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Science Press

Dot Point HSC Business Studies

i

Operations

© Science Press 2012 First published 2012 Science Press Private Bag 7023 Marrickville NSW 1475 Australia Tel: (02) 9516 1122 Fax: (02) 9550 1915 [email protected] www.sciencepress.com.au

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Science Press. ABN 98 000 073 861

Contents Introduction

v

Verbs to Watch

vi

Dot Points Operations Marketing Finance Human Resources

vii ix xi xiii

Questions Operations Marketing Finance Human Resources

1 43 95 159

Answers Operations Marketing Finance Human Resources

209 221 235 253

Science Press

Dot Point HSC Business Studies

iii

Contents

Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press

Contents

iv

Dot Point HSC Business Studies

Introduction What the book includes This book provides questions and answers for each dot point in the Board of Studies syllabus for the following topics in the Year 12 Business Studies course. 

‡

2SHUDWLRQV



‡

0DUNHWLQJ



‡

)LQDQFH



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+XPDQ5HVRXUFHV

Format of the book The book has been formatted in the following way: 1. Main topic statement from syllabus. 1.1

Syllabus requirement. 1.1.1 First question for this syllabus requirement. 1.1.2 Second question for this syllabus requirement.

The number of lines provided for each answer gives an indication of how many marks the question might be worth in an examination. As a rough rule, every two lines of answer might be worth one mark. How to use this book Completing all questions will provide you with a summary of all the work you need to know from the syllabus. You may have done work in addition to this with your teacher as extension work. Obviously this is not covered, but you may need to know this additional work for your school exams. When working through the questions, write the answers you have to look up in a different colour to those you know without having to research the work. This will provide you with a quick reference for work needing further revision.

Science Press

Dot Point HSC Business Studies

v

Introduction

Verbs to Watch account, account for State reasons for, report on, give an account of, narrate a series of events or transactions.

distinguish Recognise or note/indicate as being distinct or different from, note difference between things.

analyse Identify components and the relationships among them, draw out and relate implications.

evaluate Make a judgement based on criteria. examine Inquire into.

apply Use, utilise, employ in a particular situation.

explain Relate cause and effect, make the relationship between things evident, provide why and/or how.

appreciate Make a judgement about the value of something.

extract Choose relevant and/or appropriate details.

assess Make a judgement of value, quality, outcomes, results or size.

extrapolate Infer from what is known.

calculate 'HWHUPLQHIURPJLYHQIDFWV¿JXUHVRULQIRUPDWLRQ

identify Recognise and name.

clarify Make clear or plain.

interpret Draw meaning from.

classify Arrange into classes, groups or categories.

investigate Plan, inquire into and draw conclusions about.

compare Show how things are similar or different.

justify Support an argument or conclusion.

construct Make, build, put together items or arguments.

outline Sketch in general terms; indicate the main features.

contrast Show how things are different or opposite.

predict Suggest what may happen based on available data.

critically (analyse/evaluate) Add a degree or level of accuracy, depth, knowledge DQGXQGHUVWDQGLQJORJLFTXHVWLRQLQJUHÀHFWLRQDQG quality to an analysis or evaluation.

propose Put forward a point of view, idea, argument or suggestion for consideration or action.

deduce Draw conclusions.

recall Present remembered ideas, facts or experiences.

GH¿QH State the meaning of and identify essential qualities.

recommend Provide reasons in favour.

demonstrate Show by example.

recount Retell a series of events.

describe Provide characteristics and features.

summarise Express concisely the relevant details.

discuss Identify issues and provide points for and against.

synthesise Put together various elements to make a whole.

Science Press

Verbs to Watch

vi

Dot Point HSC Business Studies

Operations Dot Point

Page

Dot Point

Page

1.

Role of operations management

3

4.

Operations strategies

29

1.1

Strategic role of operations management – cost leadership, good/service differentiation.

3

4.1

Performance objectives – quality, VSHHGGHSHQGDELOLW\ÀH[LELOLW\ customisation, cost.

29

1.2

Goods and/or services in different industries.

5

4.2

New product or service design and development.

30

1.3

Interdependence with other key business functions.

6

4.3

Supply chain management – logistics, e-commerce, global sourcing.

31



,QÀXHQFHVRQRSHUDWLRQV

7

4.4

33

2.1

Globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability.

7

Outsourcing – advantages and disadvantages.

4.5

Technology – leading edge, established.

35

4.6

Inventory management – advantages and disadvantages of holding stock, /,)2ODVWLQ¿UVWRXW ),)2 ¿UVWLQ¿UVWRXW -,7MXVWLQWLPH 

36

4.7

Quality management – quality control, quality assurance, quality improvement.

