Stakeholders of Business Organisation

Stakeholder simply means people who have interest in an organization and people whom without their support the organization cease to exist as it is very important to note that organization by definition means a social arrangement of a group of people coming together to pursue collective goal and control their own performance with boundary separating them from external environment. However in this blog, we would not dwell on the idea of organization too much but rather just use whatever we learn to explain what stakeholder is about.

Before we dwell into the details, let us now see the different catgory of stakeholder in a business organization.
1.External stakeholder
2.Connected stakeholder
3.Internal stakeholder

Now to explain it in my own understanding, external stakeholder means people who have the least but NOT no interest in the organization. Eg. tax authority, public, pressure group. While these people may affect the decision making of the company, their influence over the decision making process is very much limited and are likely to have diverse objectives. These are people that the organization must be aware about but just take them lightly provided they(pressure groups,NGO) joint forces and come together to make a statement should then the organization take heed of them. Connected stakeholders such as customer, suppliers, bankers and shareholders whom are people with fair amount of interest in the organization and that the organization should be fully aware of their desire and opinion about the organization as they pose direct influence in the decision making process of the organization but only short of being in control in the running and actual decision making process of the organization. Lastly internal organization who have direct interest and whose action can directly affect the organization in strategic planning as well as operational part of the organization. Another way of looking at categorizing stakeholder is to split them into primary and secondary stakeholder where primary stakeholder are internal and connected stakeholders while secondary stakeholders are external stakeholder. I will not be dealing further into the examples of various group of stakeholders according to their category as it is found in the textbook but just to summarise this part is that stakeholders are categorized in accordance with their degree of interest which leads to the degree of influence over a business organization.

Now that i'm done with the part above, lets deal with stakeholder conflict. Well the world isnt perfect and not everyone is satisfied. But priority setting comes into the picture based on Mendelow who suggest that stakeholders may be positioned on a matrix as shown in BPP textbook page 80. To make thing easier to understand rather than figuring out the matrix,just remember that by deriving Mendelow's statement, they are four groups of stakeholder (not to be mistaken with the above part as we are deriving Mendelow statement) which are mainly:
1.Key player group
2.Kept satisfied group
3.Kept informed group
4. Unimportant group.
Pls take note that these arent official term but can be found in BPP textbook


Key player group like large customer are likely to affect the decision making process which ultimately affect the direction of the organization. kept satisfied group are people who are to be treated with care and their degree of interest and influence are just one step below the key player group. Kept informed group are people who are unlikely to affect the strategy of organization but whose view are still quite important as it will affect the other stakeholders while lastly the unimportant group are stakeholders who can be ignored or minimal effort required to satisfy them . It is important to note that as time goes by and strategy changes, the stakeholder categorized by the 4 main parts can change as it is fluid. However each group has three choices which are loyalty to the organization, exiting from the organization or voicing out opinion. Ultimately the stakeholders can affect the location, channel of info, limitation of choices, embodiment of culture, determination of successful implementation of the strategy of the organization and affect the degree of reliance of the organization on various group of stakeholders.

The interaction between different stakeholders and how conflict arises may be visualized through 4 main groups
1. Employer and employee
2.Customer and shareholder
3.Manager and shareholder
4.General Public and shareholder.

Employer may have conflicting interest with employee because the employer demand much from the employee without having to give too much incentives while the employee would expect otherwise
Customer would have conflicting interest with the shareholder because they want product with the best economic value while shareholder wants to maximise profit and revenue from product sold
Manager may have conflicting interest with the shareholder because they may want to do things their way and to enjoy certain degree of autonomy away from the influence of the shareholder while the shareholder only wants result (return over capital investment) and may intervene in managerial activity to increase control causing displeasure to the management team
General public have certain expectation of organization fulfilling their corporate responsibility while shareholders put great emphasis on generation of revenue and little emphasis on corporate responsibility which may cause the reduction in profit of organization and ultimately less return on their capital investment.

In conclusion, there should be a right balance between different group of stakeholders .
(article done by Harry Chew)

Chapter 3: Organisational Culture in Business

- In this chapter, we'll learn about 3 main subtopic which is the general understanding of organisational culture, factors that form up the culture of a organisation, and then we'll study more specifically about the research made by scholars and writers on culture.

- Firstly, culture can be understands as the collective programming of mind, a fixed and unique way of thinking. It is an unseen habit, shared by a group of people.

- As for organisational culture, it is the shared beliefs, habits, ways of doing certain task, and attitudes that shape the norms of a organisation.

- So what forms up the culture of a organisation? The few determinants of culture includes history, size(big size firm usually do things in a very formal way, and vice versa), purpose(profit-oriented firm will focus on more results, and vice versa), technology, leaders and owners(founder will run the business based on his habit, which will becomes the culture of the company afterward), operating environment, and location.

