Professional Documents
Culture Documents
Case studies
QANTAS: operations relies on HR to effectively communicate with
customers in order to establish positive relationships with customers to
ensure repeat sales and customer loyalty whilst HR require the jobs to be
performed from OP e.g. plane servicing technicians
Influences on Operations:
Globalisation, technology, quality expectations, cost-based
competition, government policies, legal regulation,
environmental sustainability
Globalisation:
removal of trade barriers between nations
high degree of transfer of capital, labour, resources and technology
between nations
global customers want standardised products, therefore OP must be
structured around this large businesses orient what they produce and
how they produce it towards meeting the needs of global consumers
businesses should increase the rate of global outsourcing in order to
create cost advantages over competitors
the development of factories in low-wage countries means businesses
are increasing their outsourcing rate
logistics and inventory management processes must be oriented
towards global markets
the use of manufacturing plants for the production of goods means that
businesses can achieve economies of scale advantages
supply chain: the range of suppliers a business has for global
businesses, the range of suppliers creates a network called the global
web
Technology:
technology is the design, construction and/or application of innovative
devices, methods and machinery upon operations processes
technology influences operations as it allows efficiencies to be created
in the operations processes by increasing the speed of production,
improving product quality and reducing costs due to wastage
Businesses are influenced to adopt modern technologies in order to
attain a competitive advantage over competitors
CHRISTOPHER KENDIRJIAN
Quality Expectations:
How well designed, made and functional goods are influences OP as it
shapes the way inputs are used to transform them into outputs through
value adding
Customers expectations of quality will shape the way operations are
undergone as OP managers must ensure these expectations are met in
the final product quality expectations determine the design, creation
and deliverance of products to customers
OP must follow specific standards or minimum levels of excellence
Cost-based competition:
Businesses determine their break-even point and then apply strategies
to create cost advantages over competitors
Competing with competitors in relation to price will influence
operations as OP managers would then have to ensure a cost
leadership approach is applied so that fixed and variable costs are
minimised and the business becomes price competitive
Government policies:
Policies such as taxation rates, required materials handling practices,
WHS, training, public health, environmental etc. can influence OP
primarily through the costs associated with following these policies
Government policies can also lead to new opportunities, therefore OP
managers must be aware of current governmental policies
Legal regulation:
Compliance costs are expenses associated with meeting the
requirements of the law
Many laws influence operations particularly relating to labour and
labour management, as well as environment and public health WHS,
training and development, fair work and anti-discrimination laws,
environmental protection and public health
Environmental sustainability:
Business operations should be shaped around practices that consume
resources today without compromising access to those resources for
future generations
E.g. business operations must be structured around processes that
minimise their carbon footprint
Rise in climate change influences businesses to reduce and minimise
waste, recycle water, glass, paper and metals and reduce carbon
footprint
Case studies
QANTAS
- Globalisation- developing new airlines overseas decreases costs and
improves efficiency in production
- Technology- new planes and new operational processes influences
operations due to need for retraining= increased costs
- Government- carbon tax caused an increase in costs for Qantas and a
decrease in profit
- Environmental- purchasing new, environmentally sensitive aircrafts
- Social responsibility- health surveillance program- workplace conditions
monitored
CRUMPLER:
- Globalisation- Crumpler can outsource its manufacturing and now has a
global supply chain. Operations costs have reduced as the other countries
had lower costing inputs and labour. Globalisation has allowed Crumpler to
sell to more countries such as New York and Singapore
- Technology- CAD &CAM was introduced allowing efficiency to be increased.
Headquarters started using email in its communication to allow faster
transmission of messages within the company. Three dimensional designing
software allowed them to create new products virtually and, it could be
CHRISTOPHER KENDIRJIAN
Processes of Operations:
Inputs- transformed (materials, information, customers) and
transforming resources (HR, facilities)
Inputs are resources used in the transformation process
TRANSFORMED RESOURCES:
Materials:
- Basic elements used in production process- raw materials and
intermediate goods
- Raw materials are essential substances in their unprocessed state-
come from mines, forests, oceans or recycled waste
- Intermediate goods are manufactured and used in further
manufacturing or processing e.g. steel doors used in assembly of cars
in Toyota
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Information:
- Knowledge gained from research, investigation and instruction
increased understanding
- Info can be internal and external and acts as transformed resource
when it is used to inform how inputs are used, where they are drawn
from, which suppliers are available
- External info includes market reports, stats from industry observers
and industry bodies, Gov. stats from ABS, media reports, comparative
studies
- Internal info (within business) includes financial reports, quality reports,
internal KPIs such as lead times, inventory turnover rates and
production data
Customers:
- Customers are transformed when their choices and preferences shape
quality, design and construction of products
- Customer oriented businesses take the preferences and interests of
consumers as the starting point to production processes
TRANSFORMING RESOURCES:
Inputs that carry out the transformation process enable the change
and value adding to occur
Human Resources:
- Staff are qualified, hardworking and disciplined and bring productivity
and efficiency to operations
- Employees carry out work duties and responsibilities which adds value
in transformation process
- Employees combine and coordinate other resources e.g. machinery
and technology, raw materials and finance to produce goods and
services
Facilities:
- The plant (factory or office) and machinery used in OP processes which
transform the inputs into outputs
- Modern technology, well-designed and labour friendly will be reflective
of productive operations processes
Case studies
QANTAS
Transformed resources:
- Materials- fuel + paper
- Information- statistics + transactions
- Customers customers are moved
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Transforming resources:
- Human Resources- employees- cabin crew and flight attendants
- Facilities- terminal buildings + holdings
CRUMPLER:
Transformed resources:
- Materials: The key material inputs are heavy-duty rip stop nylon and
thread to construct the bags. Crumplers bags have a water-resistant 900
denier shell.