38

4.8

Overcoming resistance to change – ¿QDQFLDOFRVWVSXUFKDVLQJQHZ equipment, redundancy payments, retraining, reorganising plant layout, inertia.

39

4.9

Global factors – global sourcing, economies of scale, scanning and learning, research and development.

41

2.2

Corporate social responsibility.

10

2.3

Legal compliance and ethical responsibility.

11

Environmental sustainability and social responsibility.

12

3.

Operations processes

13

3.1

Inputs.

13

3.2

Transformed resources (materials, information, customers).

15

3.3

Transforming resources (human resources, facilities).

16

3.4

Transformation processes.

17

2.4

 7KHLQÀXHQFHRIYROXPHYDULHW\ variation in demand and visibility (customer contact).



3.6

Sequencing and scheduling – Gantt charts, critical path analysis.

20

3.7

Technology, task design and process layout.

22

3.8

Monitoring, control and improvement.

25

3.9

Outputs.

26

3.10 Customer service.

27

3.11 Warranties.

28

Answers to Operations

209

Science Press

Dot Point HSC Business Studies

vii

Operations

Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press

Operations

viii

Dot Point HSC Business Studies

Marketing Dot Point

Page

Dot Point

Page

1.

Role of marketing

45

4.

Marketing strategies

71

1.1

Strategic role of marketing goods and services.

45

4.1

Market segmentation, product/service differentiation and positioning.

71

1.2

Interdependence with other key business functions.

46

4.2

Products – goods and/or services.

73

4.3

Branding.

74

1.3

Production, selling, marketing approaches.

47

4.4

Packaging.

75

4.5

Types of markets – resource, industrial, intermediate, consumer, mass, niche.

48

Price including pricing methods – cost, market, competition-based.

76

1.4 

,QÀXHQFHVRQPDUNHWLQJ

4.6

Pricing strategies – skimming, penetration, loss leaders, price points.

77

51 4.7

Price and quality interaction.

78

4.8

Promotion.

79

4.9

Elements of the promotion mix – advertising, personal selling and relationship marketing, sales promotions, publicity and public relations.

80

 )DFWRUVLQÀXHQFLQJFXVWRPHUFKRLFH± psychological, sociocultural, economic, government.



2.2

Consumer laws.

52

2.3

Deceptive and misleading advertising.

54

2.4

Price discrimination.

55

2.5

Implied conditions, warranties.

56

2.6

Ethical – truth, accuracy and good taste in advertising.

57

4.10 The communication process – opinion leaders, word of mouth.

81

2.7

Products that may damage health.

58

4.11 Place/distribution.

82

2.8

Engaging in fair competition.

59

4.12 Distribution channels.

83

2.9

Sugging.

60

84

3.

Marketing process

61

4.13 Channel choice – intensive, selective, exclusive.

3.1

Situational analysis – SWOT, product life cycle.

61

4.14 Physical distribution issues – transport, warehousing, inventory.

85

3.2

Market research.

65

4.15 People, processes and physical evidence.

87

3.3

Establishing market objectives.

66

4.16 E-marketing.

88

3.4

Identifying target markets.

67

4.17 Global marketing.

89

3.5

Developing marketing strategies.

69

4.18 Global branding.

90

3.6

Implementation, monitoring and FRQWUROOLQJ±GHYHORSLQJD¿QDQFLDO forecast, comparing actual and planned results, revising the marketing strategy.

70

4.19 Standardisation and customisation.

91

4.20 Global pricing.

92

4.21 Competitive positioning.

93

Answers to Marketing

221

Science Press

Dot Point HSC Business Studies

ix

Marketing

Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press

Marketing

x

Dot Point HSC Business Studies

Finance Dot Point

Page



5ROHRI¿QDQFLDOPDQDJHPHQW

97



6WUDWHJLFUROHRI¿QDQFLDOPDQDJHPHQW





2EMHFWLYHVRI¿QDQFLDOPDQDJHPHQW





3UR¿WDELOLW\JURZWKHI¿FLHQF\OLTXLGLW\  solvency.



6KRUWWHUPDQGORQJWHUP¿QDQFLDO management.

1.5

Interdependence with other key business 101 functions.



,QÀXHQFHVRQ¿QDQFLDOPDQDJHPHQW

103

 ,QWHUQDOVRXUFHVRI¿QDQFH±UHWDLQHG SUR¿WV



 ([WHUQDOVRXUFHVRI¿QDQFH



2.3

Debt – short-term borrowing (overdraft, commercial bills, factoring).

105

2.4

Debt – long-term borrowing (mortgage, debentures, unsecured notes, leasing).

