OPERATIONS

role of operations management

   strategic role of operations management – cost leadership, good/service differentiation
Apple - cost leadership:  apple has reduced its operations by forming partnerships with manufacturers such as
Foxconn in China. Costs of production such as labour and materials are significantly lower in China than the
USA achieving cost leadership.
Apple - good/service differentiation: 
Product features:
 Operating system (iOS)
 Siri (voice recognition technology)
 Apple pay
Quality: 
 Marketed as a premium product in the market and price accordingly
 Quality issues in the production of the iphone % (scratched casing) led to0 this model being
discontinued in 2013 and replaced with the iPhone 5c using low plastic casing. This represented a shift
in Apples approach to quality and the low sales for this model would suggest it was not a successful
strategy.
   goods and/or services in different industries
   interdependence with other key business functions
Apple, apple cut production of the apple watch and iPhone X due to lower demands. This shows that
marketing and Operations are closely linked. If the demand is less, production for it will decrease (otherwise
there are too much stocks of it)

influences
   globalisation, technology, quality expectations, cost-based competition, government policies, legal
regulation, environmental sustainability
Technology: Coles and Woolworths have introduced the self-Checkout. This means that operations
can be more streamlined. Apple Pay, Paypass is accepted resulting in faster payments and shorter
lines.
Quality expectations: through market research Aldi found that customers expect fresher produce,
since Aldi has increased floor space dedicated to fresh food from 15 per cent to 25 percent resulting
in increased market share. 
Cost-based competition: IKEA engages in cost-based competition through their implementation of
automated technology within factories enables them to undercut their competitors. IKEA aims for
20% lower prices than competitors, though 50% is the goal. This is achieved partly due to control over
design, manufacture, distribution and selling within a vertically integrated supply chain. Investments
in leading edge technology e.g. automation, as well as Ready-to-assemble (RTA), flat-packed furniture
and ‘self-serve warehouses’ contribute to cost savings.
Government policies:
Legal regulation/Legal compliance: UBER – Uber operated in Aus and it was illegal in many states.
Drivers were fined.  The government ended up introducing new laws and regulations that uber had to
abide by.
Environmental sustainability: IKEA uses 1% of the world’s commercially harvested wood and 0.7% of
the world's commercially harvested cotton. IKEA’s ‘People and Planet Positive’ environmental
sustainability strategy has ambitious environmental and social development goals, to be achieved by
2020. IKEA is developing the idea of ‘closed-loop’ resource chains, which promote circular use,
recycling and re-use of materials. IKEA’s Projs desk pad is an example of a closed-loop product. 
   corporate social responsibility
The Westpac Group is considered one of the most socially responsible banks in Australia. Its 2011
Sustainability objectives included: to increase the % of women in senior management positions to 40% by
2014, to reduce Scope 1 and 2 emissions by 30% on 2008 levels by 2013, and to launch a major initiative to
help address social disadvantage.
–  the difference between legal compliance and ethical responsibility
–  environmental sustainability and social responsibility
 Woolworths and Coles stopped offering single use plastic bags and offered bins in stores to recycle
single use plastic which gets made into reusable bags.

operations processes
 inputs
o –  transformed resources (materials, information, customers)
Monitoring of input sustainability, safety, ethics and origin are major tasks to be met at IKEA to maintain a
positive brand image. Product/food safety/quality paramount towards consumer satisfaction and increased
profits. Some achievements of IKEA include: IKEA stops using lead crystal in drinking glasses (1994), 100% sugar
in jams is certified organic (2015).
o –  transforming resources (human resources, facilities)
IKEA: Deputy project leader for supply chain management in Sweden, Bimal Patel said that at IKEA “there is
not much hierarchy, everyone is approachable”. Patel works in process development in the supply chain to
foster an informal atmosphere which focuses on complaint yet collaborative workspaces. There is an
“enormous flexibility in how to do things, and opinions are valued”.
Facilities Mega factories Lego:  
            3 main areas:
o Towering silos- plastic gets melted down into bricks
o 12 production lines where Lego bricks are made
o 23m high storage warehouse, bricks are stored
One location in Denmark, 500 bricks per second made, 21 billion bricks a year, largest moulding in the world,
bricks transferred to Czech Republic and Mexico for packaging.. achieving cost leadership

 transformation processes
o –  the influence of volume, variety, variation in demand and visibility (customer contact)
Apple: Predicting the volume of iPhones required involves certain risks and costs, such as over-ordering
components - underordering may lead to delays in the production of iPhones or not meeting  customer orders
by the agreed timeframe.
Forecasting the demand for each iPhone model is also challenging. Despite the marketing efforts targeted at
the iPhone 5s and 5c in 2014, they were outperformed by the sales of earlier models (4 and 4s). Managing a
variety of products requires ongoing monitoring and control in operations.
Through customer feedback (visability) the ongoing requests (thinner phone, larger screen, more powerful
operating system, better camera and longer battery life) have been filled.
o –  sequencing and scheduling – Gantt charts, critical path analysis
IKEA and Sequencing and Scheduling: IKEA utilises computer scheduling software, Kronos. This is a “fully
automated employee scheduling system that analyzes historical trading data, labour standards, projected sales
figures and employee availability to create optimum staffing schedules” for various operational activities. This
is accessed via ‘ico-worker’ which is an online IKEA portal. Kronos boosts efficiencies.
o –  technology, task design and process layout
Process technologies = RFID, automated production lines (e.g. Tesla)
Product technology = fingerprint scanner on iPhone… Face ID
o –  monitoring, control and improvement
Apple has the capability to customise iPhone colours and deliver high quality phones at a quick speed. They
also adjust the speeds of processes when necessary, e.g. slowing down production due to scratches. Quality
control checks were added to monitor the production process.
 outputs
o –  customer service
IKEA: customer experience is quite unique; display items direct customers to RTA furniture stored in self-serve
warehouse. Co-workers, signage and ‘how-to’ videos assist customers to shop at IKEA.
o –  warranties
Apple gives at least 1 year of warranty as a complementary feature with the purchase of their products, but
further services (Apple Insurance) can be purchased per month to insure the product further.