- Edgar Schein agrees that the leaders of a company or firm plays an important role in forming a organisation's culture, but he describes these determinants in a detailed way by dividing it into 3 levels that exist within an organisation's culture.

- The first level: The observable. Which divides into behavior(norms of personal), artefacts(interior design and architecture), and attitude(patterns of collective behavior).

- Another aspect that we must understand is the espoused value/express value, it is basically known as choose-to-follow value, which is also the values that follow the artefacts. It generally describe the meaning to the artefacts(the reason behind the interior design/pattern of the firm).

-Next, we came to the second level, the values and beliefs, which decides the behaviors and attitudes, or rather, the culture of the firm.

- The third level, assumptions, that lies beneath the second level, values and beliefs. It is the foundation ideas(unspoken rules) that is recognised and accepted by the culture, which controls the ways of thinking and behaving of a organisation.

-According to Schein, the easy way to distinguish the first and the two other level is that the first level is the 'explicit' element of the culture while both second and third level cannot be seen and exist at an unconscious level.

- Charles Handy in his book "Gods on Management" suggested that organisations could be categorized into four types, each differentiated by their structures, processes and management methods.

- Power Culture, which represented by the Greek god Zeus. For this type of culture, their source of power is from one individual, either the founder or the owner himself. Organisations that adopt this culture usually do not do things in a very formal way, and the decision making of the company are usually centralised. Power culture are also known as club culture.- Zeus, the head of all gods, or rather known by the god of thunder.


- Apollo is the god of the Role Culture. These organisations are dominated by rules and procedures and they do things in very formal way. And another important thing that we must know is that, the role culture organisations are always efficient in stable and predictable environments. Generally, Role Culture and bureaucracy are alike.- Apollo, the god of harmony and order, also the god of music and light.


- Athena is the goddess of the Task Culture. Similar to the concept of matrix structure in a organisation, Task Culture is a project based culture and their performance is often judge by results.- Athena the warrior goddess.


- Person Culture, or Existential is shaped by the interests of individuals. Unlike the three other culture, this culture serve the interests of the individuals within it and put them as the top priority. The Greek God of Person Culture is Dionysus.


- Dionysus, the god of fertility and wine.


- Hofstede came up with five cultural dimensions of international perspectives on organisation culture based on his study of IBM employees across the world.

- Individualism vs. Collectivism. Individualism are also known as high individualism and it focus on doing work individually(alone, without the necessary of cooperation with others), vice versa, the collectivism, which also can be called low individualism are more cohesive compared to high individualism.

- Masculinity vs. Femininity. Masculine values of assertiveness, decisiveness and material success are dominant. While Feminine values of modesty, tenderness, consensus, focus on relationships and quality of working life are less highly regarded, and confined to women. Femininity or low masculinity minimise gender roles.

- Confucianism vs. Dynamism. Confucianism culture emphasize the harmony and tolerance that exist within the organisation while dynamism are a kind of result-oriented culture.

- Power Distance refers to the equality of power in society. High power distance accepts greater centralisation and vice versa.

- Uncertainty Avoidance is the extent which security, order and control are preferred to uncertainty and change. High Uncertainty Avoidance respects control, certainty and ritual, they have greater tolerance for ambiguity and uncertainty. While low Uncertainty Avoidance have respect flexibility and creativity.

- There goes the understanding of H&P of ACCA F1 Chapter 3. Thx for reading n hope u enjoy it. =)

Formal n Informal Organization

Formal Organization

 

A formal organization is an organization that has a fixed set of rules where every worker knows exactly they are supposed to do in order to achieve the goals and objectives of the organization. The word formal describes that the organization has a well organized structure. A formal organization ensures that the rules and regulations are well defined so that individuals follow accordingly. It informs individuals of their tasks in brief and also makes sure that the individuals realise their boundaries. Most importantly, the main purpose of a formal organization is to ensure their workers are being monitored strictly so that they are able to concentrate on their work and make sure they coordinate well with other employees so that they are able to achieve the goals and objectives of the organization.

 

 

Reasons for the existence of the formal organization:

 

• In a formal organization an individual is briefed on exactly what he/she is supposed to do. This helps both the individual as well as the organization because since an individual's main objective is to achieve his/her goals it also makes it easier for the organization to accomplish its goals.
  
• The role of each worker, the responsibility of doing a task and the accountability of the workers in the organization is well defined. Hence this not only makes it easier for the employees to coordinate with each other but helps them coordinate effectively in different activities of the organization.
  
• A formal organization allows workers to specialise in what they do best. This helps in job satisfaction as the worker likes his work and knows what he is doing than and therefore specialisation may prevent inefficiency by a worker who does not specialise in what he does.
  
• A formal organization creates group cohesiveness which is the force of bringing group members close together.
  