106

2.5

Equity – ordinary shares (new issues, 109 rights issues, placements, share purchase plans), private equity.

2.6

Dot Point 3.7





115

132

 3UR¿WDELOLW\±JURVVSUR¿WUDWLR JURVVSUR¿WyVDOHV QHWSUR¿WUDWLR QHWSUR¿Wy sales); return on equity UDWLRQHWSUR¿Wy total equity).



3.10 Comparative ratio analysis – over different time periods, against standards, with similar busineses.

138

 /LPLWDWLRQVRI¿QDQFLDOUHSRUWV± normalised earnings, capitalising expenses, valuing assets, timing issues, debt repayments, notes to WKH¿QDQFLDOVWDWHPHQWV



 (WKLFDOLVVXHUHODWHGWR¿QDQFLDOUHSRUWV  4.

 ,QÀXHQFHRIJRYHUQPHQW±$XVWUDOLDQ  Securities and Investments Commission, company taxation. 

Gearing – debt to equity ratio (total liabilities y total equity).

 (I¿FLHQF\±H[SHQVHVUDWLRWRWDO  expenses y sales), accounts receivable turnover ratio (sales y accounts receivable).

Financial institutions – banks, investment 110 EDQNV¿QDQFHFRPSDQLHVVXSHUDQQXDWLRQ funds, life insurance companies, unit trusts and the Australian Securities Exchange.

 *OREDOPDUNHWLQÀXHQFHV±HFRQRPLF outlook, availability of funds, interest rates.

Page

Financial management strategies

143

 &DVKÀRZPDQDJHPHQW



 &DVKÀRZVWDWHPHQWV



4.3

Distribution of payments, discounts for early payment, factoring.

145

4.4

Working capital management.

146

4.5

Control of current assets – cash, receivables, inventories.

147

4.6

Control of current liabilities – payables, loans, overdrafts.

148

4.7

Strategies – leasing, sale and lease back.

149

 3UR¿WDELOLW\PDQDJHPHQW



 3ODQQLQJDQGLPSOHPHQWLQJ±¿QDQFLDO  QHHGVEXGJHWVUHFRUGV\VWHPV¿QDQFLDO ULVNV¿QDQFLDOFRQWUROV

 &RVWFRQWUROV±¿[HGDQGYDULDEOH cost centres, expense minimisation.



 'HEWDQGHTXLW\¿QDQFLQJ±DGYDQWDJHV  and disavantages of each.

 *OREDO¿QDQFLDOPDQDJHPHQW



4.12 Exchange rates.

154

4.13 Interest rates.

155

4.14 Methods of international payment – payment in advance, letter of credit, clean payment, bill of exchange.

156

4.15 Hedging and derivatives.

157

Answers to Finance

235

3URFHVVHVRI¿QDQFLDOPDQDJHPHQW

4.10 Revenue controls – marketing objectives. 152

 0DWFKLQJWKHWHUPVDQGVRXUFHRI¿QDQFH to business purpose.  0RQLWRULQJDQGFRQWUROOLQJ±FDVKÀRZ  statement, income statement, balance sheet. 3.5

Financial ratios.

129

3.6

Liquidity – current ratio (current assets y current liabilities).

130

Science Press

Dot Point HSC Business Studies

xi

Finance

Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press

Finance

xii

Dot Point HSC Business Studies

Human Resources Dot Point

Page

1.

Role of human resource management

161

1.1

Strategic role of human resources.

161

1.2

Interdependence with other key business functions.

162

Dot Point

Page

4.

Strategies in human resource management

189

4.1

Leadership style.

189

 -REGHVLJQ±JHQHUDORUVSHFL¿FWDVNV

190

1.3

Outsourcing – human resource functions 163 and using contractors (domestic, global).

4.3

Recruitment – internal or external, JHQHUDORUVSHFL¿FWDVNV

191



.H\LQÀXHQFHV

165

4.4

192

2.1

Stakeholders – employers, employees, employer associations, unions, government organisations, society.

165

Training and development – current or future skills.

4.5

Performance management – developmental or administrative.

193

2.2

Legal – the current framework.

168

4.6

194

2.3

The employment contract – common law (rights and obligations of employers and employees).

170

Rewards – monetary and non-monetary, individual or group, performance pay.

4.7

Global – costs, skills, supply.

195

4.8 171

Workplace disputes – resolution – negotiation, mediation, grievance procedures, involvement of courts and tribunals.

197

Minimum employment standards, minimum wage rates, awards, enterprise agreements, other employment contracts.

5.

203

Occupational health and safety and workers compensation.