operations strategies
   performance objectives – quality, speed, dependability, flexibility, customisation, cost
IKEA Quality: IKEA’s Total Quality Management (TQM) framework allows KPIs to determine customer
satisfaction. Dissatisfaction expressed through complaints and returns → negative influence on IKEA’s brand.
Suppliers are randomly audited to ensure complete compliance towards best manufacturing practices. Service
quality is measured by the expertise, service skills and product knowledge of IKEA employees.
IKEA Dependability: customers depend on IKEA to provide them with solutions to furnishing problems. IKEA
has high dependence on suppliers to meet demand → improved through vertical integration of supply chain.
Dependability on logistics improved by strategically placed distribution stores near deep-sea ports and other
IKEA stores, reducing reliance on road transport and inefficient handling of products.
IKEA Flexibility: through decentralising of core businesses within the wider IKEA corporate structure. August
2016: IKEA Group finalises selling of IKEA Supply (logistics) and IKEA Industry (factories) to their owner, Inter
IKEA Systems. → allows IKEA to focus on retail activities and makes business much more agile. adaptable and
flexible. 
IKEA Cost: minimised through implementation of efficient processes. E.g. IKEA’s use of Chemical Leasing,
whereby they pay for the amount of output, not input, minimises costs and helps the environment. IKEA are
cost leaders. From FY 2000 to FY 2010, IKEA globally made 2-3% price reductions every year → accumulates
globally.
   new product or service design and development
Telstra: The telecommunications giant Telstra is constantly innovating their new goods and services. After
being one of the pioneers of the 4G network in Australia, Telstra is hard at work building its 5G network,
having switched on over 200 5G sites since August 2018. 
   supply chain management – logistics, e-commerce, global sourcing
BP Retail: Before 2013, the supply chain management for the retail of BP was complex with many suppliers
used resulting in increased cost. In 2013 BP transitioned their $200 million worth of retail goods from their
previous suppliers to Metcash. As a result the supply chain management process at BP was consolidated and
simplified, significantly reducing costs. This was achieved through improved efficiency while increasing BP’s
flexibility of the supply chain. BP were able to reduce costs through the simplification of their supply chain
management whilst not compromising on the quality of their retail goods.
   outsourcing – advantages and disadvantages 
Virgin Mobile Australia partnered with Philippines based company Proto to outsource their 500,000 call
centre calls per year. The Proto team were able to simplify Virgin’s 41 step phone call checklist whilst allowing
the employee to use their own interpersonal skills to assist the customer. Through the use of outsourcing of
their call centres Virgin Mobile were able to exceed their customer satisfaction targets with a 20 point increase
in NPS (net promoter score) in under 6 months whilst reducing customer servicing costs by 23% and increasing
their revenue growth by 12%. Virgin Mobile Australia were able to successfully increase profit as well as quality
through the use of outsourcing to the Philippines.  
   technology – leading edge, established
The BHP Jimblebar Mine has implemented technology through autonomous earth trucks in moving between
Jimblebar’s pits and processing plants which are able to run 24 hours a day with no concerns of weather.
Through the implementation of technology through self-driving trucks BHP has decreased their haulage costs
by 20%. BHP’s iron ore has increased production by 20% while reducing costs by more than 50% making it the
world’s lowest-cost iron ore producer. The breakthrough technology of autonomous driving trucks has ensured
the quality of the product is not being compromised in any way, instead ensuring the effectiveness and
efficiency of the BHP Jimbar Mine.
   inventory management – advantages and disadvantages of holding stock, LIFO (last-in-first-out),
FIFO (first-in-first-out), JIT (just-in-time)
Woolworths: Supermarket chain Woolworths uses FIFO method of inventory valuation for fresh fruit and
consumables. This is because vegetables will spoil and become obsolete in a shorter period of time, so the
fresh stock must go out first. 
IKEA Inventory Valuation (Just-In-Time): Inventory is sold in large volumes and exists stores quickly, therefore
it is essential that IKEA value inventory through the JIT methodology. SKUs or ‘stock keeping units’ are
identification labels fitted onto every IKEA product with product information. IKEA uses these to realise the
‘cost-per-touch’ philosophy of inventory, meaning that the more hands that touch the product, the more costs
associated with it. 
   quality management
–  control
–  assurance
–  improvement
IKEA Quality Control, Assurance and Improvement: Important facet of IKEA’s TQM program is the ‘IKEA
Supplier Quality Standards’ or ISQS - name given to framework which consists of two essential processes that
IKEA suppliers must conduct: ‘GO/NOGO’ requirements and the ‘Special Process Appendices’. Testing
Laboratories that are third-party accredited towards ISO standard. Some of IKEA’s rigorous testing methods
include: Climate Chamber, Fire, Assembly, Strength and Washing Tests.
   overcoming resistance to change – financial costs, purchasing new equipment, redundancy
payments, retraining, reorganising plant layout, inertia
IKEA Purchasing new equipment: In January 2011, IKEA reduced reliance on 10 million wooden pallets per
year by developing paper-based, corrugated-cardboard pallets that reduced transport costs by 10%, and were
90% lighter and smaller than traditional wooden pallets. In order to accommodate this change, IKEA had to
purchase new forklifts to make the change → co-worker retraining. 
IKEA Financial Costs and Retraining: New and improved pallets gave savings of about 140 million Euros per
year. Despite initial costs, IKEA would be able to save approximately 50 million Euro a year. The change also
reduced carbon footprint, associated with product transport, by 6%.
Inertia: Under BCI farmers in Pakistan and India were trained on how to reduce water fertiliser and pesticide
use on their cotton crops. During 2015, 10% cotton was grown under BCI standards in over 20 countries.
Inertia experienced by farmers demanding premium price for cotton, despite raised profits due to reduced
input costs. Buyers of Better Cotton have had to ensure that they do not give in to demand for premium prices
because in order for Better Cotton to become a widely accepted commodity, it needs to be affordable.
   global factors – global sourcing, economies of scale, scanning and learning, research and
development
Boeing Global Sourcing: Companies like Boeing source globally as international countries may possess
expertise in specific areas of sourcing.  For example, Italian firm Alenia Aeronautica makes the center fuselage,
French firm Messier-Dowty makes the landing-gear system and German Diehl Luftfahrt Elektronik supplies the
cabin lighting. 
IKEA Economies of scale: As IKEA’s market share increases through store openings and e-commerce, they will
experience a greater demand for goods and thus will benefit increasingly from purchasing in larger volumes
(economies of scale). IKEA has a history of passing savings onto customers through price reductions. On
average, IKEA China has made 54% price reductions in over 100 product categories since 2005.
IKEA R&D: About 2500 products are added to IKEA’s product line every year. During 2010, IKEA opened their
first ever test laboratory outside Sweden. As well as researching and developing their own products, IKEA also
heavily invests in leading edge technologies to place their product range at the forefront of their competition.

