Managerial ethics is the study of morality and standards in business conduct. Corporate social responsibility is the obligations that corporations owe to their constituencies such as shareholders, employees, customers and citizens at large. Ethical dilemmas involve making a choice between two competing but valid options which both choices resulting in undesired outcomes. Ethical lapses are decisions contrary to an individual's stated beliefs and policies of the company.
Culture is defined in this course as a learned set of assumption, values and behaviours that have been accepted as successful enough to be passed to newcomers. Cultural differences may be extremely significant; for example, when asked whether managers must have at hand precise questions asked by subordinated, 73% of Indonesian and 78% of Japanese managers answered yes, whereas only 10% of Swedish and 18% of US managers did so. Cultural differences are significant in Australia; 43% of the population were either born overseas or have an overseas born parent.
The external environment consists of the forces and conditions outside of the organisation that could potentially influence its performance. The task environment consist of those forces that have a high potential for affecting the organisation on an immediate basis. The general environment consists of those forces which typically influence the organisation's external task environment and thus the organisation itself and the internal environment is key factors and forces inside the organisation that affect its operations.
The first evidence that change is a subject worthy of particular focus is how often it fails. Another factor is the rate of change (real or perceived) and the relative predictability. Finally the management competency for leading change.
The three most important management issues in a contemporary environment are change, technology and globalism. The four perspectives of management are the organisational context, the human factor, managing paradoxes and the entrepreneurial mind-set.
Responsibility accounting occurs when an entity is structured into strategic business units and the performance of these units is measured in terms of accounting results. Managers are then held accountable and rewarded on the basis of the results of their department. Assign responsibility; establish performance measures; evaluate performance; assign rewards. A cost centre is a business unit; it can be a function, activity or an item of equipment. When identified, a manager can be assigned responsibility for it.
A budget encourages planning, coordinates functions within an organisation, acts as a form of communication, provides a basis for responsibility accounting (where an entity is structured into strategic units and the performance is measured in terms of accounting results), provides a control mechanism, authorises expenditure and motivates employees. The budget process is the sequence of operation necessary to produce a budget for a particular organisation with the sequence depending on the perceived requirements for planning and control.
Decisions are (a) where there are no resource constraints (i.e., an action does not affect other opportunities), (b) there are resource constraints (an action limits the possibility of other choices, requiring a ranking system) and (c) mutually exclusive decisions (one choice means others will be rejected).
Sunk costs are those costs which are already paid or a firm is committeed to. They are irrelevant for future decision making.
A cost is fixed if it does not change in response to change in the level of activity and variable if the total cost changes per unit of activity. Total variable costs increase or decrease in direct proportion to the activity level. The total costs of production are made up of fixed and variable costs.
The linear cost function is a straight-line cost function that can be shown as y = a + bx
y is the total cost to be predicted, a is a constant (fixed cost) and b is the cost that will be the same for eact unit of activity and x is the number of units of actibity.
Multi-product firms have to account for costs that can be tied to a product, direct costs. They also have to account for indirect costs not directly measurable (e.g., electricity). A 'cost object' can be a product, service, process or any items which management requires cost information. The way that costs are assigned depends on their nature. A direct costs is easily traceable with a high degree of accuracy and indirect, or overhead, cost cannot be easily identifiable with a particular object.