisationswillneedtodesignstrategiesforthefuture,orwillneedtoconsiderwhatsystemsshouldbeputinplacetoensuretheaccuraterecordingoftransactions.

Itisthesecommonissuesthatwearegoingtoexamineinmoredetailinthecomingchapters.

Ownershipprivatesectororganisationsarelikelytobeownedbyindividualownersorshareholders(dependingonthetypeoforganisation).Publicsectororganisationswillbecontrolledbythegovernment,whilecooperativeswillbeownedbytheirmembers.

Objectivesasmentioned,eachorganisationhasverydifferentgoals.Thiscanrangefromtheprovisionofsocialservices(forcharitiesandpublicsectororganisations)tothemaximisationofownerwealth(forprofitseekingorganisations).

Activitiestheactivitiesofanorganisationwillbedesignedtosupportitsobjectives.Thismeansthatorganisationalactivitiesareasvariedastheorganisationsthemselves!

Sources of fundingpublicsectororganisationswilltendtoraisemoneyfromthecentralgovernment.Privatesectororganisations,suchascompaniesandcooperatives,willmostlikelyhavetoraisefundsfromtheirowners.Charitiesareusuallyfundedbydonations.

Sizeorganisationsvaryinsizefromlarge,multinationalcompaniestosoletradersconsistingofonlyoneperson.

Liabilitytheownersofsoletradersorpartnershipsareliableforanylossestheirbusinessesmake.Ownersofcompaniesenjoylimited liability.

chapter 1

KAPLAN PUBLISHING 9



freea

ccas

tudym

ateria

l.blog

spot.

com

Chapter summary


10 KAPLAN PUBLISHING



freea

ccas

tudym

ateria

l.blog

spot.

com

5Practice questions

Whichofthefollowingstatementsregardingtypesofbusinessiscorrect?

A PartnershipsareownedandrunbyoneormorepeopleB PrivatelimitedcompaniescansellsharestothepublicC ShareholdersincompaniestypicallyhavelimitedliabilityD Theownersofsoletraderstypicallyhavelimitedliability

GreenWatchisanindependentenvironmentalcharitysetuptolobbythegovernmentforimprovedenvironmentalregulationonbusiness.WhattypeoforganisationisGreenWatchmostlikelytobeclassedas?

A PublicsectorB CooperativeC NongovernmentalD Commercial

WhichofthefollowingisNOTabenefitthatorganisationshaveoverindividuals?

A TheyallowthesharingskillsandknowledgeB Theyenablepeopletoperformtaskstheywouldbeunableto

achieveontheirownC TheyenablesynergytobeachievedD Theyspeedupthetimetakentomakedecisions

chapter 1

KAPLAN PUBLISHING 11






freea

ccas

tudym

ateria

l.blog

spot.

com

Whichofthefollowingstatementsregardingorganisationsarecorrect?

(i) Companiestendtoraisemoneyfromcentralgovernment.(ii) Mostsoletradersandpartnershipshavetheaimofmaximising

ownerwealth.(iii) Publicsectororganisationsarecontrolledbythecentral

government.(iv) Charitiesformpartofthepublicsector.A (i)and(ii)onlyB (iii)and(iv)onlyC (ii)and(iii)onlyD (ii)and(iv)only

Herearefourstatementsrelatingtothefeaturesofdifferenttypesoforganisation:

Required:

(0.5 marks each, total = 3 marks)

A Thistypeoforganisationcansellitssharestothepublic.B Thistypeoforganisationisownedandrunbytwoormorepeople

whoarelegallyindistinguishablefromtheorganisationitself.C Thistypeoforganisationiscontrolledbythegovernment.D Thistypeoforganisationisownedanddemocraticallycontrolledby

itsmembers.

(a) Identifythedescriptionabovewhichisassociatedwitheachofthefollowingtypesoforganisation,byselectingA,B,C,Dornone.(i) Privatelimitedcompany(ii) Partnership(iii) Publiclimitedcompany(iv) Cooperative(v) Publicsectororganisation(vi) Soletrader







freea

ccas

tudym

ateria

l.blog

spot.

com

Required:

WritedownwhichtwooftheabovearemostlikelytobeclassifiedaspartoftheprivatesectorbyselectingTWOofthelettersfrom(A,B,C,D).

(0.5 marks each, total = 1 mark)

(4 marks)

(b) Belowarefourtypesoforganisation:A CharitiesB SchoolsC LimitedcompaniesD Policeforces

chapter 1




freea

ccas

tudym

ateria

l.blog

spot.

com

Test your understanding answers

The correct answer is C

Asoletraderwouldnormallybesomeoneworkingontheirown,sotherewouldbenocollectivegoals.

The correct answer is A

Statement(iv)wouldnotbetrue,asorganisations(whichthiscommitteecouldbeclassifiedas)allowforspecialisation.Notallofthememberswouldhavetobeskilledatperformingallofthenecessarytasks.

The correct answer is B False

Schoolsrunfundraisingactivitiestohelppayforextrabooks,e.g.toimprovethequalityofeducationgiventopupils.Theprimaryobjectiveiseducational,notprofit.Themoneymadeatthefteisthusameansnotanend.

The correct answer is D

Whileprotectingtheenvironmentistobeencouragedandisreinforcedwithinstatutetosomedegree,itisnotaprimaryobjectiveofthecompany.Companiesexistprimarilytomaximisethereturntotheirowners.









freea

ccas

tudym

ateria

l.blog

spot.

com


Publicsectororganisationswillbecontrolledbythecentralgovernment.Thisisunlikelytobeacharity,acompanyorasocialclubwhicharetypicalexamplesoftheprivatesector.

Notethataprivatelyownedandoperatedschoolcouldbepartoftheprivatesector,butschoolsarestillthemostlikelyfromthelisttobepublic.


Soletradersdonotenjoylimitedliabilityas,legally,theyarenotseparatefromtheirowners.Onlypubliclimitedcompaniescanissuesharestothepublicandpartnershipscannotbeownedbyoneperson!


Asacharity,GreenWatchisnotcommercialasitdoesnothaveaprofitmakingobjective.Itisnotobviouslycontrolledbythecentralgovernment,meaningthatitisnotinthepublicsector.Italsoclearlydoesnotmeetthedefinitionofacooperative,whichisanorganisationthatiscontrolledbythepeoplewhobuyitsgoods.


Forminganorganisationmeansthatpeopleworkcollectively.Typicallythiswillmeanthatdecisionmakingwillbecomeslower,asmorepeople(withpotentiallydifferingideas)areinvolvedinthedecisionmakingprocess.

chapter 1








freea

ccas

tudym

ateria

l.blog

spot.

com


Companiesusuallyraisemoneyfromsourcesotherthanthecentralgovernmentandcharitiesarepartoftheprivatesector,ratherthanthepublicsector.

(a) Thecorrectanswersare:(i) None

(ii) B

(iii) A

(iv) D

(v) C

(vi) None

(b) Theprivatesectorreferstoorganisationsthatarerunbyprivateindividualsandgroupsratherthanthegovernment.Therefore,thecorrectanswersare AandC.







freea

ccas

tudym

ateria

l.blog

spot.

com

BusinessorganisationandstructureChapter learning objectives


describethedifferentwaysinwhichformalorganisationsmaybestructured:entrepreneurial,matrix,functional,divisional(bygeographicalarea,byproductorbycustomertype),boundaryless(virtual,hollowormodular)

explainbasicorganisationalstructureconcepts:separationofownershipandcontrol,separationofdirectionandmanagement,spanofcontrolandscalarchain,tallandflatorganisations,outsourcingandoffshoring,sharedservicesapproach

explainthecharacteristicsofthestrategic,tacticalandoperationallevelsintheorganisationinthecontextoftheAnthonyhierarchy

explaincentralisationanddecentralisationandlisttheiradvantagesanddisadvantages

describetherolesandfunctionsofthemaindepartmentsinabusinessorganisation:researchanddevelopment,purchasing,production,directserviceprovision,marketing,administrationandfinance

explaintheroleofmarketinginanorganisation: thedefinitionofmarketing themarketingmix therelationshipofthemarketingplantothestrategicplan.

