Business Syllabus Notes (Marketing)

9 Content: Business Studies HSC Course
9.1 HSC topic 1: Business Management and Change
20% of indicative time

The focus of this topic is to examine the nature and responsibilities
of management within a changing business environment from a
theoretical and practical perspective.
Outcomes
The student:
H2.1 describes and analyses business functions and operations and
their impact on business success
H3.1 explains management theories and strategies and their impact
on business
H3.2 evaluates the effectiveness of management in the organisation
and operations of business and its responsiveness to change
H3.3 analyses the impact of management decision-making on
stakeholders
H4.1 critically analyses the social and ethical responsibilities of
management
H4.2 evaluates management strategies in response to internal and
external factors
H5.1 selects, organises and evaluates information and sources for
usefulness and reliability
H5.3 communicates business information, ideas and issues, using
relevant business terminology and concepts in appropriate
forms.
Content
Students learn to:
use existing business case studies to investigate and communicate

ideas and issues related to business management and change. The
focus of these case studies will be to:
• analyse how management theories apply to various business
situations
• explain and evaluate how change is managed in one or more
businesses.
Students learn about:
the nature of management

• the importance of effective management
• Traditional definition of management: the process of coordinating
a business’s resources to achieve its goals.
• Contemporary definition of management: the process of working
with and through other people to achieve business goals in a
changing environment.
• Every business needs effective management to succeed.
• The role of effective management is to make sure the joint

efforts of employees are directed towards achieving the goals of
the business.
• management role
– interpersonal, informational, decisional
According to Mintzberg a manager is required to act out many

different roles.
Description Activity
Role
Interpersonal Deal with people; Attend functions.

lead and motivate. Communicate with
employees.
Informational Gather and Spokesperson.
disseminate Attend meetings.
information; control
and monitor.
Solve problems and Organise research.
Decision-making make choices; Resolve conflicts.
planning. Prepare budgets.
Negotiate.
• skills of management
– people skills, strategic thinking, vision, flexibility and
adaptability to change, self-managing, teamwork,
complex problem-solving and decision-making, ethical
and high personal standards
• In general, effective managers are those who:
- possess a range of specific management skills
- are able to use these skills in a number of managerial roles.
• Karpin Report (1995) identified a number of management skills.
Management skills
People (soft) skills Self-managing Strategic thinker

• communication • delegation • conceptual skills
• interpersonal skills • time management • decision making
Adaptable to Team player Problem-solver

change • team building analytical skills
• proactive • facilitating • data analysis and
• leadership interpretation
Ethical/high
Visionary personal standards
• sense of purpose • honest and fair
• responsibility to stakeholders; reconciling conflicts of interest

understanding business organisations with reference to
management theories
• Stakeholders are groups and individuals who interact with the
business and thus have a vested interest in its activities.
– Many groups have an interest (a stake) in a business’s
activities. Society expects businesses to accept responsibility
to all stakeholders.
Social justice
Manage change Responsible
Being adaptable use of
to maintain economic
competitive resources and
advantage market power
Responsibility
of management
to stakeholders
Codes of practice Ecological
Acceptable sustainability
standards of Develop long-
business behaviour Compliance term strategies
with the law
Abide by the
country’s
laws
• classical-scientific
– management as planning, organising and controlling
– hierarchical organisational structure based on division of
labour
– autocratic leadership style
• The management philosophy adopted by a business will have an
enormous impact on all aspects of the business’s operations.
• A classical perspective on management, pioneered by Max

Weber and Henri Fayol, emphasises how best to manage and
organise work so as to improve productivity.
• A scientific approach to management, pioneered by Frederick

Taylor, studies a job in great detail to discover the best way to
perform it.
Classical and scientific management theory:

- Time and motion studies used to reduce inefficiencies
- Hierarchical organisational structure (bureaucracy)
- Clear lines of authority (chain of command)
- Narrow span of control
- Productivity improvements through division of labour
- Production line methods
- Discipline as a feature of leadership
- Autocratic leadership style; rules and procedures.
• behavioural
– management as leading, motivating, communicating
– flat organisational structure, teams
– participative/democratic leadership style
• Management functions:
- planning: a predetermined course of action. Involves
strategic, tactical and operational planning.
- organising: the range of activities that translate the
objectives into reality.
- controlling: compares what was intended to happen
with what has actually occurred.
• Management hierarchy is the arrangement that provides

increasing authority at higher levels of the hierarchy.
• Senior managers have greater accountability, responsibility

and power compared to those managers at lower levels of the
pyramid.
Board of directors; CEO; CFO;CIO

Senior executives
Divisional manager; Store manager.
Middle management team
Team manager; Supervisor
Frontline management team
Traditional management hierarchy
• Managers should bring a range of leadership styles to their

positions that may change according to the situation.
• Continuum of leadership styles:

Authoritarian or autocratic Participative or Laissez-faire
(total management control) democratic (more employee involvement)
Key feature Autocratic or Participative or Laissez-faire

authoritarian democratic manager
manager manager
Decision Makes all Consults with Team based
making decisions and employees, asks decision-making.
informs employees for suggestions Highly qualified
then decides employees
working in teams.
Control Centralised - Shares decision- Little or no central
controls all making with management role.
activities employees
Staff Expects High level of Very high level of
participation employees to employee employee
follow orders empowerment empowerment.
Communicat Top-down Two-way Two-way
ion
• The behavioural approach to management, pioneered by Elton

Mayo, stresses that people (employees) should be the main focus
of the way in which the business is organised.
• Behavioural management theory:

- Humanistic approach; employees are the most important
resource
- Economic and social needs of employees should be
satisfied
- Employee participation in decision-making
- Flatter organisational structure
- Broader span of control
- Teams increase output and job satisfaction
- Managers need good interpersonal skills.
- Democratic leadership style emerging.
• Management functions
- leading: having a vision of where the business should be
in the long and short term.
- motivating: energising and encouraging employees.
- communicating: exchanging information between people.
• The hierarchical management structure has been

criticised as being too:
- slow and unresponsive to rapid change
- expensive to maintain
- difficult to manage due to the different layers
- stifling of creativity.
• In response, businesses are adopting a flatter

management structure.
Manager
Employees or work teams
• Flatter organisational/management structures have evolved due

to the elimination of one or more management levels. Main
characteristics include:
- ‘de-layering’ of traditional hierarchical structure
- establishment of market-focused work teams
- making each work team responsible for a wide range of
production functions.
• Reducing the levels of management gives greater
responsibility to individuals in the organisation.
• Closely associated with the emergence of flatter organisational

structures is the development of work teams.
• political
– uses of power and influence, management as negotiating and
bargaining
– structure as coalitions
– stakeholder view
• Political management theory:
- Managers use power and influence to achieve business
goals.
- Organisational politics (unwritten rules of work).
- Informal coalitions and networks of stakeholders.
- Cooperation and conflict between coalitions.
- Manager must negotiate and bargain between competing
interests.
- Match sources of power to situations.
Sources of power Description
1. Legitimate Status or position

2. Expert Skills and abilities
3. Referent Individual’s charisma
4. Reward Ability to compensate
5. Coercive Actions or words
• Managers need to be aware of both the formal and informal

coalitions within the workplace.
• A coalition is two or more people who combine their power to

push or gain support for their ideas.
• strengths and weaknesses of the classical, behavioural and
political approaches
• Strengths and weaknesses of management theories:
Theory Strengths Weaknesses
Classical- - based on ‘scientific’ - employee boredom and
scientific principles exploitation
- division of labour - autocratic leadership style
- high worker productivity - job satisfaction ignored
- clear chain of command - alienation between
- rules and regulations employees and managers
Behaviou - human needs - difficult to predict human
ral recognised behaviour
- high morale - slow decision-making
- employee empowerment process
- motivated team - no clear chain of
members command
- flatter structure - conflict between theories
improves
communication
Political - recognises ‘power plays’ - misuse of power
- acknowledges coalitions - shifting power bases
and networks - source of real power
- explains power bases difficult to analyse
- highlights need for - internal conflict
negotiating and - not based on scientific
bargaining measurement
- explains stakeholders’ - perceived manipulative
role strategies
- acknowledges individual
self-interest
• systems/contingency
– adapting management and organisational approaches to
circumstances
• The systems management approach views organisations as an
integrated process in which all the individual parts contribute to
the whole.
• A system contains:
- inputs – the resources used within the business
- transformational processes – converts the inputs into a
finished product
- outputs – information about how well the organisation
has performed in relation to its stated goals.
- feedback – the products and other outcomes.
• Contingency management approach stresses the need for
flexibility and adaptation of management practices and ideas to
suit a particular situation.
• Management is a discipline that is continually evolving.

managing change
• Change is any alteration in the business and work environment.
• The ability to manage and, embrace and adapt to change will
increasingly determine a business’s competitive advantage and
survival.
• The crucial management issue is how to manage change to make
it as productive as possible.
• nature and sources of change in business
– external influences — the changing nature of markets;
economic, financial, geographic, social, legal, political and
technological developments
• External changes result from factors outside the control of the
business but which may affect its performance.
External influence Explanation

