Unit 3 Key Business Function - hkedcity.netedblog.hkedcity.net/.../1683/uploads//unit-3_key-business-function.pdf · F&B Director Judy HR Manager Cost Controller ... job candidates

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Professional Development Programme on Enriching Knowledge of the Business, Accounting and Financial Studies (BAFS) Curriculum

Technology Education Section, Curriculum Development InstituteEducation Bureau, HKSARG

August 2008

Unit 3 : Key Business Functions

Course 2 : Contemporary Perspectives on Management

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Learning Objectives

On completion of this unit, you should be able to:– understand the importance and the roles of the

key functional areas in business;– identify various types of key functional areas of an

organisation;– explain and appreciate the interrelationship and

integrated nature of different business functions;– apply these concepts and techniques to practical

problem across different business functional areas;– synthesize and evaluate business information

relevant to current issues on the integrated nature of different business functions in solving business problems.

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Unit Outline

Revisit Casa Restaurant

Key Business FunctionsHuman Resources Management

Marketing Management

Operation Management

Financial Management

Human Resources PlanningRecruitmentSelectionOrientation, Training and DevelopmentPerformance Appraisal

Value Chain Analysis

Risk Management

Information Management

Compensation and Benefits

Just-in-timeQuality Control

The Importance

Types of RiskRisk Management ProcessMethods to Manage Risk

Marketing Management Philosophies

PeoplePoliticsInformation Technology

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Casa

Jack, the CEO of Casa, is planning to expand his business by opening another five restaurants in coming 2 years.

Jack holds a meeting with his management team (Catherine, Daisy, Alfred, and Bill) for this plan which aims to expand the business profitability, efficiency and effectiveness.

In this case, how do the various key business functions support the CEO’s plan? What should the heads do to achieve the objectives?

Unit Outline

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Casa’s Organisation Chart

CashierSupervisor A Supervisor B

Waiter 1

Waitress 2

Waiter 3

Waitress 4

Waiter 5

AlanCaptainSous Chef

Commis X

Commis Y

Helpers

BillFinancial Controller

JackCEO

CatherineExecutive

Chef

DaisyMarketing Manager

AlfredF&B Director

JudyHR Manager

Cost Controller

HR OfficerProcurement Officer

Gro

up L

evel

Res

taur

ant

Leve

l

Unit Outline

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Key Business Functions

There are Six Key Business Functions in an organisation:

Unit Outline

Six Key Business

Functions in an Organisation

Human Resources

Management



Risk Management



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Human Resources Management (1)

Unit Outline

Human Resources

ManagementMarketing

Management



Six Key Business


Risk Management


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Human Resources Management (2)

Human Resources Management is concerned with getting, training, motivating and keeping competent employees through the human resources management process.

Unit Outline

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Human Resources Management Process (1)

It seeks to staff the organisation and to sustain high employee performance through strategic human resources planning, recruitment or downsizing, selection, orientation, training, performance appraisal, compensation and benefits. (Pinnington and Edwards 2000, Robin & DeCenzo, 2005)

Unit Outline

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Human Resources

Management Process

Human Resources Planning

Recruitment

Selection

Orientation, Training and Development

Performance Appraisal*

Compensation and Benefits*

Human Resources Management Process (2)

*These topics will be further discussed in detail in unit 8 Unit Outline

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Human Resources Planning (1)

The process by which management ensures that the right number and kinds of people are available in the right places at the right time for achieving the organisation’s goals.

Unit Outline

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Human Resources Planning (2)

Example:

– To implement the expansion plan, Jack then discusses with Bill, Alfred and Daisy about the manpower requirements for the expansion, such as how many full-time and part-time staff have to be recruited in order to improve business profitability, efficiency and effectiveness.

Unit Outline

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Recruitment or downsizing (1)

• Recruitment seeks to develop a pool of potential job candidates. Sources include internal search, advertisements, employee referrals, employment agencies and school placement centres.

• Downsizing refers to reduce the labour supply within an organisation through options such as firing, layoff and transfer.

Unit Outline

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Example:– After the discussion, Jack decided to recruit one

more Marketing Trainee who helps Daisy in implementing large marketing campaign.

– Daisy then states the following in the recruitment advertisement:

• the job descriptions like what a job holder does. e.g. responsible for handling marketing and ad hoc projects, performing daily administrative duties;

• the minimum academic qualifications. e.g. A degree holder in Marketing related subjects;

• the required personal characteristics. e.g. self-confident, out-going, energetic, good communication & presentation skill.