MARKETING
Role of marketing
   strategic role of marketing goods and services
McDonald’s and Strategic Role of Marketing: Former Chief Marketing Officer at McDonald’s Australia
has said that marketing at McDonald’s consists of the team, consumer insights and business analytics,
innovation of the menu, and a strong adaptation to changing trends in digital and media realms. The
strategic responsibility and role of marketing is to invest money, drive activities and deliver sustained
and real growth for the business in the long term, irrespective of the intensity of competition.
 interdependence with other key business functions
Operations and Marketing at Sukin: Sukin Naturals, an Australian skincare brand has evident
interdependence between marketing and operations. Appealing to an eco-conscious market, Sukin
advertises their recyclable packaging. This requires more precision and different manufacturing
processes, and shows the interdependence between the two.
 production, selling, marketing approaches
 Coca-Cola and Marketing Approach: Coca-Cola uses the marketing approach, specifically by targeting
small segments of the market and then providing specialised products for those markets. Thus, Coca-
Cola is highly customer-oriented. For example Coca-Cola Classic, Coca Cola No Sugar, Diet Coca Cola
are segmented brands under Coca Cola as a whole. They also intend to develop strong positive
relationships with its consumers to encourage repeat sales. For example, they utilise relationship
marketing in their Share a Coke campaign.
 types of markets – resource, industrial, intermediate, consumer, mass, niche
 McDonald’s and The Intermediate Market: McDonalds is involved in the intermediate market on a
B2B basis when it purchases drink offerings from wholesalers and producers. This includes CoolRidge
Water Bottles, Pop Tops, CocaCola products (Fanta and Diet Coke) and Goulburn Valley orange juice.
McDonalds then adopts the role of advertising such products.
influences on marketing
 factors influencing customer choice – psychological, sociocultural, economic, government
Coca-Cola and Socio-Cultural Factors: Coca Cola, as a mass market product, consistently communicates a
message that transcends social class, culture and family roles. In 2014, through their marketing campaign “It’s
Beautiful”, they had a television ad which emphasised the positivity of multiculturalism. In 2015, Coca Cola
released their ad, “Happiness is always the answer” which emphasised family relationships and arrangements.
However, Coca Cola has always relied indirectly on the pervasiveness of peer groups through their
communication. For example, the “Share a Coke” campaign.
 consumer laws
o –  deceptive and misleading advertising
Misleading Advertising by Nurofen: In proceedings commenced by the ACC, the Federal Court found that
Nurofen contraved Australian Consumer Law by advertising that its Nurofen Specific Pain products were each
formulated to treat a specific type of pain, when the products are identical. Misleading packaging resulted in
excess of $6 million in fines. This had enormous implications on the business’s reputation.
o –  price discrimination
Apple:  must sell the Iphone at the same price to all customers in Australia, this does not prevent other
retailers of iPhone from determining their own price for the same product

o –  implied conditions
Apple:  Australian consumer law requires good to be of acceptable quality, meaning certain conditions are
implied. Implied conditions include: smartphones are fit for purpose, correspond with their description, apple
will make acceptable spare parts, repairs and comply with warranties
o –  warranties
Apple:  warranty must be compliant with the Competition and consumer Act, all iPhone should comply to 1
year warranty
 ethical – truth, accuracy and good taste in advertising, products that may damage health, sugging
Dolce & Gabbana Advertisement Banned for Gang Rape: This famous fashion brand was under attack after
an advertising campaign simulated a “gang sexual abuse’. The shooting occurred in 2007, and is landmarked
as a highly unethical marketing campaign. According to the Advertising Self-Discipline Institute (which
banned the advertisement), “the advertisement offended the dignity of the woman, in the sense that the
feminine figure is shown in a degrading manner”. Additionally, it confirms “representations of abuse or the
idea of violence” towards female characters. Reduction in sales, across the globe.
engaging in fair competition
QANTAS: QANATS was accused by ACCC of anti-competitive behaviour under Trade Practices Act by increasing
number of seats well beyond passenger demand, ensuring no carrier on the route was profitable

marketing process
   situational analysis – SWOT, product life cycle
McDonald’s Swot Analysis: Strengths for McDonald’s SWOT analysis includes it’s strong financial position with
a brand value of $88 billion USD in 2016. It is also a market leader, with a wide product range which is
culturally adaptable to various markets. Weaknesses is that it has a poor public image regarding health and
has an evident inability to appeal to older consumers. As such threats include the changing perceptions of
health and diets as well as the reasons why people are not eating takeaway food (e.g. veganism). Statistically,
from 2012 to 2016 the percentage of each generated visiting burger chain has decreased. Opportunities
include an increase in online shopping and the ageing population of Australia.
   market research
Apple:  Secondary market research such as sales data and market share updates provide valuable insights to
marketers of the iPhone. Every month Apple surveys iPhone buyers revealing why customers buy Apple
products compared to competition e.g Samsung
   establishing market objectives
QANTAS: QANATS main marketing objective is to build 2 leading complementary brands, QANTAS (premium
airline) and Jetstar (low fares airline)
 Increase sales (revenue) and decrease costs (expenditure)
 Maintain QANTAS/ Jetstar’s combined domestic market share of 62%
 Match capacity with demand sustaining loads around 80%
 Increase customer service standards and customer experience
 Enhance complementary portfolio businesses like Freight
 Enhanced partnerships (with Emirates, American Airlines and China Eastern in particular) to expand
their international network
 Align Qantas and Jetstar with Asia’s growth
 Grow their frequent flyer program members and partners
   identifying target markets
Sukin and Target Markets: Sukin has identified their target market as largely young, eco-conscious consumers
who want to limit their carbon footprint. They are explicitly engaged with demographic and psychographic
segmentation. This is reflected in product differentiation, such as recyclable packaging, vegan friendly and
cruelty free.
   developing marketing strategies
Product: QANTAS: positioning is the image that QANTAS projects in relation to its competition. Qantas
brings attention to its service by using a variety of positioning strategies: by positioning in relation to
its competition e.g. by launching its own no-frills carrier, by positioning in relation to a target market
e.g. Qantas has concentrated on securing the lucrative corporate/ business market through its
CityFlyer express service, lounge upgrades and frequent flyer scheme
Place of distribution: QANTAS: comfort based features such as lounges, in-flight meals and drinks, in-
flight entertainment and seat width, scheduling features such as route frequency, time of departure
or arrival, number of stops of direct flights and the aircraft type

   implementation, monitoring and controlling – developing a financial forecast; comparing

actual and planned results, revising the marketing strategy
Developing a financial forecast:
Create Your Taste Menu at McDonalds: McDonalds formulated the “Create Your Taste” Menu. They
developed a financial forecast determining that each self service kiosk would  cost $170 000 and franchisees
were also required to purchase new equipment which included a special toaster, a new workbench, a heating
cabinet and a new fridge, as well as various tools only available from one supplier. Overall customers created
more than 1 million unique burger combinations and store traffic has increased. However in the United States
in 2016 the menu discontinued and later in 2017 in Australia.
Monitoring:
Apple:  apple would need to monitor sales data for the iPhone to identify market saturation (when sales are no
longer increasing)
Controlling: 
Apple:  apple may require a new model of iPhone to be launched or identifying new distribution channels
(place)  to increase sales and market share
Implementation: 
QANTAS: has a strong focus on taking corrective action demonstrated through: introducing its own budget
domestic carrier Jetstar in 2004 to counter Virgin’s increase market share of aviation industry, lowering flight
prices to stimulate demand, reducing flight frequency on some routes and expanding in to Asian markets to
take advantage of aviation growth

