Students will examine critical issues related to business and management context.
The objective is to gain greater understanding of the contextual factors internal to a business that impact on a business or organisation and its business decision making.
Students are to demonstrate knowledge of the subject matter by:
Defining key terms and utilising the theories and concepts presented in topics 1-5 that is-
- You should concentrate on the contextual factors, theories and concepts presented in weeks 1-5:
- Organisational structures
- Environmental forces
- Risks confronting the firm
- Organisation and business practices
- Organisational functions of diverse firms
- You should relate these to how they affect organisation or business decision-making, structure and strategy.
Showing an ability to explain major domestic and international contextual factors and how they affect business structures and strategy.
The relationship between business and management consist of the knowledge, behavior, and skill that steers a proactive relationship between different departments in an organization. Management is defined as the process of reaching the organizational goals and objectives by working with and through organizational stakeholders and available organizational resources, business, on the other hand, is explain as an organizational entity that is involved in the provision of goods and services to consumers (Jeston & Nelis, 2014).
The primary purpose of this paper is to give an intellectual capacity of management in a business context. Wesfarmers Company is an organization used to provide a clear relationship between the two contexts. The study will analyses vital business aspects such as organizational structure, environmental issues, risk confronting business, organizational business practices and organizational function of a diverse firm.
Decisional making and appropriate business strategy are the strategic management context that contributes towards achieving the set organizational goals and objectives. Organizational management have a role to play to enhance better decision-making as well as a substantial business strategy is developed (Ferrell & Fraedrich, 2015).
Wesfarmers Limited is a corporation with its headquarters in Perth, Australia. The company has predominantly focus in Australia and New Zealand market, it deals with production of fertilizers, chemical, coal mining and safety products. In 2016 financial year, Wesfarmers Limited had a revenue of AU$65.98 billion, overtaking Woolworths and BHB Billiton. Wesfarmers Limited is the largest private employer in Australia it has employed over 205, 000 employees (Datamonitor (Firm), 2000). The primary objectives of Wesfarmers is “To provide satisfactory returns to the shareholders through financial discipline and exceptional management of a diversified portfolio of businesses”
Organizational structure is defined as how essential organization activities such as allocation of task, supervision, and coordination as directed towards achieving the organizational goals and objectives. it is also explained as an approach through which different members of an organization perceive the organizational activities and its environment (Fan, Wong, & Zhang, 2013). The organizational management has the responsibility of engaging their professionalism while developing knowledge of establishing how the enterprise is operating towards achieving the defined goals that allows future growth of the enterprise. The types of organizational structure comprise divisional, functional, geographical and matrix organizational structure. The divisional structure of an organization is suitable for a firm that has distinct business units; the geographical organizational structure provides the hierarchy for an organization that operates at several locations, especially for international enterprises (Lee, , Kozlenkova, & Palmatier, 2015). A functional organizational structure is primarily based on the each job and duties allocate to every person who operates in a specific depart. On the other hand, matrix organizational structure is involved in several distinctive supervisors for each job, this structure is suitable for a large organization such as Wesfarmers Limited that operates in many locations, various functional areas, and departments.
Wesfarmers Limited is a multinational corporation that is operating in Australia and New Zealand market, the company organizational structure is considered as matrix since the company is having different division. In every division in the company is headed by a director whose responsibility is to coordinate, control and direct the divisional operations (Goetsch & Davis, 2014). Wesfarmers Limited Company operations involves two main sections retail and Industrial and other businesses. Each division is divided into different departments that also operate in Australia and New Zealand market. The chart below shows the Wesfarmers organizational structure.
Organizational structure at Wesfarmers Limited organizational provides a clarity as well as supporting the organizational shape. Every leader in the company is considered to have knowledge of encouraging efficient behaviors from departmental employees. The primary elements of using matrix organizational structure are the number of employees, geographical operations, marketplace and product evolution (Champoux, 2016).
The environmental business forces are the factor that primarily affects the operations of an enterprise. These aspects affect the decisional making process of management in relation to the responsibility of managing the organization or the departments they lead. Developing the organizational structure and promoting proactive employees behaviors is influence from both internal and external business environmental forces (Bryman & Bell, 2015). The internal environmental forces are those factors that originates within the enterprise, these factors affect the approach and the success of the internal operations of an enterprise. On the other hand, external environmental forces are those factors that are outside the company, the management in an organization does not have much control over the external factors (Chang, Yeh, & Liu, 2015).
Wesfarmers Limited is a corporation that operates under various market. Richard Goyder is the company CEO, his responsibility to coordinate and control whole organization operations. It is the obligation of top management to have knowledge, encourage proactive behaviors and develop skills of making the appropriate decision which related to the organizational missions and visions. According to the company report, the enterprise is committed to proactively managing its community and environmental impacts.
Climate changes and resilience is the primary environmental factor that affects the operations of Wesfarmers Limited. Wesfarmers Limited accepts that the world is changing, this is due to the climate changes. Many parts of Australia and New Zealand are experiencing effects relating to rising temperatures, water shortages as well as increasing scarcity of food supplies. These aspects of climatic changes affect the company employees, customers, community, and economy. However, the company recognizes the impact of human action toward the changing environment, the company believes that business sector in Australia and New Zealand has a role to play in mitigating the climate changes. Wesfarmers support the Australian Federal government commitment to limit the global warming between 1.5°C – 2°C (Limited, Wesfarmers Premier Coal, 2003).