Changing nature of - globalisation has integrated world
markets markets
Economic - economic fluctuations impact on the
market place and influence demand
Financial - deregulation created a more open
financial system
Geographic - adoption of a global outlook
Social - demographic, attitudinal and cultural
trends
Legal and political - federal, state and local government
policies and legislation
Technology - scientific, technological innovations
can improve productivity
– internal influences — effects of accelerating technology

including
e-commerce, new systems and procedures, new business
cultures
• Internal changes are largely within the control of the business
and come from the desire to improve business operations.
Internal influence Explanation

Accelerating - office equipment, computers,
technology - robotics used in the production
- process
e-commerce - the use of the Internet to do
business. Business-to-business
(B2B0 and business-to-consumer
(B2C).
New systems and - technology can revolutionise a
procedures business’s activities and operating
procedures
New business cultures - Workplace culture will need to
become more flexible and
adaptable.
–
structural responses to change — outsourcing, flat
structures, strategic alliances and networks
• As the business environment changes, organisations examine
and modify their business structures.
• Structural change refers to changes in how the business is

organised – the organisational structure.
• The aim of these changes is to make business operations run

smoothly, improve efficiency, streamline coordination and
empower employees to make their own decisions.
• Management must respond to change by:

- being flexible and innovative
- constantly reassessing the business’s position
- restructuring the business to maintain a competitive edge.
• The main structural changes include:

- Outsourcing: contracting out non-core functions due to
downsizing.
- Flat management structures: reduced levels of
management.
- Strategic alliances: two or more businesses join
together.
- Network structures: subcontracted production and
related business functions.
• Resistance to change can sometimes be common among

businesses, managers and employees.
• reasons for resistance to change
– financial costs — purchasing new equipment, redundancy
payouts, retraining, reorganising plant layout
– inertia of managers, owners
– cultural incompatibility in mergers/takeovers
– staffing — de-skilling, acquiring new skills, loss of career
prospects/promotional opportunities
• The main reasons for resistance to change are:
- Financial costs: new equipment; redundancy payments;
retraining workforce; reorganising plant layout.
- Inertia: lack of interest; refusal to cooperate by
managers/employees; fear of failure.
- Cultural incompatibility in mergers and takeovers:
possible ‘culture clash’; different work practices.
- Staffing considerations: de-skilling; acquiring new skills;
loss of career prospects or promotional opportunities.
• A change agent, is a person, or group of people, who act as a
catalyst, assuming responsibility for managing the change
process.
• managing change effectively
– identifying the need for change
– setting achievable goals
– creating culture of change (encouraging teamwork approach
using change agents)
– change models — force-field analysis, Lewin’s
unfreeze/change/refreeze model
• Five steps to successful change:

1 Identify change issue.
2 Set achievable goals.
3 Create a culture of change: teamwork; change agent.
4 Implement the change.
5 Evaluate and modify the change as appropriate.
• Lewin force-field analysis: identify, analyse and balance the

driving and restraining forces.
• The Lewin change process:

- Unfreeze: employees made aware of the reasons for
change (possible use of outside change agent)
- Change: Implement changes. New skills and behaviours
introduced.
- Refreeze: Changed behaviour rewarded to make sure it
lasts.
change and social responsibility
• ecological sustainability, quality of working life, technology,
globalisation/
managing cultural diversity, e-commerce.
• A socially responsible business will attempt to achieve two goals

simultaneously: maximising profit (double bottom line) and
providing for the greater good of society (triple bottom line).
• Social responsibility: how well a business manages the social,

environmental and human consequences of its actions.
• Ecological sustainability: production methods that conserve
and protect the environment.
• Quality of working life: workplace practices that improve

employees’ wellbeing.
• Technology: cushion its negative impact on employees.
• Globalisation/cultural diversity: manage multiculturalism and

employee diversity.
• E-commerce: training of employees, privacy and security

issues.
9.2 HSC topic 2: Financial Planning and Management

The focus of this topic is to develop an understanding of the role of
financial planning within business operation and management and
the interpretation of financial information.
Outcomes
The student:
H3.2 evaluates the effectiveness of management in the
organisation and operations of business and its
responsiveness to change
stakeholders
management
external factors
H5.2 plans and conducts an investigation into business to present
the findings in an appropriate business format
forms
H5.4 applies mathematical concepts appropriately in business
situations.
Content
Students learn to:

ideas and issues related to financial planning and management. The
focus of these case studies will be to:
• interpret the published annual reports of one or more businesses
• analyse the financial statements of one or more businesses (real
or imaginary)
• undertake comparative ratio analysis — over a period of time,
with similar businesses, against common standards.
the role of financial planning

• strategic role of financial management
• Financial management: plan and monitor the business’s
financial resources to maximise the value of the business to the
owners.
• objectives of financial management — liquidity, profitability,
efficiency, growth, return on capital
Objectives of financial management are:
- Liquidity: ability to pay short-term debts as they fall due.

- Profitability: maximise profits.
- Efficiency: minimise costs and manage assets/resources
efficiently to maximise profits.
- Growth: ability to increase business’s size in the long
term.
- Return on capital: profit returned to owners as a
percentage of their capital contribution.
• the planning cycle — addressing present financial position,
determining financial elements of the business plan, developing
budgets, cash flows, financial reports, interpretation,
maintaining record systems, planning financial controls,
minimising financial risks and losses
• The planning process involves the setting of goals and
objectives, determining the strategies to achieve these goals,
identifying and evaluating alternative courses of action and
choosing the best alternatives of the organisation.
• Financial planning is a continuous series of financial activities
undertaken over time. The planning cycle involves:
Address present
financial position Determine financial
Minimise financial elements of the plan
risks and losses
Plan financial The planning Develop budgets

controls cycle
Maintain record Monitor cash

systems flow
Interpret financial
reports
• Budgets provide information in quantitative terms (facts and
figures) about requirements to achieve a particular objective.
- Operating budget: relate to the main activities of an
organisation and may include budgets relating to sales,
production, raw materials, labour, expenses and cost of
goods sold.
- Project budget: relate to capital expenditure and
research and development.
- Financial budgets: relate to financial data and include
the budgeted revenue statement, balance sheet and cash
flows.
• Cash flow budget records the expected receipts of cash (cash

inflow) and expected payments of cash (cash outflow).
• Preparation of budgeted financial reports is an important part of

the planning process.
• Record systems must be maintained to ensure the financial

data is accurate, reliable and accessible.
• Financial risk is the risk to a business of being unable to cover

its financial obligations.
financial markets relevant to business financial needs
• major participants in financial markets including banks, financial
and insurance companies, merchant banks,
superannuation/mutual funds, companies, government (Reserve
Bank of Australia)
Financial markets: consist of financial intermediaries who
receive excess funds from savers and provide finance to
borrowers.
Money market Capital/securities market

Deals in short-term debt Deals in long-term debt and
securities. equity securities. Example:
Example: three-month bonds bonds and shares
• Financial markets are important for businesses because they

provide:
- access to funds
- investment opportunities and contacts in managing funds
- expertise in financial market dealings.
• Types of financial markets:

- Primary markets: sell new securities.
- Secondary markets: buy and sell existing securities.
- Security: documents representing finance raised by
companies or governments.
- Financial markets are influenced by overseas and domestic
economic and political factors.
- Major participants in financial markets include:
Participant Source of funds Main financial products

Commercial Deposit accounts Personal loan, mortgage,
banks overdraft
Finance and Debentures and Loan, lease, factoring,
insurance premiums equity capital
companies
Merchant Borrow short-term Commercial bills,
banks funds underwriter
Superannuatio People’s savings Equity capital, long-term
n funds loan
Companies Excess funds, Short-term loan, bills of
bonds, debentures exchange, equity loan
Reserve Bank Government Government’s banker
of Australia securities
Australian New equity capital Share issues
Stock
Exchange
• Financial markets are influenced by a wide range of political and
economic factors from both overseas and within Australia
(domestic).
• Financial markets have changed rapidly and offer new trading
instruments to suit the needs of businesses.
• role of the Australian Stock Exchange as a primary market
• overseas and domestic market influences and trends in financial

markets and their implications for business financial needs
management of funds
• sources of funds
– internal — owners’ equity, retained profits
– external — short-term borrowing, (overdraft, bank bills),
long-term borrowing (mortgage, debentures) leasing,
factoring, venture capital, grants
• A business cannot establish itself and thrive without funds to
enable it to pursue its activities.
• Sources of funds can be either internal or external.
Debt Equity
External lenders Internal

lenders
- owners’
Short-term Other sources
equity
Long-term
borrowing - retained
borrowing
profits
- overdraft - venture capital -
mortgage
- bank bill - grant -
debenture
- factoring -
leasing
- trade credit
• Internal sources - equity:
- Owners’ equity is the funds contributed by the owner or
partners to establish and build the business.
- Retained profits (profits not distributed) are the most
common source of internal finance.
• External sources - debt:

- Bank overdraft: allows the business to overdraw their
account up to an agreed amount.
- Bank bills: a type of bill of exchange given for large
amounts, usually over $50 000.
- Mortgage: a loan secured by the property of the borrower.
- Debentures: issued by a company for a fixed rate of
interest for a fixed period of time.
- Leasing: a long-term source of borrowing that involves
payment for the use of equipment that is owned by another
party.
- Factoring: the selling of accounts receivable for a
discounted price to a finance factoring company.
- Venture capital: funds supplied by private investors
either to new businesses (seed capital) or to established
businesses ready to expand or diversify.
• financial considerations — matching the terms and source of
finance to business purpose and structure
• Financial considerations: match the terms and source of
finance to business purpose and structure.
• comparison of debt and equity financing, including costs and
benefits, risks, gearing/leverage
• Comparison of debt and equity finance:
Debt Equity
• Lenders have prior claim in • Shareholders have a residual
the event of liquidation. claim on
assets.
• Debt must be repaid by
periodic repayments. • No maturity date.
• Interest payments are tax

deductible. • Dividends are not tax
deductible.
• Lenders usually require lower
rate of return.
• Shareholders require higher
return due to higher risk.
• Interest payments are fixed.
• Dividend payments are not
• Debt providers have no voting fixed and
rights. may be reduced through lack
of
funds.
• Equity holders have voting

rights.
• Debt finance is a liability to a business as it is money owed to

external sources.
• Equity finance is the most important source of funds for

companies because it remains in the business for an indefinite
time.
• The capital structure is determined by the mix of debt and
equity, and the proportion of each is known as leverage, or
gearing.
• Leverage (gearing) is the proportion of debt (external finance)

and the proportion of equity (internal finance) that is used to
finance the activities of the business.
using financial information
• the accounting framework
– The accounting framework provides most of the financial
information for decision-making purposes.
– Financial statements summarise the business’s activities
over a period of time.
– financial statements — revenue statement, balance sheet

• Revenue statement (statement of financial performance):
shows the operating efficiency – that is, revenue earned and
expenses incurred over the accounting period with the resultant
profit or loss.
• Balance sheet (statement of financial position): assets and
liabilities at a particular point in time and represents the net
worth (equity) of the business. It shows the financial stability
of the business.
– the accounting equation and relationships
The accounting equation forms the basis of the accounting process;
shows the relationship between assets, liabilities and owners’
equity.
Assets = Liabilities + Owners’ equity

– Assets are what the business owns.
– Liabilities are what the business owes.
– Owners’ equity is funds contributed by the business
owner(s).
• types of financial ratios
• Analysis of financial statements is usually aimed at the areas of:
- financial stability (i.e. liquidity and solvency)
- profitability
- efficiency.
– liquidity — current ratio
Financial ratios:
o Liquidity: ability to pay short-term debts as they fall
due.
Current ratio (working capital) = Current assets

Current liabilities
– solvency — gearing debt to equity

– Solvency: ability to pay long-term debts as they fall due.
Debt to equity ratio = Total liabilities

Owners’ equity
– profitability — gross profit ratio, net profit ratio, return on

owners’ equity
– Profitability: relationship between profit and sales.
Gross profit ratio = Gross profit

Sales
Net profit ratio = Net profit

Sales
Return on owners’ equity = Net profit__

Owners’ equity
– efficiency — expense ratio, accounts receivable turnover

ratio
– Efficiency: management of assets to generate profits.
Expenses ratio = Expenses

Sales
Accounts receivable turnover ratio = Sales_______

Accounts receivable
• Financial ratios are one of the main tools used to analyse

financial information.
• comparative ratio analysis
– over time, with similar businesses, against common
standards
• Comparative ratio analysis is used for comparing the
business’s performance:
- over time – past performance.
- inter-firm – between similar businesses.
- against industry standards – benchmarks.
• limitations of financial reports
– historical costs, value of intangibles
• Limitations of financial reports
Accounting Limitation
practice
Historical cost True value of assets may be understated or
overstated.
Value of No uniform method of valuing these, especially
intangibles goodwill.
effective working capital (liquidity) management

• the working capital ratio
• Working capital is the funds available for the short-term
financial commitments of a business.
• Working capital management is determining the best mix of

current assets and current liabilities needed to achieve the
business’s goals.
Working capital = current assets – current liabilities

• control of current assets — cash, receivables, inventories
• Control of current assets:
Current asset Control method

Cash - cash flow budget
Accounts - credit policy
receivable - monitor debtors
- factoring
Inventories - regular stocktakes
- just-in-time
• control of current liabilities — payables, loans, overdrafts
• Current liabilities are liabilities that a business must settle
within the current accounting period. They usually include
overdraft, accounts payable and short-term loans.
• Control of current liabilities:
Current liability Control method

Accounts payable - monitor creditors
- holding back payment - stretching
- early payment discounts
Loans - capital budgeting – compare return and
risk
Overdrafts - regular payments
- monitor budgets and bank charges
• strategies for managing working capital — leasing, factoring, sale

and lease back
effective financial planning
• Strategies for managing (improving) working capital:
- Leasing: ‘frees up’ cash and no upfront fees.
- Factoring: sale of accounts receivable generates
immediate cash inflow.
- Sale and lease back: cash is obtained from asset sales.
• effective cash flow management
– cash flow statements
• Cash flow management is the movement of cash in and out of a
business over a period of time.
• Cash flow statements show the movement of cash receipts and

cash payments. In preparing a statement of cash flows, the
activities of a business are generally divided into three categories:
1. Operating flows: Sales revenue and operating expenses
related to the business’s main activity.
2. Investment flows: purchase and sale of non-current assets.
3. Financing flows: borrowing, debt and equity, of the
business.
• Many businesses use bank overdrafts to cover temporary cash

shortfalls.
–
management strategies — distribution of payments,
discounts for early payments
• Cash flow management strategies:
- Distribute payments throughout the year to avoid cash
shortfalls.
-Discount for early payment to minimise late payment and bad
debts.
• effective profitability management
– cost control — fixed and variable, cost centres, expense
minimization
• Effective profitability management requires control of both the
business’s costs and its revenue.
• Profit is the difference between costs and revenue.
• Cost-control measures:
- Fixed and variable costs – identify and account for expenses.
- Cost centres – managers accountable for their business unit
expenses.
- Expense minimisation – expenses budgets assist in cost
control.
– revenue controls — sales objectives, sales mix, pricing policy
• Revenue is the income earned from the main activity of a
business.
• Revenue-control measures:
- Sales objectives – set to generate maximum revenue.
- Sales mix – review each product’s profit margin contribution.
- Pricing policy – balance market share with profitability.
ethical and legal aspects
• audited accounts, inappropriate cut off periods, misuse of funds
• Australian Securities and Investments Commission
• corporate raiders and asset stripping.
• Strategies to assist ethical practices:
- Independently checked audited accounts. (An audit is an
independent check of the accuracy of financial records and
accounting procedures.)
- Code of ethics and internal controls minimises misuse of
funds.
- Australian Securities and Investment Commission
(ASIC) monitors business practices to ensure compliance with
the Corporations Law.
• Unethical practices:
- Creative accounting – inappropriate cut-off periods can
create a false financial position.
- Corporate raiders – manipulate share price.
- Asset stripping – sell assets after takeover.
9.3 HSC topic 3: Marketing

The focus of this topic is to develop an understanding of the nature
and role of marketing in a business and the main elements involved in
the development and implementation of successful marketing
strategies.
Outcomes
The student:
H1.2 critically analyses the role of business in Australia
management
H5.2 plans and conducts an investigation into business to present the
findings in an appropriate business format
forms.
Content
Students learn to:

ideas and issues related to marketing. The focus of these case studies
will be to:
• analyse and evaluate marketing strategies for a product or service
• analyse the marketing plan of a business
• construct a marketing plan for a single product/service (real or
imaginary).
nature and role of markets and marketing

• the role of marketing in the firm and in society
• Marketing is a total system of interacting activities designed to
plan, price, promote and distribute products to present and
potential customers.
Role of marketing:
- Find out what customers want and then attempt to satisfy their
needs.
- Bring together the buyer and seller.
- Generate revenue for the business.
• A market is a group of individual, organisations or both that:
- need or want a product
- have the money to purchase the product
- are willing to spend their money to obtain the product
- are socially and legally authorised to purchase the product.
• types of markets — resource, industrial, intermediate, consumer,
mass, niche
- Resource markets:
Resource markets refer to business buyers who purchase the
factors of production which are:
o Land: agricultural, mineral deposits and forests
o Labour: people who provide skills for business needs
o Capital: economic sense (equipment)
o Enterprise: the risk- taking by entrepreneurs
- Industrial markets:
An industrial market provides products needed to manufacture
other products. E.g. coke buying aluminum cans for Alcom to
create a finished product
- Intermediate markets:
The intermediate market consists of goods purchased for resale.
These businesses buy these goods to resell them to its retail
customers.
- Consumer markets:
The consumer markets consists of personal buys such as clothes,
cds and foods.
- Mass markets:
The mass market refers to the larger number of customers who
want to buy a standard product such as electricity and petrol.
- Niche Markets:
Niche markets consist of buyers with specialized needs e.g. A first
class ticket on the Virgin Space flight or a rolex watch.
• production–selling–marketing orientation
Changes in marketing over time:
1. Production approach - Taking orders and delivering goods.
- 1820s to 1920s
- Emphasis on producing goods
- Demand for goods is greater than supply.
Just producing a product to fulfil customer requirement without offering
choice (sacrificing choice ) for a cheaper and low cost manufacturing
through large scale production. The model T manufactured by Henry
Ford in the 1920s is an excellent example. Henry boasted the customer
could have any colour so long as it was black.
2. Sales approach - Advertising and personal selling.