- A nylon rip-stop nylon, which is super strong, lightweight, durable and
resistant to fraying, tearing and ripping.
- Information: Information from a parachute manufacturer enabled the
business to start new stitching methods that added strength to the bags.
Extensive data for the design specifications for every model of bag ever
produced by Crumpler is kept in accessible files. This allows models to be
edited and changed quickly without delay, saving time and mistakes.
- Customers: Crumpler encourages feedback from its customers. They
monitor blogs and message boards to see demands for new products and to
improve existing ones.
Transformation processes:
- The influence of volume, variety, variation in demand and
visibility (customer contact)
- Sequencing and scheduling- Gant charts, critical path analysis
- Technology, task design, process layout
- Monitoring, control and improvement
Transformation is the conversion of inputs into outputs e.g. Sony takes
plastic, metal, glass and electronic parts and transforms them through
design, manufacturing and assembly into electronic products
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- Allows managers to see what needs to be done and how long it will
take with this info a business can determine order to perform tasks
and see which tasks can be done simultaneously
Overall, sequencing and scheduling gives direction and organisation to OP
processes as well as providing a means of control in order to meet the
objectives of the strategic plan
Technology
Technology involves the use of machinery and systems that enable OP
processes to be more efficient and effective
In manufacturing sector, tech can be used to shorten processes and
enable fuller utilisation of raw materials operations are more cost-
effective
In services sector, office and communications tech has enabled
markets to open up
Office technology includes computers, telephones, internet modems.
These allow work to be performed quicker- greater range of tasks can
be done- also allow workers to perform jobs at greater distances from
workplace telecommunications through emails etc.
Manufacturing technology include CAD and CAM and robotics. Robotics
allows a degree of precision and accuracy that cant be achieved
through human labour. Robotics are very costly and can be
unaffordable for some businesses
CAD allows businesses to create product designs from a series of input
parameters. Generates 3-Dimensional diagrams assisting both designer
and managers to visualise what will be produced costs can be
quantified, high speed means easy to customise designs
CAM allows manufacturing processes to be computer controlled
increase precision and accuracy in production
Task design:
Task design involves classifying job activities in ways that make it easy
for an employee to successfully perform and complete tasks
A skills audit is a formal process used to determine the required level of
skills or skill shortfalls needed to perform transformation processes
Process layout:
CHRISTOPHER KENDIRJIAN
Case studies
QANTAS
Influence of 4 Vs:
a. Volume- Qantas processes millions of people worldwide
b. Variety Qantas provides a variety of services, national and international
services
c. Variation - Qantass demand may increase during school holidays and Easter.
d. Visibility - the customer can see the workings during operating time and
there is a high customer interaction
sequencing and scheduling:
- Qantas uses software to help schedule the time between flights, repairs and
down time. In addition, this automates the whole process so there are time
savings.
Technology, process layout, task design:
-Technology- increased productivity by replacing human capital and
automation, e.g. online checking
-Processes occur in the terminal, hangar and maintenance area. The process
layout is where machines and equipment are grouped. (eliminates bottlenecks
+ saves time)
CRUMPLER:
Influence of 4 Vs:
-Variety is the main influence. Crumpler uses the batch type for its production.
They are required to produce a variety of models, styles and sizes. Each model
of bag will need to be made in different sizes and colours. The batch method
allows them to produce a huge variety of many products. It also allows them to
add different styles or models when they want to.
Sequencing and scheduling:
The aim to have products out as fast as possible. Clear scheduling allows them
to have its new products available to consumers. Each task needs to be
analysed to determine the fastest way of getting things done.