17

chapter

2



freea

ccas

tudym

ateria

l.blog

spot.

com

1Organisational structure

Organisationalstructureisconcernedwiththewayinwhichworkisdividedupandallocated.

Itoutlinestherolesandresponsibilitiesofindividualsandgroupswithintheorganisation.

Thereareseveralpossiblewaysinwhichanorganisationcanbestructured.Forthisexamyouneedtobefamiliarwitheachofthem,aswellasbeingabletoweighuptheiradvantagesanddisadvantages.

Thestructureofmostorganisationswillchangeovertimeasthecompanygrows.Atypicalpatternofstructuralchangewouldbeasfollows:

1.1 Entrepreneurial

Thisstructureisbuiltaroundtheownermanagerandistypical of small businesses in the early stages of their development.

Itisalsooftenfoundwheretheentrepreneurhasspecialistknowledgeoftheproductorservicethattheorganisationoffers.

Advantages Disadvantages

Fastdecisionmaking. Moreresponsivetomarket. Goalcongruence. Goodcontrol. Closebondtoworkforce.

Lackofcareerstructure. Dependentonthecapabilities

ofthemanager/owner. Cannotcopewith

diversification/growth.

Business organisation and structure




freea

ccas

tudym

ateria

l.blog

spot.

com

1.2 Functional/departmental structure

Functionalorganisationsgrouptogetheremployeesthatundertakesimilartasksintodepartments.

Thistypeofstructureisoftenfoundinorganisationsthathaveoutgrowntheentrepreneurialstructure.

Itismostappropriateforsmallorganisationswhichhaverelativelyfewproductsorlocationsandwhichexistinarelativelystableenvironment.


Economiesofscale. Standardisation. Specialistsmorecomfortable. Careeropportunities.

Empirebuilding. Slow. Conflictsbetweenfunctions. Cannotcopewith

diversification.

1.3 Divisional/product structure

Thisstructureoccurswhereanorganisationissplitintoseveraldivisionseachoneautonomouslyoverseeingaproduct(i.e.separatedivisionsforcarsandmotorbikes),ageographicsection(i.e.separatedivisionsforUSandEurope)orevenbycustomer(i.e.separatedivisionsthatlookaftercorporateclientsandprivateclients).

Eachdivisionislikelytohaveafunctionalstructure,withallthedepartmentsitneedsinordertooperateinitsparticularmarketsegment.

Divisionsarelikelytoberunasprofitcentres,withtheirownrevenues,expenditureandcapitalinvestments.Eachdivisionisaseparatelyidentifiablepartoftheoverallorganisation,whichisoftenreferredtoasastrategic business unit(SBU).

chapter 2


Advantages & disadvantages of functional structures

Advantages & disadvantages of entrepreneurial structures



freea

ccas

tudym

ateria

l.blog

spot.

com

ALtdisacompanythatmanufacturestwodifferentproductstoastersandtelevisions.Theproductsrequiredifferentcomponentsandrequiredifferentadvertisingandsales.

ALtdthereforeoperatesadivisionalstructure,withatoastersdivisionandatelevisiondivision.Eachdivisionhasitsownsales,purchasing,HRandadvertisingdivisions.

Thefinancedepartment,however,isstilloperatedcentrally.


Enablesgrowth. Clearresponsibilityfor

products/divisions. Trainingofgeneralmanagers. Easilyadaptedforfurther

diversification. Topmanagementfreeto

concentrateonstrategicmatters.

Potentiallossofcontrol. Lackofgoalcongruence. Duplication. Specialistsmayfeelisolated. Allocationofcentralcostscan

beaproblem.



Illustration 1 Divisional structure

Advantages & disadvantages of divisional structures



freea

ccas

tudym

ateria

l.blog

spot.

com

1.4 Geographically structured

Thisissimilartothedivisionalstructure,butinvolveseachdivisioncoveringaspecificlocation.

Forexample,aglobalcompanymaybesplitintodifferentdivisionsbasedongeographicareas.TheremaybeadivisionthatlooksaftertheorganisationsAsianoperations,onethatcoversEuropeandanotherdivisionforAmerica.


Enablesgeographicgrowth. Allowslocaldecisionmaking. Clearresponsibilityforareas. Trainingofgeneralmanagers. Topmanagementfreeto

concentrateonstrategicmatters.

Asfordivisionalstructureabove.

1.5 Matrix structure

Matrixstructuresareacombinationofthefunctionalanddivisionalstructures.

chapter 2


Product v geographic divisional structure



freea

ccas

tudym

ateria

l.blog

spot.

com

Thematrixrequiresdualreportingtotwodifferentmanagers.Forexample,lookingatthediagramabove,anemployeemanufacturingproductAwouldhavetoreporttothemanageroftheproductiondepartmentandthemanagerinchargeofproductA.

Theaimofthematrixstructureistocombinethebenefitsofboththedivisionalandfunctionalstructures.


Advantagesofbothfunctionalanddivisionalstructures.

Flexibility. Customerorientation. Encourageteamworkandthe

exchangeofopinionsandexpertise

Dualcommandandconflict. Dilutionoffunctionalauthority. Timeconsumingmeetings. Higheradmincosts.

Considerthefollowingstatements:

(i) Underthefunctionalstructure,eachdepartmentoperatesasastrategicbusinessunit.

(ii) Thematrixstructurewillenablerapiddecisionmakingwithintheorganisation.



Advantages and disadvantages of matrix structures




freea

ccas

tudym

ateria

l.blog

spot.

com

Whichofthestatementsis/arecorrect?

A (i)onlyB (ii)onlyC BothD Neither

MplcisalargecompanythatoperatesincountryG.Itmanufacturesseveraldifferentproducts,eachofwhichishighlycomplexandextremelyspecialised.Itssaleshavegrownsignificantlyoverthelastseveralyears,witheachofitsproductsproducingaroughlyequalamountofM'soverallrevenue.

WhichorganisationalstructureismostlikelytobeappropriateforM?

A GeographicB DivisionalC FunctionalD Entrepreneurial

1.6 Boundaryless structure

Thisisacontemporarymodeloforganisationaldesign,whichadoptsamoreflexibleapproachtostructure.

Boundarylessorganisationsare,essentially,anunstructureddesignthatisnotconstrainedbyhavingachainofcommandorformaldepartments,withthefocusinsteadbeingonflexibility.

Thereareanumberofdifferenttypesofboundarylessorganisationsthatyouneedtobeawareofhollow,virtualandmodular.

Hollow organisations

Holloworganisationssplittheirfunctionsintocore(i.e.strategicallyimportant)andnoncoreactivities.Anythingwhichisclassifiedasnoncoreisoutsourcedtootherorganisations.

Outsourcingreferstothecontractingoutofaspectsoftheorganisationsworktospecialistproviders.Wewilllookatoutsourcinginmoredetailinchapter8.

chapter 2





freea

ccas

tudym

ateria

l.blog

spot.

com

Forexample,anaccountancytrainingorganisationmightoutsourcelessimportantfunctions(suchaspayroll)toathirdpartyorganisationspecialisinginpayrollprocessing.Corefunctions,suchastrainingstudents,wouldbekeptinhouseandundertakenbyemployeesofthecompany.

Virtual organisations

Thisoccurswhereanorganisationoutsourcesmanyofitsfunctionstootherorganisationsandsimplyexistsasanetworkofcontracts,withveryfew,ifany,functionsbeingkeptinhouse.

Forexample,manyinternetretailerscouldbeseenasvirtualcompanies.Theirproductsareboughtinfrommanufacturers,salesaredeliveredtocustomersbythirdpartycouriersandeventheirwebsitesmaybemaintainedandhostedbyexternalITspecialists.

