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The Business Organisation


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The Business Organisation

  2. 2. The Role of Business (Textbook Reference Pg 3-5) <ul><li>What is a “BUSINESS ORGANISATION?” </li></ul><ul><li>Attributes: </li></ul><ul><li>1. Ownership and control reside in the PRIVATE SECTOR </li></ul><ul><li>2. The primary motive for establishing the organisation is PROFIT </li></ul><ul><li>3. The social purpose is ECONOMIC PRODUCTION </li></ul><ul><li>4. A dominant procedural value is EFFICIENCY </li></ul><ul><li>5. A FORMAL organisational structure exists </li></ul><ul><li>6. Member involvement is CONTRACTUAL </li></ul><ul><li>7. The primary beneficiaries are OWNERS/MANAGERS </li></ul>
  3. 3. CASE STUDY - HOLDEN PRIVATE SECTOR Company Name : Holden Ltd Ltd – Limited (which means that owners can only lose the value of their investment and not called on to sell their personal assets to meet the debts of the company) Main Business Manufacture and distribution of motor vehicles, engines, components and parts Parent Company General Motors Corporation, Detroit, Michigan, USA (GM)
  4. 4. CASE STUDY - HOLDEN PROFIT “ And it makes money. Plenty of it” “ … .. has helped enhance its stance within the GM world, where it is Rated as one of the most agile, competent and PROFITABLE of divisions” (The West Australian, Friday January 2 2004)
  5. 5. CASE STUDY - HOLDEN ECONOMIC PRODUCTION “ It makes more vehicles than any other manufacturers, exports a healthy proportion of those, has built up a major engine export business and shown great agility on th factory floor and in the showrooms, where it launched 10 new models during 2003” (The West Australian, Friday January 2 2004)
  6. 6. CASE STUDY - HOLDEN EFFICIENCY “ Prime aim was to make sure the company was BUILT TO LAST, and that meant beefing up its car production and engine operations” (The West Australian, Friday January 2 2004)
  7. 7. CASE STUDY - HOLDEN FORMAL Organisational Structure Dennis M. Mooney – Chairman and Managing Director Plus THE BOARD (e.g Brian DuCasse – Executive Director Customer Satisfaction and Quality Andrea Grant – Executive Director Human Resources Jeff Jamieson – Executive Director Manufactuirng Tony Hyde – Executivre Director Engineering and Design Vincent Kekhof – Executive Director Finance Ross McKenzie – Executive Director Sales and Marketing ) Plus GROUP OF 150 Employees below the board Plus NORMAL EMPLOYEES
  8. 8. CASE STUDY - HOLDEN <ul><li>CONTRACTUAL </li></ul><ul><li>Employees </li></ul><ul><li>The Board </li></ul><ul><li>Group of 150 </li></ul><ul><li>Other Employees </li></ul><ul><li>All on contracts as part of their terms of employment </li></ul>
  9. 9. CASE STUDY - HOLDEN OWNERS/MANAGERS Parent Company – General Motors Corporation, Detroit, Michigan The Board at Holden – Chairman and Chief Executive; Executive Directors
  10. 10. BUSINESS GOALS (Textbook Reference Pg5-8) <ul><li>STAKEHOLDERS </li></ul><ul><li>“Are individuals or groups of individuals who have an active economic and possibly moral interest in an organisation” </li></ul>
  12. 12. ORGANISATIONAL EFFECTIVENESS <ul><li>DEFINITION: </li></ul><ul><li>“Is the degree to which an organisation satisfies the demands of its stakeholders” </li></ul>
  13. 13. ORGANISATIONAL EFFECTIVENESS <ul><li>Organisations play an important role in everyone’s lives. For Example: </li></ul><ul><li>Schools </li></ul><ul><li>Banks </li></ul><ul><li>Governments </li></ul><ul><li>Transport Authorities </li></ul><ul><li>Television Stations </li></ul>
  14. 14. ORGANISATIONAL EFFECTIVENESS <ul><li>The Business Organisation in particular: </li></ul><ul><li>supplies most of the goods and services that are used by people </li></ul><ul><li>provides employment and careers </li></ul><ul><li>major source of innovation, progress and internationalisation </li></ul><ul><li>is a focus of the endeavours of many other legal, political and social organisations </li></ul>
  15. 15. ORGANISATIONAL EFFECTIVENESS Owners (shareholders) Profitability, growth Financiers Financial stability, liquidity Management Efficient production processes, profitability, market share Customers Price, product quality, satisfaction of needs Suppliers Promptness of payment, fairness of demands, resource use Employees Salary, satisfying work, personal growth potential, non- discriminatory promotion Government Contribution to exports, employment, compliance with laws, payment of taxes General public Community involvement, environmental impact, ethical practices Stakeholders Criteria
  16. 16. TYPES OF INDUSTRY <ul><li>The THREE types of Industry: </li></ul><ul><li>Primary </li></ul><ul><li>Secondary </li></ul><ul><li>Tertiary </li></ul>
  17. 17. TYPES OF INDUSTRY <ul><li>PRIMARY </li></ul><ul><li>Definition: </li></ul><ul><li>“ Are the industries that ‘grow’ or ‘collect’ raw materials” </li></ul><ul><li>For Example </li></ul><ul><li>Farming </li></ul><ul><li>Agriculture </li></ul><ul><li>Fishing </li></ul><ul><li>Mining </li></ul>
