Foundations of Business Management in South Africa - Chapter 9: Attracting and Retaining the Best Employees - PDF

# Foundations of Business Management in South Africa ## Chapter 9: Attracting and Retaining the Best Employees ### Cultural Diversity in Human Resources - Today's workforce is highly diverse, with employees bringing various beliefs, expectations, and behavioral norms to the workplace. - Manag...

# Foundations of Business Management in South Africa ## Chapter 9: Attracting and Retaining the Best Employees ### Cultural Diversity in Human Resources - Today's workforce is highly diverse, with employees bringing various beliefs, expectations, and behavioral norms to the workplace. - Managers must be aware of these differences. - Examples: European business people may offer a kiss on the cheek as a greeting; Latin Americans tend to stand closer to people they are talking to than North Americans prefer. - **Cultural (or workplace) diversity** - differences among people in a workforce owing to race, ethnicity, and gender. - Although cultural diversity presents a challenge, managers should view it as an opportunity rather than a limitation. ### Table 9-1: Advantages of Cultural Diversity | Economic Measure | Description | |---|---| | Cost | The cost of poorly integrating workers increases with diversity. However, companies that handle diversity well can create cost advantages over those that do a poor job. Companies can also reduce costs by hiring culturally sensitive and trained workers. | | Resource Acquisition | Companies develop reputations as being favorable or unfavorable employers for women and ethnic minorities. Those with the best reputations will attract and retain the best personnel. | | Marketing Edge | For multinational organizations, the insight and cultural sensitivity that come from an international perspective should improve marketing efforts. The same rationale applies to marketing subpopulations domestically. | | Flexibility | Culturally diverse employees often are open to a wider array of positions within a company and are more likely to move up the corporate ladder rapidly. | | Creativity | Diversity of perspectives and less emphasis on conformity to norms of the past should improve the level of creativity. | | Problem Solving | Differences within decision-making and problem-solving groups potentially produce better decisions through a wider range of perspectives and more thorough critical analysis of issues. | | Bilingual Skills | Cultural diversity in the workplace is valuable in the global marketplace. Employees with knowledge about another country and who can communicate in that language can prevent embarrassing mistakes due to a lack of cultural sophistication. Thus, many companies seek job applicants with a background in cultures in which the company does business. | ## The Legal Environment of HRM ### Constitution of the Republic of South Africa: 1. All South Africans have the right to fair labor practices. 2. All workers have the right to form, join, and participate in trade unions and strike. 3. All employers have the right to form, join, and participate in employers' organizations. 4. All trade unions and employers' organizations have the right to organize. 5. All trade unions, employers' organizations and employers have the right to participate in collective bargaining. ## Common Evaluation Techniques ### Objective Methods: - Objective ​appraisal methods use some measurable quantity as the basis for assessing performance. - Examples: units of output, volume of sales, and number of defective products. ### Judgemental Methods: - Judgemental appraisal methods require that the manager judge or estimate the employee's performance level. - These methods are based on employee ranking or rating scales. - When ranking is used, the manager ranks subordinates from best to worst. - A rating scale consists of several statements, on which each employee is rated based on the degree to which the statement applies. ### Avoiding Appraisal Errors: - Managers must be cautious and avoid making mistakes when appraising employees. - Overusing one portion of an evaluation instrument is common, thus risking overemphasizing or underemphasizing issues. - A manager must guard against allowing an employee's poor performance on one activity to influence his or her judgement of that subordinate's work on other activities. - A manager must also guard against discrimination based on race, age, gender, religion, national origin, or sexual orientation. ## Chapter 10: Motivating and Satisfying employees and Teams ### Herzberg's Motivation-Hygiene Theory - **Motivation-Hygiene theory** - The idea that satisfaction and dissatisfaction are separate and distinct dimensions. - **Motivation factors** - Job factors that increase motivation, although their absence does not necessarily result in dissatisfaction. - When motivation factors are present, they act as satisfiers. - **Hygiene factors** - Job factors that reduce dissatisfaction when present to an acceptable degree, but that do not necessarily result in high levels of motivation. - When hygiene factors are absent, they act as dissatisfiers. ### What is a Team and Types of Teams? - **Team** - Two or more workers operating as a coordinated unit to accomplish a specific task or goal. - **Problem-solving team** - A team of knowledgeable employees brought together to tackle a specific problem. - **Self-managed teams** - Groups of employees with the authority and skills to manage themselves. - **Cross-functional team** - A team of individuals with