Recruitment or downsizing (2)

Unit Outline

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Selection (1)

HRM decisions must be based on factors or criteria that are both reliable and valid. Through different selection devices, they help the HR to match the candidates with the job requirements. (Pinnington and Edwards 2000, Robin & DeCenzo, 2005)

Unit Outline

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Example:

• After a week, Judy, the HR manager, received a number of application forms. She then uses different selection tools, such as interview and written test to assess the suitability of the candidates.

• When the candidates pass the first-round interview and the written test, they will be informed to have second-round interview with the Marketing Manager, Daisy.

Selection (2)

Unit Outline

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Orientation and Training (1)

Once a candidate is selected and the employment of the candidate is confirmed, he or she needs to be introduced to the job and the organisation. It is called orientation. New hires must be acclimated to the organisation’s culture and be trained to do the job to achieve the organisation’s objectives. (Robin & DeCenzo, 2005)

Unit Outline

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Training involves developing or acquiring (new) skills, knowledge, changing attitudes or behaviors so that the employees know what they should know, how to work, or the attitudes they should have towards their jobs, coworkers, managers and the organisation. Thus, employee training provides learning experience to the employees to equip them for their jobs.


Unit Outline

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Example:

• After the whole selection process, Tom, a fresh university graduate, is given an offer.

• On the first working day of Tom, he attends an orientation programme in which the organisationalstructure and culture, the department, his job duties and his supervisor are introduced. After that a restaurant tour is also arranged to allow him to have a clear mindset on the culture and operations of the restaurants and the company.


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Example: • Moreover, during Tom’s 3-month probation period,

he has been given some training courses to ensure that he acquires necessary company information such as the product information and customer services, and to improve his management skills.


Unit Outline

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Performance Appraisal (1)

Managers can use several techniques in evaluating employee performance, such as comparing employees standards, comparing employees with one another, or measuring performance on the basis of preset objectives. (Pinnington and Edwards 2000, Robin & DeCenzo, 2005)

Unit Outline

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Example:

• As time flies, Tom has been working for Casa for half a year.

• Daisy and Tom have a formal contact that usually takes the form of a periodic interview (quarterly or monthly), in which the work performance of the Tom is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.

Performance Appraisal (2)

Unit Outline

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Compensation and Benefits (1)

Compensation is a cost-effective pay structure that will attract and retain competent employees and provide an incentive for the individual to exert high energy levels at work. It also attempts to ensure that pay levels will be perceived as fair by all employees.

Benefits are the non-financial rewards designed to enrich employees’ lives such as the paid time-off from work, life and disability insurance, retirement programs and health insurance. (Robin & DeCenzo, 2005)

Unit Outline

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Example:

• Waiters and waitresses at Casa are requested to work overtime during festivals, e.g. Happy Mother’s Day, Christmas and the Chinese New Year.

• In this case, the staff who have to work overtime will be eligible to claim the OT pay (compensation). Moreover, all the staff are protected by medical insurance (benefit) bought by the restaurant.

Compensation and Benefits (2)

Unit Outline

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Marketing Management (1)

Unit Outline

Human Resources

Management




Six Key Business


Risk Management


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Marketing Management includes the process of planning, organising, implementing, and controlling marketing activities, such as brand building, positioning setting, market segmentation, product development, price setting, and promotion etc. (Blythe 2005, Robin & DeCenzo, 2005)

Unit Outline

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OrientationOrientation

Marketing Management Philosophies (1)

SocietalSocietal

Key Ideas

ProductionProduction

SalesSales

MarketingMarketing

Focus on internal capabilities of the firm, such ashigh production efficiency, low cost, and mass distribution.

Focus on satisfying customer needs and wants while meeting objectives

Focus on satisfying customer needs and wants while enhancing individual and societal well-being

Focus on aggressive sales techniques and believe that high sales result in high profits

ProductProduct Focus on consumers who will favor those products that offer the most quality, performance, or innovative features.

Unit Outline

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SalesSales

MarketingMarketing

SocietalSocietal

What can we make or do best at lowest cost?What can we make or do best at lowest cost?

How can we sell more aggressively?How can we sell more aggressively?

What can we do to make customerssatisfied?

What can we do to make customerssatisfied?

What do customers want and need, and how can we benefit society?

What do customers want and need, and how can we benefit society?

Focus

ProductProduct What products consumers like most? What to produce? How to design and produce?

What products consumers like most? What to produce? How to design and produce?

Marketing Management Philosophies (2)

OrientationOrientation

Unit Outline

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Challenging Corner 1

Can you help Daisy to apply the Marketing Management concepts to the case of the new restaurants?