 

 

Overall a formal organization is an organization that has a fixed set of rules or more like formal rules which workers have to follow so that they are able to ensure that an organizations goals and objectives are accomplished. But these formal rules tend to deviate and become more personal for example an individual will start and concentrate in achieving his/her own goals or have a different desire or even maybe behave in a not so organized way. Therefore this changes from formal to informal, so basically there is an informal organization in every formal organization. Formal organizations are typically understood to be systems of coordinated and controlled activities that arise when work is embedded in complex networks of technical relations and boundary-spanning exchanges

 

    
 

 

 

Informal Organization

 

An informal organization exists because it interconnects or unites the relationship or bond between groups of individuals, which means that group members interact with each other and discuss about matters other than work. For example a worker who is a Chelsea fan may discuss about a match with a co-worker who is also a Chelsea fan. This basically has nothing to do with work but enables workers to create a friendly environment and this interaction can help improve coordination and communication within workers. An informal organization has no proper structure or a fixed set of rules. It is something that is not planned but develops randomly. It exists alongside a formal organization but since it's informal it mainly develops due to personal relationships, social networks, and common interest. An informal organization also helps boost the motivation levels of workers. For example a worker might be really bored or stressed with work and a small break which involves the interaction between a co-worker about their common interests may actually relieve the stress of the worker and may even take away the boredom which enables a worker to get back to his with a fresh start.

 

 

The positive impact of the informal organisation on the business

 

• Complements the formal organization
  

  Formal plans, policies, procedures, and standards cannot solve every problem in a dynamic organization; therefore, informal systems must blend with formal ones to get work done. Informal relations in the organization prevent the organization from the self-destruction that would result from literal obedience to the formal rules, regulations, and procedures. No business organization could function merely by everyone following the "letter of the law" with respect to written rules and procedures. Faculty, staff, and informal groups must cooperate in abiding the law, to effectuate an organized, sensibly run enterprise.
  

• Speeding up processes
  

  Managers are less concerned on checking on workers when they know the informal organization is cooperating with them. This encourages delegation, decentralization, and greater worker support of the manager, which suggests a probable improvement in performance and overall productivity. When a manager acknowledges that workers are conscientiously working on their group projects, there are likely to be fewer tests and prompt checks on workers as to how they are doing their jobs. This eases the manager load and saves time on occasional checks which might even distract the workers confidence and rather promotes a better relation-ship between both parties.
  

• Improves communication among members
  

  The informal group develops a communication channel or system (i.e., grapevine) to keep its members informed about what management actions will affect them in various ways. This also allows workers to interact with each other which will help in revealing themselves and rather feeling more comfortable. This also encourages workers to step forward in giving ideas which might benefit the management in ways they are not aware of.
  

 

 

 

 

The negative impact of informal organisation:

 

• Rumours
  

  The grapevine dispenses truth and rumor with equal vengeance. Ill-informed employees communicate unverified and untrue information that can create a devastating effect on employees. This can undermine morale, establish bad attitudes, and often result in deviant or, even violent behavior.
  

• May cause Inefficiency
  

• Resistance to change
  

  Perpetuation of values and lifestyle causes informal groups to become overly protective of their "culture" and therefore resist change.
  

Span of control and Scalar Chain

What is Span of control and Scalar Chain?

Through my understanding, a span of control is the number to worker who report directly to a manager. The more workers under one manager, the wider the span of control. A wider span of control therefore forms a FLAT organisation. We will discuss more about FLAT organization later

Scalar Chain is the number of level of the management, for example the first level on the management is director, then manager, assistant manager, then only junior worker. the example has 4 level in the scalar chain

Tall and Flat organisation

A tall organisation has many level of management. The chart below shows the tall organisation structure. It has a narrow span of control.

We can see that, each leader only has one staff under him, the order can be directly send directly throughout the level. The staff will has incentive to work hard since there is less competition among themselves to get promotion, but it may also happen in opposite way. A tall organization may cause inefficiency when the works pass through too may hands.

A flat organisation

This type of organization structure is the opposite tall organization, it has wider span of control just like the chart below

There is less level of management in this structure. The cost involve in administration is low. Worker in this organisation may have closer relationship with their superior. The top level management may able to know bottom level staff well, and assign them to the task which is best for the staff.

Centralisation and decentralisation

What is Centralisation?

In the class, Mr Bill had used a good example to explain about what is centralisation. He used a kid n his parent as a example. When the kid goes for outting, he has to report everything to his parent. Every time he goes out, he must be back home before 11pm, if not he will be punished. The control of parent over their son is call centralisation. In a centralised organisation, the upper level of an organisation is just like the parent for the kid, the lower level just like the son, they have little chance to make their own decision.

Decentralisation is totally different from centralisation. We can use PARENT AND SON example also but in the other way round. The lower levels of an organisation have more chances to make their own decision just like the parent give more freedom to their son.

