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UNIT 1: MANAGEMENT
KEY TERMS
Management: The process used to accomplish organizational goals through planning, organizing,
leading and controlling people and other organizational resources.
Manager: An individual who is in charge of a certain group of tasks, or a certain area or a department
of a business.
Chief Executive Officer (CEO): The most senior manager responsible for the overall performance
and success of a company.
Planning: A management function that includes anticipating trends and determining the best strategies
and tactics to achieve organizational goals and objectives.
Organizing: A management function that includes designing the structure of the organization and
creating conditions and systems in which everyone and everything work together to achieve the
organization’s goals and objectives.
Leading: Creating a vision for the organization and guiding, training, coaching and motivating others
to work effectively to achieve the organization’s goals and objectives.
Controlling: A management function that involves establishing clear standards to determine whether
or not an organization is progressing toward its goals and objectives, rewarding people for doing a
good job, and taking corrective action if they are not.
UNIT 2: WORK AND MOTIVATION
KEY TERMS
Motivation: factors that influence the behavior of workers towards achieving business goals.
Motivation can be increased by:
1. Monetary rewards
2. Non-monetary rewards
3. Introducing ways to give job satisfaction
Job satisfaction: the enjoyment a worker gets from feeling that they have done a good job. There are
three ways to motivate workers to be more committed to their job and work more effectively.
1. Job rotation ( swapping workers round and only doing a specific task for a limited time before
swapping round again ).
2. Job enlargement ( extra tasks are added to the job to make it more interesting )
3. Job enrichment ( adding tasks that require more skill and/or responsibility )
Theory X: The average person does not like work. Workers must be constantly supervised so they will
work. Motivation is from external factors, e.g. pay schemes where the workers are paid more for
increased input.
Theory Y: The average person is motivated by internal factors. To motivate workers you need to find
ways to help workers take an interest in their work, e.g. give rewards, incentives.
Maslow’s hierarchy of needs: A theory of motivation which states that five categories of human needs
dictate an individual’s behavior. Those needs are physiological needs, safety needs, love and
belonging needs, esteem needs and self-actualization needs.
Frederick Herberg’s motivation theory: Humans have two sets of needs: one is for the basic needs,
which he called hygiene factors or needs and the second is for a human being to be able to grow
psychologically, which he called motivational needs or motivators.
Hygiene factors: The factors that must be present in the workplace to prevent job dissatisfaction.
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THEORY X AND THEORY Y
Theory X Theory Y
It assumes that most people are incapable of It assumes that most people have a psychological
taking responsibility for themselves and have to need to work, and given the right conditions - job
be looked after or threatened, for example with security, financial rewards - they will be creative,
losing their job and rewarded with incentives, ambitious and self-motivated by the satisfaction
probably monetary ones such as a pay rise or of doing a good job.
bonuses.
It has traditionally applied, for example, by It is probably more applicable to skilled
managers of factory workers in large-scale professionals called “knowledge workers” -
manufacturing. managers, specialists, programmers, scientists,
engineers - than people in unskilled jobs.
It relates to the basic, lower order needs at the It relates to higher order needs such as esteem (
bottom of the hierarchy, such as financial achievement, status and responsibility) and
security. self-actualization (personal growth and
fulfillment) that can be pursued if basic needs are
needed.
SATISFIERS AND MOTIVATORS
Satisfiers Motivators
It include things like good labor relations, good It includes things such as having a challenging
working conditions, job security, good wages, and interesting job, recognition and
benefits such as sick pay paid holidays and a responsibility, promotion and so on.
pension
SOLUTION: How to motivate
Give them some responsibilities not as individuals but as part of a team. For example, some
supermarkets combine office staff, the people who fill the shelves and the people who work on the
checkout tills into a team and let them decide what product lines to stock, how to display them, and so
on. Other employers encourage job rotation, as doing four different repetitive jobs a day is better than
doing only one.
UNIT 3: COMPANY STRUCTURE
KEY TERMS
Organizational structure: The levels of management and division of responsibilities within an
organization.
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Hierarchy: The levels of management in any organization from the highest to the lowest. A level of
hierarchy refers to managers/ supervisors, other employees who are given a similar level of
responsibility in an organization.
Chain of Command: The structure in an organization which allows instructions to be passed down
from senior management to lower levels of management.
Span of Control: The number of subordinates working directly under a manager.
Directors: Senior managers who lead a particular department or division of a business.