Unit Outline

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SalesSales

MarketingMarketing

SocietalSocietal

Jack is thinking of how to improve the production efficiency to order to reduce the customers’ waiting time

Jack is thinking of how to improve the production efficiency to order to reduce the customers’ waiting time

The Marketing Department places a lot of advertisements on the magazines and TV about the launch of new dishes

The Marketing Department places a lot of advertisements on the magazines and TV about the launch of new dishes

The waiters and waitresses collect customers’ opinions on the new dishes, feedback to the chef for improvement

The waiters and waitresses collect customers’ opinions on the new dishes, feedback to the chef for improvement

The chef decides to use olive oil to cook in order to respond tothe rise of health awareness of the customers

The chef decides to use olive oil to cook in order to respond tothe rise of health awareness of the customers

ProductProduct The chef has to think of some new dishes to match with the theme such as the “Lunar New Year”, “Happy Mother’s Day”, “Halloween”, with different features and flavors

The chef has to think of some new dishes to match with the theme such as the “Lunar New Year”, “Happy Mother’s Day”, “Halloween”, with different features and flavors

Challenge Corner 1 (solution)Challenging Corner 1 (solution)

SuggestionsOrientationOrientation

Unit Outline

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Example:• Daisy, the Marketing Manager discusses with Jack

about the marketing details of the proposed new restaurants.

• After the discussion, they agree to launch a promotional campaign “Italian Food Festival” to arouse the public awareness of Casa.

• Now Daisy has to plan, organise, lead and control the related marketing activities of the campaign.


Unit Outline

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Operation Management (1)

Unit Outline

Human Resources

ManagementMarketing

Management


OperationManagement

Six Key Business


Risk Management


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Operation management refers to the design, operation, and control of the transformation process that converts resources such as labour and raw materials into goods and services that are sold to customers. (Galloway et al, 2000, Robin & DeCenzo 2005)

The following tools can be used to ensure the right good and services are delivered at the right time:– Value Chain Analysis– Just-in-time– Quality Control

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Example:• Alfred and Bill have to consider how to design,

operate and control the operation and production processes such as the staff arrangement, the quality and quantity of the raw materials, etc for the new restaurants.

Unit Outline

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Value Chain Analysis (1)

• Value chain analysis shows the activities within and around an organisation, and relates them to analyse the strength of the organisation. Hence, it evaluates the value that each particular activity adds to the organisations’ products or services.(Recklies, 2001)

• Porter (1985) suggested that to provide value is the key to attract and keep customers through product performance, features and attributes.

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• Value can be added at each step beginning with the processing of raw materials and ending with a finished product in the hands of end users.

• The process of managing the entire sequence of integrated activities and information about product flows along the entire value chain is called value chain management.

Unit Outline

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Unit Outline

Sup

port

Act

iviti

es Margin

Margin

Infrastructure

Human Resource Management

Technology Development

Procurement

Ser

vice

Mar

ketin

g an

d S

ales

Out

boun

d Lo

gist

ics

Ope

ratio

n

Inbo

und

Logi

stic

s

Primary Activities

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Example:• Alfred and Bill have to oversee and try to add

value to each stage of operations including designing recipes, buying ingredients, monitoring chef cooking, services provided by waiters and waitresses, and obtaining customer responses.


Unit Outline

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Just-in-time (1)

• Just-in-time inventory systems change the technology with which inventories are managed. Inventory items arrive when they are needed in the production process instead of being stored in stock.

• In Japan, JIT system is called Kanban, it means “card” or “signal” in Japanese. It refers to a system of cards in shipping containers that uses the just-in-time concept. (Robin & DeCenzo, 2005)

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Example:• The new restaurants are planned to extend the

reputation from Casa which is famous for using fresh food as ingredients daily.

• Fresh food items such as vegetables, fish and seafood arrive when they are needed for cooking instead of being stored in stock.

• However, cooking fresh food daily is a challenging job to Catherine and her subordinates because they have to estimate the daily demand of each type of food accurately.

• Advantage: e.g. reduce loss of unused ingredients

Just-in-time (2)

Unit Outline

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Quality Control (1)

• Quality control refers to monitoring quality -weight, strength, consistency, color, taste, reliability, or any one of the characteristics to ensure that it meets the preset standard.

• It can save the cost of further rework as superior quality control minimises the number of defective parts or processes.

Unit Outline

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Example:

• At Casa, good quality means that the food should be properly prepared and the service should be prompt and courteous.

• Therefore, the food quality in terms of weight, color and taste of every dish has to be monitored in order to ensure that it meets the standard and the expectation of the customers,

• and waiters and waitresses are well trained to provide superior customer services.