Types Of Organisation Structure

Different organizations will have different structures. For example most organisations will have a marketing department responsible for market research and marketing planning. A customer services department will look after customer requirements. A human resources department will be responsible for recruitment and selection of new employees, employee motivation and a range of other people focused activities. In addition there will be a number of cross-functional areas such as administration and Information Technology departments that service the functional areas of the company. These departments will provide back up support and training.

Organizations are structured in different ways:

1. by function
2. by regional area

3. by product e.g. marketing manager crisps, marketing manager drinks

Different Types of Organisation Structure

Entrepreneurial Structure

· This structure is usually for the small business. The owner is the manager and the decision maker. The owner has control over all the aspects of the business and its employees.

FUNTIONAL STRUCTURE

Department in this organisation will be grouped by their function, for example production, sales, marketing, finance and so on.

Employees within the functional divisions of an organization tend to perform a specialized set of tasks, for instance the engineering department would be staffed only with engineers. This leads to operational efficiencies within that group. However it could also lead to a lack of communication between the functional groups within an organization, making the organization slow and inflexible.

Product/Divisional/Departmental Structure

In this structure, it divided the organization according to the type of work, region, product and so on. Large organization may break down into Rail, water, road and building division

For example each division has a general manager which have below them an entirely separate management structure for production, accounting, human resources and marketing. One general manager exists for Proton cars and another for Proton heavy vehicles, for example. Therefore people are grouped into separate self-contained divisions.

Matrix Structure

In this structure, professionals with a variety expertise are brought together to work on a projects. They report to a number of managers of different projects. It is to share knowledge and personnel to maximize effectiveness.

This type of structure help to decrease the number of people need to be hired since workers are shared between different projects. Time can be saved as those workers share information as they work on different projects. Theoretically, this results in a better product at a lower cost.

Since professionals work on more than one project at a time, they can keep each other informed about progress in other areas of the company. Company will become stronger when different department are working against each other

There are also limitations for this structure.

In-fighting can occur as managers compete for the time and attention of workers that they share.

If a Matrix Structure gets too big, it can be difficult to manage effectively.

Compare to the functional managers, project manager in Matrix Structure may have limited power on the project itself only, whereas the functional manager control over their resources and project areas too. Below is the Matrix Structure chart.

Let take some example to have a clearly understand on Matrix Structure. An employee in marketing department has assigned to product Y. Now he has to report to his product manager and his department manager also.

What is Organizational Structure?

By definition, an organizational structure is a mainly hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim.

An organisation can be structured into many different ways and styles, depending on the goal and objective such as matrix structure, entrepreneurial structure, functional structure and so on. We will discuss the different types of organisation structure later on.

Why does an organisation need a structure?

As we discuss in the class with Mr Bill, I managed to understand why an organisation need a structure.

By my understanding, an organisation structure allocates of responsibilities for different functions and processes to different entities such as the branch, department, workgroup and individual. It help individual cooperate systematically to achieve their objective or goal.

Besides that, an effective organizational structure help facilitate working relationships between various entities in the organization and may improve the working efficiency within the organizational units.

Every organisation made up of more than one person will need some form of organisational structure. An organisational structure shows the way in which the chain of command works within the organisation. For example:

n The Managing Director has the major responsibility for running of the company, including setting company targets and keeping an eye on all departments.

n The Distribution Manager is responsible for controlling the movement of goods in and out of the warehouse, supervising drivers and overseeing the transport of goods to and from the firm.

n The Production Manager is responsible for keeping a continuous supply of work flowing to all production staff and also for organizing manpower to meet the customers' orders.

The chart below is the organization chart for the SUNWAY COLLEGE

-#1.5: Marketing-

-pls refer to previous post for the understanding different department and their function.
- previous post:
#1.1 - R&D Department
#1.2 - Purchasing Department
#1.3 - Production Department
#1.4 - Service Operations


-Marketing-
- Gotta save the best for the last, marketing is another function that we always get to see in our life. To get to the concept of marketing quickly, we should really take a overall look at how to understand it steps by steps.

- The marketing activities can be grouped broadly into four roles: Sales support, Marketing communications, Operational marketing, and Strategic marketing. Each emphasis on different role with different aspect, function, and different respond.

- The operational marketing role will be performed by a marketing function in a business, some instance will be like: Research and analysis, Contribution to strategy n marketing planning, managing brands, implementing marketing programmes, measuring effectiveness, and managing marketing teams.

- Well, for ACCA student, it is very important for us to know that there is a very close relationship between marketing and strategic management. First, the marketing audit will apply strategic control by analyse the the market's strength, weakness, and its external environment, this will aid to marketing planning, in which will help much in the Corporate strategic plans as a guidance to the overall development of an organisation.

- The corporate planning process actually depends much on the marketing department, this is why the marketing audit takes on a very important aspect of marketing control, in which the marketing plan is always concerned uniquely with products and markets.