173

Effectiveness of human resource management

5.1

Indicators.

203

Anti-discrimination and equal employment opportunity.

174

5.2

Corporate culture.

204

5.3

Benchmarking key variables – changes in staff turnover, absenteeism, accidents, level of disputation, worker satisfaction.

205

2.4

2.5 2.6

 (FRQRPLFLQÀXHQFHV

175

 7HFKQRORJLFDOLQÀXHQFHV

177

 6RFLDOLQÀXHQFHV±FKDQJLQJZRUN patterns, living standards.

178

2.10 Ethics and corporate social responsibility.

180

3.

Processes of human resource management

181

3.1

Acquisition.

181

3.2

Development.

183

3.3

Maintenance.

185

3.4

Separation.

187

Answers to Human Resources

253

Science Press

Dot Point HSC Business Studies

xiii

Human Resources

Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press

Human Resources

xiv

Dot Point HSC Business Studies

DOT POINT "«iÀ>̈œ˜Ã

Science Press

Dot Point HSC Business Studies

1

Operations

Notes ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................ 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Science Press

Operations

2

Dot Point HSC Business Studies

1. Role of operations management.

Role of the operations function

Production

1.1

Production controls

Supply chain management

Quality controls

Logistics

Inventory controls

Strategic role of operations management. 1.1.1

'H¿QHRSHUDWLRQV

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.1.2

Outline the relationship between value adding and operations processes.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.1.3

List six aspects of the operations role.

............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.1.4

'H¿QHVWUDWHJLF

............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.1.5

Referring to an example, explain how decisions made in the operations function can affect each key business function.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.1.6

'H¿QHFRVWOHDGHUVKLS

............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press

Dot Point HSC Business Studies

3

Operations

1.1.7

1.1.8

Classify the following types of cost as either input costs (IC), production costs (PC), stock costs (SC), labour costs (LC) or quality control costs (QC). s

Costs of machinery

(

)

s

Costs of quality testing

(

)

s

Costs of wages

(

)

s

Costs of storage

(

)

s

Repairs to machinery

(

)

s

Electricity and water costs

(

)

s

Costs of shrinkage

(

)

s

Warranty costs

(

)

s

Overtime costs

(

)

s

Costs of testing machinery

(

)

%ULHÀ\RXWOLQHKRZHDFKRIWKHIROORZLQJDVVLVWLQFRVWOHDGHUVKLS Supplier rationalisation

............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Economies of scale ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.1.9

Distinguish between goods and services.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.1.10 Explain the term ‘differentiation’ with respect to services. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.1.11 Describe how goods can be differentiated. ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press

Operations

4

Dot Point HSC Business Studies

1.2

Goods and/or services in different industries. 1.2.1

'LVWLQJXLVKEHWZHHQLQWHUPHGLDWHDQG¿QDOJRRGV

............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.2.2

Referring to two examples distinguish between standardised and customised goods .

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.2.3

Explain how services can be standardised.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.2.4

Distinguish between perishable and non-perishable goods.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.2.5

Outline the notion of perishability with respect to services.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.2.6

Describe why self-service is increasingly encouraged in the delivery of services.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press

Dot Point HSC Business Studies

5

Operations

1.3

Interdependence with other key business functions.

Operations management

Business goals

Marketing (and sales)

1.3.1

Human resources management

Finance and accounting

Other business functions (IT, R&D)

Identify four key functions of business.

............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.3.2 %ULHÀ\RXWOLQHWKHUROHRIHDFKRIWKHIROORZLQJEXVLQHVVIXQFWLRQV Operations ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Marketing ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Finance ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Human resources management ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

1.3.3

Explain the importance of a systems approach to understanding the interdependence of key business functions.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press

Operations

6

Dot Point HSC Business Studies

2. Influences on operations. 2.1

Globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability.

Technology Globalisation

Environmental sustainability

Quality expectations

Influences on operations management

Legal regulation

2.1.1

Cost-based competition

Government policies

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............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

2.1.2

Describe how globalisation can affect each of the following aspects of operations. Sourcing of product

............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Location of manufacturing ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Need for innovation ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Need to protect intellectual property ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

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Dot Point HSC Business Studies

7

Operations

2.1.3

Distinguish between technologies used in administration and those used in manufacturing.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

2.1.4

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............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

2.1.5

'H¿QHTXDOLW\

............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

2.1.6

Explain how quality expectations shape the operations function.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

2.1.7

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............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

2.1.8

Describe how cost can affect price.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

2.1.9

Outline the effect of a low-cost business on competitors.

............................................................................................................................................................................................................................... ............................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................

Science Press

Operations

8

Dot Point HSC Business Studies