- 1920s to 1960s
- Emphasis on selling goods
- Demand is weaker.
This was done through advertising and producing products to compete
with competitors and hence increase sales and market share.
3. Marketing approach – Aimed at satisfying customers’ needs.

- 1960s to present
- Emphasis on identifying customer needs through market
research
- Establishing and maintaining customer relationships
- Development of the marketing concept.
Researching the needs of their customers and developing products to
effectively meet the needs.
4. Ecological approach – Ecologically sustainable development is
based on consumer choices as they may want to buy only
environmentally friendly products or may want to see the business
incorporate ecological sustainability. An e.g. of this is McDonalds using
recycled paper packaging after consumer backlash to the previous
Styrofoam.
• the marketing concept — customer orientation, relationship
marketing
• The marketing concept is a business philosophy that sates that all
section of the business are involved in satisfying a customer’s
needs and wants while achieving the business’s goals. It is based on
four principles:
- customer-oriented
- supported by integrated marketing strategies
- aimed at satisfying customers
- integrated into the business plan so as to achieve the
business’s goals.
• Marketing concept accomplished through:
- Customer orientation: marketing decisions and practices
are based on customers’ needs
- Relationship marketing: long-term relationships with
individual customers to create customer loyalty.
• marketing planning process
• Marketing planning process is the process of developing and
implementing marketing strategies to achieve marketing strategies,
and consists of five steps:
1. Performing situational analysis
2. Establishing market objectives
3. Identifying target markets
4. Developing marketing strategies
5. Implementing, monitoring and controlling the marketing plan.
elements of a marketing plan
• situational analysis including SWOT and product life cycle
• establishing market objectives
• identifying target market
• developing marketing strategies
• implementation, monitoring and controlling — developing a
financial forecast, comparing actual and planned results, and
revising the marketing strategy
• An integrated marketing plan gives purpose and direction to all
the business’s activities.
• There are five steps involved in developing a marketing plan.
Step 1 Situational analysis: A precise understanding of the

business’s current position and where it is heading.
- SWOT (strengths, weaknesses, opportunities and
threats) analysis: provides the information needed to
complete the situational analysis and assesses the
business’s position compared with its competitors.
- Product life cycle analysis: At each stage of the cycle
a different marketing strategy is necessary. A business
must be able to launch, modify, and delete products in
response to changes in the product life cycle.
Step 2 Establish marketing objectives: The realistic and

measurable goals to be achieved through the marketing plan.
The marketing objectives should be more customer oriented than
the objectives for the entire business, and should include specific
targets to be met – for example, ‘Increase market share by 5 per
cent over twelve months’. Marketing objectives include:
- Increase market share. Market share refers to the

business’s total share of the total industry sales for a
particular market.
- Expand the product range. Product mix is the total
range of products offered by a business.
- Expand existing markets. Geographical
representation refers to the presence of a business
and the range of products across a geographical area.
- Maximising customer service. Customer service
means responding to the needs and problems of the
customer.
Step 3 Identify target markets: Specific groups of

customers with similar characteristics. Two broad approaches
can be used when selecting a target market:
1. Total market: a vast number of people. Example:
Basic food items.
2. Market segmentation: the total market is
subdivided into groups of people who share common
needs. Example: HSC Business Studies students.
Step 4 Develop marketing strategies: Actions to achieve
marketing objectives based on the ‘four Ps’ which make up the
marketing mix: product, price, promotion and place.
• A business controls four basic marketing strategies (the four Ps) to
reach its target market.
1. Product – anything that satisfies a need or want and can be
offered in exchange.
2. Price – the value placed on what is exchanged.
3. Promotion – activities used to communicate to a target
market persuasive, positive information about a business and its
products.
4. Place – methods used to get the product to the customer.
• The four Ps make up the marketing mix.
Step 5 Implement, monitor and control the marketing plan:
- Implement: decide which marketing strategies will be
put into action.
- Monitor:
o check and observe progress of the marketing
plan.
o establish a performance standard
o develop a financial forecast
- Control: compare actual performance against
planned through the use of sales analysis, market
share analysis/ratios, marketing profitability
analysis.
- Corrective action may need to be undertaken and revise
the marketing strategy through:
o changes in the marketing mix
o new product development or product deletion.
market research process
• determining information needs, data collection (primary and
secondary), data analysis and interpretation
• Market research is the process of systematically collecting,
recording and analysing information concerning a specific
marketing problem.
• Marketing data refers to the information, usually facts and

figures, relevant to the defined marketing problem.
- Primary data: information from original sources. Example:
Interviews and surveys.
- Secondary data: information collected by other organisations.
Example: ABS.
• To obtain reliable and accurate information marketers follow a
three-step approach.
Step Explanation
1. Determine The problem is clearly stated to
information needs determine what needs to be measured
and the issues involved.
2. Collect data from Data collected by mail, telephone and
primary and secondary personal surveys, personal observation
sources or from private data sources.
3. Analyse and Determine what the data means.
interpreting data
customer and buyer behaviour

• types of customers — people, households, firms, educational
institutions, government, clubs and societies, religious
organizations
• Buyer behaviour: The decisions and actions of customers
involved in buying and using products.
• Types of customers:
1. Individual/household: personal and family spending.
2. Business customers: businesses buying goods and services.
3. Institutional: non-profit organizations.
4. Government: spending by all levels of government.
• the buying process — buyers and users
The buying process includes the steps all customers tend to follow
when purchasing a product. Buyers generally go through a five-
step process when they buy goods:
 Recognize a need
 Research its benefits
 Evaluate alternatives
 Purchase a product
 Decide if satisfied or dissatisfied from product.
• factors influencing customer choice — psychological, sociocultural,
economic, government
• Customers’ choices are influenced by four main factors:
1. Psychological: the buyer’s perceptions, motives, attitudes
and personality.
2. Sociocultural: the buyer’s family role, peer groups, social
class and culture.
3. Economic: the level of economic activity and individual
incomes.
4. Government: the influence of regulations and policies on
marketing activities.
developing marketing strategies

• market segmentation and product/service differentiation
• Market segmentation allows the business to direct its marketing
strategies to specific groups of customers. Consumer market
segmented according to demographic, geographic, lifestyle and
behavioural variables.
Marketing plan Segment 1
consisting of:
Segment 2
• objectives Mass market
• strategies
Primary target
market
• marketing mix
Segment 3
Product Price Promotion Place Secondary target

market
• A primary target market is the market segment at which most of

the marketing resources are directed.
• A secondary target market is usually a smaller and less
important market segment.
• A mass marketing approach seeks a large range of customers.
• A concentrated market approach requires the business to direct
its marketing mix towards one selected segment of the total
market. A niche market is a narrowly selected target market
segment, a segment within a segment; a ‘micromarket’.
• Segmentation results in product differentiation: when products
that are the same or similar are made to appear different and/or
better than those of their competitor.
• product and service
A product is a good or service, an idea or any combination of the
three which can be offered for sale. It consists of tangible and
intangible benefits – a total product concept. All products are a
combination of tangible and intangible attributes.
– positioning
– Positioning: developing a product image. Assists with
product differentiation. Examples: Rolex, No Frills, Nike.
– branding
– Branding: name, term, symbol or logo identifying a specific
product. Brands can be manufacturer’s, house, or generic
depending on ownership
– packaging
– Packaging: a container and graphic designs helping preserve,
protect and promote the product.
• price including pricing methods — cost, market and competition-
based
• Selecting the most appropriate pricing method is important.
Pricing method Explanation

1. Cost plus This is the simplest method. The business
margin determines the total cost of production and then
adds an amount for profit. The extra margin is
referred to as the mark-up.
2. Market Instead of using costs to determine price,
businesses sometimes set prices according to
the level of supply and demand – whatever the
market is prepared to pay. When demand is
high, prices are high. When demand is low,
prices fall.
3. Competition- This method is often used when there is a high
based degree of competition from businesses
producing similar products. A business can
choose a price that is either below, equal to or
above that of the competitors.
– pricing strategies/tactics — skimming, penetration, loss

leaders, price points
– Four pricing strategies can also be used to determine price:
1. Price skimming – charge the highest price possible for
innovative products.
2. Price penetration – charge the lowest prices possible to
quickly achieve a large market share.
3. Loss leader – sell a product below its cost price to attract
customers to the business.
4. Price lining – (price points) a limited number of key prices or
price points for selected product lines.
– price and quality interaction
• promotion
– elements of the promotion mix — personal selling,
advertising, below-the-line promotions, public relations
– Promotion mix is the various promotion methods used to
inform, persuade and remind a target market about a product.
Promotion Explanation
method
Sales representative dealing directly with a
Personal selling
customer. The message can be modified to
suit the specific circumstances. Complex and
technical products require this approach.
Paid, non-personal message communicated
Advertising
through a mass medium such as electronic or
print. Advertising is an essential tool for
successful marketing.
Promotional activities designed without the
Below-the-line
use of an advertising agency. The activities
are designed ‘in-house’. These activities
include exhibitions, point-of-sale material,
demonstrating and direct marketing.
Publicity and Publicity is any free news story about a
public relations business’s product. Its main aim ism to
enhance the image of the product. Public
relations involves activities aimed at creating
and maintaining a favourable relationship
between a business and its customers.
– the communication process including opinion leaders and

word of mouth
– Opinion leaders and word of mouth assist the
communication of a promotional message.
• place/distribution
– distribution channels and reasons for intermediaries
– Place refers to the channels of distribution (marketing
channels) which are the routes taken to get the product from
the producer to the customer. This process usually involves a
number of intermediaries (retailer, wholesaler, agent).
– channel choice including intensive, selective, exclusive
• Market coverage refers to the number of outlets a firm
chooses for its product including:
- intensive – as many outlets as possible.
- selective –only a few outlets are used.
- exclusive – only one outlet.
– physical distribution issues including transport, warehousing,
inventory
• environmental effects on distribution — technology, local
government
• Physical distribution is all those activities concerned with the
efficient movement of the products from the producer to the
customer. It involves transporting, warehousing and inventory
control.
• Non-store retailing is gaining in popularity. Marketers can use
electronic channels such as the Internet and telemarketing.