Operations strategies:
STRATEGY DESCRIPTION HOW IT AFFECTS
OPERATIONS
Performanc Quality: quality of design, - Sets benchmarks that
e quality of conformance businesses can work to
objectives- (meeting standards) and achieving and therefore
quality, quality of service improve efficiency and
speed, Speed: time taken for productiveness of
dependabil production and operations operations
ity, processes to respond to - Ability to assess actual
flexibility, changes in market demand and planned results in
customisati satisfy customer demands as order to build on areas
on, cost quickly as possible that need improvement
Dependability: how consistent
and reliable products are
how long products are useful
before they fail measured by
warranty claims for goods and
customer complaints for
services
Flexibility: how quickly OP
processes can adjust to
changes in market can be
improved by using machinery
better or buy new tech that
CHRISTOPHER KENDIRJIAN
standards for
productivity and speed
Inventory Holding stock means consumer - The LIFO method
manageme demand can be met and overstates costs and
nt: alternative products can be understates gross profit
advantages offered if a particular product and can save the
and line runs out. It also means business money in
disadvanta business has opportunity for relation to tax
ges of immediate revenue and allows - The FIFO method
holding the business to promote the understates costs and
stock, use of products. Stock looks profits are overstated,
FIFO, LIFO, good on the balance sheet making the businesses
JIT (assets), older stock can be financial position untrue
sold at reduced prices - The JIT method saves
encouraging cash flow and storage costs
attracting sales of other - Managing inventory can
products improve the efficiency of
Holding stock has operations as managers
disadvantages such as cost of determine the correct
storage, spoilage if perishable, balance of stock
insurance, and theft and available in order to best
handling expenses. Also the suit the demand for
cost of obsolescence when products and to meet
stock remains unsold consumer needs and
The LIFO method assumes that wants
the last goods purchased are
the first goods sold and
therefore the cost of each unit
sold is the last cost recorded
The FIFO method assumes the
first goods purchased are also
the first goods sold and
therefore the cost of each unit
sold is the first cost recorded
The JIT method refers to exact
amounts of material inputs
arriving only as when needed
in the OP process
Quality Processes a business uses to - using quality
manageme ensure consistency, reliability, management ensures the
nt safety and fitness of purpose of business maintains and
products improves its productivity
Quality control reduces and efficiency through
problems and defects in comparing actual
products by using inspections products to set standards
at various points in the of excellence
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equipment, losses of
productivity due to time taken
for staff to adapt to new
working environment
inertia is the psychological
resistance to change
strategies used to overcome
resistance include identifying
the source of change,
communicating the change,
using change agents (someone
who initiates change), applying
change models such as Kurt
Lewins unfreeze-change-re-
freeze, creating a culture for
change, setting achievable
goals
Global Global sourcing involves - Global sourcing allows a
factors- purchasing supplies or services business to attain a
global in global markets. It allows a competitive advantage
sourcing, business to achieve cost through being cost-
economies advantages, access new tech, effective
of scale, access expertise and labour. - Taking advantage of
scanning However operations can economies of scale
and increase in complexity, makes products more
learning managing different regulatory price competitive
and R&D conditions between nations is - Scanning and learning
difficult and control of allows businesses to
standards may be lost improve their standards
Economies of scale refer to according to other best
cost advantages that can be practice businesses
gained by producing products - Research and
on a larger scale meaning development allows for
there is a lower cost per unit opportunities for growth
Scanning and learning is the and development of a
process of analysing and business through new
understanding global product design and
environments and learning development
from the best practice
businesses around the world.
Management journals, industry
and business associations,
conferences and forums act as
opportunities for business
learning
Research and development
CHRISTOPHER KENDIRJIAN
Case studies
QANTAS
Performance objectives:
- Quality- transactions must be accurate
- Speed- Customers must be processed swiftly (reduce waiting time)
- Dependability- The service must be reliable
- Flexibility- Qantas must be able to change and react to market changes.
- Cost- Processes must be efficient
New product design and development
- Qantas has launched 2 new airlines in the Asia pacific area to take
advantage of the growth.
- Qantas constantly updates services or processes in order to main
competitive and profitable.
Supply chain managements
This is the controlling of the flow of supplies through Qantass operations, to
the final customer. -
- Fuel is purchased, sourced and stored, and moved.
- Global sourcing- Qantas sources some pilots from New Zealand, and cabin
staff at Asia. Plane maintenance is done at Malaysia.
- E commerce- Qantas has reduced time consuming and manual processes.
Real time information can be provided to customers.
Quality management
- Quality control- Inspections are carried out periodically at key stages to
make sure standards are met.
- Quality assurance The level of quality at all stages are monitored at
Qantas by measurement against standards.
- Quality improvement- Qantas invites staff to participate in brainstorming
ideas and suggestions to improve quality.
Overcoming resistance to change
CHRISTOPHER KENDIRJIAN
CRUMPLER:
Performance objectives:
Quality is the most important to Crumpler. Their products last long and are
of high quality.
Speed is an objective of Crumpler. Recently CAD and CAM has increased the
speed of operations and the time it takes to get bags from the warehouse to
retailers. This reduces delay and costs.
Dependability is the reliability of the product or service. The company has a
reputation for having long lasting products. They will not break down and
products will always be available in their stores. There is also dependability
in supply and delivery. Crumpler always fills orders and distribute to
retailers on time and web orders.
New product design and development
Crumpler is always improving its products and developing new bags. With
the release of the Apple iPad, there was the making of the Herbus and Fur
Bags.
Recently, they upgraded their zippers. The Vislon zipper was covered with
water repellent. This made an irritating sound to customers, so a silent
option was made.
The Velcro fasteners were updated so that the bag can be closed using two
closures and the cover was under the Velcro. This meant that it was more
efficient and there were less chances of ripping
Supply chain management
The supply chain management has been outsourced to two German
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partners.
This has allowed the supply chain management to improve by speeding up
the delivery of products from warehouse to consumers, planning current
inventory levels and managing damaged goods returned by customers and
distributors.
The operations has been more global, warehouses have been based
overseas
Outsourcing
Crumpler outsources its manufacturing to Korea and Vietnam. Recently, this
it was in Melbourne.
This was done as Vietnam provided cheap labour, made good quality
products and had a reliable supply.
Technology
Crumplers technology is tried and tested. The core inputs like the nylon and
zippers were developed in the 1930s.