Thereis typicallyonlyasmallcentralstaffwithinavirtualbusiness, whocoordinateallofthesedifferentthirdpartiesandensurethattheircustomersneedsarethereforemet.

Modular organisations

Theseareexamplesofboundarylessmanufacturingcompanies.Ratherthansimplymakingtheirownproduct,theybreakthemanufacturingprocessdownintomodulesorcomponents.Eachcomponentcanthenbemadebythecompanyoroutsourcedtoanexternalsupplier.

Forexample,amobilephonemanufacturermaypayexternalmanufacturerstomakesomekeycomponentsforitshandsetssuchasprocessorsandscreens.Thesearethenassembledbythemanufactureralongwithothercomponentsithasmanufactureditself.

Inextremecases,themanufacturingofallcomponentscanbeoutsourced,meaningthatthecompanysimplyassemblesthemtocreateitsfinalproduct.

2Other basic organisational concepts

Aswellasthedifferenttypesoforganisationstructure,youneedtobeawareoffourotherkeystructuralconcepts.

2.1 Separation of direction and management

Ownershipandmanagementoflargerorganisationsareoftenseparated.Thisisespeciallycommoninlargercompanies,wheretheowners(shareholders)electdirectorstorunthecompanyontheirbehalf.

Inordertoensurethatdirectorsarerunningthebusinessinthebestinterestsoftheowners,manysafeguardsandcontrolsareputinplace.Thesewillbedealtwithinmoredetailinchapter11.





freea

ccas

tudym

ateria

l.blog

spot.

com

Notethatdirectionandmanagementmayalsobeseparatedinlargerorganisations.Directorsmaylackthetimetodealwitheveryissuethatarisesinthedaytodayrunningoftheorganisation.Theywillthereforeappointmanagerstoundertakethesetasksforthem.

Thisleavesthedirectorsfreetofocusoncreatingandmanagingthehighlevelstrategiesfortheorganisation,whilethemanagersfocusonthedaytodayoperationalissues.Forexample,thedirectorsmaydecidethattheorganisationisgoingtolaunchanewproduct,orwillopenachainofnewstores.Themanagerswillbeinchargeofdecisionssuchashiringandfiringjuniorstaffanddealingwithcustomercomplaints.

Inasmallcompanythereisusuallyadivorceofownershipandcontrol.

Isthisstatement:

A TrueB False

2.2 Scalar chain

Thisisthelineofauthoritywhichcanbetracedupordownthechainofcommand,fromthemostseniormemberofstafftothemostjunior.Itthereforerelatestothenumberoflevelsofmanagementwithinanorganisation.

2.3 Span of control

Amanagersspanofcontrolisthenumberofpeopleforwhomheorsheisdirectlyresponsible.

Thefactorsthatinfluencethespanofcontrolinclude:

the nature of the workthemorerepetitiveorsimplethework,thewiderthespanofcontrolcanbe.

the type of personnelthemoreskilledandmotivatedthemanagersandotherstaffmembersare,thewiderthespanofcontrolcanbe.

the location of personnelifpersonnelarealllocatedlocally,ittakesrelativelylittletimeandefforttosupervisethem.Thisallowsthespanofcontroltobecomewider.

chapter 2





freea

ccas

tudym

ateria

l.blog

spot.

com

Considerthefollowingstatements:

Whichofthesestatementsis/arecorrect?

(i) Thescalarchainrelatestothenumberofpeopleoverwhomamanagerhasauthority.

(ii) Abusinesswithhighlyskilled,motivatedmembersofstaffwilltendtohaveawiderspanofcontrolthanabusinesswithdemotivatedemployees.


2.4 Tall and flat organisations

Atallorganisationhasmanylevelsofmanagement(alongscalarchain)andanarrowspanofcontrol.

Aflatorganisationhasfewlevelsofmanagement(ashortscalarchain)andawidespanofcontrol.



Test you understanding 4



freea

ccas

tudym

ateria

l.blog

spot.

com

Itisworthnotingthattallorganisationstendtobemorebureaucraticandtakelongertomakedecisions,duetothelargenumberoflevelsofmanagementthatneedtobeinvolved.

Flatorganisationstendtohaveweakercontrolandfewerchancesforemployeestoprogressorbepromotedwithintheorganisation.

Ifamanagerialstructurehasmanylevelsofmanagement,isitlikelytohaveanarroworwidespanofcontrolateachlevelofmanagement?

2.5 Offshoring

Offshoringreferstotheprocessofoutsourcingorrelocatingsomeofanorganisationsfunctionsfromonecountrytoanother,usuallyinanefforttoreducecosts.

Forexample,manycompaniesintheUKhavemovedtheircustomercallcentrestoothercountries,suchasIndiaandthePhilippines.ThesecountrieshavesignificantlylowerwageratesthantheUK,makingthe callcentrescheaperfortheoffshoringcompanytooperate.

chapter 2





freea

ccas

tudym

ateria

l.blog

spot.

com

Whilethecostsavingscanbesignificant,offshoringcancreateadditionalproblemsfortheorganisation,includingproblemswithculturaldifferencesandlanguagebarriers.

2.6 Shared Services Approach

Thisapproachinvolvesrestructuringtheprovisionofcertainserviceswithintheorganisationsothatinsteadoftheservicebeingfoundinseveraldifferentpartsoftheorganisationitiscentralisedintoonespecificpartoftheorganisation.

Forexample,amediumsizedbusinessmayhaveacoupleofstaffineachdepartment(i.e.sales,production)thatdealwithITforthatpartoftheorganisation.

AsharedservicesapproachwouldbetoformadistinctITdepartmentthatalltheITstaffweretransferredinto.ThisITdepartmentwouldthenofferITservicestotheentireorganisation.

Thisapproachhasseveraladvantages,including:

Notethatasharedservicesapproachismorethansimplycentralisingthefunctionintooneplace.Sharedservicesofteninvolvesrunningtheservice,forexampleIT,likeaseparatebusinesswithintheorganisationandchargingtherestoftheorganisationfortheuseoftheservice.

improvedqualityofserviceprovision improvedconsistencyofservice costsavingsthroughgreaterefficiencyandreducedduplicationofroles

3Centralisation and decentralisation

Anothermethodofanalysingstructuresisbyreferencetothelevelatwhichdecisionsaremade.

Thefactorsthatwillaffecttheamountofdecentralisationare:

Inacentralisedstructure,theupperlevelsofanorganisation'shierarchyretaintheauthoritytomakedecisions.

Inadecentralisedstructuretheauthoritytotakedecisionsispasseddowntounitsandpeopleatlowerlevels.

managementstyle abilityofmanagement/employees geographicspread sizeoftheorganisation/scaleofactivities.





freea

ccas

tudym

ateria

l.blog

spot.

com

Theadvantagesanddisadvantagesofdecentralisationare:


Seniormanagementfreetoconcentrateonstrategy.

Betterlocaldecisionsduetolocalexpertise.

Bettermotivationduetoincreasedtrainingandcareerpath.

Quickerresponses/flexibility,duetosmallerchainofcommand.

Lossofcontrolbyseniormanagement.

Dysfunctionaldecisionsduetoalackofgoalcongruence.

Poordecisionsmadebyinexperiencedmanagers.

Trainingcosts. Duplicationofroleswithinthe

organisation. Extracostsinobtaining

information.

WhichofthefollowingisNOTalikelyadditionalcosttoanorganisationcausedbydecentralisation?

A Additionaltrainingcostsareoftenrequiredinadecentralisedorganisation

B Duplicationofroles,leadingtohigherpersonnelcostsC Extracostsofgatheringinformationfromvarioussourcesand

locationsD Lostsalesduetolackoflocalknowledgeandexpertise

Howdoestheabilityoftheemployeesaffectthelevelofdecentralisation?

4Levels of strategy

Withinanorganisation,eachlevelofmanagementwillhavedifferentrolesandresponsibilities.Thisisespeciallythecasewhenitcomestodevelopingastrategy,orplanforthefuture,fortheorganisation.