Marketing strategies
   market segmentation, product/service differentiation and positioning
Geographic: 
Apple:  Apple segments consist of the Americas (north and south), Greater China, Japan, Europe and the rest
of Asia. The highest demand for smartphones in 2015-2016 was seen in Asia. The importance of these
developing markets can be seen in changes to the appearance of the iPhone, such as a larger screen size which
is preferred by Asian smartphone users. 
Demographic: 
Apple:  the high price of iPhones (relative to competitors) is targeted at higher incomes customers in
developed countries. The iPhone 5c was the first ‘low cost’ iPhone to be targeted at customers globally
however had limited success. 
Psychographic: 
Apple:  iPhone users are more concerned about the status of owning an iPhone compared to android, iPhone
users are shown to have higher levels of emotionality, more extroverted and lower levels of honesty and
humility. The integration of iTunes in the iPhone is an example of how Apple identified the interests of
consumers
Behavioural:
Apple:  in the market for smartphones, network carriers will segment customers according to their level of
usage. For example, a cheaper plan will cover less phone and data usage then expensive ones. 
   products – goods and/or services
McDonald’s Changes Their Packaging: McDonald’s changed their marketing strategies, concerning products in
2016. This was motivated by the desire to make McDaonlds into a “modern, progressive burger company”. The
new designs feature 4 new colours including Passionate Purple, Optimistic Orange, Ocean Fresh Blue, Zesty
Lime and Magical Magenta, as well as the signature red and yellow. The aim is not only to refresh packaging
but support the goal for all it’s fibre-based packaging to come from recycled or certified sustainable sources by
2020.
Apple: 
 Focus on innovation and design
 Compatibility with other Apple products (Apple Watch)
 Apple pay
o –  branding
Apple:
 Strong brand image and highly visible placement of Apples logo on devices
o –  packaging
Apple:  focus on quality, design and appearance. Strong brand image, highly visible logos on apple products,
packaging suggestive of quality, slow opening box, creates anticipation, peeling back plastic.
 price including pricing methods – cost, market, competition-based
IKEA’s Cost Based Pricing Method: IKEA utilises a cost-based pricing method in the sense that, “at IKEA we
design the price tag first and then develop the product to suit that price. IKEA product developers and
designers work directly with suppliers to ensure that creating the low prices starts on the factory floor.”
Ipholds IKEA’s perception as an affordable, but high quality furniture provider.
o –  pricing strategies – skimming, penetration,  loss leaders, price points
Spotify and Price Penetration: The free service, then premium for $0.99 for the first three months, then for
full priced premium. In a competitive market, with Apple Music and SoundCloud, penetration pricing can
distinguish Spotify from its competitors. As of quarter 2 in 2019, Spotify has over 108 million Premium
Subscribers globally. Spotify noted that though the end of June offering three months of “Spotify Premium for
$0.99” saw “notable strength seen across emerging markets”.
ALDI: Aldi has created a new market segment distinguished by price within the grocery industry in Australia. As
Aldi grows in market share, it is placing downwards pressure on prices. This can be seen in the recent price-
focused market campaigns initiated by its competitors- coles “down, down, prices are down” campaigns. There
is a perception amongst consumers that low prices commensurate with low quality, however this is not the
case and this Aldi has uniquely aligned low prices with high quality- this is what distinguishes the brand and
explains the rapid growth (both domestically and internationally). Penetration pricing is used for low cost
sourcing and low prices, this strategy ensured that Aldo experienced sustained growth since it set up stores in
Australia. Aldi ensures their prices on the range of products it offers are much lower than that of its
competitors. 
Apple:
 Price skimming is used when a new iphone is released, positioning it as a leading edge, quality
product
 When a model is upgraded, the older model price is reduced to more competitive (competition-based
pricing)
 A competition-based pricing strategy is adopted for low cost (SE) and older models, usually aligned
with the latest Samsung model
  Bundling plans offered by network providers allow customers to pay off their phone over a two year
period, making the high price of iPhones somewhat less significant
 Buy-back program and discounted prices on other models in Asia
o –  price and quality interaction
 promotion
o –  elements of the promotion mix – advertising, personal selling and relationship marketing,
sales promotions, publicity and public relations
Dominios and sales promotion: Domino’s AnyWare allows Domino’s to be ordered at the fingertips of
customers at all times. This multi-channel (text message, twitter) approach to interfacing with customers gives
the potential to capture a lot of data which allows in-depth customer segmentation which Domino’s uses to
improve efficiency of their marketing.   The information collected through the sales system gives
Domino’s the ability to assess consumer buying patterns, who is the dominant buyer within a household, who
reacts to their coupons, and how they react to the channel they’re getting Domino’s from. This means
Domino’s can present different coupons and product offers to tailor to the individual consumer. Domino’s now
processes approx. 55% of orders via online systems which gives them insights into customers and practices,
leading customers to have a better, faster and more quality-based experience (competitive advantages).
Online discount offers and on time delivery enables high market share. Promoting online sales channels
offering discounts helps to increase customer satisfaction by offering convenience and cost control. Mobile
apps and channels was the largest boom to Domino’s product sales which became popular because of its
customisation features
Apple: - the use of media to create a highly publicised event of new product launches
 TV and mass media advertising has traditionally focused on the innovation, quality and design
features of the iPhone, as well as being connected with others (Facetime)
 Product placement in TV shows and movies e.g. The Simpsons
 Publicity and a secrecy approach to keep the media guessing about upcoming models
o –  the communication process – opinion leaders, word of mouth
McDonald’s and Word of Mouth: In 2010, McDonald’s developed a word of mouth strategy to increase sales
of their McSpicy Wings in China. They announced they’d accept any discount coupons on chicken wings in
China, and customers could receive a discount on McDonald’s McSpicy Wings. McDonald’s then publicly
promised that if 1 million people pledged their love for McSpicy Wings online it would distribute free chicken
wings for 7 days at selected restaurants. More than 2 million signed, and McDonald’s distributed thousands for
free. Sales of McSpicy wings ultimately increased by 10% to 30% with revenue increasing in tandem.
 place/distribution
o –  distribution channels
Darrell Lea: in 2012, the business to revive the brand after it collapsed, implementing significant restructure of
the brand. Darrell Lea products continued to be produced and sold to wholesale customers as well as 1200
licensed retailers. The remaining 27 “darrell lea” branded company owned stores closed. To rescue the well
known brand, they did supermarket distribution deals such as IGA, as well as David Jones, Big W and Australia
Post as stockists. Darrell Lea’s poor performance in identifying consumer trends and in pushing its products
into new distribution channels most likely pushed the brand into administration. They needed to close down
stores and look at other forms of distribution. Darrell Lea has a 70% share of the liquorice market and 10%
share of the ‘chocolate bites’ market competing with brands like M and M’s.
Apple: Distribution of iPhones by online sales, apple store, mobile carriers (optus)
 In 2016, Apple had 486 retail stores in 19 countries and online store available in 39 countries
 Approx 30% of Apple sales are made through direct distribution channels (online apple stores) and
70% were through indirect channels such as network carriers