Computer programs are used to develop the design patterns on the bags. In
the program, they can set the material inputs, size, shape and even colour.
They can be inputted into the program and the robots will cut the sizes and
padding just as they like it. This saves materials and increases efficiency.
Inventory management system
FIFO is used at Crumpler. There is the assumption that the first stock that
has been purchased and is the oldest will be sold first. This prevents old
stock becoming obsolete and building up. More importantly, stock has to be
available as promoted
Quality management
Bags are regularly checked and inspected to check for any defects. However
quality assurance is heavily relied on, their factories are certified with an
ISO 9002 which means quality is assured. Also, zero defects is the aim for
them.
Change at crumple
The driving force is to be debt free, but the restraining forces are job losses.
Many jobs were lost when they outsourced overseas and reduce
manufacturing locally. When the design technology was updated, local jobs
were lost.
Global factors
Crumpler has begun obtaining its inputs from countries that specialise in it.
Zippers and buckles were manufactured in Vietnam while, Nylon was made
in china. Sheets were imported from Taiwan. By doing this, costs can be
reduced as there is a large supply of those inputs overseas.
Crumpler has increased its capacity through expanding globally. The
Vietnamese manufacturers had produced bags for similar businesses under
the same roof, but increasing its production. This has allowed them to
reduce costs, and this reduces costs and increasing profits for Crumple. By
doing this, they have been able to increase production from 300 bags to
1,000,000 units.
CHRISTOPHER KENDIRJIAN
To scan and learn about what competitors are doing, Crumpler keeps up to
date about travel goods trade events in Europe and USA. Unfortunately,
other companies have begun to copy them.
TOPIC 2: Marketing
Role of Marketing:
Strategic role of marketing goods and services
The strategic role of marketing refers to the long-term goal of achieving
profit maximisation. This is achieved through providing choice,
improving standard of living, providing employment, creating brand
awareness and increasing market share
Influences on Marketing:
Factors influencing customer choice- psychological,
sociocultural, economic, government
Psychological:
- Influences within an individual that affect his or her buying behaviour.
This includes individuals perception, motives, attitudes, personality and
self-image and learning
- Perception is the process of selecting, organising and interpreting info
to create meaning individuals with positive perception of products
will be inclined to purchase products managers must create positive
perception
- Motives are the reason customers purchase products main motives
for purchasing products include comfort, health, safety, ambition,
CHRISTOPHER KENDIRJIAN
Warranties:
- Offering a degree of protection to the customer if the good is faulty or
if the service is not carried out with care and skill
- A warranty is a promise made by a business to repair or replace faulty
products
- False or misleading statements concerning the existence, exclusion or
certain conditions of warranties is prohibited under the Competition
and Consumer Act
Case studies
CRUMPLER:
Consumer laws:
- Crumplers warranty service is testament to the quality of their products.
The business believes that their warranty should reflect the quality of the
product and customer confidence in the product.
- If the Crumpler bags fail while they are in the bags owner, it will be
replaced or repaired.
Ethical:
The beer for bags campaign is encouraging the illegal trade of alcohol and
promotes drinking amongst the 183 demographic were taking beer off
the streets and giving you the bags. In Brisbane and Adelaide, police closed
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down the sale, arguing that Crumpler were in breach of liquor licensing
laws.
Processes of Marketing:
Situational analysis (SWOT, product life cycle), market
research, establishing market objectives, identifying target
markets, developing marketing strategies
Situational analysis:
SWOT ANALYSIS:
Internal External
Strengths: Opportunities:
What is business good at? Technology
Products popular? Strong economy
Customers loyal? Low interest rates
Skilled workforce? New markets
Efficient functioning? Expansion through mergers
High quality?
Equipment
Weaknesses: Threats:
Incompetent managers New laws
Past failures New competition
Are computer systems obsolete? Trends in markets
Info collected from this determines objectives and marketing
strategies to achieve objectives
Monitoring:
Sales analysis, market share analysis and market profitability
analysis are KPIs that can be used to monitor the effectiveness of a
businesss marketing plan
Controlling:
Using the above KPIs, a business can compare actual and planned
results in order to see where the plan is working and where it is not
Businesses can also revise the marketing strategy i.e. change the
marketing mix as to achieve the marketing objectives more
effectively. Changes can include product, price, promotion and place
modifications
Developing new products allows a business to achieve long-term
growth
Case studies
QANTAS
SWOT
Strengths
Lowering of costs and increased efficiency
Largest Australian based airline loyalty programme
Excellent safety record
Globally recognised name and logo
Weaknesses
Relatively complex fleet
High labour and operating costs
Union disputes
Safety incidents
Opportunities
Creating a new airline in asia
Developing E commerce
Evolving aircraft technology
Threats
Weakening in the domestic and international market
Competition
Fuel costs increasing
Product lifestyle
Introduction- Qantas, started a new product and had promoted heavily. The
brand awareness was built up.
Growth- Profitability increased by 14% in 2010 and routes were expanded.
Profitability was achieved for the first time.
Maturity- Sales levelled off and competition increased. Many changes were
done to the lounge, planes and checking.
CHRISTOPHER KENDIRJIAN
Market research
Information about customer needs, brand preferences and characteristics
were identified.