- And also, there are four types of marketing orientation towards the customer, which is: Production orientation(demand always exceeds supply because customer will buy whatever the organisation produce), Product orientation(which is a variant of production orientation, as the firms only needs to add more features to the product for the demand to increase), Sales orientation(Product that must be sold actively and aggressively to persuade the customer to buy them, a very typical example of this would be of course, credit card~), and lastly, Marketing orientation(Which focus on a targeted market and try to satisfy its customer, in this case, it is different than production orientation because research need to be done in order to adapt the organisation to the needs and wants of the market.).

- When organisational capacity meets customer requirements, the balance can be achieve by deciding on a best, or rather, optimum marketing mix. The variables that determine the marketing mix are known as the 4Ps: Product, Place, Price, and Promotion. Of course, the ideal marketing mix will always be the one that holds a proper balance between each of these elements.

- Talking about the product, first we need to understands that product actually refers to BOTH product and service, and its usually grouped into two, core product(the product's essential and initial features) and augmentations(additional benefits). The product issue may include: Design(size and shape), features, quality and reliability, packaging, safety, ecological friendliness, image, and function.

- Place, which covers two main issues: Outlets, and Logistics. Outlets are the place where the products are sold, for example in shops or grocery store. Logistics is the management of to warehouses, storage and transportation.
So why does place takes on a very important role in marketing mix? We learn bout Product, production, and how the implication of the marketing orientation is affected by the different product and service. Well now, even if you... Yes, I mean YOU, who is reading this IS(might be) a vegetarian, do tell me, is there anyone who is not familiar with this famous fast food restaurant: McDonald's? This is why place plays such an important role, McDonald's itself has its franchises all around the world(122 country with more than 63,000 outlets world wide.) which includes.... well, tell me which country that doesn't have McDonald's outlet and I'll give you the credit for it. :D

- [McDonald's. "Bala Bap Baa Baa I m lovin' it." For those who can sing that, you're probably a 'victim' of their advertising 'trick.' Don't deny it pls.. :P]


- Price, price for the organisation, is a weapon agaisnt competitors. Price is also part of the image of the product, rightly or wrongly, because consumer tends to link the quality of the product and the price as directly proportional. Of course, not forgot to say that the price element of the mix itself covers the basic price, discounts, credit terms and interest free credit.

- Promotion, another very important aspect in the marketing mix which includes all marketing communications. Promotion is intended to stimulate the potential customer through four behavioural stages known as AIDA: Awareness of the Product, Interest in the product, Desire to buy, and Action(an actual purchase). The types of promotion can also be: Public relations, Direct selling by sales personnel, sales promotion(money-off coupons), and advertising.
Another very easy way to remember this is... by using Mr.Bill's method again: to remember it because it is... everywhere~
So whr is it this time? Lets take something very popular this time, we had fast food, so now we will go for soft drinks(sorry for the junk food part, but nonetheless its still popular right? XD). Coke, or rather ,Pepsi. The above explanation(by text or by this blog) have shown us that one of the type of promotion is advertising. The soft drink company Pepsi itself over the years has recruited many famous pop star to help them promote the Pepsi Drinks. If any of you needs something to recall back, well we got some 'hot' shots here :)


- [Coca-Cola, also known as Coke. If you never try this before, don't worry, it's not your fault, that will have to be their advertising manager's prob. :D]


- [As mentioned, over the years, the soft drink company Pepsi has put a lot of effort into advertising their product. The photo below shows us the 'Pepsi Star' from Hong Kong, Taiwan, and Korea.]

- [Not to forget our Korean pop star Rain who earns a lot by... Well, see it yourself, and don't fall for him pls :D]

- In addition for the very last part, there are also service marketing where there are three more Ps for our understanding: the People who delivered the service(smiling), the Processes by which the service is delivered (fast food delivery service), and the Physical evidence of the service(glossy brochure).

- Thats all for all, for any enquiries related to this topic as posted as any error on this blog, pls kindly tell us or do us a favor by informing the author: Song Leong. Anyone of the H&P Co would be loved to help all... =)

-#1.4: Service Operations-

-pls refer to previous post for the understanding different department and their function.
- previous post:
#1.1 - R&D Department
#1.2 - Purchasing Department
#1.3 - Production Department


-Service Operations-
- Hello all, again, after some very theoretical concept and understanding of different department in organisation that we already discussed earlier. It is time to approach something that we gets a lot more familiar in our life, just like what Mr.Bill said: Its not just bout theory, its everywhere~
Time to put it in use...

- First of all, it is very important to know that services are intangible, cannot be stored, and the purchase in services results in no transfer of property.

- And so, the nature of services that we must understand is that, it is: intangibility, Inseparability(which will be explains further on later), variability, and ownership.

- As for now, we should try to understand the implications of service provision, which includes poor service quality on once occasion, complexity, pricing, and also human resources management.