o –  channel choice – intensive, selective, exclusive

Sukin and Selective Channel Choice: Sukin Skincare utilises a selective channel choice, with the product
available in Priceline, Coles and a few other stores to demonstrate accessibility to eco-friendly products, but
still ensure a level of niche. They are able to develop the B2C relationship, as evident by branded product
stands. Sukin is slowly intensifying their distribution, establishing their position but ensuring it is accessible to
many.
o –  physical distribution issues – transport, warehousing, inventory
McDonald’s and Physical Distribution Issues: McDonalds supply chain model is based on a culture of
partnership and collaboration. In an average year Macca’s spends more than $650 million on Australian
produce. Logistics giant Martin Brower, the supply chain partner to McDonalds Australia has signed onto a 20-
year lease for an 18 559 sqm facility comprising a large and advanced warehouse. They have had a long
standing relationship with McDonalds since 1956.
 people, processes and physical evidence
Qantas: Quality services rely on HR providing skilled employees - over 33,000 employees. All staff must have
the appropriate skills + training ($275 million spent on training yearly). Uniforms encourage a professional
appearance. Processes implemented to ensure stricter - i.e. check in processes. Physical evidence = terminal
spaces, planes, lounges + website. 
Apple - people:
 Strong focus on sales and customer service in Apple stores
 Job titles such as ‘Genius’ and ‘Specialist’ to raise employee status
 In-store, online and phone support for after sales, repairs, complaints and warranties.
Apple - Process:
 Online ordering system
 Free upgrades of IOS for existing customers
 Pre-ordering available prior to new product launches
Apple - physical evidence:
 Apple stores are designed to reflect the importance of innovation and quality
 Encourage hands-on approach, allowing customers to ‘test drive’ Apple products
 Elaborate building entrances for most stores, positioned in prime city locations
 E-marketing
Apple: Product:  WEll designed websites allows the iPhone to be displayed next to accessories + compatible
devices → increased customer awareness, FAQS can be provided online → lowered customer service expenses
Price: price-comparison websites, Apple increases profits by selling online - reduce costs of operating retail
stores potentially → lower priced products
Place: Apple website offered in various languages and cultural preferences
Promotion: Various images, audio, videos + information about the iPhone on the website, New product
launches + related activities published on website, Promotion of products through email + social media
 global marketing
o –  global branding
Apple:  logo has changed 3 times - current loo = simple + globally recognised, Competitive advantage during
product launch due to global brand recognition, 2016 - Apple was the most valuable brand in the world -
US$233bn

Oreo was largely focused in the US market, but the dominant position in the US limited growth opportunities
and spurred Kraft to turn to international markets. It entered the international market as Cadbury Oreos
because Cadbury is a stronger, more well known name than Kraft.
o –  standardisation
Apple:: used in some iPhone marketing strategies, Same iPhone is found in every country where it is sold,
Some promotional strategies are standardised - simple images of the iPhone used in all countries, iPhone 5c TV
ads - people from various nations speaking their own language on their iPhone 5c, Standard marketing
strategies → Reduced iPhone marketing costs

o –  customisation
Apple: Some believe the iPhone 6 Plus was a product designed for the Asian market - large scenes were
popular with competitors, 2015: First iPhone ad tailored for Indian market - based around Indian wedding
ritual

Once Oreo went into the Indian market it used locally-sourced ingredients, modification of the recipe to suit
Indian tastes and possibly cheaper ingredients, a smaller size and competitive prices. Customising the product
to suit the indian market was seen as a success, its market share has grown from 1% to 30% of the cream
biscuit market.
o –  global pricing:
Apple: iPhone prices in AUstralia have been inline with exchange rates, Australia to pay $300 more for iPhone
X - sales tax

Once Oreo launched in the Chinese market, 72c for a pack of 14 oreo’s was too expensive for the value
conscious Chinese, introducing smaller packets for just 29c to cater to the Chinese buying habits. The changes
had a positive impact on sales. (Customised pricing)

Learning from the Chinese market, it shaped the way Kraft has approached Oreo’s launch in India. Oreo
entered India through the import route and was initially priced at Rs 50 (about $1) for a pack of 14. But sales
were insignificant partly because of limited availability and awareness, but also because they were
prohibitively expensive for the value- conscious Indian masses. The company took localisation strategies
seriously and provided Kraft the local foothold it needed in India. (Market-customised pricing)
o –  competitive positioning
Apple:  positions its products on the high end of the market - quality + design - priced accordingly, Apple has
turned to Asian market - new marketing strategies needed, 2014: Apple secured a contract with China Mobile
Inc (China’s largest phone carrier) → increased iPhone sales in 2015 + increased market share

To ensure competitiveness, Kraft’s chinese division formulated a modified recipe, making the cookie more
chocolatey and the cream less cloying, developing 20 prototypes of reduced- sugar oreo’s and tested them
with Chinese consumers. They introduced different packages, smaller packages to cater to the Chinese buying
habits
Kraft customised the Oreo in India, entering the market as Cadbury Oreo’s rather than Kraft and was
sweetened to suit the Indian palate. With television forming the main medium of communication, Indian Oreo
division focused on rapid brand awareness and extensive distribution. The market share has grown from a little
over 1% accumulating 30% of the cream biscuit market. 
 
 
FINANCE
role of financial management
   strategic role of financial management
McDonald’s: McDonald’s corporate vision is “to move with velocity to drive profitable growth and become an
even better McDonald’s serving more customers delicious food each day around the world”. They want long
term growth and profitability and a distinguished competitive advantage. This strategic role of growth was
evident in their 2017 annual report, “in 2017 global comparable sales increased 5.4% and global comparable
guest counts increased 1.9%, with positive results achieved on all segments”.
   objectives of financial management
 profitability, growth, efficiency, liquidity, solvency
   short-term and long-term
Woolworths’ Wants to Reduce Reliance on External Debt: In Woolworth’s 2018 annual report, solvency was
an objective made evident - Woolworth’s wanted to limit their external financing. This was achieved, 2018
annual report, “Our balance sheet was also stronger with net repayable debt reduced by a further $677
million, through business growth and good working capital management”.
 interdependence with other key business functions
Sony HR and Finance: In 2009, Sony cut 5000 jobs due to declining profits and finances.  HR needs finance to
fund the expansion of departments and operations - operations cannot expand as it may increase their costs.