• environmentally responsible products
• The ethical and legal position adopted by a marketing manager is
ultimately determined by individual judgement.
• Two marketing strategies that have raised the concerns of many

people relate to the ethics of:
- sponsorship deals
- product placement: the inclusion of advertising into
entertainment.
• Marketers need to be sensitive to society’s environmental

concerns. This can lead to new marketing opportunities such as
green marketing; that is, products that have minimal
environmental impact.
• other issues including creation of needs, impacts of retail

developments, sugging (selling under the guise of research)
• Other ethical considerations include:
- customer manipulation and persuasion.
- encouragement of materialism.
- security and privacy of databases.
- high advertising costs create higher prices.
- sugging: selling under the guise of research.
• role of consumer laws in dealing with

– deceptive and misleading advertising
– price discrimination
– implied conditions
– warranties
– resale price maintenance.
• The main restrictive trade practices are:

- deceptive and misleading advertising – creating a false
impression in an attempt to influence customers.
- price discrimination – the setting of different prices for a
product in separate markets
- implied conditions – unspoken and/or unwritten terms of a
contract. The two most important implied terms relating to
consumer purchases refer to:
o merchantable quality: the product is of a
standard a reasonable person would expect for
the price.
o fitness of purpose: the product is suitable for
the purpose for which it is being sold.
- warranties – promise to repair or replace faulty products.
- resale price maintenance – forcing a set price on a retailer.
9.4 HSC topic 4: Employment Relations

The focus of this topic is to understand the nature of effective
employment relations and their importance to business operation and
society.
Outcomes
The student:
H2.2 evaluates processes and operations in global business
stakeholders
management
external factors
relevant business terminology and concepts in appropriate forms
H5.4 applies mathematical concepts appropriately in business
situations
Content
Students learn to:

ideas and issues related to employment relations. The focus of these
case studies will be to:
• analyse how conflict and change are managed in a business
• prepare and justify possible ways of resolving conflicts in the
selected business organisations.
the nature of employment relations

• stakeholders in the employment relations process — employers,
employees, employer associations, unions, government
organizations
• Employment relations refers to the total relationship between an
employer and employee.
• Stakeholders in the employment relations process:
Employees Employers
Objectives Objectives
• better wages and • increase profit
conditions • increase
• job security flexibility
• participation in • minimise costs,
decisions be competitive
Conflict or cooperation
possible at all levels
Governments
Objectives
• global competitiveness
• higher living standards
and employment
• workplace reform
• compliance with
legislation
Australian Industrial
Relations Commission,
Federal Court,
Employment Advocate
• managing the employment relations function

– line management and specialist
• Employers and mangers deal with employment relations on a daily
basis.
• Under recent legislation, employers have gained more power to
make arrangements relevant to individual workplaces.
• Employees are more highly educated than in the past. There are
many changes to employment conditions and basis of employment.
• Trade unions are organisations formed by employees in an

industry. Unions have played a powerful role in employment
relations. Union membership has been declining over the last two
decades.
• Employer associations act on behalf of employers:

- in collective bargaining sessions
- provide advice
- make wage submissions
- negotiate agreements
- lobby governments.
• Governments are an important stakeholder in the employment

relations process. Their key roles are:
- Legislator: pass laws, which provide the legal framework for
industrial relations.
- Employer: employ almost one-third of Australian workers.
- Responsible economic manager: ensure stable economic
growth.
- Administrator of government policies on industrial
relations: implement legislation they pass.
- Representative of Australia in the international arena:
implement international treaties.
• Industrial tribunals and courts: operate to:

- settle industrial disputes through conciliation and
arbitration.
- Supervise the making of agreements or awards (legally
enforceable, formal agreements made collectively between
employers and employees that outline the pay and conditions.
• Most large businesses train their line managers in general
employment issues.
• Specialist managers for employment relations are responsible

for:
- recruitment and selection
- induction and training
- separation
- managing and implementing equal employment opportunity
and affirmative action legislation.
key influences on employment relations
• social influences — changing work patterns, population shifts
• legal influences — overview of major employment legislation
• new organisational behavioural influences — flat management and
team structures
• economic influences — economic cycle, globalisation
• Change is the only constant in the business environment. The main
influences on employment relations are:
Social influence Employment relations response

Changing work patterns Fewer permanent employees
More casual employees
Flexible working hours
Telecommuting
Population shifts Increase in the female participation
rate Family-friendly or work/life
balance
Employees wanting more
involvement
Legal influences Employment relations

response
Employment contracts Greater awareness of social justice
Equal employment opportunities
Anti-discrimination
Centralised to decentralised
system
Organisational influences Employment relations

response
Flatter management Employee participation
structure Alternative motivational strategies
Job enlargement, rotation,
enrichment
Self-managing work teams
Training and development
Economic influences Employment relations
response
Economic cycle Changes in demand for labour
Downsizing
Structural change
Globalisation Inefficient work practices
removed
Global employment contracts
Cultural awareness training
Manage diverse workforce
effective employment relations
• role of employment relations
• Most organisations that are successful in the long term maintain a
balance between concern for success (expansion and profit) and
regard for their employees.
• Well-managed employees ensure efficient and effective use is

made of their skills, time and working relationships.
• Effective employment relations provide the competitive edge as

similar raw materials, technology and business systems become
common to all organisations in a global marketplace.
• Managing employment relations effectively involves the following

activities:
- Human resource planning: determining future needs, and
changes to the internal and external environment.
- Recruitment: locating and attracting the right quantity of
staff to apply for employment vacancies or anticipated
vacancies.
- Selection: gathering information about each applicant for a
position and then using that information to choose the most
appropriate applicant.
- Placement: locating the employee in a position that best
suits the needs and utilises the skills of the individual.
- Training and development: training develops skills,
knowledge and attitudes; development focuses on enhancing
the skills of the employee to allow them to accept promotion
within the organisation.
- Rewards management: the provision of monetary and non-
monetary rewards.
- Conflict resolution: the constructive use of conflict and
dispute resolution.
- Legal compliance: abide by the appropriate legislation such
as occupational health and safety (OH&S).
- Separation: employees leaving the organisation. This needs
to be handled properly to avoid claims of discrimination.
• communications systems — grievance procedures, worker
participation, team briefings
• Functional communication systems are vital for effective
employment relations. This involves:
1. Grievance procedure: system to deal with workplace
complaints.
2. Worker participation: employee involvement in decision-
making.
3. Team briefings: managers and employees meet to discuss issues.

Quality circles and semi-autonomous teams assist in this
process.
• rewards — financial, non-financial
• Rewards can be monetary or non-monetary, and intrinsic (sense
of personal achievement) or extrinsic (rewards given outside the
job itself such as incentive payment).
• An effective rewards management system should attract, retain
and motivate employees, and be equitable.
Non-monetary rewards Monetary rewards

- Interesting work - Wage and salary
- Challenge - Incentive bonus
- Responsibility - Fringe benefits
- Satisfaction - Profit sharing
- Recognition - Commission
• training and development — induction
• Effective training and development improves employee
performance and productivity.
• An effective induction program introduces new employees to the
job, their co-workers, the organisation and its culture.
• Ongoing training is critical due to technological change and global
competition, leading many organisations to promote the concept of
a ‘learning organisation’ within the business.
• Key features of an effective training program include:
Step 1: Assess the needs (needs analysis).
Step 2: Determine the objectives of the training program.
Step 3: Consider the internal and external influences.
Step 4: Determine the training process
Step5: Evaluate the training program.
• Training can be formal, informal, off-the-job or on-the-job.
• Development assists employees to cope with added responsibility

and accountability. It prepares employees for promotion.
• flexible working conditions — family-friendly programs
• Flexible working conditions enable employees to balance work
and family responsibilities. Family-friendly programs include:
- childcare
- family support
- family leave
- flexible working hours.
• Flexible remuneration agreements can be used as a
motivational tool and tied to the achievement of key performance
indicators. Agreements can include:
- profit-sharing
- productivity sharing.
• Flexible working hours are a common feature of enterprise

agreements and individual contracts.
• measures of effectiveness — levels of staff turnover, absenteeism,
disputation, quality, benchmarking
• An employment/human relations audit can be used to evaluate the
employment relations activities and their effectiveness.
• Quantitative measures relate the effectiveness to costs and
profits. Benchmarking – comparing business performance
against industry standards –
can be used to achieve world’s best practice.
• Qualitative measures provide feedback on changes in behaviour
or improved quality of service provided.
• Measures of effective employment relations include:
1. Level of staff turnover – the rate at which employees leave
the business.
2. Absenteeism – failure to report for work without leave being
approved.
3. Industrial disputes – direct employee industrial action such
as strike, work ban, go-slow.
• High rates of these measures indicate ineffective employment
relations.
legal framework of employment