varying specialities, expertise, and skills that are brought together to achieve a common task. - **Virtual team** - A team consisting of members who are geographically dispersed but communicate electronically. ### Roles Within a Team - **Task-Specialist role** - Played by the group member who pushes the team towards achieving goals and objectives by concentrating fully on the assigned task. - **Socioemotional role** - Played by the individual who supports and encourages the emotional needs of the other members, placing the team members' personal needs above the task at hand. - **Dual role** - A combination of the socioemotional and task-specialist roles. - **Non-Participant role** - Played by a person who does not contribute to accomplishing the task and does not provide favorable input concerning team members' socioemotional needs. ## Chapter 11: Building Customer Relationships Through Effective Marketing ### Table 11-1: Eight Major Marketing Functions | Function | Description | |---|---| | **Exchange Functions** | All companies-manufacturers, wholesalers, and retailers - buy and sell to market their merchandise. | | 1. Buying | Includes obtaining raw materials to make products, knowing how much merchandise to keep on hand, and selecting suppliers. | | 2. Selling | Creates possession utility by transferring the title of a product from seller to customer. | | **Physical Distribution Functions** | These functions involve the flow of goods from producers to customers. | | 3. Transporting| Involves selecting a mode of transport that provides an acceptable delivery schedule at an acceptable price. | | 4. Storing | Goods is often necessary to sell them at the best selling time. | | **Facilitating Functions** | These functions help the other functions to take place. | | 5. Financing | Helps at all stages of marketing. To buy raw materials, manufacturers often borrow from banks or receive credit from suppliers. Wholesalers may be financed by manufacturers, and retailers may receive financing from the wholesaler or manufacturer. Finally, retailers often provide financing to customers. | | 6. Standardization | Sets uniform specifications for products or services. Grading classifies products by size and quality, usually through a sorting process. Together, standardization and grading facilitate production, transportation, storage, and selling. | | 7. Risk Taking | Even though competent management and insurance can minimize risks, it is a constant reality of marketing because of such losses as bad debt expense, obsolescence of products, theft by employees and product liability lawsuits. | | 8. Gathering Market Information | Is necessary for making all marketing decisions. | ### Utility: The Value Added by Marketing - **Utility** - The ability of a good or service to satisfy a human need. - There are four kinds of utility: 1. **Form utility** - Utility created by converting production inputs into finished products - for example, conversion of raw materials into a phone. 2. **Place utility** - Utility created by making a product available at a location where customers wish to purchase it. - Example: A pair of shoes shipped from a factory to a department store. 3. **Time utility** - Utility created by making a product available when customers wish to purchase it. - Example: Christmas decorations that are manufactured in April, but not displayed until October when consumers start buying them. 4. **Possession utility** - Utility created by transferring title (or ownership) of a product to a buyer - e.g., new car. ## Chapter 12: Creating and Pricing Products That Satisfy Customers ### Classification of Products - Products can be grouped into two general categories: 1. **Consumer product** - A product purchased to satisfy personal and family needs. 2. **Business product** - A product bought for resale, for making other products, or for use in a business's operations. ### Consumer Product Classifications - Three categories of consumer products: 1. **Convenience product** - A relatively inexpensive, frequently purchased item for which buyers want to exert only minimal effort. - Examples: bread, petrol, newspapers. 2. **Shopping product** - An item for which buyers are willing to expend considerable effort in planning and making the purchase. - Examples: appliances, bicycles, mobile phones. 3. **Specialty product** - An item that possesses one or more unique characteristics for which a significant group of buyers is willing to expend considerable purchasing effort. - Examples: sports cars, original artwork. ### Business Product Classifications - Categories of business products: - **Raw material** - A basic material that becomes part of a physical product; usually comes from mines, forests, oceans, or recycled solid wastes. - **Major equipment** - Large tools and machines used for production purposes. - Examples: cranes, stamping machines. - **Accessory Equipment** - Standardized equipment used in a business's production or office activities. - Examples: hand tools, scanners, calculators. - **Component part** - An item that becomes part of a physical product and is either a finished item ready for assembly or a product that needs little processing before assembly. - Examples: tires, computer chips. - **Process material** - A material that is used directly in the production of another product, but is not readily identifiable in the finished product. - Examples: industrial glue, food preservatives. - **Supply** - An item that facilitates production an operations, but does not become part of a finished