TheAnthonyTriangleisamodelthatcanbeusedtoillustratethetypesofstrategicplanningthatwillbemadeateachleveloftheorganisationshierarchy.

chapter 2






freea

ccas

tudym

ateria

l.blog

spot.

com

Different levels of planning

Strategic planningisundertakenbyseniormanagers.Itinvolvesmakinglongtermdecisionsfortheentireorganisation.

Tactical planningisundertakenbymiddlemanagement.Ittendstolookatplansforspecificdivisionsordepartmentsandspecifieshowtouseresources.

Operational planningisundertakenbyjuniormanagersandsupervisors.Itisshortterm,detailedandpractical.

Theaboveplanninglevelscouldbeappliedtoasupermarketasfollows:

Notethatinordertobesuccessful,thelevelsofstrategymustsupporteachother.Ifastrategicdecisionismadetoimprovecustomerservice,thismustbesupportedbyappropriatetacticaldecisionsbeingmadeineachstore,suchasallocatingmoreofthestoresbudgettohiringadditionalcustomerservicesemployees.Eventhen,thiswillonlybeasuccessiftheoperationalstrategiesselectthemostappropriatecandidatesforthenewrole.

Strategicplanningwouldinvolvemakingplansforthewholebusiness.Thiscouldinvolvewhichlocationstoopenorclosestoresandwhethertoraisecashfrominvestors.

Tacticalplanningwouldbethecreationofstrategiesforaparticularsupermarket.Forexampledecisionsaboutspecialoffers,localadvertisingandwhichproductsshouldbestocked.

Operationalplanninginvolvepractical,daytodaystrategies,suchasorganisingshiftpatterns,decidingwhentostocktheshelvesandadvertisingforandselectingnewemployees.



Illustration 2 Strategic, tactical and operational planning



freea

ccas

tudym

ateria

l.blog

spot.

com

Hisaretailstoresellingelectronics.Itiscurrentlydecidinghowmanyunitsofitsproductsitwillneedtoordernextmonthinordertomeetcustomerdemand.

Whichlevelofstrategicplanningdoesthisrelateto?

A StrategicB FunctionalC TacticalD Operational

5The roles and functions of the main departments in a business organisation

Inspiteoftheirstructuraldifferences,organisationsusuallyhavemanysimilarities.Oneoftheseisthatmanyorganisationsoperatesimilarbasicdepartmentstoeachother,withthesamerolesandconcerns.

Someofthemostcommondepartmentsarelistedbelow.

Department Role Key concernsResearch and development

Improvingexistingproducts

Developingnewproducts

Purchasing Acquiringthegoodsandservicesnecessaryforthebusiness

Priceandpaymentterms Quality Stocklevels/delivery

schedules

Production Convertingrawmaterialsintofinishedgoods

Quality(ofmaterialsandfinishedgoods)

Costs Wastage/efficiency Stocklevels/production

schedules

chapter 2





freea

ccas

tudym

ateria

l.blog

spot.

com

Direct service provision

Providingservicestoclients(e.g.accountancyfirm)

Quality Timesheets/scheduling

Marketing Identifyingcustomerneeds

Marketresearch Productdesign Pricing Promotion Distribution

Customerneeds Quality Promotionalstrategy Distributionchannelstrategy Pricingstrategy

Administration Administrativesupport

Processingtransactions

Efficiency Informationprocessing

Finance Bookkeeping Financial

reporting Financial

controls Budgeting Theraisingof

capital

Accuracyandcompletenessofrecordkeeping

Monthlymanagementreporting Annualfinancialreporting

Whichofthefollowingisnotpartoftheresponsibilityofaresearchanddevelopmentdepartment?

A ImprovingexistingproductsB DevelopingnewproductsC ResearchingnewtechnologiesforapplicationtofutureproductsD Researchingmarketdemandforproducts






freea

ccas

tudym

ateria

l.blog

spot.

com

rlearLine

6Marketing

6.1 What is meant by marketing?

MarketingisdefinedbytheInstituteofMarketingasthemanagementprocessthatidentifies,anticipatesandsuppliescustomerneedsefficientlyandprofitably.

Thekeyemphasisisthusoncustomerneeds:

Identifyingandanticipatingneedsmarketresearch. Supplyingcustomerneedsproductdesignanddevelopment. Efficiencydistribution. Profitabilitypricingdecisionsandpromotion(informingcustomers

aboutyourproductsotheybuyit).

Marketinginvolvesmuchmorethanjustadvertising!

Marketingismainlyconcernedwithwhichofthefollowing?

A IncreasingsalesrevenueB StreamliningproductionC AnticipatingandmeetingcustomerneedsD Maximisingprofit

chapter 2



Marketing versus product orientation



freea

ccas

tudym

ateria

l.blog

spot.

com

6.2 The marketing mix

Themarketingmixisthesetofcontrollablevariablesthatafirmblendstoproducedesiredresultsfromitschosentargetmarket.

Therearefourbasicelements(the4Ps),whichmustbemanagedtosatisfycustomersneedsataprofit.

Product Thisincludesproductfeatures,durability,design,brandname,packaging,range,aftersalesservice,warrantiesandguarantees.

Place Choiceofdistributionchannels,transportation,outletmanagement,stocksandwarehouses.

Promotion (distribution)

Advertising,personalselling,publicity,salespromotiontechniques.

Price Pricelevels,discounts,allowances,paymentterms,creditpolicy.

6.3 Product issues

Therearetwomainproductissuestoconsider:

ProductdefinitionThemainissueregardingproductistodefineexactlywhattheproductshouldbe.Thiscanbedoneonthreelevels:



The marketing mix additional detail



freea

ccas

tudym

ateria

l.blog

spot.

com

ProductpositioningWithallofthesefactorsthequestionofproductpositioningiscriticalhowdoesourproductcomparewiththeofferingsofcompetitors?Isourproductbetter?Ifso,inwhatway?

Anewcarcouldbespecifiedasfollows:

Core/genericproductpersonaltransportation. Actualproductrangeofenginesizes,differentbodyshapes

offered,etc. Augmentedproductmanufacturerswarrantyordealers

discountedservicecontract.

6.4 Pricing issues

Therearefourkeyconsiderations(the4Cs)whendecidingthepriceofaproduct:

Theseissuescanbeblendedtogivearangeofpricingtactics,includingthefollowing:

Costthepricemustbehighenoughtomakeaprofit. Customerswhataretheywillingtopay? Competitionisourpricehigherthancompetitors? Corporate objectivese.g.thepricecouldbesetlowtogainmarket

share.

Costpluspricingthecostperunitiscalculatedandthenamarkupadded.

Penetrationpricingalowpriceissettogainmarketshare. Perceivedqualitypricingahighpriceissettoreflect/createanimage

ofhighquality. Pricediscriminationdifferentpricesaresetforthesameproductin

differentmarkets,e.g.peak/offpeakrailfares. Goingratepricingpricesaresettomatchcompetitors. Priceskimminghighpricesaresetwhenanewproductislaunched.

Laterthepriceisdroppedtoincreasedemandoncethecustomerswhoarewillingtopaymorehavebeenskimmedoff.

chapter 2


Illustration 3 Marketing

Product further considerations



freea

ccas

tudym

ateria

l.blog

spot.

com

6.5 Promotional issues

Promotionisessentiallyaboutmarketcommunication.TheprimaryaimistoencouragecustomerstobuytheproductsbymovingthemalongtheAIDAsequence:

Towardsthisfirmswilluseacombinationofdifferentpromotionaltechniquesaspartoftheirpromotionalmix,including:

6.6 Place (distribution) issues

Thekeydecisionunderplaceisbetween:

Lossleadersoneproductmaybesoldatalosswiththeexpectationthatcustomerswillthengoonandbuyothermoreprofitableproducts.

Captiveproductpricingthisisusedwherecustomersmustbuytwoproducts.Thefirstischeaptoattractcustomersbutthesecondisexpensive,oncetheyarecaptive.