The data source was selected. (Surveys, mail based surveys, complaint
monitoring, government statistics, magazines and interviews)
Marketing objectives
Qantas attempted to:
i. Maintain the combined domestic market share
ii. Grow Jetstar in Asia
iii. Increase customer service standards
iv. Match demand with capacity
v. Reduces losses in international departments
Implementing, monitoring and controlling the marketing plan:
Developing financial forecasts of revenue using past sales data and surveys. Estimations
are then done after.
Comparing actual and planned results- done using (sales analysis + market share analysis
+ market profitability). They reveal the current situation of the business.
Revising marketing strategies and taking action.
Qantas revised its marketing by reducing prices to stimulate demand, reduced flight
frequencies and cancelled orders for new planes.
Marketing strategies:
Market segmentation, product/service differentiation and
positioning
Segmentation:
Involves dividing the total market into segments or parts aim is to
increase sales, market share and profits by better understanding
and responding to the desires of the different target customers
Segmentation may be demographic (age, gender, education,
income), geographic (urban, suburban, rural), psychographic
(lifestyle, personality, motives, socioeconomic group) and
behavioural (purchase occasion, benefits sought, loyalty, usage
rate, price sensitivity)
Product differentiation:
Developing and promoting distinguishable characteristics in
products compared to competitors business gains more control in
the market particularly with price
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MARKETING MIX:
product, price, promotion, place/distribution
PRODU Branding:
CT Name, term, symbol, design identifying a specific product and
distinguishes it from competitors
Manufacturers brand are products branded by the businesses that make
them e.g. sunbeam, Kraft, Billabong high appeal to customers because
they are recognised across the country, are widely available and are
reliable and high quality
Private or house brand is owned by the retailer or wholesaler. Often
cheaper products because retailer or wholesaler can buy at lower costs
e.g. Myer sells own brand Miss Shop
Generic brands are products with no brand name at all plain
packaging cheaper to manufacture and sell
Benefits of branding for consumers:
- Identify specific products they like
- Evaluate quality
- Reduce level of perceived risk of purchase
- Psychological reward symbolises status and prestige
Benefits of branding for business:
- Gain repeat sales because customers recognise products
- Introduce new products with same brand customers already familiar
- Promotion of one product, simultaneously promotes others
- Encourage customer loyalty business can charge higher price
Packaging:
Development of a container and the graphic design for a product well
designed will give positive impression of the product and encourage first-
time customers can create images of luxury, sensuality and
exclusiveness, helping to promote the product
Packaging:
- Preserves product
- Protects from damage
- Attracts customers attention
CHRISTOPHER KENDIRJIAN
E-marketing:
Is the practice of using the internet to perform marketing activities
faster, more efficient way of doing business and also an effective
way of attracting customers
Such e-marketing technologies include web pages, podcasts, SMS,
blogs, Web2.0, social media advertising
Social media advertising is inexpensive, easy to use and monitor,
and effective to gain exposure in a market
Global marketing: global branding, standardisation,
customisation, global pricing, competitive positioning
Global branding:
- Worldwide use of a name, term , symbol or logo to identify the
sellers products
- It can be cost effective because only one ad can be used in many
locations
- It provides uniform worldwide image
- Successful brand name may be linked to new products introduced
into the market
Standardisation:
- Assumes the way the product is used and the needs it satisfies is
the same over the world
- Marketing mix is the same in all markets
- E.g. electrical equipment, mobile phones, soft drinks
- Can be cost-effective as businesses can take advantage of
economies of scale also promotional strategies may be standardised
therefore saving money
Customisation:
- Assumes the way a product is used as well as the needs it satisfies
are different between countries e.g. maccas serve beer in Germany
- Marketing plan is customised to suit the economic, political and
sociocultural characteristics of the target country
CHRISTOPHER KENDIRJIAN
Global pricing:
- How businesses coordinate their pricing policies across different
countries
- Customised pricing occurs whenever consumers in different
countries are charged different prices for the same products
because costs can differ between nations
- Market customised pricing sets prices according to the local market
conditions e.g. competition, demand
- Standard worldwide pricing is charging the same price for a product
anywhere in the world 2 risks involved: domestic businesses may
undercut the standardised price and changes in exchange rates may
negatively impact exported prices
Competitive positioning:
- Relates to how a business will carve out a place within the
competitive market environment and position its product through
differentiation
- In order to do this, businesses must gain deeper understanding of
the dynamic enviro in which they operate, and form their strategies
according to evolving conditions
Case studies
Qantas:
Product
This is the benefits and attributes designed to suit the customers needs. They
include scheduling features,
Frequent flyer schemes (points are earned towards free tickets), intangible
benefits (safety and reliability) and the brand name.
Price
This is the cost of the service to the customer. Pricing methods used are:
Cost plus margin- Qantas adds a percentage on top of the COGS
Market- Qantas lowers costs if the market demand is high
Competition- Qantas may lower costs if the competitors are decreasing
prices
Pricing strategies include: Price penetration- reducing prices to gain market
share AND Loss leading- Qantas made a loss in the short term in order to
compete against other competitors
Promotion
This is the methods that an organisation uses to communicate its products for
CHRISTOPHER KENDIRJIAN
Standardisation
This is the standardising of the many elements of the marketing mix. >>>
allows economies of scale to be achieved.