Quality Control (2)

Unit Outline

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Financial Management (1)

Unit Outline

Human Resources

ManagementMarketing

Management


OperationManagement

Six Key Business


Risk Management


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Atrill & Mclanry (2004) stated that financial management aims to:– prepare financial budget tied to daily operation and

development plan;– establish a budgetary control system;– ensure adequate internal controls are established; – keep proper books of accounts and other financial &

accounting records;– establish an internal review mechanism; and – promptly investigate, clearly explain, and properly

rectify departure from budget (Variance analysis).

Financial Management (2)

Unit Outline

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Importance of Financial Management (1)

• Understand/assess financial implications of decisions (planning)

• Ensure operations are carried out with due regard to economy, efficiency and effective (control)

• Provide feedback to daily operation based on existing policies (accountability)

Unit Outline

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Example• Bill, the Financial Controller, has to manage the

cash flow, bank relationships, payroll, purchases of equipment, and acquisition of capital in order to generate a profitable growth and effective use of capital.

• Moreover, Bill and his subordinates, the cost controller and the procurement officer, also have to liaise with vendors for purchasing ingredients at the best price.

Importance of Financial Management (2)

Unit Outline

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Risk Management (1)

Unit Outline

Human Resources

ManagementMarketing

Management


OperationManagement

Six Key Business


Risk Management


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Risk Management (2)

• Uncertainty – is the lack of sure knowledge or predictability because of randomness.

• Risk – arises from the uncertainty about outcomes that are not equally desirable.

Unit Outline

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Types of Risk

Business managers are subject to different types of risk:

– Physical risks – wind, flood, disease

– Market risks – quality, quantity or price, exchange rates and interest rate

– Other risks – legal, financial, environmental

Unit Outline

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Risk Management (2)

• A process that identifies loss exposures faced by an organisation and selects the most appropriate strategies for dealing with such exposures.

• From an economic perspective, risk management seeks to mitigate the monetary loss of a company. (Paul et al, 2007)

Unit Outline

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Risk Management Process

Unit Outline

Step 1: Plan the risk management effort

Step 1: Plan the risk management effort

Step 2: Identify the riskStep 2: Identify the risk

Step 3: Evaluate the potential frequency and severity of loss

Step 3: Evaluate the potential frequency and severity of loss

Step 4: Develop methods to managethe risk

Step 4: Develop methods to managethe risk

Step 5: Implement the risk management methods

Step 5: Implement the risk management methods

Step 6: Monitor the risk management program

Step 6: Monitor the risk management program

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Methods –Loss control

• Actions that reduce the expected cost of losses by reducing the frequency of losses and/or the severity of losses that occur.

• Reduce level of risk activity

• Increase precautions

Unit Outline

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Methods –Internal Risk Reductions

• Firms can reduce risk internally by:

– diversifying their activities.

– investing in information to obtain superior forecasts or expected losses.

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Methods –Insurance

• Insurance is the pooling of fortuitous losses by transfer of such risks to insurers who agree to indemnify insured for such losses and to provide other pecuniary benefits on their occurrence.

Examples: • Casa has to prepare different types of insurance such

as property, automobile, third-person liability, workmen’s compensation for the new restaurants.

Unit Outline

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Information Management (1)

Unit Outline

Human Resources

ManagementMarketing

Management


OperationManagement

Six Key Business


Risk Management


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• It refers to the systems and processes for the creation, distribution, storage, retrieval and use of recorded information in both electronic and hard copy formats.

• It is the harnessing of the information resources and information capabilities of the organisation in order to add and create value both for itself and for its clients or customers. (Choo, 2006)

Unit Outline

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Benefits of Information Management

• If the firm can manage the information strategically, it can benefit from:– reducing costs; – reducing uncertainty or risks; – adding value to existing products or services; – creating new value through new information-

based products or services.

Unit Outline

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• The success of information management depends on the successfulness of managing the following three aspects of the organisation.– People;– Political; and – Information technology

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People

• Organisations are collections of people.

• With information flow within an organisation, different people react differently towards the information.

• It is necessary to put effort to overcome the people issues such as emotional, status quo and perceptions.

Information Management -People

Unit Outline

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Politics

• It can be divided into two levels – interpersonal (small scale) or part of the culture (more widespread)

• Staff will feel threatened and not valued to various information towards an issue.

Information Management -Politics

Unit Outline

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Information Technology

• IT builds the technical information infrastructure that facilitates the efficient processing and movement of data, files, and messages.

• It enables the firm to perform its work with accuracy, reliability, and efficiency.