Advertisinge.g.placingadvertsonTV,innewspapers,onbillboards,etc.

Salespromotiontechniquese.g.Buyonegetonefree. Personalsellinge.g.doortodoorsalesmen. Personalrelations(PR)e.g.sponsoringsportsevents.

Selling directherethemanufacturersellsdirectlytotheultimateconsumerwithoutusinganymiddlemen,e.g.accountancyfirmsdealdirectlywiththeirclientswithoutrecoursetobrokersorothermiddlemen.

Selling indirectherethechannelstrategycouldcompriseamixtureofretailer,distributors,wholesalersandshippingagents,e.g.fooddistributionwillofteninvolvedistributorsandretailerstogettheproductfromfarmertoconsumer.



Variations in marketing mix settings



freea

ccas

tudym

ateria

l.blog

spot.

com

Nileisanonlineretailerofgames,DVDsandbooks.Itiscurrentlyplanninganupgradetoitswebsitetomakeiteasierforcustomerstofindtheitemsthattheyarelookingfor.

Whichoneofthe4Psofmarketingdoesthisrelateto?

A PriceB PlaceC PromotionD Product

6.7 The strategic marketing process

Themarketingprocessimpactsthestrategicplanningprocessofanorganisationasfollows:

Strategic analysis of the firm and its business environment

Marketinganalysiswillinclude:

Strategic choice

Marketingdecisionswillinclude:

analysisofbrandstrength,productquality,reputation,etc. analysisofcompetition marketresearchtodeterminemarketattractiveness detailedanalysisofcustomerexpectationsandpower.

decisionsregardingwhichproductstosell segmentingpotentialmarkets(e.g.byage)andthentargetingattractive

segments developingstrategiesforeachofthemarketingmixvariables.

chapter 2





freea

ccas

tudym

ateria

l.blog

spot.

com

Strategy implementation

Implementingmarketingstrategieswillinclude:

settingbudgetsforadvertising,etc. settingtargetsforsalesrevenue,marketshare,brandawareness,etc. monitoringandcontrol.

Analysisofbrandstrengthwouldcomeunderwhichpartofthestrategicplanningprocess?

A StrategicanalysisB StrategicchoiceC Strategicimplementation




Strategic marketing further analysis



freea

ccas

tudym

ateria

l.blog

spot.

com

Chapter summary

chapter 2




freea

ccas

tudym

ateria

l.blog

spot.

com

7Practice questions

Thefollowingfourstatementsrelatetoeitherthefunctionalordivisionalstructures.

Whichofthestatementsrelatetoafunctionalstructure?

(i) Enablesaccesstoeconomiesofscale(ii) Tendstocauseduplicationofroles(iii) Doesnotusuallycopewellwithdiversification(iv) Specialistsmayfeelisolated

A (i)and(ii)B (i)and(iii)C (ii)and(iii)D (ii)and(iv)

Conflictingdemandsoverallocationofresourcesismostlikelytobeadisadvantageforwhichtypeoforganisationalstructure?

A EntrepreneurialB MatrixC DivisionalD Geographical







freea

ccas

tudym

ateria

l.blog

spot.

com

HLtdisamanufacturingcompany.Theworkundertakenissimple,meaningthateachmanagerlooksafteralargenumberofemployees.Becauseofthis,therearerelativelyfewlevelsofmanagementwithinthecompany.

WhichofthefollowingiscorrectwithregardstothestructureofHLtd?

A Widespanofcontrol,shortscalarchainB Narrowspanofcontrol,shortscalarchainC Widespanofcontrol,longscalarchainD Narrowspanofcontrol,longscalarchain

Whichofthefollowingwouldbeatypicalfeatureofaflatorganisation?

A EasycareerprogressionforemployeesB ClosesupervisionofemployeesbymanagersC FasterdecisionmakingD Highlevelsofbureaucracy

Whichofthefollowingisanadvantageofcentraliseddecisionmaking?

A Allowsseniormanagementtofocusonhighlevelstrategicdecisions

B BettermotivationformorejuniorstaffC ImprovedlocaldecisionsD Avoidanceofdysfunctionaldecisionmaking

chapter 2







freea

ccas

tudym

ateria

l.blog

spot.

com

GLtdisasupermarket.Ithasthreestrategiesinplace:

UsingtheAnthonytrianglemodel,whatwouldeachofthesestrategiesbeclassifiedas?

(1) Tohirefiftynewcheckoutoperatorswithinthenextfiveweekstohelpreducecustomerqueuetimes

(2) Tobeginthesaleofelectronicsinallstoreswithinthenexttwoyears(3) TorelocateoneofitsstoresintownAtoanew,moresuitablesite,

locatedbythestoremanager

Strategy 1 Strategy 2 Strategy 3A Strategic Tactical OperationalB Operational Strategic TacticalC Tactical Operational StrategicD Operational Tactical Strategic

Pearplchascreatedanewtypeofmobilephone.IttookanumberofyearsofresearchanddevelopmentandPearareconcernedthatthecompanysrivalswillquicklycopythephoneandselltheirownversions.Pearhavethereforedecidedtosellthephoneataveryhighinitialpriceperunitinordertoquicklyrecoupthedevelopmentcosts.Oncerivalproductsarelaunched,Pearwilldropthepriceinordertocompetemoreeffectively.

WhattypeofpricingstrategyisPearusing?

A PenetrationpricingB GoingrateC PerceivedqualityD Priceskimming







freea

ccas

tudym

ateria

l.blog

spot.

com

Considerthefollowingstatements.

Whichofthesestatementsis/arecorrect?

(i) PromotioninvolvestheuseoftheAIDAsequence,whichstandsforAdvertise,Interest,DesireandAction.

(ii) Whenlookingatstrategicmarketing,settingbudgetsforadvertswouldoccuratthestrategicimplementationstage.


Jplcwishestochangeitscorporatestructure.Ithasdecidedtooutsourceallofitsnoncorefunctionstoexternalthirdparties.

WhichofthefollowingboundarylessstructuresisJplcplanningtoadopt?

A InformalB VirtualC ModularD Hollow

(a) ALtdisconsideringchangingitsorganisationalstructure.However,itisconcernedaboutthepossibledrawbacksofwhicheverstructureisselected.

Thetwoorganisationalstructuresthatarebeingconsideredare:

A FunctionalB Matrix

chapter 2







freea

ccas

tudym

ateria

l.blog

spot.

com

Required:

Classify the following disadvantages as primarily relating to either A (Functional) or B (Matrix):

(0.5 marks each = 2 marks in total)

Thefollowingsentencescontaingapswhichspecifytherelevantaspectofthemarketingfunction.

ALtdfeelsitisimportanttoconsiderthecost,customers,competitionanditsowncorporateobjectiveswhenthinkingabout1.

Required:

ALtdisconcernedthatitisfailingtocommunicatewiththemarket,meaningthatcustomersaresimplynotinterestedinbuyingAsproducts.ThisindicatesaweaknessinAs2.

Required:

(1 mark each, total = 2 marks in total)

(4 marks)

(i) Largenumbersoftimeconsumingmeetings(ii) Dualcommand,leadingtoconflict(iii) Difficultycopingwithdiversification(iv) Overlapofauthoritybetweenmanagers

(b) ALtdisalsoconcernedaboutitsmarketingprocess,whichitbelievesiscurrentlyineffective.Itisawarethattherearefourkeyaspectstothemarketingfunction,whichare:A ProductB PlaceC PromotionD Price

(i) Select the aspect of the marketing function which appropriately fills gap 1 above i.e. select A, B, C or D.

(ii) Select the aspect of the marketing function which appropriately fills gap 2 above i.e. select A, B, C or D.





freea

ccas

tudym

ateria

l.blog

spot.

com



TheseparatepartsoftheorganisationoperateasSBUsinadivisionalstructurenotafunctionalstructure.

Thematrixstructuretendstorequiretimeconsumingmeetingsandhassignificantoverlapofauthoritybetweenmanagers.Thistendstoslowthedecisionmakingprocessdown.