  18. 18. TYPES OF INDUSTRY <ul><li>SECONDARY </li></ul><ul><li>Definition: </li></ul><ul><li>“ Use the raw materials from the Primary sector in what is sometimes referred to as ‘downstream processing’ </li></ul><ul><li>For Example: </li></ul><ul><li>Manufacturing </li></ul><ul><li>Construction </li></ul><ul><li>Wholesaling </li></ul>
  19. 19. TYPES OF INDUSTRY <ul><li>TERTIARY </li></ul><ul><li>Definition: </li></ul><ul><li>“Involves selling an end product or providing a service” </li></ul><ul><li>Sub sections: </li></ul><ul><li>Retail – The selling of a finished product to the end user </li></ul><ul><li>Service – Transport, Hospitality, Education, Counselling or Consulting </li></ul>
  21. 21. Types of Business Entity <ul><li>Two Sectors </li></ul><ul><li>The economy can be divided into two sectors: </li></ul><ul><li>The Private Sector </li></ul><ul><li>The Public Sector </li></ul>
  22. 22. The Private Sector <ul><li>Private individuals and firms that are owned by private individuals </li></ul><ul><li>Firms in the private sector include: </li></ul><ul><ul><li>Sole Traders </li></ul></ul><ul><ul><li>Private Limited Companies (Pty Ltd) </li></ul></ul><ul><ul><li>Partnerships </li></ul></ul><ul><ul><li>Public Limited Companies (Ltd) </li></ul></ul>
  23. 23. The Public Sector <ul><li>Made up of central government, local government, and businesses that are owned by government </li></ul>
  24. 24. LEGAL FORMS OF A BUSINESS <ul><li>Sole Trader </li></ul><ul><li>Partnership </li></ul><ul><li>Public Company </li></ul><ul><li>Private Company </li></ul><ul><li>Co-operative </li></ul><ul><li>Franchise </li></ul><ul><li>Government Enterprise </li></ul>
  25. 25. LEGAL FORMS OF A BUSINESS <ul><li>Sole Trader </li></ul><ul><li>This business has legally only one owner – usually the person who manages the business </li></ul>
  26. 26. LEGAL FORMS OF A BUSINESS <ul><li>Partnership </li></ul><ul><li>This business may have between 2 and 20 owners who can all be involved in running the business. </li></ul>
  27. 27. LEGAL FORMS OF A BUSINESS <ul><li>Private Company (Proprietary Limited Company – Pty Ltd) </li></ul><ul><li>A private company has a minimum of one person and a maximum of 50 ‘owners’. This structure is usually chosen for family run businesses. </li></ul>
  28. 28. LEGAL FORMS OF A BUSINESS <ul><li>Public Company (Ltd) </li></ul><ul><li>A Public Company has a minimum of 5 owners but no upper limit of owners (shareholders) </li></ul><ul><li>A Public Company can sell its shares via the Stock Exchange </li></ul>
  29. 29. LEGAL FORMS OF A BUSINESS <ul><li>Co-operative </li></ul><ul><li>Co-operatives are owned by their staff, who are ‘members’ of the firm </li></ul><ul><li>Profits are shared amongst the members </li></ul><ul><li>Losses too must be shared </li></ul>
  30. 30. LEGAL FORMS OF A BUSINESS <ul><li>Franchise </li></ul><ul><li>Many businesses today are franchises </li></ul><ul><li>A business idea is licensed to a franchisee </li></ul><ul><li>The owners of the brand receive a license fee </li></ul><ul><li>The franchisee gains the right to use the business brand </li></ul>
  31. 31. LEGAL FORMS OF A BUSINESS <ul><li>TRUST </li></ul>
  32. 32. KEY BUSINESS FUNCTIONS (Textbook Reference p9-12) <ul><li>Marketing </li></ul><ul><li>Human Resources </li></ul><ul><li>Operations </li></ul><ul><li>Finance </li></ul>
  34. 34. MARKETING MANAGEMENT <ul><li>“Involves the planning and implementation of the design, pricing, promotion and distribution of products” </li></ul><ul><li>A primary purpose is to create an exchange which satisfies the customer while enabling the business to achieve its profit objectives </li></ul>
  35. 35. HUMAN RESOURCE MANAGEMENT <ul><li>“ Involves planning and implementation of the processes associated with acquiring, developing and maintaining an organisation’s workforce for the purposes of achieving the organisations objectives” </li></ul><ul><li>Involves: </li></ul><ul><li>Job Design, recruitment and selection, training and development, development of performance appraisal systems and pay structures, and industrial relations </li></ul>
  36. 36. OPERATIONS MANAGEMENT <ul><li>“Is the planning and implementation of the organisation’s production system, which transfers inputs into valuable outputs” </li></ul><ul><li>Involves: </li></ul><ul><li>Questions relating to layout, location and capacity of production facilities, quality control, inventory management, production scheduling and project management </li></ul>
  37. 37. FINANCIAL MANAGEMENT <ul><li>“ is the planning, organising and controlling of the acquisition and use of financial resources to achieve the business’ objectives” </li></ul><ul><li>Involves: </li></ul><ul><li>Obtaining the right types of finance on the most advantageous terms, investment evaluation, budget planning and control, and accounting information systems </li></ul>