CHAPTER 1: LARGE
SCALE ORGANISATIONS
IN CONTEXT
MONDAY 13 FEBRUARY, 2012
LEARNING OBJECTIVES [TO BE COPIED
INTO YOUR BOOK]
• Define and use relevant management terms
• Explain objectives, strategies and performance
indicators in the context of a business
KEY TERMS
• Organisation; large-scale organisation; corporation; multinational
corporation; shareholder; government business enterprise;
government department; not-for-profit organisation; charities;
foundations; public companies; private companies;
management; privatisation; objective; vision statement; mission
statement; strategies; gross domestic product (GDP); imports;
exports; balance of payments; research and development;
invention; innovation; tariffs; infrastructure; downsizing;
outsourcing; internal environment; external environment; macro
environment; operating environment; stakeholders; employees;
unions; customers; suppliers; competitors; lobby groups;
globalisation; effectiveness; efficiency; key performance
indicators; profitability; number of sales; percentage of market
share; rate of productivity growth; customer survey; staff survey;
staff turnover; customer complaints; level of wastage;
benchmarking; number of workplace accidents; social
responsibility; ethical management; triple bottom line
GLOSSARY
• An organisation is two or more people working together
to achieve an objective
• A large-scale organisation employs 200 or more people,
earns revenue in the millions or has assets worth $200
million or more
• A multinational corporation is owned and based in one
country and operates in many countries throughout the
world
• A corporation is owned by shareholders and aims to
make a profit
• A shareholder is any person who owns shares (unit of
ownership) in a company
• A government business enterprise is government owned
and operated
HOMEWORK REVIEW
• Question 6: Outline the difference between a vision
statement and a mission statement.
• A vision statement is a broad expression of what an
organisation hopes to become. Whereas a mission
statement is more specific – it formally expresses an
organisation’s reasons for existence, its purpose and
method of operation. The vision statement is also
more future oriented than the mission statement.
QUESTION 7
• Does every large-scale organisation have profit as
its objective?
• Not every large-scale organisation has profit as its
main objective. Not-for-profit organisations such as
charities and foundations like the Salvation Army
and the Heart Foundation for example, exist to
provide goods, services, or funds to benefit the
disadvantaged or assist our community. They may
make an incidental profit but it is not their primary
purpose.
QUESTION 8
• List some examples of organisational objectives
• Organisational objectives include making a profit,
providing customer service, supporting the
community and environment, fostering creativity
and innovation, offering career opportunities, and
meeting the needs of stakeholders.
QUESTION 9
• Explain what a strategy is using an example.
• A strategy is an action taken by an organisation to
achieve specific objectives. For example, if an
organisation’s objective is to increase its profits, it
may use the strategy of launching a new
advertising campaign, improving efficiency through
the use of new technology or increasing staff
productivity through better training and
procedures.
QUESTION 10
• Outline the positive contributions that large-scale
organisations make to the economy.
• Large-scale organisations make many positive
contributions to the economy, including, providing
employment and income for large numbers of
employees, paying taxes to governments, exporting
products that generate income for Australians,
undertake investment, research and development
which lead to economic growth.
QUESTION 11
• Explain the various activities for which large-scale
organisations are sometimes criticised.
• Large-scale organisations are sometimes criticised
for seeking to maximise their profits without caring
for their impact on society or the environment.
Some negative activities including downsizing and
outsourcing which results in local job losses, and
damage to the environment e.g. Alcoa was
prosecuted in relation to a spill and pollution at its
Wagerup site.
QUESTION 12
• What is the internal environment?
• The internal environment consists of all the
conditions within an organisation which it has some
control over. Also called the micro environment, it
includes anything that may affect its performance
such as people (employees, management),
policies, culture and resources.
QUESTION 13
• Explain the difference between the operating
environment and the macro environment.
• Although the operating environment and the macro
environment are both examples of an organisation’s
external environment there are key differences. The
operating environment includes the stakeholders that an
organisation comes into contact with, such as
customers, suppliers and competitors. The organisation
retains some control over these conditions. However, the
organisation has no control over the macro
environment. This includes the legal, political and
economic influences around it, e.g. globalisation
QUESTION 14
• List the factors that make up the operating
environment
• The operating environment is made up of the
interactions with outside stakeholders such as
customers, unions, competitors, creditors, suppliers,
lobby groups, regulatory bodies.
QUESTION 15
• List the factors that make up the macro
environment.
• Factors that make up the macro environment
include globalisation and other
social/economic/legal forces beyond the control of
an organisation, e.g. Global Financial Crisis, new
laws/taxes such as the Carbon Tax
QUESTION 16
• Explain the difference between effectiveness and
efficiency
• Effectiveness refers to the extent to which an
organisation is able to achieve its objectives.
Efficiency on the other hand, refers to how well an
organisation uses its resources to achieve those
objectives.
QUESTION 17
• Define the term ‘key performance indicator’ and
explain how large-scale organisations use them.
• KPIs are specific criteria that evaluates the
efficiency and effectiveness of an organisation.
LSOs use them to measure success and precisely
evaluate performance of a particular area of its
operations.
QUESTION 18
• Explain what is involved when large-scale
organisations use benchmarking.
• Benchmarking is a practice used by organisations
to evaluate its own performance by comparing it to
other leaders in the field. This comparison allows for
a more accurate evaluation as it measures the
organisation against another that is known for its
high performance.
QUESTION 19
• What is a stakeholder?
• A stakeholder is an individual or group with an
interest in (or is affected by) the operations of a an
organisation.
QUESTION 20
• List some of the main stakeholders
• Some of the main stakeholders include customers,
employees, unions, management, shareholders,
suppliers, creditors, lobby groups and members of
the community.
QUESTION 21
• In what ways can stakeholder interests conflict?
• Large-scale organisations have a range of stakeholders,
each with their own set of interests and demands.
Sometimes the interests will be compatible. Sometimes
the interests will be incompatible. For example, satisfying
shareholders’ demands for a high dividend may mean
reducing production costs by outsourcing some of a
company’s manufacturing processes. This may result in
job losses and would therefore cause dissatisfaction
among employees. Satisfying one set of stakeholders
may therefore involve making another set of
stakeholders dissatisfied.
QUESTION 22
• Outline what is meant by the terms ‘social
responsibility’ and ‘ethics’.
• Social responsibility refers to the obligations a
business has to the wellbeing of its stakeholders and
the environment. This responsibility is over and
above anything prescribed by law. Ethics refers to
moral standards (accepted ideas of right and
wrong) which guide behaviour.
HOMEWORK
• Questions 1-4 on page 22 of the textbook
• Extension: Questions 5& 6 of the textbook