Principles of Business Management 2 nd Edition

Transcription

1 Principles of Business Management 2 nd Edition Edited by JOHAN STRYDOM Contributors Marolee Beaumont Smith Andreas de Beer Maggie Holtzhausen Jerome Kiley Danie Nel Cecile Nieuwenhuizen Theuns Oosthuizen Sharon Rudansky-Kloppers Rigard Steenkamp OXFORD UNIVERSITY PRESS SOUTHERN AFRICA

2 Table of contents Preface xxv PART i INTRODUCTION TO BUSINESS MANAGEMENT i I Business and its challenges 3 Johan Strydom Purpose of this chapter 3 Learning outcomes Introduction What is a business? Business and profits The economic principle The factors of production Natural resources Human resources Capital Entrepreneurship The economic systems in which businesses operate South African businesses and the changing social contract The expectations of business-related stakeholders The expectations of opinion-related stakeholders The expectations of public-related stakeholders Corporate social responsibility The current social contract of a South African business The parts of this book 19 Case study: Shoprite 2010 annual report how the Shoprite group is interacting with its stakeholders 21 Summary 23 Glossary 24 Multiple-choice questions 26 References and end-notes 27 Answers to multiple-choice questions 28

3 PRINCIPLES OF BUSINESS MANAGEMENT 2 The business environment 29 Jerome Kiley Purpose of this chapter 29 Learning outcomes Introduction The systems approach The organisational environment The micro-environment The market environment The macro-environment The natural environment The technological environment The social environment The political environment The economic environment The international environment Conducting a SWOT analysis (study of the parts) of a business's environment 43 Case study: Pick n Pay 45 Summary 47 Glossary 48 Multiple-choice questions : 50 References and end-notes 51 Answers to multiple-choice questions 52 PART 2 MANAGEMENT TASKS 53 3 The task of management 55 Theuns FJ Oosthuizen Purpose of this chapter 55 Learning outcomes Introduction What is management? What is a manager? Organisations in which managers work Levels of management Top management Middle management First-level management 59

4 Table of contents \ 3.6 Management tasks ; Planning Organising Leading Motivating Controlling Areas of managements Production and operations managers Logistics managers Information-technology managers Financial managers Human-resources managers Marketing managers Public-relations managers Administrative managers Management skills Conceptual skills Human skills Technical skills Management competencies Management roles Decisional roles Interpersonal roles Informational roles 69 Case study: Toys for Africa 70 Summary 71 Glossary 71 Multiple-choice questions 74 References and end-notes 74 Answers to multiple-choice questions 75 Planning 76 Sharon Rudansky-Kloppers Purpose of this chapter 76 Learning outcomes Introduction Why planning is necessary The planning process Setting goals 79

5 PRINCIPLES OF BUSINESS MANAGEMENT f A 4.3. i. i The mission statement of the organisation The environment of the organisation The values of management The experience of management A hierarchy of goals The mission statement The strategic goals The tactical goals The operational goals Criteria for setting effective goals Developing action plans Strategic plans Tactical plans Operational plans Implementing the selected plans The full circle 88 Case study: Medical scheme takes action 88 Summary 89 Glossary 90 Multiple-choice questions 91 References and end-notes 92 Answers to multiple-choice questions 92 5 Organising 93 Andreas de Beer Purpose of this chapter 93 Learning outcomes Introduction The organising process Gathering information Identifying and analysing activities Classifying activities Allocating staff Assigning authority and responsibility Facilitating (encouraging) work Principles (basic rules) of organising Co-ordination The chain of command Unity of command 95

6 Table of contents Span of control Authority Line authority Staff authority Line-and-staff authority Functional authority Project authority Responsibility Accountability Delegation.-, Centralisation and decentralisation Specialisation Divisionalisation A divisional structure based on business functions A divisional structure based on products A divisional structure based on geographic location (place on the earth) A divisional structure based on projects A divisional structure based on consumer or client needs Organisational structures The line organisational structure The line-and-staff organisational structure The functional organisational structure The divisional organisational structure The matrix organisational structure The teams organisational structure The network organisational structure no 5.5 The changing organisation no Case study:jonny Happy Feet Limited in Summary 113 Glossary 113 Multiple-choice questions 114 References and end-notes 115 Answers to multiple-choice questions Leading 116 Maggie Holtzhausen Purpose of this chapter 116