Line managers: People who have responsibility for people below them in the hierarchy of an
organization.
Supervisors: Junior managers who have direct control over the employees below them in the
organizational structure.
Staff managers: Specialists who provide support, information and assistance to line managers.
Delegation: Giving a subordinate the authority to perform a particular task.
Decentralization: Taking decisions away from the center of an organization - away from the Head
Office.
- A disadvantage of functional organization is that people are often more concerned with the success of
their own department than that of the company as a whole, so there are permanent conflicts.
-Factors leading companies to flatten the hierarchies: the modern tendency and advanced IT systems.
Many companies have also been forced to cut back and eliminate jobs in recessions.
-The owners of small firms want to keep as much control over their business as possible, whereas
managers in larger businesses who want to motivate their staff often delegate decision making and
responsibilities to other people.
-Matrix management: in which people report to more than one supervisor.
-Teams are not always very good at decision making, and usually require a strong leader.
UNIT 4: MANAGING ACROSS THE CULTURE
KEY TERMS
Glocalization: is a combination of the words “globalization” and “localization”. The term is used to
describe a product or service that is developed and distributed globally but is also adjusted to
accommodate the user or consumer in a local market.
Culture: is defined as the complex system of values, traits, morals, and customs shared by a society.
Context: refers to the stimuli, environment, or ambience surrounding an event.
The Lewis Model: was developed by linguist and leading cross-cultural specialist Richard [Link].
The model divides humans into 3 clear categories, based not on nationality or religion but on
BEHAVIOR, namely, Linear-active, Multi-active and Reactive.
High-context culture: is a culture by which rules of communication are primarily and dominantly
transmitted through the use of contextual elements. These include specific forms of body language, the
social or familial status of an individual, and the tone of voice employed during speech. High-context
cultures usually do not have rules that are explicitly written or stated.
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Low-context culture: refers to a culture whereby most communications take place through verbal
language and rules are directly written out or stated for all to view.
Power distance: is the distribution of power among individuals within a culture and how well unequal
levels of power are accepted by those with less power.
Why is it important for companies to be aware of local cultures?
Because local cultures, habits, beliefs and principles can easily affect the performance of their business
in each country.
Describe the characteristics of businesspeople from Multi-Active, Reactive and Linear-Active
cultures.
-Businesspeople in linear-active cultures such as Britain, the USA and Germany are generally
organized and rational, try to act logically rather than emotionally, plan in advance, and like to do one
thing at a time. They believe in respecting rules, regulations and contracts called “universalists” - they
think rules apply to everybody. They are not afraid of confrontation but will compromise when
necessary to achieve a deal. They are essentially individualist
-Multi-active cultures in Southern Europe, Latin America and Africa attach more importance to
feelings, emotions and intuition, and relationships and connections. People like to do many things at the
same time, they are flexible, good at changing plans and happy to improvise. They believe in social or
company hierarchy, and respect status. They are essentially collectivist or called particularist - they
believe that personal relationships and friendships should take precedence over rules and regulations.
-People in reactive cultures in Asia prefer to listen to and establish the other’s position, and then react
to it. They try to avoid confrontation and don’t want to lose face or cause someone else to. They rarely
interrupt speakers and often avoid eye contact. They try to formulate approaches which suit both
parties.
What is culture? What factors are likely to be governed by cultures?
Culture may be defined as the complex system of values, traits, morals and customs shared by a
society. Culture is a powerful operating force that molds the way we think, behave and communicate.
Major features of low-context and high-context cultures
-Communicators in low-context cultures (such as those in North America, Scandinavia, and Germany)
depend little on the context of a situation and shared experience to convey their meaning. They assume
that messages must be explicit, and listeners rely exclusively on the written or spoken word.
Low-context cultures tend to be linear, analytical, and action oriented. Business communicators stress
clearly articulated messages that they consider to be objective, professional, and efficient. Words are
taken literally.
-Communicators in high-context cultures (such as those in China, Japan, and Middle Eastern countries)
assume that the listener does not need much background information. High-context cultures are more
likely to be intuitive and contemplative. Communicators in these cultures pay attention to more than
spoken or written words. They emphasize interpersonal relationships, nonverbal depression, physical
settings, and social context. Thus, in high-context cultures, communication cues tend to be transmitted
by posture, voice inflection, gestures, and facial expressions.
What does the Power Distance Index measure?
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The Power Distance Index measures how people in different societies cope with inequality- in other
words, how they relate to more powerful individuals.
