Large-scale organisations in context VCE Business Management Unit 3.

Large-scale organisations in context

VCE Business Management Unit 3

© Cambridge University Press 2012

LARGE SCALE ORGANISATIONS IN CONTEXT

AREA OF STUDY 1

UNIT 3CORPORATE MANAGEMENT

CHAPTER 1LARGE SCALE ORGANISATIONS


What is an organisation?

Organisations occur in every part of ourlives, both socially and in our business or worklife. Organisations are a deliberate arrangementof people working to achieve a specific purposeor set of goals.


What is an organisation? (cont.)

Organisations enableus to achieve morethrough a teamenvironment.


Why are organisations needed?

They provide continuity of knowledge andexperience and help us to manage complexsocial and technological change. Employmentand career opportunities can result from beingpart of an organisation.


What do all organisations have in common?

Organisations have common characteristics:distinct purpose or goal(s), comprised of twoor more people, and adopt a distinct form ofstructure.



Common criteria for classifying an organisationas large are:• number of employees (more than 200)• substantial total assets



• substantial total revenue• substantial profits• dominant market share• large-sized operations• business locations – generally

multiple.



General characteristics of a large-scaleorganisation:• Strategic objectives are formulated.• Strategic planning is undertaken.• Formalised policies, procedures and rules are

adopted and documented.• Organisational structure is devised.


What do all organisations have in common? (cont.)

• A chain of command and hierarchical management structure is established.

• A coordinated and decentralised approachto decision making is adopted.

• Specialisation of activities into departmentsor within departments occurs.


Large-scale organisations in Australia

Many Australian large-scale organisationsoperate as multinational corporations withtheir business activities occurring in more thanone country.


Large-scale organisations in Australia (cont.)

Organisations often enter into joint ventures,merge together, demerge, are taken over ina hostile manner, or are acquired by anotherorganisation. Some may choose to downsizetheir operations or outsource their non-coreactivities.


Large-scale organisations in Australia (cont.)

A dual-listed company is created when acompany, usually as the result of a merger,applies to have two independent listings(separate shareholders) on two stockexchanges.


Different types of large-scale organisations

There are many ways in which large-scaleorganisations can be differentiated:• Ownership – government business enterprises

(GBEs), government departments and statutory authorities that form the basis of the public sector, or private business organisations that form the basis of the private sector


Different types of large-scale organisations (cont.)

• Orientation or focus – either as a for-profit ornot-for-profit organisation

• Type of business activity – to which industryclassification and level they belong.


Organisational objectives and strategies

All organisations mustset objectives. Theobjectives set willdepend on the natureof the business activitybeing undertaken.


Organisational objectives and strategies (cont.)

A hierarchy of objectives needs to beestablished, commencing with the missionstatement (common purpose) down to theindividual objectives of employees. This processis referred to as Management by Objectives.



The SMART principle is used to ensure thatobjectives being set are specific, measurable,achievable, relevant and time-bound.



Objectives may coverthe areas of: financial,service, ethical andsocial responsibility,and environment.



Plans (strategic, tactical and operational) needto be put in place at each level of theorganisation to assist in achieving theobjectives.


Typical management functionsManagement undertakes the key roles ofplanning, organising, leading and controllingto assist the organisation to achieve theseobjectives.


Typical management functional areas Typical management functional areas inlarge-scale organisations include operations,finance, human resources, marketing andresearch and development.


Typical management functional areas (cont.)

Large-scale organisations contribute eitherpositively or negatively to our economythrough:• gross domestic product (GDP), employment,• balance of payment (exports/imports), research• and development, and infrastructure growth.


Environments of business

Businesses in Australia operate in an opensystem that interacts and is dependent uponits specific internal and operating environment.The general (macro) environment also exertspressure on all businesses.


Three levels of the organisation environment

There are three levels of environment: external(macro and operating) and internal.


Macro environment

The macro environment refers to a rangeof factors or pressures such as economic,government and political, legal, technological,global, social and environmental.


Operating environment

The operating environment refers to a range offactors or pressures such as customers,competitors, suppliers, trade unions, lobbygroups, financial institutions and regulatorybodies.


Internal environment

The internal environment refers to a range offactors or pressures such asshareholders/owners, management,employees, organisational structure andcorporate culture.


Stakeholders in large-scale organisations

Stakeholders, being those individuals or groupswith a vested interest in an organisation’soperations, are most commonly found in theoperating and internal environments of theorganisation.


Stakeholders in large-scale organisations (cont.)

Stakeholders can be: • shareholders • Directors• management • employees • trade unions• Customers



• Suppliers• creditors/banks• the community• government and competitors.Each of these stakeholders has either issues orinterests associated with the organisation.



Business success for an organisation isdependent upon being able to respond quicklyto changes or pressures that come from eitherIts external or internal environment.



Awareness of theinterests and issues ofstakeholders must alsobe taken into account.


Evaluation of performance All stakeholders in anorganisation want toknow how it has beenperforming.


Efficiency

Efficiency measures the use of theresources of an organisation to producegoods and services.


EffectivenessEffectiveness is measured in terms of whetheran organisation has met its objectives.


Productivity

Productivity is a quantitative measure ofefficiency. It measures the relationshipbetween resource inputs and outputs.


Measuring organisational efficiency and effectiveness

Performanceindicators (PIs)measure theefficiency andeffectiveness of theorganisation.


Performance indicatorsPIs include: number of sales, percentage ofmarket share, profit, the rate of productivitygrowth, the results of staff and customercomplaints, the number of workplaceaccidents, job satisfaction and staffturnover.


The ‘balanced scorecard’ measurement

Using the balanced scorecard approachenables an organisation to review andassess the performance in a range of areas.


Stakeholder approach

The stakeholderapproach evaluatesthe organisationfrom otherperspectives.


Growing importance of other measures of organisational performance

Alternative performance indicators arebecoming more important as thesemeasures provide a more roundedapproach to organisational evaluation.


Growing importance of other measures of organisational performance (cont.)

Stakeholders such as employees,shareholders, government, customers,suppliers and competitors all have aninterest in the performance of theorganisation.


Growing importance of other measures of organisational performance (cont.)

It is important for organisations toexamine their performance in their role as a‘good corporate citizen’ and for theircontribution to the community and socialresponsibility.

Large-scale organisations in context VCE Business Management Unit 3.

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