influences on financial management

   internal sources of finance – retained profits
Apple Retained profit: Retained profits remained stable at around 75% of owner’s equity between 2016 &
2017, but decreased significantly in 2018. 
   external sources of finance
 debt – short-term borrowing (overdraft, commercial bills, factoring), long-term borrowing
(mortgage, debentures, unsecured notes, leasing)
Apple Debt: The significant increase in Apple’s total liabilities between 2017 & 2018 is due to increases in both
current & non-current liabilities in the given period. In recent years, Apple has responded to the availability of
low interest rates in the global market by steadily increasing its debt. 
McDonalds:
Overdraft: McDonalds currently has US$2.5 billion overdraft.
Commercial bills: McDonalds issues these to the public to raise funds (short-term unsecured debt)
Leasing: usually McDonalds buys land and leases it to franchisees leasing 12000 stores in 2017.
Unsecured notes/debentures: McDonalds has borrowed cash at a fixed rate using unsecured notes and
debentures.
   equity – ordinary shares (new issues, rights issues, placements, share purchase plans),
private equity
McDonalds:
 McDonalds initially raised capital when it floated in 1965 on the NYC stock exchange.
 Have issued 1700 million shares.
 800 shares are still in the market.
 Maccas pays shareholders consistent high dividends.
 Maccas AUS requires new franchisees to have 25% of the total cost of a new maccas restaurant in
cash to personally invest.
   financial institutions – banks, investment banks, finance companies, superannuation funds, life
insurance companies, unit trusts and the Australian Securities Exchange
McDonalds:
 McDonalds uses a range of bank and finance companies worldwide to fund its operations.
 Business but also abide by NYSE, regularly disclosing financial info. 
   influence of government – Australian Securities and Investments Commission, company taxation
ASIC: BMW 
 BMW Australia Finance will refund millions of dollars’ worth of loans (approx. $77 m) to thousands of
customers after it was found to have breached responsible lending provisions 
 In response to an investigation by ASIC 
Company Taxation: Google 
  Google accounts for about ½ of Australia’s digital ad spend but most of the $4.2 billion of revenue
collected here doesn’t get taxed 
  Much of the top line revenue goes to a Google company based in Singapore, where tax is 10% rather
than 30% in Australia 
 Shifts revenue to low taxing jurisdictions (Singapore) gives the Australian Tax Office (ATO) the ability
to impose a 40% tax on profits shifted from Australia to a lower taxing country 
   global market influences – economic outlook, availability of funds, interest rates 
Economic Outlook: Apple
 Will have a significant influence on the market for iPhones & the financial strategies employed by
Apple to achieve its objectives 
 Highest economic growth projected in China & India  

processes of financial management

   planning and implementing – financial needs, budgets, record systems, financial risks, financial
controls
McDonald’s and Financial Planning and Implementation: McDonald’s continuously assesses their present
financial position and determines their financial position. In 2015 McDonalds identified the need to reimage
and modernise restaurants. The company budgeted for this, “The company expects capital expenditures for
2016 to be approximately $2.0 billion. About half of this amount will be used to open new restaurants...The
remaining capital will be used to reinvest in existing locations.” In terms of maintaining record systems
McDonald’s uses a POS system called NP6. McDonald’s uses an external auditor, Ernst and Young to assess the
effectiveness of financial controls annually.
   debt and equity financing – advantages and disadvantages of each
   matching the terms and source of finance to business purpose
McDonald’s: leases most of the land and buildings on which franchisees run their business- matching terms
and source of finance
   monitoring and controlling – cash flow statement, income statement, balance sheet
Woolworth’s Financial Statements in Annual Report 2018: The use of income statements are interwoven
throughout the report. For example, through the use of income statements, in its Annual Report 2018,
Woolworths via observing cost of sales, income tax expense, branch expenses etc.determined that its profit for
the period 2018 was $1795 million, an increase from 2017 of $1593 million. As such Woolworth’s can monitor
its performance and implement appropriate financial controls.
   financial ratios
   liquidity – current ratio (current assets ÷ current liabilities)
Qantas: Qantas’ low rate indicated an inability to meet short term debts. Like most airlines it operates on a
negative working capital position. Qantas holds very little cash received to pay long term debt-- reducing
interest costs. Having facilities in place (including a standby facility of $300 million and issue of short term
notes) to draw cash when needed to pay creditors and dividends to shareholders, liquidity ratio increased in
2015 from 0.68:1 from 0.66:1 in 2014, other airlines- singapore airlines 1.1:1 and Air New Zealand 0.93:1,
liquidity strategies needed: controlling assets, controlling current liabilities, leasing more aircraft, buildings. 

 gearing – debt to equity ratio (total liabilities ÷ total equity)

Gearing: Apple 
 Significant overall increase in debt funding 
 In recent years, Apple has responded to the availability of low interest rates in the global market by
steadily increasing its debt, as well as undertaking a capital return program 
 profitability – gross profit ratio (gross profit ÷ sales); net profit ratio (net profit ÷ sales); return on
equity ratio (net profit ÷ total equity)
Profitability: Apple
 Sales growth largely attributed to iPhones (contributed my price increases) 
 Sales in all geographical region’s strong growth

 efficiency – expense ratio (total expenses ÷ sales), accounts receivable turnover ratio (sales ÷ accounts
receivable)
Qantas: Airline industry uses the revenue seat factor ratio as a key indicator of efficiency. Measures the % of
total passenger capacity actually utilised by paying passengers. Strategies to improve efficiency:
 Introduction of new and more efficient aircrafts
 New crew and training bases
 Investment in new IT systems
 Lower costs of sales because of a significant increase in internet bookings
 Reduced overhead costs due to improved economies of scale
Restructuring of catering, engineering and international operations

 comparative ratio analysis – over different time periods, against standards, with similar businesses

   limitations of financial reports – normalised earnings, capitalising expenses, valuing assets, timing
issues, debt repayments, notes to the financial statements
Normalised Earnings Qantas : Special circumstances may distort the analysis of Qantas’ results e.g. 2011
natural disasters such as Cyclone Yasi may have had adverse effects on Qantas’ profitability of $224 million

Capitalising expenses McDonald’s: taxes and legal fees are capitalised up to date where future benefits are
expected to exceed those costs. Expenses for a new restaurant site are recorded as an asset and depreciated
over the use life of that asset therefore spreading costs over 40 years. This therefore means that McDonald’s
may overstate its current year profit. 
Valuing assets McDonald’s: McDonalds have AUD $400 million in goodwill on their 2017 balance sheet. Issues
with this are that Maccas may be paying much higher than goodwill is actually valued, limiting reliability of
figure on balance sheet. Goodwill may also not be relevant years after the purchase. 
Notes to the financial statements: Google
 ·  IAB calculates the total digital ad spend in Australia at $8.8 billion whereas Google Australia only
reported top line revenue of $1.07 billion then just paid $26 million of that in tax
·  Notes accompanying the financial statements show that “cost of sales” for advertising goes to
Singapore company
Rather than selling directly, the Australian Google subsidiary earns a “commission” on behalf of the Asia-based
company

   ethical issues related to financial reports

Qantas : has ethical and legal responsibilities in relation to its financial management through:
 Audits: professional examination of accounting data
 Professional account bodies
 Accounting standards which establish general principles to be followed in relation to financial
statements
 ASIC which ensures companies adhere to the Corporations Act
 ASX included in its listing rules disclosure requirements and other regulations and other regulations
with listed companies must comply
QANTAS has come into criticism in its failed takeover bid by APA

McDonald’s Independent Audit by Ernst & Young: McDonald’s was independently audited by Ernst & Young in
accordance with relevant legislation in the United States. It was declared that “the company’s international
control over financial reporting is designed to provide reasonable assurance.” However “Ernst & Young, an
independent registered public accounting firm” audited financial statements in 2018, 2017 and 2016”.
“Management evaluates the audit recommendations and takes appropriate action”. This upholds ethical
financial reporting.