Waste and water use is also an environmental force that affects the internal and external operations of Wesfarmers Limited. Waste affects the working condition of the company; it may lead to the outbreak of fatal diseases that will affect the employees, this may lead to bad behavior from the employees. Water use in the company is a material issue; as a result, Wesfarmers Limited has focused on the appropriate measures of using water efficiently (Champoux, 2016).
Risk confronting Wesfarmers Limited
Risk is defined as the possibility at which a company will have lower than anticipated returns and profit, the business risk is contributed by various factors such as sales volume, price per unit, competition overall economy, climate and government regulations. Wesfarmers Limited is a company that is involved in many business practices such as retail, industrial and other business activities, as a result of operating in different business activities the company is facing different business risk (Wagner III & Hollenbeck, 2014).
Environmental Business Forces
Competition is a business factor that is considered to contribute towards encouraging business risk; it is a business environmental factor that involves the operation of different firms in the market. Competition risk influences are promoted by low quality and quantity of products. Wesfarmers Limited owns Coles supermarket, the company is facing stiff competition from other operating supermarket in the market such as Woolworth Supermarket and Aldi's (Biddle, 2016). According to the study, Aldi's rate of expansion is observed to be ramping up significantly from 2016, this will automatically escalate its market share as it inserts pressure to the margin supermarket operators in the market. Stiff competition from the operating companies in the market affects the decisional making process of Wesfarmers Limited since it will be under pressure to meet the requirements of the target markets (Wagner III & Hollenbeck, 2014).
The financial risk involves those activities that originate from the financial activities of the company. Proper utilization of financial resources demonstrates the commitment of organizational management in moving towards achieving the organizational goals and objectives. Liquidity risk is a financial risk at Wesfarmers Limited; the company has failed to focus on how to identify new investment activities. The foreign currency risk is a primary financial factor that affects Wesfarmers Limited since it operates in different markets which have many currency risks (Pfaff, 2016). The currency risk affects the company competitive approaches as well as the decisional making strategies on the target market. Wesfarmers Limited primary currency exposures involve rising from sales and purchases by an operating unit in currencies other than the Australian dollars.
Organizational and business practices is a business management context that plays a critical role in the decisional making process, it also plays a vital role in developing business strategy that will promote achieving of organizational goals and objectives (Champoux, 2016).
Sourcing is a business practice that involves accessing products and services from other companies and countries. Wesfarmers Limited retail business sources products various location like China, Bangladesh, Indonesia, India, South Korea, Malaysia and Europe. Sourcing products from other countries encourage economic benefits that contribute toward making appropriate business decisional making developing substantial business strategy; it also allows Wesfarmers Limited to offer affordable products to the consumers (Small, Bailey, Lydon, & Davern, 2013).
The organizational functions of a diverse firm contribute to the success of the organizations. Wesfarmers Limited is a diverse company that operates in different target markets. Diversity in business contributes many business concepts that affect the decision making of a diverse enterprise, the organizational management has to make decisions and business strategies that will be compatible with the targeted markets. Wesfarmers Limited is a diverse corporation whose objective is to provide satisfactory returns to the shareholders through financial discipline and exceptional management of a diversified portfolio of businesses. The organization function of Wesfarmers Limited is to promote ethical business activities, promote corporate social responsivity, protecting the environment, protecting the needs of the employee and satisfying the needs of consumers by provision of quality food products and services (Cameron, Sayers, Sacks, & Thornt, 2015).
Management and business context are related aspect that contributes towards the organizational success. Decision making process and developing appropriate business strategy depends on the functions of the management in relation to the business activities that an enterprise is involves in. Organizational structure is a management tool that promoted the proactive decision-making process and encourages substantive business strategy, it defines the shape of the organization as well as the role to be played by every departmental director (Rothaermel, 2015). Wesfarmers Limited is a corporation that is diverse in it activities, it diversity has contributed towards economic benefits anc increase in company profitability making. organizational environmental such as competition and financial risk affects the decision making of the company management.
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Champoux, J. E. (2016). Organizational behavior: Integrating individuals, groups, and organizations. . Routledge.
Chang, D. S., Yeh, L. T., & Liu, W. (2015). Incorporating the carbon footprint to measure industry context and energy consumption effect on environmental performance of business operations. Clean Technologies and Environmental Policy, (Vol. 17).
Datamonitor (Firm). (2000). Wesfarmers Limited. New York, NY:: Datamonitor.
Fan, J. P., Wong, T. J., & Zhang, T. (2013). Institutions and organizational structure: The case of state-owned corporate pyramids. Journal of Law, Economics, and Organization, 29(6), 1217-1252.
Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson Education.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River: NJ: pearson.
Lee, , J. Y., Kozlenkova, L. V., & Palmatier, R. W. (2015). Structural marketing: using organizational structure to achieve marketing objectives. Journal of the Academy of Marketing Science,, 43(1), 73-99.
Limited, Wesfarmers Premier Coal. (2003). 50 years of powering Western Australia: From Western Colleries to Wesfarmers Coal. Collie, W.A: Wesfarmers Premier Coal.
Pfaff, B. (2016). Financial risk modelling and portfolio optimization with R. John Wiley & Sons.
Rothaermel, F. T. (2015). Strategic management. New York, NY: McGraw-Hill.
Small, M. N., Bailey, T. P., Lydon, M. Y., & Davern, T. (2013). Best practice fleet management and priority actions. ACRS.
Wagner III, J. A., & Hollenbeck, J. R. (2014). Organizational behavior: Securing competitive advantage. Routledge.
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