There is the one world name and logo on all planes + tickets >> improves
corporate image+ captures greater share.
Customisation
This is the ability to differentiate the marketing to target different markets.
Qantas adjust/tailors its marketing based on the markets. Japanese markets
will have Asian dishes and Japanese fluent speakers.
COCA COLA AMATIL:
Market segmentation Coke uses psychographic segmentation- diet coke
targeted at health conscious market from ages 18-35
CHRISTOPHER KENDIRJIAN
TOPIC 3: Finance
Role of Financial Management:
Strategic role of financial management:
The strategic role of financial management is to ensure that planning
and monitoring of a businesss financial resources enables the
achieving of financial objectives. Financial management must set
financial objectives and ensure the business can achieve them, source
finance, prepare budgets and financial statements, distribute funds to
other parts of the business and maintain sufficient cash flow
Objectives of financial management: profitability, growth,
efficiency, liquidity, solvency- Short term and long-term goals
Profitability is the ability of a business to maximise its profits in
the long-term. In order to do this a business must monitor
revenue, pricing policies, costs and expenses, inventory levels and
level of assets
CHRISTOPHER KENDIRJIAN
Advantages Disadvantages
Owners equity- - No interest - May be difficult to
money contributed by payable= cheap raise equity as the
owners in the form of way of growing owners lack
capital company financial resources
Retained profits- - Company value - Often insufficient to
profits that are kept in increases through fund a businesss
the business rather growth strategies
than distributed to the - Funds are kept and
shareholders used for business
activity
- No interest paid
Unit trusts:
- A.k.a mutual funds, take funds from a large number of small investors
and invest them in specific types of financial assets.
- Such investments include the short-term money market, shares,
mortgages and public shares
Life insurance companies:
- Provide loans to corporate sector through receipts of insurance
premiums, which provide funds for investment
- The funds received from premiums (called reserves) are invested in
financial assets
ASX:
- Australian securities exchange functions as a market operator
- It is a market where shares are bought and sold
- It acts as a primary market enabling companies to raise new capital
through the issue of shares and through the receipt of proceeds from
the sale of securities.
- It acts as a secondary market where pre-owned or second hand shares
are traded between investors who may be individuals, businesses,
governments or financial institutions
determini
ng
financial
needs
establishi
developin
ng
g
financial
budgets
controls
identifyin
maintaini
g
ng record
financial
systems
risks
Financial controls:
Policies and procedures that ensure that the plans of the business will
be achieved in the most efficient, cost-effective way
Common causes of financial problems include theft, fraud, damage or
loss of assets and errors in record systems
Budgets and comparing actual and planned results is a form of
financial control
Common policies and procedures that promote control:
Clear authorisation and responsibility of tasks
Separation of duties
Rotation of duties
Control of cash e.g. cash banked daily
Protection of assets
Control of credit procedures
Debt finance
Advantages Disadvantages
- Funds are readily available - Increased risk because of high
- Increased funds should increase cost (interest, bank charges and
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Liabilities:
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Profitability: net profit ratio, gross profit ratio, return on equity ratio
(Gross profit/sales) x100
Shows what percentage of each sales dollar is gross profit
The higher the ratio the better. If it is declining, then the business may
need to reduce COGS or increase sales by seeking cheaper suppliers or
increase their prices
(Net profit/sales) x100
Takes into account expenses and the higher this ratio the better
A declining ratio shows that the businesss expenses are rising at a
faster rate than sales or that sales have fallen while expenses have
remained the same
If ratio is decreasing, business should reduce expenses such as wages
(by outsourcing), use penetration pricing to increase sales by selling a
greater volume of products
(Net profit/owners equity) x100
Shows the reward owners receive for using and risking their funds
(equity). It informs owners if the business is a good investment
compared to other businesses
Ideal ratio would be 10%
Efficiency: expense ratio, accounts receivable turnover ratio
Total expenses/sales
Shows the proportion of each dollar earned that is absorbed by
expenses
The lower the ratio, the more efficient the business
If the ratio is rising, the business can increase prices or find cheaper
ways of operating e.g. find cheaper suppliers, use energy efficient
lighting and recycle paper
Sales/Accounts receivable, then do 365 divided by this answer
Shows the number of days it takes a business to collect payment from
its accounts receivables how long it takes to recover credit sales
Usually 30 days is acceptable but depends on industry
If business is waiting too long, it can use factoring or offer discounts for
early payment or charge interest for late payment
A business must have clear ideas and policies, particularly about its
marketing objectives including sales objectives, sales mix and
pricing policies
Marketing objectives:
A businesss sales objectives must be set at a level that would cover
costs, both fixed and variable and thus result in a profit
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Hedging:
The practice of protecting the business from adverse
(unfavourable) changes in exchange rates by entering into a
contract at the present time to buy or sell foreign exchange at a
specified rate on a given date in the future
Derivatives:
Financial tool that is used to hedge against unfavourable changes in
Australias exchange rate
A forward contract involves firms entering into a contract at the
present time to buy or sell foreign exchange at a specific rate on a
given date in the future exchange rate is fixed regardless of future
fluctuations
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An options contract gives the buyer the right to buy or sell foreign
currency at some time in the future
A swap contract is an agreement to exchange currency in a spot
market with agreement to reverse the transaction in the future
Case studies
Qantas:
Working capital management: uses leasing of non-current assets
such as planes and buildings as a way to increase working capital