financial management strategies

 cash flow management
 cash flow statements
 distribution of payments, discounts for early payment, factoring
Discounts for early payment: HPM Electrical: Offer big customers like Bunnings a 2% discount for payment
within 10 days on its usual 30-day credit terms, 89% of stores do this usually within 7 days, Interest made
equates to a $37,000 cash flow improvement each year
Factoring: Harvey Norman: Uses factoring for its 3 years interest free sales, GE Finance purchases the debt at a
reduced rate & pays Harvey Norman now for the funds owed
Frees up cash to be used in the business today & allows Harvey Norman to focus on its core business rather
than following up debt
   working capital management
 control of current assets – cash, receivables, inventories
Control of current assets Apple: Key challenge in managing inventory is anticipating the demand for new
models of iPhone as over or under supply of stock can lead to additional costs or delays in production, Apple
uses FIFO and pre-pays suppliers for some stock to ensure it is available
 control of current liabilities – payables, loans, overdrafts
Control of current liabilities Woolworths: Policy of delaying accounts payable to most of their food and grocery
suppliers, Takes on average 51 days to settle debts with their suppliers, extended this to 60 days to improve
working capital
 strategies – leasing, sale and lease back
McDonald’s Leasing Strategy & Control of Current Assets: At McDonalds, the 2015 Annual Report shows
McDonald's also built a further US $13 billion worth of buildings on land that it leases. This shows a heavy
reliance on leasing as a working capital strategy. McDonalds also has a system where late payments of rent or
royalties attract high interest for franchisees. This helps McDonalds control its largest receivable.

Sale & lease back Air Asia: Leased 182 Airbus jets valued at $1.2 billion to cut debt & return money to
shareholders, & grow its business, Shares rose 5%, Did this to fix finances that came under scrutiny by amounts
owed
   profitability management
  cost controls – fixed and variable, cost centres, expense minimisation
Cost Controls  Aldi: Minimises waste to reduce costs, Trolley $2 deposit system ensures customers return after
use, resulting in fewer trolleys being lost & needing replacing & doesn’t need to employ someone to collect
trolleys, Reduces staff costs by not being open 24 hours like competitors, more productive during trading
hours, less power costs
 revenue controls – marketing objectives
Increases in Revenue at Woolworths Since 2017: Implemented several revenue controls through marketing
objectives including their Lower Prices Always Campaign (pricing policy that Woolworths has engaged in) and
selling a range of children’s promotional prizes. This has increased parental demand, accruing points towards
promotional Prizes. Their Everyday Rewards Card (relationship marketing) has also acted as a revenue control.
Cost controls have occurred through a decrease in traditional promotions and advertising, liquidation of
Masters and associated assets as well as self serve checkouts.
 global financial management
 exchange rates
Qantas: is exposed to various financial risks in its international business operations such as changes in foreign
exchange rates due to fuel, operational expenditure (lease payments, interest payments & capital expenditure)
Approx. 40% of revenue is generated in other currencies
 interest rates
 methods of international payment – payment in advance, letter of credit, clean payment, bill
of exchange
 Hedging
Apple: apple enters into foregin currency forward & option contracts with financial institutions to protect
against foreign exchange risks. They hedge a portion of their material foreign exchange exposures, typically for
up to 12 months
 derivatives
Qantas: has hedged 86% of its fuel needs in 2018, Qantas uses a number of strategies to minimise the impact
of financial risks in order to:
o   Reduce the probability of financial distress
o   Protect its capital base
o   Minimise the cost of capital
o   Provide a stable business & profit outlook
o   Exploit its financial strength
Qantas uses derivatives like forward cover & options to hedge future fuel purchases, future interest payments
& future capital expenditure payments,, Qantas had hedged 95% of its fuel needs for 2017, Qantas gains 40%
of revenue in other currencies meaning hedging and derivatives are a must

HUMAN RESOURCES 

role of human resource management 

  interdependence with other key business functions :

Apple: 
 Operations: - Would need to communicate Job and Task Design requirements to HR, enabling them to
recruit and select a suitable candidate, lack of training has been identified as contributing to quality
problems experienced at Foxconn prior to the launch of the iPhone 5, resulting in workplace disputes
and a reported cost of US$1.5 billion. 
 Marketing: - Must communicate with HR to ensure retail employees are adequately trained in current
marketing strategies, such as the price, product, place (distribution) and promotion of Apple products.
 Finances: - Generally impose limitations on HR activities with the allocation of budgets, cost centres,
sales targets and expense minimisation strategies. 
 
outsourcing – human resource functions – using contractors – domestic, global 
Apple
 iPhone outsourced to manufacturing partner Foxconn in China. Foxconn is the largest manufacturer
of electronics products, producing 40% of goods worldwide. It's estimated that approx. half of
Foxconn’s annual revenue is generated from the production of Apple products. Controversy regarding
 their management of 1 million employees, include media reports of workers being beaten and
committing suicide. In addition, riots and strikes at Foxconn factories relating to working conditions. 

key influences  

stakeholders – employers, employees, employer associations, unions, government organisations, society

QANTAS: 
 Qantas management: restructure organisation, outsource, relocate staff overseas, discount airlines +
casualisation = ↓costs + ↑flexibility 
 Employees: 29,000 people – pilots, flight crew  Concerned with existing pay, working conditions + job
security  Angered by Qantas’ industrial relations tactics + time taken to end disputes 
 Unions: highly unionised, Transport Workers Union – major role in resolving disputes + negotiating
new enterprise agreements to Oppose pay cuts + outsourcing community + industrial campaigns 
 Employer associations: member of Australian International Airlines Operation Group – affiliated with
ACCI – operates on national + international level (represent Qantas concerns) 
 Government Organisation: Fair Work Act 2009, Corporations Act 2001, WHS Act 2011, Worker’s
compensation o Laws on industrial relations through agencies,

legal – the current legal framework 

McDonald’s:
 Currently, all Australian employees of McDonald’s, whether at a company or a franchised store,
fall under the McDonald’s Australia Enterprise Agreement 2013.This enterprise agreement was
negotiated between McDonald’s Australia and the Shop, Distributive & Allied Employees’
Association (SDA), which represented the workers. 97% of McDonald’s employees voted to
accept the enterprise agreement. The agreement is one of the largest enterprise agreements in
Australian labour history. A 2017 report in the Sydney Morning Herald claimed that some
McDonald’s employees are worse off under the current EA. 

IKEA:
 IKEA WHS & Workers’ Compensation: No fatalities recorded during IKEA FY15. Annual ‘SecCheck’
involves auditing of IKEA facilities for safety/security matters. Employees receive safety training for
bomb threats, robbery situations, fire prevention and evacuation procedures. In FY13 there was a
37% improvement in accident rate vs. FY12.
Economic: 
QANTAS:
 Onset of GFC and prolonged downturn in 2009 saw a major contraction in demand for Qantas
services. Along with increased competition globally. This impacted HR as the airline reduced staff
numbers in a bid to cut costs. Executive pay was frozen. 2014 Qantas cut 5000 jobs as part of a cost
reduction program to improve profitability.