Information Management -Information Technology

Unit Outline

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Example• The discovery of food poison or problematic raw

materials are the challenges to Casa Restaurant, those announcements such as the Malachite green and Nitrofurans residues found in freshwater fish imported from the Mainland and Sudan dyes found in eggs, increases the public’s awareness on the food processing.


Unit Outline

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Example (cont.)

• In order to control the uncertainty and ensure the foods are safe, Casa manages the information flow and uses across its information-intensive activities.

• Casa requests all of its food suppliers to provide information about the supply chain of the food ingredients.

• Then Casa posts the relevant information in the restaurant and on its company website.

• It helps clarify any uncertainty in this issue, and regain customers’ confidence in the restaurant.


Unit Outline

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Challenging Corner 2

The peak hour of the Casa is at dinner time. The sales from noon to 6 pm are rather low. Jack would like to further develop the business by boosting up the sales during that period.

He has a suggestion that installing WiFi system in the restaurant would attract students and young business executives having lunch and tea in the restaurants.

Regarding the suggestion, describe the issues that should be considered under the six key business functions.

Unit Outline

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Challenging Corner 2 (solution) (1)

Marketing Management:

• It is a good idea to expand the target market to younger generations, the restaurant would do some extra business anyway.

• People always like to surf the net in cafe or fast food chain. However, Casa is a high-class Italian restaurant. Would the installation of WiFi system demolish the image of the restaurant?

Unit Outline

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Operation Management:

• Customers enjoying Internet surfing will stay longer in the restaurant. It increases the manpower demand in the afternoon, thus affects the preparatory work for the dinner time.

• To what extent the daily operation is disrupted during the system installation time?

• Would the restaurant layout be required to be changed?

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Human Resources Management:

• A technical man is required to ensure service availability and stability. Should the technical man be recruited outside or be trained from an existing staff?

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Financial Management:

• How much is the system cost?

• How much would the sales be boosted up? Is it cost-effective?

• Is the service free?

• If it is not free, lots of effort are required in time-tracking and billing. Is it worthwhile?

Unit Outline

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Information Management:

• Can the WiFi system be integrated with the existing computer system to facilitate the inventory, order-taking, billing and credit card processing?

• In a first-class Italian restaurant, nobody would like to see someone’s laptop images that are offensive or pornography. How can we prevent the customers from surfing those information/websites?

Unit Outline

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Risk Management:

• If the WiFi system is integrated with the restaurant’s internal computer system, it will increase the chance of the internal system being hacked?

Unit Outline

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All the abovementioned issues are interrelated.

The six key business functions have to work together to remove the hindrances and to support the strategic decision.

Unit Outline

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Summary

Now, you have come to the end of the unit. You should be able to:

understand the six key functions areas in business. explain and apply the different business functions in solving business problems.

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References

• Atrill, P. and McLaney, E. (2004), Accounting and Finance for Non-Specialists, Pearson Education

• Blythe, J. (2005), Essentials of Marketing, Pearson Education

• Choo, Chun Wei. (2006) The Knowing Organisation: How organisations use information to construct meaning, create knowledge and make decisions. Second Edition. New York: Oxford University Press.

• Galloway, L. et al (2000), Operations Management in Context, Butterworth-Heinmann

• Paul M. Collier, Anthony J. Berry, Gary T. Burke (2007), Risk and Management Accounting, CIMA Publishing

• Pinnington, A and Edwards, T. (2000), Human Resource Management, Oxford University Press

• Recklies, D. (2001), The Value Chain.Available on URL : http://www.themanager.org/models/ValueChain.htm

• Robin. S.P and DeCenzo D.A. (2005), Fundamental of Management, Pearson Education

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Further Readings

• Lapide (2006), Demand Management Revisited, The Journal of Business Forecasting.

Detlor, Brian (2004), Towards knowledge portals: From Human Issues to intelligent agents , Dordrecht, Netherlands: Kluwer Academic Press

• 李漢雄 (2002), 人力資源策略管理, 南方日報出版社

• 錢可通 (1995), 人力資源管理個案, 香港出版集團

• 詹益政 (2002), 旅館餐飲經營實務, 揚智

• 張國平 (2005), 財務管理 : 觀念與應用, 臺北市 : 三民書局

• 朱延智 (2002), 企業危機管理 , 五南圖書

• 鄭子云 (2001), 企業風險管理, 商務印書館

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End of the Unit

EndEnd--ofof--unit Assessmentunit AssessmentThis is the end of Unit 3.

Please go to the Unit Assessment before attempting

the next unit.

Documents

Unit 3 Key Business Function - hkedcity.netedblog.hkedcity.net/.../1683/uploads//unit-3_key-business-function.pdf · F&B Director Judy HR Manager Cost Controller ... job candidates