- Poor service quality on one occasion is likely to lead to widespread distrust of everything the organisation does. As what Mr.Bill explains before, the lectures and the guide he gave us for previous class is a kind of service, provided by him as the employee and also by the Sunway organisation. To take this into our example, poor service quality on one occasion is like, lets say if Mr.Will(Another of our lecturer in Sunway, lets say.) wins a lottery and he lost his money accidentally a minute after he claims his price, he Might get mad and not be able to control his EQ, so that will make him unable to concentrate in the class and are not able to teach us well, whats worse, he might even throw chairs at us since he is not really in a good mood. This kind of example is the poor service quality example, and it will only lead to widespread distrust, why? Because we will thinks that our money, the school fee that we paid is not worth the quality of the service provided, so we will complaint for the poor service quality of Mr.Will and therefore tend to thinks that Sunway is not a very nice school. Of course, Mr.Bill would never do this to us, no worries friends. :)

- Complexity and human resources management. Take an example of a barber shop, and both Isaac and Harry went to the shop with the intention of getting a nice haircut to make themself looks cooler. Complexity means that they will get their very satisfying haircut respectively and of course, since their hair style are not of the same kind, they need different barber for that. For this case, human resources management comes in place, the correct barber with the correct skill matches with their customer and ends up with correct kind of service. Simple enough to understand this concept, because if both barber ends up switching and couldn't perform as expected, then Harry will end up looking like Isaac while Isaac while end up with the looks of Harry.

- Pricing, talk about money. I think anyone of you who is currently reading this might be more sensitive than me in this issue... If not, ask the text book or ask yourself, do you always satisfy with how much they charge you everytime u get a service?(Lets say, haircut?)

- For the very last part that we need to understand about service operations, there are different dimensions of service operation. Tangibles, reliability, responsiveness, communication, credibility, security, competence, courtesy, understanding customers needs, and access. If these proves too hard for anyone of u to comprehend it, pls kindly ask the author for this topic: Song Leong of H&P CO for more ridiculous examples... with the hope that it will not insult more ppl, and will make u all understand.

- So for now, the above are the general understanding plus the details about the service operations, it can be referred to all kinds of service in business, Inclusively those that I took as example.

- Next: #1.5 - Marketing

-#1.3: Production Department-

-pls refer to previous post for the understanding different department and their function.
- previous post:
#1.1 - R&D Department
#1.2 - Purchasing Department

-Production Department-
- Generally, the production function plans, organises, directs, and controls the necessary activities to provide products and services, creating outputs which have added value over the value of inputs.

- To explains further the definition of production function, we should know that the process of adding of value into the input usually consist of the following that occupies the production manager's attention: scheduling jobs on machine, assigning labour to jobs, control the quality, improving the methods of work, and wastage management(to minimize it).

- The production manager needs to manage the longer-term decisions to set up the production organisation, the usual longer-term decisions includes: Selection of equipment and processes, job design and methods, factory location and layout, ensuring the right number and skills of employees.

- Meanwhile, the short-term decisions that are concerned with the running and control of the organisation includes: Production and control, Labour control and supervision, Quality management, Inventory control, and Maintenance. These are the short-term decisions that a production managers have to decide on.

- Yes, while the understanding of these departments remains theoretical, these department are closely related to one another, especially for longer-term decisions, the activities of production function must be integrated with other functions.

- For examples, product design is co-ordinated with R&D, Job design is with human resources, quantities of production is related to sales department, and work force management is with human resources department.

- Next #1.4: Service Operations

-#1.2: Purchasing Department-

-pls refer to previous post for the understanding different department and their function.
- previous post: #1.1 - R&D Department

-Purchasing Department-
- Purchasing is a vital element of strategy, so usually the most senior purchasing executive may be on the board of directors. But when raw material becomes a very important cost, the purchasing officer may work in the production function.

- Purchasing manager, officer, or executive has the main responsibilities of deciding or to obtain the best purchasing mix, which includes these important aspects: Quality, Quantity, Price, and Delivery.

- To ensure that the size and the timing of purchasing orders is of optimum level, the quantity of purchase plays a very important role in this. As such, a system of inventory control will set the optimum reorder levels to ensure the economic order quantities(EOQ) are obtained for individual inventory items. Though it is generated by computer, the Optimum Reorder Levels and the EOQ can be calculated manually as well, but I wasnt sure whether we will learn that further in our ACCA paper or not.

- While the quality of the input might affects the quality of output and also the efficiency of the production function, the price of purchasing input is of equal importance as well. The purchasing manager should always pick the best value over a period of time, considering quality, delivery, urgency of order, inventory-holding requirements and so on.

- As for the aspect of Delivery in the purchasing mix, the lead time between placing and inventory of an order is very important in inventory control and production planning. The efficiency of these also depends on how the delivery timing and method are controlled.