Technological: 
QANTAS: 
 Impacted heavily by technological changes either forced such as new security systems in response to
terrorism threats or in response to maintaining competitiveness and cut cuts.
New planes like the Dreamliner and A380: 
 New inflight entertainment system
 New check in and self-service kiosks
As a result staff need to learn new skills as the technology is introduced or some positions have become
redundant.
McDonald’s:
all McDonald’s employees use Metime – an online platform that is used for such things as
rostering, pay and training. Each employee has a personal login to this system. This helps
McDonald’s to maintain effective communication with employees.
 social – changing work patterns, living standards   
Apple:
 Low labour costs in China have influenced Apple to outsource, reducing cost of production and
increasing profitability. China has flexible locations for operations due to high levels of supply of
labour. 
 Foxconn has increased its male participation rate from 59 to 64% between 2009 and 2011 due to the
lack of available women in China resulting from the one child policy
ethics and corporate social responsibility 
Grill’d:
Local Matters The burger joint ‘Grill’d’ uses CSR through the “Local Matters” community donation program.
Every month, each of the Grill’d restaurants donate $500 back into their local community. At the end of the
month Grill’d splits the $500, the group with the most tokens receives $300 and the other two groups receive
$100 each. By making ethically informed choices, the business effectively gives back to the community and
invites the consumer to do so.
Priceline - The ‘Sisterhood Foundation’ becomes more than just a beauty choice, as the foundation supports
women in need through six different charities across Australia. Some of the charity partners involved are
“Panda”, “Children First”, “Fight Dementia”. The aim is to support women who are affected by serious illness
and share the stories of those affected in order to raise awareness. Since its inception, the foundation has
raised more than 2 million dollars through the priceline sisterhood.

processes of human resource management 

acquisition 
QANTAS: 
 Identifying staffing needs involved conducting job analysis, which defines the scope of job activities,
responsibilities and positioning of the job at Qantas.
 Recruitment and selection is a lengthy process at Qantas. It involves weeding out some applicants,
physical examinations for some roles and ending with the job offer and contract of employment.  
 Selection error results in a number of costs including lost production, damage to company reputation
and name, absenteeism, the cost of terminating an employee and the cost of replacing an employee
with a fresh one.
development :
Apple:
 Apple’s development program is marketed as one of the key attractions and benefits for employees.
Every location provides training and development opportunities on a regular basis, which counts as
work time, to keep up to date on the latest products.. Apple’s strong focus on customer service
means that customer service training is a key focus for retail staff. 
Maintenance: 
QANTAS: 
 Has aimed at keeping pay increases to 3% per year
 Flexible working conditions – attract and retain talented staff
  Can include:
·   Flexible working hours
·   Flexible reward options
·   Work from home arrangements e.g. rostered days off
·   Family leave
FAMILY FRIENDLY PROGRAMS
·  Increasing paid maternity leave from 10-12 weeks
·  Keep in touch programme for staff on maternity leave
·  Building new child care facilities in Sydney, Melbourne and Brisbane
Separation: 
McDonald’s:
The nature of the fast-food industry, plus the fact that McDonald’s employees are often young
people in their first job, means that McDonald’s has a significantly higher staff turnover than
 many other companies.
 McDonald's Australia reported that its staff turnover rate is 42% for crew and 20% for
management
 McDonald’s Australia also conducts anonymous exit surveys of employees. These can help
management ascertain why staff are leaving and put in place strategies to prevent this.

strategies in human resource management:

  leadership style: 
 IKEA: Leadership is an important aspect that has been devoted by Ikea HRM. The international
statistics reveal that IKEA is among the 20 best companies in leadership. Ikea adopts a democratic
leadership style.
 IKEA encourages employees to participate in democratic management style on behalf of the
business decisions. Consulting with employees or asking for their suggestions on final decisions
allows the managers to be able to clearly identify and understand co-worker feedback.
job design – general or specific tasks
  McDonald’s: McDonald's employees have specific skills built into their job design with little or no
scope for change allowing for consistency, efficiency and uniformity. 
  recruitment – internal or external, general or specific skills
QANTAS: Recruitment and selection is based on merit, and when making hiring decisions managers are
encouraged to not only comply with Equal Employment Opportunity and anti-discrimination
requirements, but also to bolster a diverse workplace culture when selecting from the pool of qualified
candidates. Qantas aims to make its recruitment process accessible to all candidates by advertising
positions both broadly and in specific publications. 
  training and development – current or future skills  
QANTAS:  
 invests more than $275million a year in training and development 
 Pilots do more than 48,000 hours of annual training
 All flight attendants undertake the latest service and safety training
 In 2008,  QANTAS opened up a new Centre of Excellent Service which features customer
experience zones
performance management – developmental or administrative 
Apple: Apple’s Genius Bar employees are regularly retrained and retested on their knowledge due to the
rapidly changing nature of the Apple products.
  rewards – monetary and non-monetary, individual or group, performance pay 
McDonald’s:
McDonald’s offers a range of rewards for staff members  E.g. discounted food & beverages
(up to 50%), promotions, group & individual pay, awards and prizes
 Employees at McDonald’s corporate headquarters may be eligible for company cars,
healthcare services, discounted child care and fitness membership

global – costs, skills, supply: 

QANTAS: 
 Tries to hire host country staff instead of transferring domestic staff to work in senior
management positions overseas
·  If suitable staff cannot be found, ethnocentric approach will be used ( parent staff used)
 Provides good working conditions which help prevent shortage of skilled labour

workplace disputes – resolution – negotiation, mediation, grievance procedures, involvement of courts

and tribunals 
 Apple: Foxconn – when manufacturing the iPhone 5, problems occurred resulting in production
 line workers going on strike after confrontations with quality control managers. A lack of training
was the cause.

effectiveness of human resource management  

corporate culture:   
 Apple: Culture has been shaped by a history of innovation, its leaders and the peer pressure
among employees to be among the contributors to the final product that the customer sees.
Every communication, process, product launch event and advertising slogans make it clear that
innovation is at the heart of Apple’s success.
changes in staff turnover: 
 QANTAS: Rates for Qantas have increased 2016 -4.4%; 2017 – 4.9% May mean that HRM is less
effective. It may mean an increase in costs such as recruitment and training and development. 
absenteeism :
 QANTAS: The rates have decreased in recent years. Most up to date info – 2012 – 9.6 days; 2013
– 9.1 days. 
Accidents: 
 Apple:  Apple’s outsourcing partners have been criticised for unsafe working conditions & high
rates of accidents occurring in their factories, 7 days and live in crowded dorms, 2 years ago 137
workers at an Apple supplier in East China were injured after they were ordered to use a
poisonous chemical to clean iphone screens, 7 months later 2 explosions occurred at iPad
factories killing 4 injuring 77. 
levels of disputation: 
 QANTAS: Recent actions by Qantas to axe jobs, introduce more part time and casual employees,
establish low cost carriers both here and overseas based on poorer wages and conditions. Qantas
has been plagued by recent industrial issues. 
 E.g. 2011 – ground staff went on a 4 hour national strike and Qantas was forced to cancel 28
flights and delay another 27 causing disruption to about 6000 people
worker satisfaction:
 McDonald’s: 
 83% of McDonald‘s restaurant managers in its top markets globally think it is a great place to
work
 In 2013,89% of crew members were satisfied that they receive the training needed to do a good
job
 In 2013, 87% of managers felt that the person they reported to supported their professional
development