Indicate the differences between low-context cultures and high-context cultures.
Low-context cultures High-context cultures
Subordinates consider themselves as equals of Subordinates expect formal hierarchies and
their supervisors. They confidently voice embrace relatively authoritarian, paternalistic
opinions and participate in decision making. power relationships.
Relationships between high-powered individuals In many Asian cultures, these characteristics are
and people with little power tend to be more important. A strict top-down management
democratic, egalitarian, and informal. In Western structure allows for faster decision making, but it
cultures, people are more relaxed about social also prevents subordinates from speaking up due
status and the appearance of power. Deference is to fear or resignation, researchers say. Employee
not generally paid to individuals merely because silence can be costly.
of their wealth, position, seniority, or age.
UNIT 5: RECRUITMENT
KEY TERMS
Recruitment: the process from identifying that business needs to employ someone up to the point at
which applications have arrived at the business.
Employee selection: the process of evaluating candidates for a specific job and selecting an individual
for employment based on needs of the organization.
A job analysis: identifies and records the responsibilities and tasks relating to a job.
A job description: outlines the responsibilities and duties to be carried out by someone employed to do
a specific job.
A job specification: a document which outlines requirements, qualifications, expertise, physical
characteristics, etc for a specified job.
Internal recruitment: when a vacancy is filled by someone who is an existing employee of the
business.
External recruitment: when a vacancy is filled by someone who is not an existing employee and will
be new to the business.
Induction training: an introduction given to a new employee, explaining the business’s activities,
customs and procedures and introducing them to their fellow workers.
On-the-job training: occurs by watching a more experienced worker doing the job.
Off-the-job training: involves being trained away from the workplace, usually by specialist trainers.
Advantages of internal recruitment
-It is quicker and cheaper than external recruitment, which may involve expensive advertising.
–The person is already known to the business and their reliability, ability and potential are known.
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-The person also knows how the organization works, its structure and what is expected from its
employees.
-It can be very motivating for employees to see their fellow workers being promoted - it makes them
work harder if they consider that promotion is possible for them too.
Disadvantages of internal recruitment
-No new ideas or experience come into the business. Other companies may have different ways of
working and these ways may be better in some respects, including making the business more efficient.
Internal recruitment does not allow for these working practices to be brought into the business and this
is a major limitation when the industry is changing rapidly.
- There may be rivalry among existing employees and jealousy towards the worker who gains
promotion.
- The quality of internal candidates might be low.
The main benefits to a business of external recruitment are:
-External applicants might bring new ideas and this can improve the effectiveness and efficiency of the
business.
-There will be a wider choice of applicants with different skills and experience.
-It avoids the risk of upsetting workers when someone who is internally promoted
The limitations of external recruitment include
-It takes longer to fill the vacancy
-It is more expensive than internal recruitment because of advertising costs and the time spent
interviewing candidates.
External recruitment
► If a business decides that none of its current employees has the necessary skills or expertise to fill a
vacancy, or they want to increase the choice of candidates for a job, then they will use external
recruitment. This does not mean that current employees cannot apply for the job and might even be
successful in getting the job. Businesses that are growing rapidly, or that have a high labor turnover
will frequently use external recruitment to fill job vacancies.
The advantages of induction training are that it:
-helps new employees to settle into their job quickly
- may be a legal requirement to give health and safety training at the start of a job
- means workers are less likely to make mistakes.
The disadvantages of induction training are that it:
-is time-consuming
-means wages are paid but no work is being done by the worker
-delays the start of the employee commencing their job.
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The advantages of on-the-job training are that:
-individual tuition is given and it is in the workplace so the employee does not need to be sent away
(travel costs are expensive)
-it ensures there is some production from the worker while they are training
-it usually costs less than off-the-job training
-it is training tailored to the specific needs of the business.
The disadvantages of on-the-job training are that:
-the trainer will not be as productive as usual because they are showing the trainee what to do instead
of getting on with their job
-the trainer may have bad habits and they may pass these on to the trainee
-it may not lead to training qualifications recognised outside the business.
The advantages of off-the-job training are that:
-a broad range of skills can be taught using these techniques
- if these courses are taught in the evening after work, they are cheaper for the business because the
employee will still carry out their normal duties during the day
-the business will only need to pay for the course and it will not also lose the output of the employee
-employees may be taught a variety of skills, becoming multi-skilled, and this makes them more
versatile - they can be moved around the company when the need arises
-It often uses expert trainers who have up-to-date knowledge of business practices.