Profitability management- revenue controls: The revenue was
controlled via:
Setting clear sales objectives and breaking them down
Discounting airfares to maintain loads- pricing policies
Reconfiguring its planes with more economy class seats- sales mix changed
to introduce better products and thus increase profitability
Profitability management- cost controls: Qantas reduced its costs by 20%
by:
Cutting flying capacity and cutting services back
Cancelling orders for new planes
Restructuring
Fuel conservation
global financial management:
when the Australian dollar appreciates against other currencies, fuel,
payments and capital expenses are cheaper
hedging- Qantas uses derivatives such as future interest payments and
forward exchange contracts in order to protect its capital base, exploit its
financials, minimise capital costs and reduce financial distress
Crumpler:
Methods of international payments: uses payment in advanced for
international suppliers. Transactions are made online
TOPIC 4: HR
Role of HRM:
Strategic role of human resource management (HRM):
The strategic role of HRM is to manage positive relationships
between employers and employees in order to best meet the
strategic plan of the business
HRM must develop an effective workforce in order to add value to
other parts of the business because employees are the business
best asset
HRM must focus on specific strategies to retain, reward, and
motivate effective and skilled employees to achieve the businesss
objectives
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Advantages Disadvantages
- Expand capacity - Quality may fall
- Improve quality to an extent - Costs may increase
- Save costs to an extent - Hidden costs
- Conserve capital - Lack of communication
- Focus on core business functions - Reduced business learning
through reliance on experts
Case studies
Qantas:
Strategic role: To manage effectively the relationship between employer and
employees in order to achieve its goals, minimise costs, improve quality in
working life and ensure legal compliance.
- Unions: many of its employees are under unions and include the
Australian Workers Union, Allied services union and the Australian
manufacturing union who oppose outsourcing and job cuts
- Government organisations: Qantas must abide by policies through
departments such as courts, tribunals and agencies
Minimum wage rates: employees have a base rate of pay for a number
of ordinary hours they work and is determined by modern awards,
enterprise agreements or national minimum wages
Awards: the legally enforceable minimum terms and conditions that
apply to a business or industry. It covers things such as base pay rates,
conditions for different types of employment, overtime and penalty rates,
allowances, hours of work and superannuation. Individual flexibility
arrangements (IFAs) allow an employee to come to an agreement with
employer that varies the modern award or enterprise agreement to
address their individual circumstances
Enterprise agreements: collective agreements made at a workplace
level between an employer and group of employees (collective
agreements) about terms and conditions of employment. They offer
broader terms and conditions than modern awards and therefore is an
alternative to the modern awards. There are single-enterprise
agreements, multi-enterprise agreements (between 2 or more employees
and employers) and greenfields agreement (single and multi-agreements)
relating to a new enterprise or the employer that are made before any
employees are employed. Key features of enterprise agreements are:
- Cover rates of pay, penalty and overtime rates, allowance, hours of
work, personal and annual leave
- Must be approved by FWC who ensures the agreement:
Is agreed by those involved
Passes Better off overall test (BOOT) compared to modern award i.e.
it is better off overall, than modern awards
Covers a representative group of employees
Has an expiry date
Has flexible clause (allows for variation if required)
Provides opportunity for employee bargaining
Other employment contracts: can include:
- Individual contracts: that exist when employers and an individual
employee negotiate a contract covering pay and conditions
- Independent contractors: (consultants/freelances) undertake works
for a business however dont have the same legal status as an
employee
- Casual contract: have short term, irregular or season work and arent
entitled to holiday or sick leave
- Part-time contracts: have a continuing employment contract and
work <30 hours per week. They have access to entitlements offered
to full-time employees
Work Health and Safety:
Covers employees and employers and is enforced by the NSW Work
Health and Safety Act 2011. It is required that:
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Eco factors impact the demand for labour and the pressure of wage
growth
It involves the economic cycle, inflation and globalisation
Globalisation has increased competitive pressures on businesses,
with many increasingly recruiting or outsourcing functions offshore
Technological:
Can be a source of improvement in productivity, communication and
competition between businesses, however it can cause redundancy
through the process of capital labour substitution
It can also cause the need for re-training which will increase costs
however improve the productivity of a businesss workforce
Social influences:
Changing work patterns:
Increase in part-time and casual work means an increase in career
flexibility and job mobility, increased participation rates of women
and ageing population (flexible working arrangements is critical in
utilising this ageing workforce)
Also increase in early retirement
Living standards:
High living standards include WHS, regular wage increases,
performance bonuses, fringe benefits, leave and superannuation
benefits
There is pressure from global competition and conflict for desire of
high living standards work life balance
Ethics and CSR:
Ethical business practices are those that are socially responsible,
morally right, honourable and fair
Managers must recognise that:
- Pleasant working environments motivate and retain staff
- Performance and motivation is maximised when staff feel secure,
confident, acknowledged, safe and rewarded
- Business depends on community as it is a source of staff and a
source of customers and resources
Business should develop a code of conduct/ethics
In relation to working conditions, managers must:
- Comply with social justice and industrial legislation
- Provide safe and healthy working environment
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Processes of HRM:
Acquisition, development, maintenance, separation
Acquisition:
The process of attracting and recruiting the right staff for the role in
a business
It involves identifying staff needs by analysing the internal