The correct answer is B

AsMhasseveralcomplexproducts,astructurethatcreatesaseparatedivisiontolookaftereachoneseemsthemostlogical.Functionalandgeographicalstructureswouldstruggletocopewiththedifferingneedsoftheproducts.Thelevelofworkneededtorunalarge,complexorganisationwouldalsoprobablybebeyondthecapabilitiesofanentrepreneurialstructure.

The correct answer is B False

Theytendtobeownermanaged.


Thescalarchainrelatestothenumberoflevelsofmanagementwithintheorganisation.

Narrow

chapter 2






Test you understanding 4



freea

ccas

tudym

ateria

l.blog

spot.

com


Adecentralisedbusinessdelegatesdecisionmakingdowntoemployeesatalower,ormorelocal,level.Thisshouldallowforbetterlocaldecisionstobemade,hopefullymaximisingsales.

Notethatanothercostofdecentralisationcouldbepoordecisionsorgoalcongruenceleadingtoincreasedcosts.

Themoreabletheemployees,themoredecisionstheycanbeentrustedwith,andthegreaterthelevelofdecentralisation.


Thisstrategyisverydetailedandpractical.Notethatfunctionalstrategyisanothernamefortacticalstrategy.


Demandwouldbeassessedbyamarketresearchfunctionwithinthemarketingdepartment.


Thekeyfocusofmarketingiscustomerneeds.










freea

ccas

tudym

ateria

l.blog

spot.

com


GiventhatthewebsiteisthemainlocationthatNiletransactsbusiness,makingthesiteiteasiertousewillbeimprovingNilesplaceofbusiness.


Strategicanalysiswouldincludeanassessmentofthefirmsstrengthsandweaknesses,includingbrandname.


Makesureyouremembertherelativeadvantagesanddisadvantagesofeachorganisationalstructure.


Themaindifficultywithmatrixorganisationsisconflictsoverthelinesofcontrolwhichcanleadtoconflictingdemandsoverallocationofresources.


Therearefewlevelsofmanagement,meaningthescalarchainisshort.Thefactthateachmanagerhasalargenumberofsubordinateswouldindicateawidespanofcontrol.

chapter 2









freea

ccas

tudym

ateria

l.blog

spot.

com


Flatorganisationshavewidespansofcontrolandashortscalarchain.Thismeansthattherewillberelativelyfewmanagementpositionsforstafftobepromotedinto.Awidespanofcontrolwillalsomeanthatitisdifficultformanagerstomonitortheactivitiesofallstaff.However,fewermanagerstendstomeanfasterdecisionscanbemade.


Centralisationinvolvesdecisionsbeingmadebyseniormanagement,ratherthanbyjuniororregionalstaff.OptionsA,BandCareadvantagesofdecentralisation.Centralisationdoes,however,ensurethatallthedecisionsaremadebythesameteamofmanagers,improvinggoalcongruence.


Strategyoneispracticalandshortterm,makingitanoperationalstrategy.Strategy2affectsthewholebusinessandislongterm,indicatingastrategicplan.Strategythreeaffectsaspecificsectionofthebusiness(inthiscase,aparticularstore)andismadebymiddlemanagement(thestoremanager),indicatingatacticalplan.


Thisisaclassicexampleofpriceskimming.


AIDAstandsforawareness,interestdesireandaction,sostatement(i)iswrong.Statement(ii)iscorrect.










freea

ccas

tudym

ateria

l.blog

spot.

com


Rememberthatoutsourcingnoncoreactivitiesreferstoaholloworganisation.Virtualorganisationsoutsourceallfunctions(includingcore),whilemodularorganisationshavesomecomponentsoftheirproductmadebyotherorganisations.

(a) Thecorrectanswersare:(i) B

(ii) B

(iii) A

(iv) B

Rememberthatthematrixstructurehasbothfunctionalanddivisionalmanagementinplace.Whilethiscanbeanadvantagewhendiversifying,itmeanshavingtwosetsofmanagement,whichcanleadtoconflict,disagreementandadditionalexpense.

(b) Thecorrectanswersare:(i) D youareprovidedwiththe4Csinthestatement,whichrelate

topricing.(ii) Cbydefinition,thisreferstopromotion.

chapter 2






freea

ccas

tudym

ateria

l.blog

spot.

com





freea

ccas

tudym

ateria

l.blog

spot.

com

OrganisationalcultureinbusinessChapter learning objectives


defineorganisationalculture describethefactorsthatshapethecultureoftheorganisation explainthecontributionmadebywritersonculture:

Scheindeterminantsoforganisationalculture Handyfourculturalstereotypes Hofstedeinternationalperspectivesonculture

explaintheinformalorganisationanditsrelationshipwiththeformalorganisation

describetheimpactoftheinformalorganisationonthebusiness.

51

chapter

3



freea

ccas

tudym

ateria

l.blog

spot.

com

1Defining organisational culture 1.1 Definition

Therearemanydefinitionsofcorporateculture.Theseinclude:

Thespecificcollectionofvaluesandnormsthataresharedbypeopleandgroupsinanorganisationandthatcontrolthewaytheyinteractwitheachotherandwithstakeholdersoutsidetheorganisation.Hill & Jones

Thewaywedothingsaroundhere.Handy

Ultimately,culturemeansthesumtotalofallthebeliefs,attitudes,normsandcustomsthatprevailwithinanorganisation.

Eachorganisationwillhaveitsowndistinctivecultures,andbehaviouracceptableinoneorganisationalculturemaybeinappropriateinanother.Forexample,somecompanieswillexpectstafftoundertakeadditionalworkintheirowntime,whileotherorganisationswillnot.

Alsoculturesdevelopovertimeorcanchangeinstantlyasaresultofasinglemajorevent,e.g.deathofcompanyfounder,threatenedtakeover,etc.

1.2 Components of culture

Therearethreekeyelementstoanyorganisationsculture.

Organisational culture in business




freea

ccas

tudym

ateria

l.blog

spot.

com

Normsguidepeoplesbehaviour,suggestingwhatisorisnotappropriate(thedonething)e.g.informaldresscodes

Symbolsorsymbolicactione.g.ritualssuchasbuyingtheofficeacakeonyourbirthday.

Sharedvaluesandbeliefsunderlietheculturebyidentifyingwhatisimportante.g.abeliefintheimportanceofpeopleasindividuals.

2The factors that shape the culture of the organisation

Thesixmajorinfluencesonthecultureofanorganisationareasfollows:

Size Technology Diversity Age History Ownership

3Writers on culture

Therearethreewritersyouneedtohaveknowledgeof:Schein,HandyandHofstede.

3.1 Schein

Scheinarguesthatthefirstleadersofacompanycreateitsculture.Futureleaderswillonlybeselectediftheysupportthisoriginalculture.Thusthelinkbetweencultureandleadershipisverystronganditcanbeverydifficulttochange.

Scheinfurthercommentedthatitifleadersaretolead,itisessentialthattheyunderstandthecultureoftheorganisation.Inordertotryanddefineculture,Scheindescribedthreelevels:

Artefactsthesearetheaspectsofculturethatcanbeeasilyseen,e.g.thewaythatpeopledress.

Espoused valuesthesearethestrategiesandgoalsofanorganisation,includingcompanyslogansetc.

chapter 3


Other influences on culture

The main factors that shape culture



freea

ccas

tudym

ateria

l.blog

spot.

com

Newemployeesfindthelastlevelofculturethemostdifficulttounderstand,andlackofunderstandingofthebasicvaluesisoneofthemaincontributorstofailurewhentryingtoimplementchange.

Basic assumptions and valuesthesearedifficulttoidentifyastheyareunseen,andexistmainlyattheunconsciouslevel.

WhichofthefollowingwouldNOTbeclassifiedbyScheinasanartefact?

A DresscodesintheorganisationB DesignoftheorganisationspremisesC StatedaimoftheorganisationtoimprovecustomerserviceD Officefacilitiesprovidedbytheorganisation

3.2 Handy

Handypopularisedfourculturaltypes.

