Understanding of the Business and Management Concepts
Discuss about the Understanding Management and Business Context.
Understanding management in business context is one of the key aspects in the business. It is important for every entrepreneur to focus on developing the overall process putting up a company. Setting up effective management system within the organisation is important for the smooth operation of the organisation. The present study will involve the discussion of the business management and key internal contextual factors that impact on the business positively or negatively. The present study will be done on Commonwealth Bank which is one of the leading financial service Company in Australia and the world. The present study is done based on the five different management topics that have been discussed in the class. The analysis is presented effectively based on the topic 1 to 5.
The first topic mainly talks about the emergence of business and also the relevance of different components involved with business. The emergence of business organisations has happened a long time back during the early civilisations and hence the concept of business could be stated as comparatively old concept. With time passing and with the world becoming more civilised business concepts started cropping up slowly for the needs and wants of the consumers. Slowly and steadily different kinds of corporate structures were formed which helped the companies to develop different kinds of business all across the world. For instance sole trader businesses where only one trader is responsible for the business, Partnership where more than one partner operates the business and they have official agreement, the company form of business is another key style of business structure which is mainly operated by number of shareholders in the company who invest on shares and stocks of the company and become directly related stakeholders in the business and Trusts which is run by different people together (Wallis, 2015). The case study company used for reference that is Commonwealth Bank Australia is a company form of business and generates capital through shares and bonds. The company is a financial institution and also an effective form of investment for many people. The company has the director who performs number of statutory duties. The company follows the Corporations Act 2001 and the directors will have to abide by the corporation act in order to avert any kind of legal troubles. Commonwealth Bank has a legal Tax File Number under which the company pays tax. The company has Australian Company Number (ACN) which is issues by ASIC to the company to be reflected in all official documents like invoices, and other papers (Padgett & Powell, 2012). The director of the company Commonwealth Bank has to perform common law duties as well as the statutory duties for the organisation and makes sure that the company operates effectively. It could be said that most of the limited liability company are effective but their procedures are complicated enough and so it is important to implement the organisational procedure effectively.
Environmental Factors and their Importance for an Organisation
The second topic discusses the key aspects of the environmental factors and their importance for an organisation. It could be said that for every company analysing the environmental forces becomes highly important. There are different tools and techniques which help in understanding the environmental position of an organisation like the PESTLE analysis which helps to understand the external environment of an organisation; on the other hand SWOT is an extremely effective strategic tool that helps to discuss the internal and external environment of an organisation together. Both the tools are effective in understanding the internal and external business environment of the organisation effectively. It is important for Commonwealth Bank Australia to understand its internal and external business environment successfully which will help the organisation (Scott, 2013).
Political: Changing policies of the government has led the company to increase the returns of the shareholders to attract them effectively. Due to the changes in policies financial deregulation has taken place and the company has got upper hand in the market.
Economic: The regulatory capital framework has stronger impact on the business. The economic policy of the company is extremely effective for the organisation.
Social: The banks play pivotal role in the welfare of the communities and Commonwealth bank does a lot of effective social works for the communities (Grundy, 2006).
Technological: The Company employs effective technology like online banking.
Legal: The Company abides by the corporation act 2001 which helps to operate smoothly.
Environmental: The Company works with the focus of green business and boycotts the use of paper. it has promoted online banking which helps to develop their market (Zalengera et al., 2014).
- Diversified business in different branches.
- It is one of the largest companies in Australia.
- Strong revenue and increasing profit.
- High and skillful employees.
- Involved in number of controversies.
- The loan impairment is a concern (Worthington & Britton, 2015).
- Starting of the core net banking is effective for the organisation.
- Expansion activities in overseas markets.
- Launching of new products and services
- Initiatives like “One Commbank” have helped a lot of consumers.
- Increase in financial institutions in Asian countries, and even in Australia
- Risk due to the change in foreign exchange rates.
- Weak economic outlook can lead to stagnation or decline in growth (Klapper et al., 2011).
The Third topic discusses the common risks that organisations could face in business. Commonwealth bank operates in a highly competitive market and hence it is important that the company is able to focus on developing its risk assessment procedure successfully. The common risks that Commonwealth Bank faces are political risks which concerns with the country’s current political position and its status. The problems with global risks like problem of import duty and export duty et cetera. Economic risk is also a crucial risk which commonwealth bank faces in the market. Like foreign investment issues and labor issues due to weaker economic strength. Market uncertainty is another risk which poses a huge problem for the organisation in markets. High competition in market and weaker research and development issues are highly important to be sorted out (Berg, 2010). The company employs an effective strategy of risk mitigation. It implements an effective procedure to assess the risk with the help of risk assessment procedure and then tries to reduce the adverse effects of the risk. Business continuity and disaster recovery is one strategy to mitigate risks for the company. The political risks are often accepted and used as strategy to work for the company. The most common problems the company has faced so far is the economic and political issues which has affected the company and it has also taken positive steps to mitigate these issues effectively with the help of risk assessment. Global risks are also very tough for a company to work with and hence Commonwealth Bank applies the global risk management strategy which consists of market evaluation, research and development, and strategy implementation (De Kluyer, 2010).
Common Risks Faced by Organizations
The fourth topic discusses the different aspects of business practices. Commonwealth Bank Australia focuses on developing its relationship with the employees and developing their engagement with the company. For this the company employs different motivational programs and reward and incentive programs for the employees. It could be said that incentives like increments, changes in the salary structure, ESI and PF and added responsibilities on the employees helps to develop the employee engagement with the company. The company focuses on high performance work practices which are effective for the organisation to grow and develop its business (Argenti, 2015). The company has aligned the high performance work practices like compensation, increment, employee relations communications, performance appraisal are properly synchronised in order to have a positive impact on the business. The company operates under best practice which helps to ensure that it attains the highest level of success for the business. Formal benchmarking is done in the company which compares performance levels and sets up effective benchmark for performance. It also applies best practice benchmarking which helps to develop the business as it continuously researches for companies with high performance strategy that helps to set its best practice benchmark (Vermeulen, 2012).
The fifth topic is one of the key topics in the module as it discusses the different sections of a firm. For instance in the CBA the operations functions as the core section of the business. It handles all the transactions of the consumers’ right. It manages plans and organises and sells financial products and services to the consumers. The marketing section of the company focuses on effective communication of the company with the stakeholders important for the business. The marketing section involves marketing mix assessment which helps to improve the business transactions and communications with the stakeholders. The finance section helps to develop the business by assessing the financial requirements of the company, managing financial resources and implementing financial resources effectively for CBA. The Human resource management at the company focuses on getting the best possible candidates to work for the company and also manage their payroll and other things effectively (Baden-Fuller & Morgan, 2010).
The present study has discussed all the key aspects involved with the management and business. The present study has discussed about the risks and challenges that a company could face, it has also discussed the important aspects like external and internal business environment of a company and functions of the diverse sections in the business which has helped to complete the study successfully.
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