- Other than deciding the best purchasing mix, the purchasing manager also have the responsibilities to control: Inputs for production, inputs for administration, cost, liaison with the R&D department, management of supplier, maintenance of inventory levels, and obtaining various information for the evaluation of purchasing alternatives.

- Effective purchasing can affect profit in this three ways: It obtains the best value for money, assists in meeting quality targets for the firm's long-term marketing strategy, and it minimises the inventory-holding costs.

- Next #1.3: Production department

-Organisational Departments and Functions: #1.1-

As for the key term and exact definition for this chapter and any sub-topic inclusive, I think everyone should be reading it in our text book AND Reference book, etc. So... to explain the understanding of H&P Co. in this topic, here is how we explain it:
For better understanding, pls note:
Bold - Key word/terms
Red - Topic(s)
Green - Definition/understanding
Italic - Definition/understading

Here we will talk about a few main departments and their function in an organisation. Which includes:
1.Research and development
2.Purchasing
3.Production
4.Service Operations
5.Marketing

So we will start off with -Research and development department-
- As we all know research may be pure, applied, or development. With the intention to improve products or processes, this is why R&D come in handy when this department co-ordinated with marketing. Not to forget that the credits usually goes to the specialist staff employed to conduct R&D (Research and Development.)

- Pure research is a kind of research to obtain new knowledge or wisdom, to make things sound simpler, the time when there is no any text or reference book about Accounting in Business, the author of either Sunway-TES text buk, or BPP(for instance) have to conduct their own research which starts from zero to understand how accountant relates in business and how different department co-ordinates with each other to be more efficient in heading towards the company's goal.

- As for applied research, it is like our Sunway-TES text book, from all the various source of ACCA knowledge, it combines different producer's text book data And add in their own knowledge and hence, our Sunway-TES ACCA Text book is produced, taa-daa~
Thats for applied research, which has a more specific practical application.

- Development is the use of existing knowledge to produce new product or system, in this case, we can be viewed as the specialist staff which conduct our own research on this topic about 'organisational departments and functions', and this blog that we have to write out to explain our understanding based on what we learned is called development.

- As in overall, the R&D department can be divided into two categories: The Product Research, and the Process Research.

- Product Research focus more on creating new products, while process research concentrates more on improving the way or the efficiency which the products or services are made or delivered.

- The aspects of Process Research includes Processes, Productivity, Planning, and Quality management. All of these aspects are important for quality enhancement and increment of efficiency.

Info for The H&P Company group members ONLY

Please be alerted that all of you group members will be given the password to gain full access to this blog for posting and editing purpose. The password for both the blog as well as the gmail account linked to it is the same but shall not be revealed here for privacy purpose.You will also receive full access to the Gmail account mentioned. Gmail account registration is required to set up this blog and i thought maybe we can also use the gmail account as our official email as a group for correspondence with lecturer if we need to do so collectively as a group. However if your correspondence needs are personal, please refrain from using the gmail account but do use your own email account. Last but not least, feel free to touch up on the blog to make it more interesting in appearance but let us show some respect for each others' posting by not editing them without the consent of the original author. Thank You.

Regards, Harry Chew

How does an accountant relate to business ? (Pre-Introduction)

The question above which is the title of this posting often emerge in the mind of young people who intend to join the accounting profession or for others who may want to know more about the role of accountant in business rather than just being satisfied with the common perception that being an accountant is all about dealing with facts and figures etc. balance sheet, income statement and so on.

To aid us in explaining our point of view on this subject matter, let us first define a few terms which will be related directly to the question (title of post) which are the terms "business" and "accountant" and those terms that may be used in the explanation later.
The definition of the terms are as followed:
BUSINESS:work relating to the production, buying and selling of goods and services
ACCOUNTANT: a person whose job is to keep financial account
FINANCIAL: involving or relating to money
RISK:the possibility that something unpleasant or negative may happen.

Having define all the essential terms, it is necessary to look back at history on accounting.
A short excerpt from Wikipedia may give us an idea on how long accounting though during the time not in monetary terms but rather in the exchange of goods and the quantities involved since barter trade came into existence first before money was commonly accepted as a medium of exchange.
"Accountancy's infancy dates back to the earliest dates of human agriculture and civilization (the Sumerians in Mesopotamia, and the Egyptian Old Kingdom). Ancient economic thought of the the Near East facilitated in the creation of accurate quantities and relative value of agricultural products, methods that were formalized by trading and monetary systems by 2000BC)"

It is important to note that while business may be carried out with or without money with the aforesaid explanation, however monetary system which set values for tangible things or services using numbers and has now become an international yardstick and hence further discussion on the subject matter will be related to the monetary system. Through a long period of time along with Luca Pacioli contribution's in the field of accounting and who was also thought as the father of modern accounting, a certain set of principles and guidelines has been laid down which is duly applied in contemporary accounting practices depending on the arising needs of different businesses as well as legal obligation.