Notethatthisisoftenfoundinorganisationswithanentrepreneurialstructure,asoutlinedinthelastchapter.

Thistendstobemosteffectiveinstableenvironments,wheretheworkperformedbyemployeesrarelychanges.

Powerculture(denotedbytheGreekgodZeus)Herethereisone major source of powerandinfluence.Forexample,inasmallownermanagedbusinesstheownermaystrivetomaintainabsolutecontroloversubordinates.Theremaybefewproceduresandrulesofaformalkindasstafftakedirectiondirectlyfromtheowner.

Roleculture(denotedbytheGreekgodApollo)Inthisversionofculture,peopledescribetheirjobbyitsduties,notbyitspurpose,sojobdescriptionsdictatethewaywedothingsaroundhere.Thiswouldbeseeninabureaucraticorganisation,wherethestructuredeterminestheauthorityandresponsibilityofindividualsandthereisastrongemphasisonhierarchyandstatus.






freea

ccas

tudym

ateria

l.blog

spot.

com

Taskculture(denotedbytheGreekgodAthena)Theemphasishereisonachieving the particular task at handandstaffmayneedtobeflexibletoensuredeadlinesaremet.Peoplethereforedescribetheirpositionsintermsoftheresultstheyareachieving.Nothingisallowedtogetinthewayoftaskaccomplishment.Thisisbestseeninprojectteamsthatexistforaspecifictask.

Personculture(denotedbytheGreekgodDionysius)Thisischaracterisedbythefactitexiststosatisfy the requirements of the particular individual(s)involvedintheorganisation.Thepersoncultureistobefoundinasmall,highlyparticipatoryorganisationwhereindividualsundertakeallthedutiesthemselves,forexample,abarristerinchambers.

IdentifythecorrectstatementregardingHandysculturaltypesfromthefollowing:

A Roleculturestendtofocusontheneedsoftheindividualsworkingintheorganisation

B Powerculturestendtobebureaucraticorganisationswithlargenumbersofpowerfulmanagers

C Personculturestendtodevelopinsmall,highlyparticipatoryorganisations

D Roleculturesnormallyrequirestafftobeflexibleinordertoensuredeadlinesaremet

Identifytwodisadvantagesthatataskculturecouldcreateforanorganisation.

3.3 Hofstede

Hofstedelookedfornationaldifferencesbetweenover100,000ofIBMsemployeesindifferentpartsoftheworld,inanattempttofindaspectsofculturethatmightinfluencebusinessbehaviour.

Hefoundfourtraitsorculturaldimensions:

Individualism (vs. collectivism)looksattheextenttowhichpeopleareintegratedintogroups.Someculturesaremorecohesivethanothers.e.g.AngloSaxonculturesaregenerallymoreindividualisticthanthecollectivistculturesofSouthAmerica.

chapter 3






freea

ccas

tudym

ateria

l.blog

spot.

com

Highindividualismindicatesthatstaffexpecttobeassessedontheirownachievementsandperformance.

Lowindividualism(orcollectivism)wouldmeanthatstaffexpecttobeassessedonagroupbasisandprefertheorganisationtosetgroupgoals.

HighUAcultureswillnotliketoactoutsidetheirnormaljobdescriptionsorroles.Theyprefertobedirectedbymanagementandlikeformalrulesandguidelines.

LowUAcultureswillbepreparedtotakemorerisksandgobeyondtheircomfortzones.Theytendtodislikebureaucracyasitstiflesinitiative.

HighPDculturesexpecttoanswertopowerfulmanagersanddonotexpecttohaveanydemocraticinputintodecisionsthataremade.

LowPDculturesexpecttobeinvolvedwiththedecisionmakingprocessandwantlessdirectsupervisionbymanagers.

Employeesinmasculineculturescanbemotivatedbyofferingthemjobtitles,increasedstatusandpayrises,asthisiswhattheculturevalues.

Staffinfemininecultureswillbemotivatedmorebyworklifebalance,qualityoflifeandrelationshipsatwork.

Uncertainty avoidance (UA) indexdealswithasociety'stoleranceforuncertaintyandambiguitye.g.FranceandJapanusebureaucracytoreduceuncertaintybecausetheydislikeit.

Power distance (PD) index theextenttowhichthelesspowerfulmembersoforganisationsandinstitutionsacceptandexpectthatpowerisdistributedunequallye.g.inSouthAmericansocieties,differencesinpowerweretoleratedmorethaninNorthEuropeancultures.

Masculinity (vs. femininity)amasculinecultureisonewherethedistinctionbetweentherolesandvaluesofthegendersislargeandthemalesfocusonwork,powerandsuccess(e.g.inJapaneseculture)whereasinfeminineculturessuchasFinland,thedifferencesbetweenthegenderrolesismuchsmaller.





freea

ccas

tudym

ateria

l.blog

spot.

com

LookingattheHofstedetraits,choosetheclassificationthatmostcloselyfitsGreatBritain.

Individualisticorcollective?

Largepowerdistanceorsmall?

Masculineorfeminineroles?

JanehasrecentlymovedtocountryAtoheadupanewlycreatedresearchteam.

Shequicklydiscoversthatherstaffseemunwillingtomakemajordecisionsforthemselvesandexpecthertomonitortheirworkclosely.

WhichofthefollowingfeaturesofHofstedesculturaldimensionsareJanesstaffdemonstrating?

A HighindividualismB LowpowerdistanceindexC HighuncertaintyavoidanceD Femininity

4The informal organisation and its relationship with the formal organisation

Inthelastchapter,welookedattheconceptoftheformalstructuresofanorganisation.Thesehavebeendesignedbymanagementtotryandensurethattheorganisationmeetsitsgoals.

Nowweneedtolookattheinformalorganisation.

Theinformalorganisationisthenetworkofrelationshipsthatexistwithinanorganisation.

Thisnetworkevolvesovertimeandtendstoarisethroughcommoninterestsandfriendshipsbetweenmembersofstaff.Theserelationshipsareoftenacrossdivisions.

chapter 3






freea

ccas

tudym

ateria

l.blog

spot.

com

Aninformalorganisationwillbepresenttosomedegreewithinallformalorganisations.

Thinkoftheinformalorganisationasbeinganaspectoftheorganisationsculture.

Theadvantagesanddisadvantagesofinformalorganisationare:


bettermotivation

bettercommunication

provisionofsocialcontrol

inefficientorganisations oppositiontochangecanbe

intensified thegrapevineeffect,wherepotentially

inaccurateinformationorrumoursspreadthroughtheinformalorganisation

conformity

Whichofthefollowingstatementsis/arecorrect?

(i) Informalrelationshipsareshownonorganisationalcharts.(ii) Informalrelationshipswithinanorganisationcanbeacross

divisions.A (i)onlyB (ii)onlyC BothD Neither




Advantages and disadvantages of the informal organisation



freea

ccas

tudym

ateria

l.blog

spot.

com

Theinformalorganisationcaneitherenhanceorholdbackthebusiness.

Managersneedtobeawareoftheinformalstructureandensurethatthey:

adapttheformalstructuretocomplementtheinformalone maintainalooserformalstructuresothattheinformalstructurecan

thrive. attheveryleasttakeaccountoftheinformalstructureindecision

making.

chapter 3


Informal groups



freea

ccas

tudym

ateria

l.blog

spot.

com

Chapter summary





freea

ccas

tudym

ateria

l.blog

spot.

com

5Practice questions

AccordingtoSchein,thereisastronglinkbetweencultureand_________.

Whichwordorwordsbestfilltheblank?

A ManagementstyleB LeadershipC DiversityD Thesizeoftheorganisation

Hcompanyisanalysingitscorporateculture.Ithasfoundthatmanyofitsstaffbelievethatthemainpurposeofthecompanyistosimplyearnasmuchprofitaspossibleandthereforetheyarefailingtoprovidehighqualityservicetocustomers.