• the employment contract — common law (rights and obligations of
employers and employees), statutes, awards, agreements
• An employment contract is a legally binding agreement between
employer and employee. Every employee has a contract with an
employer.
• A written contract gives more protection to both parties and

encourages parties to clarify the key duties and responsibilities of a
job.
• Under common law both parties have basic rights and

obligations.
Employer obligations Employee obligations

- provide work - obey lawful and reasonable
- payment of income commands
- legislative compliance - use care and skill
- duty of care - act in good faith
• Statutes are laws made by federal and state parliament about

employment conditions, wage and salary determinations, and
dispute resolution.
• Australia has a dual system of industrial relations, although
changing.
• Constitution gives federal government powers to pass legislation on

industrial relations.
• The industrial relations system has undergone an evolution from a

centralised to a decentralised system starting with the
Workplace Relations Act 1996 (Cth.)
• Further reforms have been implemented under the Howard

government as the move to Australian Workplace Agreement
(AWAs) (individual contracts), the reduction in the powers of the
Australian Industrial Relations Commission, and the establishment
of a Fair Pay Commission.
• At the federal level there are three types of agreements available to

businesses and employees:
1. awards
collective
agreements
2. certified (enterprise) agreements
3. individual agreements (AWAs)
• Certified agreements may cover a single business or multiple

businesses. They are made between an employer and a union, or
unions, or a group of employees.
• AWAs are individual contracts, signed individually and are secret.
Certified agreement Australian workplace

(CA) agreement
(AWA)
- collective agreements for - individual agreements but
employees at a specific may be agreed collectively
workplace - replace the award for a
- can replace awards or act as specific workplace
‘add-ons’ - must be registered with the
- must pass a ‘no disadvantage Employment Advocate
test’. - bargaining agents can be
- majority approval required appointed
- signed individually and are
secret
• Individual common law employment contracts mainly apply to the

managerial or professional level and common in the private sector.
• types of employment contract — casual/part-time/flexible,

permanent, casual
• Types of employment contracts include:
- casual: employment that is short term, irregular and
uncertain; not entitled to holiday pay or sick leave.
- part-time: continuing employment contract but less hours
than full-time.
- regular or continuing employees: continuing
employment contract and are required to work a specified
number of hours per week.
- fixed-term employees: employed on a contract for a
specific period.
• The growth of casual and part-time work has provided many
opportunities for businesses and employees. However, it raises a
number of serious social and economic issues.
industrial conflict
• definition and causes — wage demands, working conditions,
management policy, political goals and social issues
• Conflict generally agrees to disputes, disagreements or
dissatisfaction between individuals and/or groups.
• A dispute exists when employees withdraw from work or a refusal
by an employer to allow employees to work.
• Causes of industrial conflict
Cause of dispute Example

Wage demands Increased pay rates
Working conditions Leave, hours and physical
conditions
Management policy Changing work practices
Political and social Green bans
issues
• In recent years, the number of working days lost to industrial
disputes fell dramatically.
• perspectives on conflict — unitary, pluralist, radical
• There are three common perspectives on conflict:
- Unitary: stakeholders work as a team to achieve shared
goals. Conflict is minimised.
- Pluralist: stakeholders have conflicting objectives. Conflict is
legitimate and hard to avoid.
- Radical: power struggle between stakeholders. Conflict is
inevitable.
• types of industrial action

– overt — lockouts, pickets, strikes, bans, work-to-rule
– covert — absenteeism, sabotage, turnover, exclusion from
decision-making in business
– Types of industrial action:
Overt (highly visible) Covert (not highly visible)
Lockout: employers refuse Absenteeism: unapproved
employees admission absence form work
Picket: employees stop entry Sabotage: vandalism and theft

into workplace
Strike: employees withdraw Turnover: staff resignations
their labour
Bans: selected tasks not Exclusion from decision-
performed making: not inviting all staff to
meetings
Work-to-rule: employees refuse
to perform additional duties
• roles of stakeholders in resolving disputes

• The key stakeholders involved in resolving disputes include
employees, employers, governments, trade unions, employer
associations and industrial tribunals.
• Since the introduction of the Australian Workplace Relations Act
1996 a move towards employers and employees resolving disputes
without outside assistance.
• Many firms try to develop a corporate culture in which disputes are
minimised through cooperative working relationships and by
training staff in procedures, policies and guidelines for managing
disputes.
• dispute resolution processes — conciliation, arbitration, grievance
procedures, negotiation, mediation, common law action,
business/division closure
• Dispute resolution procedures:

- Commences with grievance procedures.
- Negotiation: discussion between the parties to reach a
solution.
- Mediation: objective third person assists parties to reach a

solution.
Australian Industrial Relations Commission (AIRC)
- Conciliation: mediation involving a meeting of the parties to

reach a solution.
- Arbitration: commissioner makes a legally binding decision.
- Common law: disputes settled by court action when no

relevant employment legislation exists.
- Business/division closure: if dispute is impossible to

resolve.
• costs and benefits of industrial conflict
– financial, personal, social, political, international
• Costs and benefits of industrial conflict
Type Costs Benefits

Financial - lost production and - increased productivity
wages after changes
- business closure implemented
- improved working
conditions
Personal - stress, insecurity and - work problems resolved
fear
Social - community anger - new career opportunities
Political - voter dissatisfaction - better employment
policies
Internatio - loss of export - workplace reforms
nal markets improve global
competitiveness
• issues in the workplace
– working conditions
– Ethical business practices are those practices that are
socially responsible, morally right, honourable and fair.
– An ethical framework must be developed for the workplace and
include a code of conduct and a code of ethics.
– An ethical employer will provide safe and healthy working
conditions that improve employee welfare. This is enforced by
the Occupational Health and Safety Act 2000 (NSW).
Employers have a duty of care and employees have a
reciprocal duty.
– Occupational Health and Safety (OH&S)
– Workcover recommends implementing a six-step approach to
OH&S.
Step 1. Develop an OH&S policy.
Step 2. Set up a consultation mechanism with employees.
Step 3. Establish a training strategy for new and existing staff.
Step 4. Establish a hazard identification and workplace
assessment process.
Step 5. Develop and implement risk control.
Step 6. Promote, maintain, and improve these strategies.
– workers’ compensation — state and/or federal agencies and
common law redress
– Employers are legally obliged to take out workers’
compensation insurance, a no-fault system emphasising
rehabilitation and monetary compensation.
– Employees must notify their employer as soon as possible of an
injury or work-related illness.
– Common law redress may be available for injured employees
to sue for negligence.
– anti-discrimination
– Discrimination occurs when a policy or a practice
disadvantages a person or group because of a personal
characteristic that is irrelevant to the performance of the work.
– Employers and managers working in employment relations

need to be familiar with the following legislation:
o Human Rights and Equal Opportunity Commission Act
1986 (Cth).
o Affirmative Action (Equal Employment Opportunity for
Women) Act 1986 (Cth).
o Sex Discrimination Act 1984 (Cth) and the Anti-
Discrimination Act 1977 (NSW).
– All employers are required to take reasonable steps to
eliminate discrimination.
– Equal Employment Opportunities (EEO)
• Equal employment opportunities (EEO) encourages equitable
practices in recruitment, selection, training and promotion.
• Private sector employers with more than 100 employees are obliged
to develop an affirmative action program, which aims to remove
discriminatory employment barriers and take action to promote
equal opportunity for women in the workplace.
• An employment contract is legally binding, so employers must
terminate the contract in a legally compliant manner.
• There are three ways an employee can be sacked:
1. Summary dismissal: when a serious breach of the
employment contract occurs, such as fraud or assault. This is
instant and given without notice.
2. On notice: when a dismissal is based on poor performance.
3. Retrenchment or redundancy: when an employee is no
longer needed for
economic or commercial reasons.
– unfair dismissal.
• Unfair dismissal occurs when an employee’s dismissal is harsh,
unreasonable or unjust.
• Criticism of the unfair dismissal legislation by employers resulted in
the Howard government reforming the process.
9.5 HSC topic 5: Global Business