environment (business goals and culture to determine required and
appropriate skills needed by potential staff in order to fit
organisational structure) and external environment (eco conditions,
competition, technology, legal, political and social factors
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Maintenance:
Processes needed to retain staff and manage their wellbeing at work
Offers family friendly programs that support a work-life balance
provides flexible job roles such as job sharing, multiskilling,
telecommuting, part-time work and flexible hours
Communication and workplace culture:
Poor communication results in workplace conflicts and high turnover
rates. Methods of communication include regular team meetings, staff
seminars, social functions and staff surveys focuses on building trust
between employees and avoiding conflict
Employee participation:
Firms encourage employee participation to improve communication,
employee empowerment and their commitment to improving quality
and efficiencies
Benefits:
Monetary or non-monetary
Businesses carefully consider the value of these benefits in terms
of retention of staff and workplace culture, as they are expensive and
some attract an employer-paid fringe benefits tax (FBT)- is a tax
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Autocratic Participative/democratic
Managers make decisions quickly More consultative approach,
without input from staff encouraging employees to be
Works well with more engaged in decision-
unskilled/inexperienced making process
workforce because the work is Gives workers a greater sense of
highly organised and controlled ownership and thus higher job
It can decrease staff motivation satisfaction and productivity
and satisfaction which can result Emphasis on high quality output
in high levels of absenteeism rather than efficiency
and staff turnover Takes longer to make decisions
Workers compliance is often Workers are seen as a resource
recognised through financial that can be developed over time
reward
Advantages Disadvantages
Inter Staff motivation Can reinforce
nal Builds commitment and loyalty negative culture
Productivity maintained employees Can lead to rivalry
already familiar with workplace for positions
culture Unsuccessful
Recognises and rewards staff internal applicants
Cheaper as there is a less chance of may be demotivated
failure because strengths and Little value added-
weaknesses of staff are already no new skills
known
Exter Wider applicant pool Risk of unknown
nal New ideas, perspectives and skills staff may not fit
Get specific skills- save money on culture
training Lost productivity in
More diversity- business fosters initial stages due to
equal employment opportunities- induction processes
CSR Takes a lot of time
Builds organisational brand through and effort
publicity Risk of legal claims
Performance management:
Addresses both individual and business performance successful
individual performance will often translate into the businesss strategic
objectives being met
Performance management:
- Identifies opportunities for productivity improvement
- Assesses legal compliance
- Justifies staffing decisions
- Provides feedback and recognition
- Identifies training and development needs
- Assesses performance against organisational standards
Developmental performance management improves individual
performance through establishing objectives such as reaching target
sales that are consistent with achieving the organisations goals
Administrative performance management assesses the progress
of the business in meeting its strategic goals and where necessary,
identifying areas for improvement such as establishing new goals or
employee performance
Benefits of performance management
Developmental Administrative
Assist with HR planning Higher productivity
Can plan to overcome gaps or Better financial performance
weaknesses found in Helps assess rewards/benefits
performance linked to performance
Identifies training and Creates opportunities for
development or legal compliance employees to provide feedback
needs Employee focus is aligned with
Builds trust through organisational strategy
communication of expectations
Helps identify, motivate and
retain talented staff for
leadership succession
INVOLVEMENT OF COURTS/TRIBUNALS:
Conciliation and arbitration:
- A dispute may be referred to FWC who appoint a conciliator to hear
both sides
- Conciliation is when a third party helps resolve a dispute through
calling a conference if this fails, arbitration is used
- Arbitration is where a third party hears dispute and makes a legally
binding decision to resolve the dispute. An order (decision that
requires employees and employers to carry out from the tribunal)
may be handed down and may end a restrictive work
practice/behaviour
Common law action:
- Common law action is open to any party involved in or affected by
industrial action
- Benefit of industrial action is that relationships and conditions may
be improved
Case study:
Crumpler
Leadership style: The participative approach to leadership is utilized.
The employees are encouraged to contribute their ideas and thoughts and
take creative ownership of the business, the emphasis is on letting
employees do their job with minimal interference
Workplace disputes: Workplace disputes are rare at Crumpler due to
the positive working environment. Disputes are settled within the
company, rather than through external arbitration, through largely
informal discussion with senior management, who seek to address all
issues as soon as possible without resulting in more tensions. The close
working environment makes it clear as to whether disputes are settled
and staff are satisfied.
Qantas:
Leadership style
- The autocratic leadership style was utilized in the 1990s where
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Effectiveness of HRM:
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Refers to a worker who neglects to turn up for work when they were
scheduled to do so
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Accidents
- This is the amount of accidents that have been working as a result of the
tasks.
- In 2015, the injury rate was reduced from 41.5% to 35.3%. This means
that those employees are available for longer and no replacements are
required.
Levels of disputation
- This is the amount of tension between the corporation and the employees.
In recent years, there have been high amounts of strikes and industrial
actions due to the recent action to axe jobs, introduce part time
employees and outsourcing.
Worker satisfaction
- This is how happy workers are at the organisation. It is related to
motivation and productivity. It is hard to measure and Qantas analyses it
via surveys, invitations for employee feedback.