AccordingtoSchein,whatlevelofculturehasHcompanyidentified?

A EspousedvaluesB ArtefactsC BasicassumptionsandvaluesD Power

chapter 3






freea

ccas

tudym

ateria

l.blog

spot.

com

CountryVhasastandingarmyoftenthousandsoldiers.Eachsoldierhasaseriesofcloselydefineddutiesandtasksthattheyareexpectedtofulfilonaregularbasis.Theaccomplishmentofthesetasksismonitoredbyahighlybureaucraticadministrationfunction.Noncompliancewiththerulesispunishedandsoldiersarenotexpectedtogobeyondthedutiestheyhavebeenset.

AccordingtoCharlesHandy,whattypeofculturedoescountryVsarmydemonstrate?

A RoleB TaskC PowerD Person

StaffincountryGdisliketheirmanagersinterferingintheirwork.AccordingtoHofstede,thismeansthatthecultureis:

A MasculineB HighuncertaintyavoidanceC LowpowerdistanceD Collective

Informationmaybepassedinformallybetweenindividualswithinanorganisation,sometimesleadingtothespreadofinaccuraterumour.Thisisknownasthe_______________.

Whichwordorwordsbestfillthegap?

A InformalorganisationB FormalorganisationC CorporatecultureD Grapevineeffect








freea

ccas

tudym

ateria

l.blog

spot.

com

Company Risamanufacturingcompanywheremostworkersarepartofthesameunion.Employeesprefertonegotiatepayandconditionsasagroup,ratherthanitbeingnegotiatedonaonetoonebasiswithmanagement.

Company Soperatesalargecallcentre.Staffmembershavestatedtheirpreferencetohavedetailedscriptsprovidedbymanagement.Thesescriptscanhelptheemployeestodealwithanyunexpectedqueriesorobjectionsthatmayarisewhentalkingtocustomers.

Company Thasrelativelyfewmanagers,asmoststaffmembersarefelttobeselfmotivatedandtrustworthy.Whendecisionsaremadebymanagers,employeesexpecttohaveachancetostatetheiropinionsandhavethesetakenintoaccountbytheirmanagers.

Company Uhasrecentlybeeninvolvedinpaynegotiationswithmembersofitsworkforce.Itsmanagershavediscoveredthatmostemployeessimplywishtobepaidmoreorbegivennewjobtitles.Theyseemuninterestedinadditionalholidaysortheofferofflexibleworkingarrangements.

ThefollowingaredimensionsusedbyHofstedetoclassifydifferenttypesoforganisationalculture:

Required:

(1 mark each, total = 4 marks)

1 High 2 LowA Powerdistance A1 A2B Uncertaintyavoidance B1 B2C Individualism C1 C2D Masculinity D1 D2

(i) ForCompanyR,selectwhichcombinationofdimensionsapplyfromthegridabove(i.e.A1).

(ii) ForcompanyS,selectwhichcombinationofdimensionsapplyfromthegridabove(i.e.A1).

(iii) ForCompanyT,selectwhichcombinationofdimensionsapplyfromthegridabove(i.e.A1)

(iv) ForCompanyU,selectwhichcombinationofdimensionsapplyfromthegridabove(i.e.A1)

chapter 3





freea

ccas

tudym

ateria

l.blog

spot.

com



Thiswouldbeclassifiedasoneoftheorganisationsespousedvalues.


Aisadefinitionofthepersonculture,nottheroleculture.

Bisincorrectasapowerculturetendstoonlyhaveonemajorsourceofpower.Bureaucracytendstobefoundinaroleculture.

Disalsoincorrectasthisdescribesataskculture.

Ataskcultureisonewherenothingisallowedtogetinthewayofcompletingthetask.

Disadvantagescouldbe:

highlevelsofstress qualitycompromisedinanefforttogetthejobfinishedontime peoplefeelingthattheirindividualneedsaresurpassedbythe

needsofthetask,e.g.feelingpressurisedtoworklate.

Althoughthepointscanbedebated,andthecultureischanging,GreatBritainisprobably:

Individualistic

Smallpowerdistance

Masculineroles









freea

ccas

tudym

ateria

l.blog

spot.

com


Theworkersaredemonstratingadislikeofuncertainty.Notethatiftheyhadlowpowerdistance,theywouldnotwantJanetosupervisetheirworkclosely.

Thereisinsufficientinformationavailabletoconcludeonthemasculinityorindividualismoftheculture.



Whiletheothersarefactorsthatmayaffectculture,Scheinbelievedinastronglinkbetweenleadershipandculture.


Basicassumptionsandvaluesareoftendifficulttoidentifyandexistmainlyatanunconsciouslevel.Inthiscase,itrelatestowhatstaffbelievetheirfunctionisandwhattheythinktheorganisationexpectsofthem.Thiscanbequitedifferenttotheorganisationsstatedgoals(espousedvalues).


Roleculturesvaluetheperformanceofanindividualsdutiesnomore,noless.Armedforcesareacommonrealworldexampleofthis.

chapter 3









freea

ccas

tudym

ateria

l.blog

spot.

com


Bydefinition.


Thegrapevineeffectrelatestoinformalcommunicationbetweenindividualswithintheorganisation.Don'tgetconfusedbetweenthisandinformalorganisationitself,whichdescribestherelationshipsbetweenindividualsintheorganisation.Inreality,thegrapevineoftenfollowsthesameroutesastheinformalorganisation.

Thecorrectanswersare:

(i) C2workersprefertonegotiateandbejudgedcollectively,ratherthanasindividuals.

(ii) B1employeesclearlydislikedealingwiththeunexpected,indicatinghighUA.

(iii) A2employeesexpecttohaveasayinmanagementactivities,indicatingalowpowerdistance.

(iv) D1employeesaremotivatedbymoneyandstatus,ratherthanworklifebalance.Thisindicatesamasculineculture.








freea

ccas

tudym

ateria

l.blog

spot.

com

InformationtechnologyandinformationsystemsinbusinessChapter learning objectives


identifyanorganisationssystemrequirementsinrelationtotheobjectivesandpoliciesoftheorganisation

identifybusinessusesofcomputersandITsoftwareapplications:spreadsheets,databasesandaccountingpackages

describeandcomparetherelativebenefitsandlimitationsofmanualandautomatedfinancialsystemsthatmaybeusedinanorganisation

explainhowthetypeofinformationdiffersandthepurposesforwhichitisappliedatdifferentlevelsoftheorganisation:strategic,tacticalandoperational

listtheattributesofgoodqualityinformation.

67

chapter

4



freea

ccas

tudym

ateria

l.blog

spot.

com

1Data and information

Informationanddataaretwodifferentthings.

Dataconsistsofnumbers,letters,symbols,rawfacts,eventsandtransactions,whichhavebeenrecordedbutnotyetprocessedintoaformthatissuitableformakingdecisions.

Informationisdatathathasbeenprocessedinsuchawaythatithasmeaningtothepersonthatreceivesit,whomaythenuseittoimprovethequalityoftheirdecisionmaking.

Informationisvitaltoanorganisationandisrequiredbothinternallyandexternally.Managementrequiresinformation:

Thisinformationwillbeusedbyvariousthirdparties,including:

toproviderecords,bothcurrentandhistorical toanalysewhatishappeninginthebusiness toprovidethebasisfordecisionmakingintheshortandlongterm tomonitortheperformanceofthebusinessbycomparingactualresults

withplansandforecasts.

theshareholdersorownerswhowillwanttoknowhowtheirinvestmentisperforming

customersandsupplierswhowillwanttoknowhowstablethebusinessisandthereforewhetheritwillbeareliabletradingpartner

employeeswhowillhaveaninterestintheperformanceoftheorganisationandhowitimpactsonthejobsecurityandpay

governmentagenciessuchastaxauthorities.

Information technology and information systems in business


Types of data



freea

ccas

tudym

ateria

l.blog

Documents

Kaplan F1 pg4-633.pdf