Large-scale organisations in
context
VCE Business Management Unit 3
UNIT 3
CORPORATE
MANAGEMENT
AREA OF STUDY 1
LARGE SCALE
ORGANISATIONS
IN CONTEXT
CHAPTER 1
LARGE SCALE
ORGANISATIONS
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What is an organisation?
Organisations occur in every part of our
lives, both socially and in our business or work
life. Organisations are a deliberate arrangement
of people working to achieve a specific purpose
or set of goals.
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What is an organisation? (cont.)
Organisations enable
us to achieve more
through a team
environment.
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Why are organisations needed?
They provide continuity of knowledge and
experience and help us to manage complex
social and technological change. Employment
and career opportunities can result from being
part of an organisation.
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What do all organisations have in
common?
Organisations have common characteristics:
distinct purpose or goal(s), comprised of two
or more people, and adopt a distinct form of
structure.
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What do all organisations have in
common?
Common criteria for classifying an organisation
as large are:
• number of employees (more than 200)
• substantial total assets
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What do all organisations have in
common?
•
•
•
•
•
substantial total revenue
substantial profits
dominant market share
large-sized operations
business locations –
generally multiple.
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What do all organisations have in
common?
General characteristics of a large-scale
organisation:
• Strategic objectives are formulated.
• Strategic planning is undertaken.
• Formalised policies, procedures and rules are
adopted and documented.
• Organisational structure is devised.
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What do all organisations have in
common? (cont.)
• A chain of command and hierarchical
management structure is established.
• A coordinated and decentralised approach
to decision making is adopted.
• Specialisation of activities into departments
or within departments occurs.
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Large-scale organisations in Australia
Many Australian large-scale organisations
operate as multinational corporations with
their business activities occurring in more than
one country.
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Large-scale organisations in Australia
(cont.)
Organisations often enter into joint ventures,
merge together, demerge, are taken over in
a hostile manner, or are acquired by another
organisation. Some may choose to downsize
their operations or outsource their non-core
activities.
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Large-scale organisations in Australia
(cont.)
A dual-listed company is created when a
company, usually as the result of a merger,
applies to have two independent listings
(separate shareholders) on two stock
exchanges.
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Different types of large-scale
organisations
There are many ways in which large-scale
organisations 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
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Different types of large-scale
organisations (cont.)
• Orientation or focus – either as a for-profit or
not-for-profit organisation
• Type of business activity – to which industry
classification and level they belong.
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Organisational objectives and
strategies
All organisations must
set objectives. The
objectives set will
depend on the nature
of the business activity
being undertaken.
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Organisational objectives and
strategies (cont.)
A hierarchy of objectives needs to be
established, commencing with the mission
statement (common purpose) down to the
individual objectives of employees. This process
is referred to as Management by Objectives.
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Organisational objectives and
strategies (cont.)
The SMART principle is used to ensure that
objectives being set are specific, measurable,
achievable, relevant and time-bound.
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Organisational objectives and
strategies (cont.)
Objectives may cover
the areas of: financial,
service, ethical and
social responsibility,
and environment.
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Organisational objectives and
strategies (cont.)
Plans (strategic, tactical and operational) need
to be put in place at each level of the
organisation to assist in achieving the
objectives.
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Typical management functions
Management undertakes the key roles of
planning, organising, leading and controlling
to assist the organisation to achieve these
objectives.
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Typical management functional areas
Typical management functional areas in
large-scale organisations include operations,
finance, human resources, marketing and
research and development.
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Typical management functional areas
(cont.)
Large-scale organisations contribute either
positively or negatively to our economy
through:
• gross domestic product (GDP), employment,
• balance of payment (exports/imports),
research
• and development, and infrastructure growth.
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Environments of business
Businesses in Australia operate in an open
system that interacts and is dependent upon
its specific internal and operating environment.
The general (macro) environment also exerts
pressure on all businesses.
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Three levels of the organisation
environment
There are three levels of environment: external
(macro and operating) and internal.
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Macro environment
The macro environment refers to a range
of factors or pressures such as economic,
government and political, legal, technological,
global, social and environmental.
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Operating environment
The operating environment refers to a range of
factors or pressures such as customers,
competitors, suppliers, trade unions, lobby
groups, financial institutions and regulatory
bodies.
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Internal environment
The internal environment refers to a range of
factors or pressures such as
shareholders/owners, management,
employees, organisational structure and
corporate culture.
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Stakeholders in large-scale
organisations
Stakeholders, being those individuals or groups
with a vested interest in an organisation’s
operations, are most commonly found in the
operating and internal environments of the
organisation.
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Stakeholders in large-scale
organisations (cont.)
Stakeholders can be:
• shareholders
• Directors
• management
• employees
• trade unions
• Customers
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Stakeholders in large-scale
organisations (cont.)
• Suppliers
• creditors/banks
• the community
• government and competitors.
Each of these stakeholders has either issues or
interests associated with the organisation.
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Stakeholders in large-scale
organisations (cont.)
Business success for an organisation is
dependent upon being able to respond quickly
to changes or pressures that come from either
Its external or internal environment.
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Stakeholders in large-scale
organisations (cont.)
Awareness of the
interests and issues of
stakeholders must also
be taken into account.
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Evaluation of performance
All stakeholders in an
organisation want to
know how it has been
performing.
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Efficiency
Efficiency measures the use of the
resources of an organisation to produce
goods and services.
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Effectiveness
Effectiveness is measured in terms of whether
an organisation has met its objectives.
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Productivity
Productivity is a quantitative measure of
efficiency. It measures the relationship
between resource inputs and outputs.
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Measuring organisational efficiency
and effectiveness
Performance
indicators (PIs)
measure the
efficiency and
effectiveness of the
organisation.
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Performance indicators
PIs include: number of sales, percentage of
market share, profit, the rate of productivity
growth, the results of staff and customer
complaints, the number of workplace
accidents, job satisfaction and staff
turnover.
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The ‘balanced scorecard’
measurement
Using the balanced scorecard approach
enables an organisation to review and
assess the performance in a range of areas.
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Stakeholder approach
The stakeholder
approach evaluates
the organisation
from other
perspectives.
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Growing importance of other measures
of organisational performance
Alternative performance indicators are
becoming more important as these
measures provide a more rounded
approach to organisational evaluation.
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Growing importance of other measures
of organisational performance (cont.)
Stakeholders such as employees,
shareholders, government, customers,
suppliers and competitors all have an
interest in the performance of the
organisation.
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Growing importance of other measures
of organisational performance (cont.)
It is important for organisations to
examine their performance in their role as a
‘good corporate citizen’ and for their
contribution to the community and social
responsibility.
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