7 f PRINCIPLES OF BUSINESS MANAGEMENT : Learning outcomes Introduction The three components of leadership An interactive framework of leadership Leadership versus management A brief history of leadership theories Earlier leadership theories Trait theories Behaviour theories Situational approaches Newer leadership approaches A re-birth of earlier trait theories A move towards leadership-follower approaches Other leadership perspectives (theories) Leadership tools Leadership and diversity Leadership and gender Leadership and culture Integrating diverse leadership styles Worldwide leadership trends 129 Case study: Me, myself as manager and leader 130 Summary 131 Glossary '. 131 Multiple-choice questions 132 References and end-notes 133 Answers to multiple-choice questions Motivating 136 Jerome Kiley Purpose of this chapter 136 Learning outcomes Introduction What is motivation? The needs and expectations of employees Individual differences The needs of individuals Maslow's hierarchy of needs Alderfer's ERG Theory McClelland's Needs Theory 141

8 Table of contents The expectations of employees Expectancy Theory Equity Theory Managing employee's motivation Directly influencing employee behaviour Goal-setting Theory Behavioural modification (change) Facilitating (helping to bring about) employees' good performance The quality-of-work-life approach Herzberg's Two-Factor Theory The job characteristics model McGregor's Theory X and Theory Y, and the selffulfilling prophecy Monitoring employee morale Practical motivational strategies 149 Case study: SA's top employers as voted for by students 150 Summary 152 Glossary 153 Multiple-choice questions 156 References and end-notes : 157 Answers to multiple-choice questions Controlling 159 Theuns FJ Oosthuizen Purpose of this chapter 159 Learning outcomes Introduction Types of control Pre-control Concurrent control Post-control Sources of control Individual self-control Group control Organisational control Stakeholder control The control process Developing performance standards 165

9 PRINCIPLES OF BUSINESS MANAGEMENT Measuring actual performance Comparing actual performance with performance standards Reinforcing good performance, and correcting if necessary When to use a control measure Financial controls Quality controls ; Total quality management Quality circles Six Sigma Benchmarking Continuous improvement Reduced cycle time The balanced scorecard The benefits of controlling 171 Case study: Environmental management controls at African giant hotel and entertainment group -African Skies 172 Summary 174 Glossary 174 Multiple-choice questions 176 References and end-notes 177 Answers to multiple-choice questions 178 PART 3 THE FUNCTIONAL AREAS OF MANAGEMENT Operations management 181 Rigard Steenkamp Purpose of this chapter 181 Learning outcomes Introduction A brief history of operations management Operations management is the core function of any organisation Effectiveness, efficiency, and productivity Operations strategies Product design and operations design Operations planning and control 189

10 Table of contents Reconciling (dealing with opposites) supply and demand (give and take) Loading Sequencing Scheduling Monitoring Addressing bottlenecks Demand management Fixed-capacity planning Adapting capacity to a change in demand...; Inventory management Material-requirements planning Make-or-buy decisions Operation improvement Quality and quality management Statistical process control Maintenance and replacement Safety, health and environmental management Project planning and control Project planning and Gantt charts Network analysis 202 Case study:the lean paradigm at L'Oreal 203 Summary 204 Glossary 205 Multiple-choice questions 208 References and end-notes 210 Answers to multiple-choice questions Logistics management 211 Danie Nel Purpose of this chapter 211 Learning outcomes Introduction Defining logistics management The objectives of logistics management Minimising total logistics costs Increasing customer service Trade-offs between minimising costs and optimising service 214

11 PRINCIPLES OF BUSINESS MANAGEMENT 10.4'Activities of logistics Purchasing management Order processing Inventory management Transportation Warehousing Materials-handling and packaging Integrated logistics Reverse logistics Global logistics. 228 Case study: Using distribution centres to improve customer service 229 Summary 229 Glossary 230 Multiple-choice questions 232 References and end-notes 233 Answers to multiple-choice questions Financial management 236 Marolee Beaumont Smith Purpose of this chapter 236 Learning outcomes Introduction The functions of financial management Analysing the financial position of a business Managing the assets of a business Managing the liabilities (what is to be paid) of a business The core principles of financial management The cost-benefit principle The risk-return principle The time-value-of-money principle Analysing financial statements The balance sheet The income statement Ratio analysis Liquidity ratios The current ratio The quick ratio 244

12 V Table of contents Asset-management ratios Inventory turnover Average collection period Total asset turnover Debt-management ratios The debt ratio The gearing ratio The interest-coverage ratio Profitability ratios The gross profit margin., The profit margin The return on total assets The return on equity Applying ratio analysis Break-even analysis Fixed and variable costs The break-even point Some limitations of break-even analysis Financing capital requirements Short-term financing 254 n Trade credit Bank credit Factoring of trade receivables Long-term financing Equity funding ' Long-term bank loans Financial leases 257 n.8 The cash budget Preparing a cash budget Managing trade receivables and inventories Managing trade receivables 260 n Credit policy Credit terms Collection policy Managing inventories The optimum level of inventory holdings 263 Case study: Financial ratio analysis of Polokwane Printing Company 264 Summary 266

