Versus
Hard HRM versus Soft HRM
an approach to managing staff that focuses on cutting costs, e.g. temporary and part-time employment contracts, offering maximum flexibility but with minimum training costs
an approach to managing staff that focuses on developing staff so that they reach self-fulfilment and are motivated to work hard and stay with the business
It measures the degree to which the capital of the business is financed from long-term loans
Gearing Ratio
High quality profit
Profit that can be repeated and sustained
statements of profit or loss
used to measure and compare the performance of a business over time, compare with the budgeted, bankers will need it to decide whether to invest in those companies or not, same for investors
Reduce cost, reduce overheads, increase prices
Strategic choice VS. strategic analysis
identifying, choosing and deciding between options vs. where is the business now
measures how long on average how long it takes the business to recover payment from customer who have bought goods on credit
Days in receivables
Operating Profit
Also known as net profit which is gross profit minus overhead costs (indirect costs)
statement of financial position
Decide whether to invest in a business
To assess the assets and the liquidity of the business
To determine the (financial) health / performance of a business
To compare with the previous year / to compare with competitors to show whether the business is worth more or less / growing
To see the amount of debt the business has
Help decide how to vote at shareholder meetings e.g. whether to expand
improve my gearing ratios
sell more shares and use capital raised to pay back loans, reduce dividends, retain more profit and use it to finance the loans, sell assets to raise finance which is then used to repay the loans.
Strategy vs. tactic
strategic decisions are long term, difficult to reverse, taken by directors and senior managers
vs. tactical decisions are short to medium term, decisions are reversible, taken by less senior managers and subordinates with delegated authority
A ratio that measures the annual return from dividends as a percentage of current market share price
Dividend yield ratio =
Dividend per share/Current share price*100
Goodwill
The reputation and prestige of a business that has been operating for sometime also give value to the business over and above the worth of its physical assets
Part time employment for the business
Employees can be required to work at particularly busy periods of the day
More staff are available to be called upon should there be sickness or other causes of absenteeism.
The efficiency of employees can be assessed before hiring full time
By using teleworking from home for some groups of workers, even further savings in overhead costs
Zero hours contracts mean that there is no fixed cost. Wage is only paid if the worker is called in to work for a specified number of hours
improve my liquidity
Sell fixed assets
Get a loan from the bank
Sell inventories for cash
Just in Time inventory management,
Ask customers to pay back in a shorter period of time
Porters versus Core competencies
Power of buyers, suppliers, threat of substitutes, barriers to entry and competitive rivalry helps the business make decisions about markets to enter and reduces risk by considering factors that affect success.
Product based on a business’s core competences, but not necessarily for final consumer or end user.
Measures the annual profitability of an investment as a percentage of the average investment (average capital cost)
Accounting rate of return
Capital Expenditure
Any item bought by a business and retained for more than one year, that is the purchase of fixed and non-current assets
measuring productivity
1.Improved staff motivation
2.More efficient and reliable capital equipment
3.Better staff training
4.Increased worker involvement in problem solving to speed up methods of production
5.Improved internal efficiency
Force field analysis
●Force field analysis encourages managers to consider different aspects of a decision
●By identifying restraining forces action can be taken to mitigate negative effects and reduce risk
●Visual summary of factors in a decision
●Helps focus attention on the most important forces affecting the decision
●Facilitates discussion of these points to enhance decision making
●Forces can be weighted thus improving decision making
●Subjective forces are objectified by giving them a weighting focusing attention on important issues and making it easier to compare force for and against change.
Blue Ocean vs. Red Ocean
One that exploits uncontested market space through product differentiation and low cost
competes with existing markets - exploit existing demands
The current value of all future cash flows generated by a project, including the initial capital investment
Net Present Value
Net realisable Value
the amount for which the existing inventory can be sold
Use of IT and AI in HRM
1.Recruitment: It can help screening CVs without bias. It can record and analyze thousands of possible replies to standard interview questions -> and follow up
2.Chatbots: to provide answers to common employee questions to avoid answering repetitive answers.
3.VR (realistic and interactive training courses): it lit hence saves cost on trainers’ time and space needed for trainings.
4.Biometric time clocks: check the identity of employees present at work.
Scenario Planning
It forces managers to consider the main risks and uncertainties that affect their businesses
Managers have to develop a range of strategies to deal with different scenarios
It makes managers adopt a flexible approach as different scenarios will require different strategies