Having given a rather informative introduction which has not answer the question, lets move on to a few points which may be relevant to our discussion now.
1. Accountant helps in managing money or to be more specific cash flow of the company for continual sustainability of the business. It it worthwhile to note that while each company has resources which may or may not be measured by money, the resources available are finite and must be used efficiently to create the desired end point(s). To stick to our parameter of our discussion, we will talk about resources in monetary terms. For example, a company has a certain amount of money and may choose to acquire a land as an asset. However several land are sold at the price within the affordability range of the company but are located in different places. The company has only the privilege to buy a piece of land out of the several options made available due to limited fund. Hence an accountant may step in and analyze the profitability of the acquisition of each asset and to make suggestion to the board of directors or top management level on which choice will be most suitable for the interest of the company in the long run. This is the basis for "investment centre" as stated in ACCA F1 Chapter 1 where the term "return on capital employed (ROCE)" will come into picture

2.An accountant plays the role in the final preparation of financial or management report of a business. It is important to know the difference between this two report but we are not going into the details. Ultimately the goal of these report is to allow stakeholders know the overall performance and standing of a company measured yet again in monetary values based on the parameter system and hence aid them in formulation of new strategy or further fine tuning of existing strategy taking into consideration the intended direction on the company in the future. Speaking on this part, the crediblity of an accountant is very important in preparing an accurate and complete report which are key attributes to good reporting as stated in ACCA F2 syllabus chapter 1:Accounting in Management. This is because inaccurate information may lead to wrong decision making which may eventually lead to the demise of a business if no corrective steps are taken.

3.With regards to point no.2, an accountant also has the responsibility things that are not quantified by the monetary system yet somehow will affect the monetary figures that appear on different aspects of financial reporting. This comes in during analysis where one try to consider how the one thing affect the other thing or simply "walking backward" by finding out what factors produces effect in monetary terms.

4.As mentioned much earlier on legal obligation, an accountant has the duty to ensure financial reporting of the company is in line with the standards set whether by local government or regulatory bodies in the international arena. Since monetary resources are limited, it would not be in the best interest of the company to pay high tax. Hence equipped with the knowledge, an accountant can act as adviser to help company save money by paying less tax on certain key areas in compliance with the taxation law laid down and hence bring about the efficient use of monetary resources

5.Accountant are in a position where they can easily know how a business is performing. In the simplest way for a business to be performing for sustainability, the benefit produced must outweighed the cost of using available resources. Hence an accountant may be able to suggest sales target to maintain profitability of a business by taking into consideration that the revenue must outnumbered the cost of using various resources used. This is when collaboration between the accounting department which is involved in giving account of the performance of the company and the marketing and sale department which identify need of consumers and selling products becomes an important relationship with regards to the context

6.Yet linking to point no.2, an accountant must consider the risk factor in all business decision. While risk may or may not be realized and there goes a saying "the higher the risk, the greater the gain" , it is essential that the accountant list out the risks for each decision or policy drafted out to strike a balance between safety and risk so as to maintain control over the business and not fully subjecting it to the volatility of the market and the demand of human being. It is important to note that based on the parameter set, there are no such things as good risk or bad risk, but only high risk or low risk.

7.An accountant on the management level may help in identifying the weak link between different levels or groups in the company as one of the main job of accountant is to ensure effective communication of financial report. While the term link may be subjected to various interpretation, here we would like to state that the link mean the transfer of financial information for the purpose of overall evaluation of the business by top level management. To think of it in deeper sense, it also allow the accountant to act as an investigator and detect fraudulent act which may exist as anomalies in financial reporting and cause things to not add up, thus showing the weak link. That's when internal auditing come into the picture

8.While an accountant may constantly evaluate the efficiency of the use of resources which may lead to different business investment decision and can be linked to the first point, an accountant may provide some other important information which may be financial or non financial in nature through the management information system (MIS) to aid the company's decision maker to restructure itself internally and not necessarily only when the company has file for bankruptcy order in order to maintain the efficient use of limited resources to sustain itself as an organization and to be prepared to face tough competition and other uncertainties.

Having said all these, we hope that we had at least painted a picture that everyone could understand even if not all of it. It is with great hope that by furthering our understanding in accounting by moving forward in our ACCA syllabus as time goes by that we can a greater understanding and when being asked this question again, we could answer it from more perspective and with greater maturity. Thank You

Posting done by Harry Chew courtesy of ideas from members of The H&P Company, Mr.Bill and classmates


(p.s Mr.Bill, I'm not able to come out with 10 points as i tried my best while at the same time taking care not to overlap points but rather cross linking it in an appropriate manner. Do point out to me any concept or ideas i may had misunderstood to prevent further misunderstanding as we progress forward according to the layout of the syllabus)