13 r PRINCIPLES OF BUSINESS MANAGEMENT J Glossary 266 Multiple-choice questions 269 References and end-notes 270 Answers to multiple-choice questions Human-resources management 271 Maggie Holtzhausen Purpose of this chapter 271 Learning outcomes Introduction The role of human-resources management The human-resources management process Strategic human-resources planning Job analysis Human-resources forecasting Staffing the organisation Recruitment Selection Induction Developing and assessing the organisation's human resources Training and development Performance management Maintaining the organisation's human resources Important trends in human-resource management 290 Case study: Oyster Bay Lodge 291 Summary 294 Glossary 294 Multiple-choice questions 296 References and end-notes 297 Answers to multiple-choice questions Marketing management 300 Sharon Rudansky-Kloppers, Johan Strydom Learning outcomes Introduction The nature of marketing Marketing thinking through the years The production era 304

14 ^ Table of contents The sales era The marketing era Profit orientation Consumer orientation 305 J Social responsibility Organisational integration Consumer behaviour Determinants of consumer behaviour Individual factors Group factors The consumer's decision-making process Awareness of an unsatisfied need or problem Gathering information on how best to solve the problem Evaluating all possible solutions Deciding on a course of action Post-purchase (after purchase) evaluation Marketing research The marketing-research process Step 1: Defining the problem Step 2: Developing hypotheses Step 3: Collecting data Step 4: Processing, analysing and interpreting information Step 5: Compiling a research'report and making recommendations Market segmentation, target marketing and product positioning Market segmentation The market-aggregation approach The single-segment approach The multi-segment approach Using variables to describe the market structure Target marketing Product positioning The product decision Definition of a product The product concept Classification of consumer products 320

15 PRINCIPLES OF BUSINESS MANAGEMENT r ; J i Convenience products Shopping products Specialty products Unsought products Brand decisions Brand loyalty Packaging decisions Product strategies Product differentiation Product obsolescence The product portfolio The development of new products The product life cycle Distribution decisions Selecting the distribution channel Factors that play a role in the determination of a distribution channel The type of product The type of market The existing distribution channels Channel leadership Market coverage Logistics (also called physical distribution) Price decisions Price defined The price-determination process Adaptations of the final price Marketing-communication decisions Marketing communication defined Advertising The advertising message Personal selling Sales promotions Public-relations management 340 Case study: Pick n Pay moving forward 342 Summary 344

16 V Table of contents : Glossary 344 Multiple-choice questions 350 References and end-notes 351 Answers to multiple-choice questions 351 PART 4 ENTREPRENEURSHIP AND THE BUSINESS PLAN Entrepreneurship 355 Cedle Nieuwenhuizen Purpose of this chapter 355 Learning outcomes Introduction 355 Case study: Dimension 5 Business Services Group (Pty) Ltd The economic impetus of entrepreneurial business Who is an entrepreneur? Ingenuity Leadership Calculated risk-taking The entrepreneurial process Temporary entrepreneurs versus growth-orientated entrepreneurs Entrepreneurship, management and leadership in entrepreneurial businesses Types of entrepreneurial business The informal business sector The micro- and small business sector The medium and large business sectors Franchisors and franchisees Corporate entrepreneurship 368 Case study: Craig Lyons 369 Summary 370 Glossary 370 Multiple-choice questions 371 References and end-notes 372 Answers to multiple-choice questions 373

17 PRINCIPLES OF BUSINESS MANAGEMENT 15 The business plan 374 Cedle Nieuwenhuizen Purpose of this chapter 374 Learning outcomes Introduction Identifying an opportunity Performing a feasibility study Performing a viability study Establishing who the consumers would be and what their needs are Developing the mission or purpose statement of the business Defining the business goals and business objectives Determining the business's share of the total market Calculating the income of the business Calculating the expected net profit of the business to determine if the business idea is viable Calculating the break-even point Developing the business plan The contents and framework of a business plan Key elements of a business plan The cover sheet The table of contents The executive summary The business team : The analysis of the macro- and market environment and the positioning of the business in the market The history and profile of the business The products and/or services plan The marketing plan The production or operational plan The financial plan The implementation timetable The summary and concluding remarks The appendices and references Determining the resources and starting the business Case study: Afrique Cosmetics executive summary 392 Summary 392

18 Table of contents Glossary 393 Multiple-choice questions 394 References and end-notes 395 Answers to multiple-choice questions 395 Index 396