product. - Examples: paper, pencils. - **Business service** - An intangible product that an organization uses in its operations. - Examples: financial services, legal services. ## Chapter 13: Distributing and Promoting Products ### Physical Distribution - **Physical distribution** - All those activities concerned with the efficient movement of products from the producer to the ultimate user. - It combines several interrelated business functions, the most important of which are: - Inventory management - Order processing - Warehousing - Materials handling - Transportation ### Inventory Management - **Inventory management** - The process of managing inventories in such a way as to minimize inventory costs, including both holding costs and potential stockout costs. - **Holding costs** - The expenses of storing products until they are purchased or shipped to customers. - Include: - The money invested in inventory. - The cost of storage space. - Insurance costs. - Inventory taxes. - **Stockout costs** - Sales lost when items are not in inventory. ### Order Processing - **Order processing** - Activities involved in receiving and filling customers' purchase orders. ### Warehousing - **Warehousing** - The set of activities involved in receiving and storing goods, and preparing them for reshipment. - Warehousing includes the following activities: - Receiving goods - Identifying goods - Sorting goods - Dispatching goods to storage - Holding goods - Recalling, picking and assembling goods - Dispatching shipments ### Materials Handling - **Materials handling** - The physical handling of goods, in warehouses as well as during transportation - **Unit Loading** - A method of materials handling in which several smaller cartons, barrels, or boxes are combined into a single standard-size load that can be moved efficiently by forklift, conveyer, or truck. ### Transportation - **Transportation** - The shipment of products to customers. - **Carrier** - A business that offers transportation services. - **Types of carriers:** - **Common Carrier** - A transportation business whose services are available to all shippers. - Examples: railroads, airlines. - **Contract Carrier** - Do not serve the general public and the number of businesses they can handle at a time is limited by law. - **Private carrier** - Owned and operated by the shipper. ### Types of Advertising by Purpose - **Primary-demand advertising** - Advertising whose purpose is to increase the demand for all brands of a product within a specific industry. - Example: The South African Sugar Association. -**Selective-demand (or brand) advertising** - Advertising that is used to sell a particular brand of product. - It is by far the most common type of advertising, and it accounts for the majority of advertising expenditures. - **Institutional advertising** - Advertising designed to enhance a business's image or reputation. - Example: Telkom sponsored the South African Olympic team in 2016 and ran advertisements. ### Major Steps in Developing an Advertising Campaign 1. Identify and analyse the target audience 2. Define the advertising objectives 3. Create the advertising platform - An advertising platform includes the important selling points or features that an advertiser will incorporate into the advertising campaign. 4. Determine the advertising appropriation. - The advertising appropriation is the total amount of money designated for advertising in a given period. 5. Develop the media plan. - A media plan outlines an advertisement timetable and which media will be used. 6. Create the advertising message 7. Execute the campaign 8. Evaluate advertising effectiveness ## Chapter 14: Exploring Social Media and e-Business ### Photos, Videos, and Podcasts - **Media sharing sites** - Allow users to upload photos, videos, and podcasts. - **Photo sharing** - Provides a method for a company to tell a compelling story about its products or services through postings on either the company's website or a social media site. - Example: Cape Union Mart posts photos of the latest fashions on its Facebook page. - **Videos** - Can tell stories. - Example: Mr Price Home posts do-it-yourself décor videos on its YouTube channel. - **Podcasts** - Digital audio or video files that people listen to or watch online on tablets, computers, smartphones, or other mobile devices. - Podcasts offer the convenience of being available for download at any time. ### Measuring and Adapting a Social Media Plan (slide 1 of 2) - **Quantitative social media measurement** - Using numerical measurements, such as counting the number of website visitors, number of fans and followers, number of leads generated, and the number of new customers. - **Key performance indicators (KPIs)** - Measurements that define and measure the progress of an organization towards achieving its objectives. ### Measuring and Adapting a Social Media Plan (slide 2 of 2) - **Qualitative social media measurement** - The process of accessing the opinions and beliefs about a brand that primarily uses sentiment analysis to categorize what is being said about a company. - **Sentiment analysis** - A measurement that uses technology to detect the mood, attitudes, or emotions of people who experience a social media activity. ### Defining E-Business - **E-business (electronic business)** - The organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs through the facilities available on the internet (all bus activities and services conducted using the web). - Not to be confused with e-commerce - buying and selling activities conducted online (online transactions ONLY). - **Mobile marketing** - Communicating with and selling to customers through mobile devices. - Many companies have apps to make mobile transactions faster and more convenient for customers. - Example: Starbucks offers an easy-to-use app for customers to pay for their lattes or espressos directly from a smartphone or tablet. -While all businesses use four resources (human, material, informational, and financial), these resources are typically more specialized when used in an e-business. ### Organizing e-Business Resources - E-business resources may be more specialized than in a typical business. - Many businesses have turned to outsourcing to reduce the cost of specialized resources used in e-business. - **Outsourcing** - The process of finding outside vendors and suppliers that provide professional help, parts, or materials at a lower cost. ## Chapter 15: Using Management and Accounting Information ### What is a Management Information System? - **Management information system (MIS)** - A system that provides managers and employees with the information they need to perform their jobs as effectively as possible. - The purpose of an MIS is to distribute timely and useful information from internal and external sources to the managers and employees who need it. ### A Business's Information Requirements (slide 1 of 2) - Many businesses are organized into five areas of management: - Finance - Operations - Marketing - Human Resources - Administration ### Every MIS Must be Tailored to the Organization it Serves and Must Perform Five Functions: 1. Collects Data 2. Stores Data 3. Updates Data 4. Processes Data into Information 5. Presents Information to Users ## Chapter 16: Mastering Financial Management ### The Need for Financial Management - **Financial management** - All the activities concerned with obtaining money and using it effectively. - Proper financial management must ensure that: - Funds are available when needed now and in the future, obtained at the lowest possible cost, and used as efficiently as possible. - Financing priorities are established in line with organizational goals and objectives. - Spending is planned and controlled. - A business's credit customers pay their bills on time, and the number of past due accounts is reduced. - Bills are paid promptly to protect the business's credit rating and its ability to borrow money. - The funds required to pay the business's taxes are available to meet tax deadlines. - Excess cash is invested in conservative, marketable securities. ### Careers in Finance - Typical job titles in finance include: - Chief financial officer - Financial manager - Consumer credit officer - Financial analyst - Financial planner - Insurance analyst - Investment account executive - Managers and employees in the finance area must: - Be honest - Have a strong background in finance, accounting, or mathematics. - Know how to use a computer to analyze data. - Be an expert at both written and oral communication. ### Sources of Unsecured Short-Term Financing (slide 2 of 3) - **Trade credit** - A type of short-term financing extended by a seller who does not require immediate payment after delivery of merchandise. - It is the most popular form of short-term financing because most manufacturers and wholesalers do not charge interest for trade credit. - **Promissory note** - A written pledge by a borrower to pay a certain sum of money to a creditor at a specified future date. - Promissory notes usually require the borrower to pay interest. - A promissory note offers two important advantages to the business extending the credit: 1. A promissory note is legally binding and an enforceable contract. 2. A promissory note is a negotiable instrument. ### Venture Capital, Angel Investors, and Private Placements (slide 1 of 2) - **Venture capital** - Money invested in small (and sometimes struggling) businesses that have the potential to become very successful. - Generally, a venture capital firm consists of a pool of investors, a partnership established by a wealthy family, or companies with money to invest. - In return for financing, these investors generally receive an equity or ownership position in the business and share in its profits. ### Venture Capital, Angel Investors, and Private Placements (slide 2 of 2) - **Angel investor** - An investor who provides financial backing for small business startups or entrepreneurs. - Unlike venture capitalists, angel investors are often focused on helping a business or an entrepreneur succeed rather than earning huge profits. - Angel investors often provide more favorable financial terms when compared with venture capitalists and financial institutions. - **Private Placement** - Occurs when stock and other corporate securities are sold directly to insurance companies, pension funds, large institutional investors, or mutual funds. ### Corporate Bonds (slide 1 of 3) - **Corporate bond** - A company's written pledge that it will repay a specified amount of money with interest. - Interest rates for corporate bonds vary with the financial health of the company issuing the bond. - Specific factors that increase or decrease the interest rate that a company must pay when it issues bonds include: - The company's ability to pay interest each year until maturity. - The company's ability to repay the bond at maturity. - Most corporate bonds are registered bonds. - **Registered bond** - A bond registered in the owner's name by the issuing company. - **Maturity date** - The date on which a corporation is to repay borrowed money.