The disadvantages of off-the-job training are that:
- costs are high
-it means wages are paid but no work is being done by the worker
-the additional qualifications mean it is easier for the employee to leave and find another job.
UNIT 7: CLASSIFICATION OF BUSINESS
KEY TERMS
The primary sector of industry extracts and uses the natural resources of Earth to produce raw
materials used by other businesses.
The secondary sector of industry manufactures goods using the raw materials provided by the primary
sector.
The tertiary sector of industry provides services to consumers and other sectors of industry.
A mixed economy has both a private sector and a public state sector.
Public sector: the sector of the economy in which organizations are owned and controlled by the state
(government)
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Private sector: The sector of the economy in which organizations are owned and controlled by
individuals.
Privatization: The sale of state-owned assets such as public corporations to the private sector.
Sole trader: a business owned and operated by one person.
Limited liability: the liability of shareholders in a company is limited to only the amount they
invested.
Unlimited liability: the owners of a business can be held responsible for the debts of the business they
own. Their liability is not limited to the investment they made in the business.
Partnership: a form of business in which two or more people agree to jointly own a business.
Shareholders:the owners of a limited company. They buy shares which represent part-ownership of
the company.
Private limited companies: businesses owned by shareholders but they cannot sell shares to the
public.
Public limited companies: business owned by shareholders but they can sell shares to the public and
their shares are tradable on the Stock Exchange.
What business activities are included in the quaternary sector?
It consists of information services such as computing, ITC (information and communication
technologies), consultancy (offering advice to businesses) and R&D (research and development,
particularly in the scientific field). Broader definitions add the new media, libraries, universities and
colleges, and other intellectual activities including culture generally.
Features of business organization:
Sole trader: is the most common form because there are so few legal requirements to set it up. The
owner is the sole proprietor.
A partnership is a group or association of at least two people who agree to own and run a business
together. The partners will contribute to the capital of the business, will usually have a say in the
running of the business and will share any profits made.
Companies are jointly owned by the people who have invested in the business. These people buy shares
in the company and they are therefore called shareholders. These shareholders appoint directors to run
the business. In a private limited company, the directors are usually the most important or majority
shareholders.
Public limited company: the most suitable for very large, well-known businesses as they have been
able to raise the capital to expand nationally or even internationally.
Franchising is now an extremely widespread form of business operation. The franchisor is a business
with a product or service idea that does not want to sell to consumers directly. Instead, it appoints
franchisees to use the idea or product and sell it to the consumer. Two international examples of a
franchise are McDonald’s restaurants and The Body Shop.
A joint venture is when two businesses agree to start a new project together, sharing the capital, the
risks and the profits.
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UNIT 8: PRODUCTION
KEY TERMS
Production: the process of converting inputs such as land, labor and capital into saleable goods, for
example shoes and cell phones.
Inventories: the stock of raw materials, work-in-progress and finished goods held by a business.
Lean production: the production of goods and services with the minimum waste of resources.
Job production: the production of items one at a time.
Batch production: the production of goods in batches. Each batch passes through one stage of
production before moving onto the next page.
Flow production: the production of every large quantity of identical goods using a continuously
moving process.
Just-in-time (JIT): is a production method that involves reducing or virtually eliminating the need to
hold inventories of raw materials or unsold inventories of the finished product.
What are the benefits and limitations of different production methods?
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UNIT 9: LOGISTICS
KEY TERMS
Logistics: the marketing activity that involves planning, implementing, and controlling the physical
flow of materials, final goods, and related information from points of origin to points of consumption to
meet customer requirements at a profit.
Inbound logistics: the area of logistics that involves bringing raw materials, packing, other goods and
services, and information from suppliers to producers.
Materials handling: the movement of goods within a warehouse, from warehouses to the factory floor,
and from the factory floor to various workstations.
Outbound logistics: the area of logistics that involves managing the flow of finished products and
information to business buyers and ultimate consumers.
Reverse logistics: the area of logistics that involves bringing goods back to the manufacturers because
of defects or for recycling.
Supply chain: A network of facilities that performs the function of procurement of materials,
transformation of these materials into finished products, and the distribution of these products to
customers.
Logistic management: That part of supply chain management, which plans, implements, and controls
the flow and storage of goods between the point of origin and the point of consumption.
UNIT 10: QUALITY
KEY TERMS
Quality: to produce a good or a service which meets customers expectations.
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