The focus of this topic is to examine the implications of globalisation on
business structure, functions and management.
Outcomes
The student:
H1.1 explains the impact of the global business environment on
business role and structure
H1.2 critically analyses the role of business in Australia
H2.2 evaluates processes and operations in global business
stakeholders
management
external factors
relevant business terminology and concepts in appropriate forms
Content
Students learn to:

ideas and issues related to global business. The focus of these case
studies will be to:
• select a global business and identify its international targets
• describe and analyse the reasons for its international expansion
• explain the influences on this business in the global market
• explain the strategies used by the business to achieve its targets.
globalisation
• nature and trends — growth of the global economy and changes in
markets (financial/capital, labour, consumer)
• The global economy is the world economy and refers to the
economic activity going on in the world.
• Global influences on the Australian business environment include:

- Increasing globalisation and a changing international business
environment.
- Changes in protection policies.
- Establishment of overseas operations.
• Globalisation is the movement across nations of trade,

investment, technology, finance and labour.
• Globalisation is not a new process. However, in the last 20 years the

world has experienced rapid and widespread globalisation.
• National economies are merging into one huge, interdependent

global economic system.
• Globalisation of markets refers to the combining of once

separate and distinct national markets into one huge global
marketplace.
• Globalisation of production refers to the way many businesses

purchase their inputs from around the globe and tend to
manufacture components in low-cost countries.
• Changes in markets:
1. Finance/capital – expanded flows due to deregulation and
technology.
2. Labour – mobile skilled employees.
3. Consumer products – appeal of ‘global products’ enabled by e-
commerce.
• trends in global trade since World War II

• Trends in global trade since World War II
- 1945-1960 – United States domination of global trade.
- 1960-1980 – Japan and Europe re-emerge
- 1980 to the present – the global marketplace due to the
expansion of regional trading blocs.
• drivers of globalisation
– role of transnational corporations
– global consumers
– impact of technology
– role of government
– deregulation of financial markets
– Five interrelated forces are leading businesses to the
globalisation of their production and marketing.
Driver of globalisation Explanation

Transnational Businesses operating on a worldwide
corporations scale conducting business-to-business
trade and integrating national
economies.
Global consumer World’s consumers have become
global in their buying behaviour.
Technology Advances in travel and information
technology increase trade and
information flows.
Government Trade agreements reduce trade and
investment barriers.
Deregulation if financial Foreign direct investment
markets encouraged as regulations removed.
• interaction between global business and Australian domestic
business
• Since the 1990s, there has been a heightened sense of awareness
of the need for domestic businesses and managers to increase their
interactions with global businesses.
• As globalisation gathers momentum Australian businesses face

increased competition as well as more opportunities.
• Australian businesses have three specific advantages in the
transition phase:
1. Networks and relationships are well established.
2. Multicultural make-up of the Australian workforce.
3. Governments and private consultant provide advice.
global business strategy
• methods of international expansion
– export
• The different methods of international expansion require
varying degrees of involvement each requiring varying degrees of
involvement in global business.
• Exporting: when a business manufactures its products in its home

country and then sells them in foreign markets.
- Can be a relatively low-risk method of entering overseas
markets.
- There are three different methods of exporting:
o Indirect exporting is the most basic level of exporting
where a business sells its products to a domestic
producer, who then exports the product.
o Direct exporting happens when the exporting
business sells its products to an agent or intermediary
or final consumers in another country.
o Intracorporate exporting (transfer) is the selling of a
product by a firm in one country to a subsidiary firm in
another.
– foreign direct investment
– Foreign direct investment (FDI) occurs when a business
from one country owns property, assets or business interests in
another country.
– There are three methods of FDI:

1. Greenfield strategy: a new business venture from scratch.
2. Acquisition strategy: acquiring through a takeover or
merger of an existing business operating in the foreign country.
3. Joint venture: two or more businesses agree to work
together and form a jointly owned but separate business.
– relocation of production
• Relocation of production (relocation offshore) occurs when
the domestic production facility is closed down and then set up in a
foreign country. The motivation behind this strategy is usually cost
reduction as the relocation is often to a low-cost, developing
country.
– management contract
– Management contract: an arrangement under which a global
business provides managerial assistance and increased
technical expertise to a second or host business for a fee.
– licensing/franchises
– Licensing is an agreement in which one business (licensor)
permits another (licensee) to produce and market its product,
brand name etc for a royalty fee.
– Franchising is a specialised form of licensing in which the
franchisor grants the franchisee the right to use a company’s
trademark and distribute its product.
• reasons for expansion
– increase sales/find new markets
– acquire resources and have access to technology
– diversification
– minimise competitive risk
– economies of scale
– cushioning economic cycle
– regulatory differences
– tax minimization
• Global businesses enter foreign markets for a number of reasons, all
of which are ultimately linked to the desire to increase sales and
profits.
• The main reasons for expansion.
Reason
Explanation
Increase If domestic markets are small in size or saturated,
sales/new overseas markets provide new opportunities.
markets
Acquire Access to raw materials and technology that are either
resources and too expensive or unavailable in the domestic country.
technology
Diversification - Geographic – markets across the world helps spread
the risk of falls in sales in any one market.
- Product – increasing the range of products sold.
- Supplier – less vulnerable to supply problems and
price rises.
Minimise Operating in many overseas markets can lessen
competitive exposure to competition.
risk
Economies of Cost savings gained when the scale of production
scale increases.
Cushioning Selling in numerous markets cushions the impact of a
economic cycle reduction in domestic demand.
Regulatory Taking advantage of differences in laws of the host
differences country to gain a cost advantage.
Tax Low-tax host countries offer incentives of tax holiday
minimisatio and tax haven.
n
specific influences on global business

• financial
– currency fluctuations
– interest rates
– overseas borrowing
• A business that operates globally has to deal with a more complex

set of factors compared to a business that operates only in the
domestic market, including:
- difficulty of assessment
- different value systems
- decision making is more complex
- cultural differences.
• Financial influences are largely ‘uncontrollable’ although a

business can put in place appropriate financial management
strategies to minimise their negative effects.
1. Currency fluctuations. In all global transactions it is
necessary to convert one currency into another.
- This transaction is performed through the foreign
exchange (forex or fx) market, which determines the
price of one currency relative to another.
- Exchange rate: value of one currency to another.
Example: A$1 = US$0.70 means one Australian dollar is
worth 70 US cents.
- Exchange rates fluctuate over time.
- Depreciation: a downward movement of the
Australian dollar (or any other currency) against another
currency. Exports become cheaper but imports dearer. An
appreciation has the opposite effect.
- Fluctuations impact on production costs, revenue
and profitability.
2. Interest rates. Finance is generally required for overseas

expansion. Borrowing offshore to gain a lower interest rate can
expose the business due to adverse currency fluctuations.
3. Overseas borrowing. There is a diverse range of debt and

equity sources within the international capital market. However,
there are two main sources:
- International equity (share) market. This involves
selling shares of ownership to new or existing owners
worldwide.
- International bond market. A bond is an IOU from one
business to another and requires the borrower to repay a
certain amount, plus interest, by a specified date.
• political
– tensions between protectionism and free trade
– international organisations and treaties (World Trade
Organisation)
– trade agreements
– regionalism
– war and civil unrest
• Political influences. A political risk is any political event that
results in a drastic change to the country’s business environment
and ultimately has a negative impact upon business operations and
profit.
• Political risks tend to be greater in countries experiencing social and
economic unrest.
• Some political influences could act as incentives, encouraging

businesses to relocate.
1. Tension between protectionism and free trade

- Protectionism creates artificial barriers to free trade
- Many governments are encouraging free trade. The debate
causes tension within and between countries.
2. International organisations and treaties

- The actions and decisions of international organisations
have an enormous impact upon global business.
- The main organisations are:
(i) World Bank (WB): Bank lending encourages business
activity.
(ii) International Monetary Fund (IMF): Fosters orderly
exchange arrangements and an international monetary
system.
(iii) Bank for International Settlement (BIS): Provides
stability and certainty to the world’s financial system.
(iv) World Trade Organisation: World Trade
Organisation (WTO): Responsible for managing world
trade, trade negotiations, treaties and investment.
3. Trade agreements and regionalism. The main aim of the

WTO is to remove barriers to international trade. A trade
agreement is a negotiated relationship between countries that
regulates trade between them.
- Countries that participate in a trade agreement form
economic communities – trading bloc. The main trading
blocs are:
(i) European Union (EU)
(ii) North American Free Trade Association (NAFTA)
(iii) Association of South-East Asian Nations (ASEAN)
(iv) Asia-Pacific Economic Cooperation (APEC).
4. War and civil unrest. Business operations can be

significantly disrupted in politically volatile countries.
• legal
– contracts
– dispute resolution
– intellectual property
• Legal influences. There is no one set of international laws. A
global business must be aware of the host’s unique legal system.
1. Contracts: legally enforceable agreements. There are two

main legal systems in the world: common law and civil law.
Rights and responsibilities of contractual parties vary between
countries. A contract should outline a method of resolving
disputes.
2. Dispute resolutions. Negotiation and mediation are less

expensive methods. WTO has a dispute settlement process.
3. Intellectual property refers to property that is created by

an individual’s intellect.
- Brand names, trademarks, patents and copyrights need
to be protected. Not all countries enforce intellectual
property conventions.
• social/cultural
– languages
– tastes
– religion
– varying business practices and ethics
4. Social and cultural influences. Global businesses must be

aware of and appreciate the unique system of values, beliefs,
rules and customs of a host country.
- Language. A difficult barrier to overcome and will impact

on negotiations. Need to appreciate the importance of non-
verbal communication.
- Tastes. Exported products should be modified to suit local
tastes.
- Religion. Insensitivity could damage business
relationships.
- Varying business practices and ethics. Vary the world
over. International business managers must research and
accept business practices and ethics of the countries with
which they wish to conduct business. Difficulty in
distinguishing between a ‘gift’ and a ‘bribe’.

managing global business
• financial
– methods of payment
– credit risks
• There are a number of private and government organisations
(Austrade) that offer assistance with a particular aspect of
managing a global business.
1. Financial management of a global business involves methods of

payment, currency exchange fluctuations, credit risks and insurance.
• Method of payment and credit risks.
Method of Explanation Risk to

payment exporter
Payment in Allows the exporter to receive payment and Least
advance then arrange for the goods to be sent. Few
importers will agree to these terms because
it exposes them to the most risk.
Letter of credit A commitment by the importer’s bank, Minimal
which promises to pay the exporter a
specified amount when the documents
proving shipment of the goods are
presented.
Clean payment Easiest and quickest method. Occurs when Minimal
(clean the payment is sent to, but not received by,
remittance) the exporter before the goods are
transported. Favoured by exporters, but not
so much by importers.
Bills of A document drawn up by the exporter Moderate
exchange demanding payment from the importer at a
specified time. Widely used method and
allows the exporter to maintain control over
the goods until payment is either made or
guaranteed. Two types: bills against
payment and bills against acceptance.
Open credit Allows the importer to access the goods, Most
(account) with a promise to repay at a later date.
– hedging
• Hedging reduces the risk of currency fluctuations.
- A spot exchange occurs when two parties agree to
exchange currency and finalise a deal immediately. Spot
exchange rates: the value of one currency in another
currency on a particular day.
Hedging (natural and financial instrument – derivatives) can be used
to minimise the risk of having to accept an unfavourable exchange
rate.
– derivatives
– Derivatives are financial instruments that may be used to
lessen the risk of currency fluctuations. There are three main
derivatives:
(i) Forward exchange contract: a contract to exchange one
currency for another currency at an agreed exchange rate on a
future date.
(ii) Options contract: gives the buyer (option holder) the right,
but not the obligation, to but or sell foreign currency at some
time in the future.
(iii) Swap contract: an agreement to exchange currency in the
spot market with an agreement to reverse the transaction in the
future.
– insurance
– Insurance: protection against default of payment, product
damage and financial risks.
– obtaining finance
– Obtaining finance.
(i) Domestic capital market: Australian banks and financial
institutions.
(ii) International capital market: international financial
institutions.
(iii) Eurocurrency market: nominating a currency of choice –
US dollar, Deutschmark, British pound, Japanese yen.
• marketing
– research of market
2. Marketing management. A global business must modify its
marketing plan to suit overseas markets.
• Market research to determine:

- economic capabilities of host country.
- market potential for a product.
- social, cultural and political features.
– global branding
– Global branding: worldwide use of names, symbols and logos.
Helps global recognition irrespective of language.
– standardisation and differentiation
– A standardised marketing mix can be adopted based on an
identical product being sold worldwide. A differentiated
approach uses a customised marketing plan to suit the host
country’s local needs.
• operations
– sourcing (vertical integration, make or buy)
3. Operations management. To remain competitive, businesses are
forced to find ways to reduce costs of production and improve their
products.
• Sourcing decisions are a business’s decisions about whether it
should make or buy the resources that are needed to create its
products.
Reasons to make (vertical Reasons to buy (outsourcing)

integration)
- Greater control - Greater flexibility
- Lower costs - Lower risk
- Protect technology - Lower costs
- Improve scheduling - Superior technology
– global web (components produced in different countries)

– Transnational corporations can establish a global web, a
network of cost-effective production sites located around the
world usually in low-wage countries.
• employment relations
– organisational structure
4. Employment relations management. The quality, quantity and
composition of the available labour force are important considerations.
• As a business expands globally it must adapt its organisational

structure.
– staffing
– Businesses may adopt one of three methods to staff overseas
operations:
(i) home country: citizens of the TNC’s own country
(ii) host country: citizens of the overseas country
(iii) third country: citizens of neither the home nor host
country.
– shortage of skilled labour
• Need for an understanding of the different labour laws, wages and
working conditions between countries. Shortages of skilled labour
overcome by recruiting expatriates. Non-managerial staff are
normally host country nationals.
– labour law variations

– Need for an understanding of the different labour laws, wages
and working conditions between countries. Shortages of skilled
labour overcome by recruiting expatriates. Non-managerial
staff are normally host country nationals.
– ethnocentric/polycentric/geocentric staffing system
– Staffing system: concerned with the selection of employees
for particular jobs. One of three approaches:
(i) Ethnocentric: key management staff are relocated from the
home country.
(ii) Polycentric: host country employees are recruited.
(iii) Geocentric: the best employees available are selected
irrespective of nationality.
• evaluation — strategies with reference to a particular global
market
• Management strategies should be constantly evaluated to
determine their degree of success.
• Evaluation involves:
- Measure actual performance.
- Compare against planned performance and goals.
- Take corrective action if performance is unacceptable.
• modifications of strategies according to changes in global market
• A business should constantly scan the business environment and
modify existing strategies in response to market and technological
changes. Example: market saturation and e-commerce.
management responsibility in a global environment
• ethical practice
— tax havens and transfer pricing
1. Tax havens and transfer pricing:
Business practice Explanation

Tax haven Countries that impose little or no company
tax. The main role is to provide a business
with the means to avoid or minimise their
taxation liability so as to maximise their after-
tax profit.
Transfer pricing This provides the opportunity for the business
(intracorporate as a whole to gain while both the buying and
sales) selling subsidiaries ‘lose’ because the
subsidiaries receive a lower price for their
products than if the transaction took place on
the open market. Manipulation of the price
hides the profit, and reduces customs and
import tariffs.
– minimum standards of labour
2. Exploiting employees. Minimum standards of labour
refer to those conditions that affect a business’s employees,
suppliers, subcontractors or others ion the supply chain.
– Some businesses exploit weak labour laws in order to reduce
wage costs.
– A human rights code of conduct is one method of
attempting to conduct business in a socially responsible way.
– dumping illegal products
3. Dumping illegal products. Developing countries are
sometimes coerced into taking hazardous materials in order to
avoid the more stringent environmental laws of a developed
country.
– ecological sustainability.
4. Ecological sustainability. There is growing pressure to
adopt ecologically sustainable operating practices.
• Corporate social and ethical responsibility is a contentious area with

arguments for and against.

Business Syllabus Notes (Marketing)

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Business Syllabus Notes (Marketing)

Uploaded by

Copyright:

Available Formats

9 Content: Business Studies HSC Course

9.1 HSC topic 1: Business Management and Change

20% of indicative time

Students learn to:

use existing business case studies to investigate and communicate

Students learn about:

the nature of management

• Every business needs effective management to succeed.

• The role of effective management is to make sure the joint

According to Mintzberg a manager is required to act out many

Interpersonal Deal with people; Attend functions.

People (soft) skills Self-managing Strategic thinker

Adaptable to Team player Problem-solver

• responsibility to stakeholders; reconciling conflicts of interest

• A classical perspective on management, pioneered by Max

• A scientific approach to management, pioneered by Frederick

Classical and scientific management theory:

• Management hierarchy is the arrangement that provides

• Senior managers have greater accountability, responsibility

Board of directors; CEO; CFO;CIO

Divisional manager; Store manager.

Middle management team

Team manager; Supervisor

Frontline management team

Traditional management hierarchy

• Managers should bring a range of leadership styles to their

• Continuum of leadership styles:

Key feature Autocratic or Participative or Laissez-faire

• The behavioural approach to management, pioneered by Elton

• Behavioural management theory:

• The hierarchical management structure has been

• In response, businesses are adopting a flatter

Employees or work teams

• Flatter organisational/management structures have evolved due

• Closely associated with the emergence of flatter organisational

Sources of power Description

1. Legitimate Status or position

• Managers need to be aware of both the formal and informal

• A coalition is two or more people who combine their power to

• Management is a discipline that is continually evolving.

• External changes result from factors outside the control of the

business but which may affect its performance.

External influence Explanation

– internal influences — effects of accelerating technology

and come from the desire to improve business operations.

Internal influence Explanation

• Structural change refers to changes in how the business is

• The aim of these changes is to make business operations run

• Management must respond to change by:

• The main structural changes include:

• Resistance to change can sometimes be common among

• Five steps to successful change:

2 Set achievable goals.

3 Create a culture of change: teamwork; change agent.

4 Implement the change.

5 Evaluate and modify the change as appropriate.

• Lewin force-field analysis: identify, analyse and balance the

• The Lewin change process:

• A socially responsible business will attempt to achieve two goals

• Social responsibility: how well a business manages the social,

• Quality of working life: workplace practices that improve

• Technology: cushion its negative impact on employees.