Chapter 10 - Management Activities 1: Planning

Question 1

What is planning

Answer 1

It occurs when management looks to the future and sets specific goals for the business. The manager must put strategies in place in order to achieve these goals.

Question 2

What does smart stand for

Answer 2

S - specific 
M - measurable 
A - achievable
R - relevant 
T - timed

Question 3

Explain the S in smart

Answer 3

Specific - the plan must clearly state its goals. Everybody should understand what the plan will achieve

Question 4

Explain the M in smart

Answer 4

Measurable - there should be evidence that the goal has been achieved e.g. measured in percentages

Question 5

Explain the A in smart

Answer 5

Achievable - this goal must be realistic, it should challenge the business to achieve it but should be possible

Question 6

Explain the R in smart

Answer 6

Relevant - the goal should be relevant to the overall business goals

Question 7

Explain the T in smart

Answer 7

Timed - this is the target date when the goal should be achieved by

Question 8

What are the five steps of planning

Answer 8

1. Assess the current situation
2. Set a goal
3. Create a plan
4. Implement the plan
5. Review the plan

Question 9

Explain the 5 steps in planning

Answer 9

1. Assess the current situation - swot analysis, identifies the strengths, weaknesses, opportunities and threats
2. Set a goal - Analyse the results of the swot analysis and come up with a goal to help the business succeed
3. Create a plan - come up with a plan to help the firm achieve its mission statement
4. Implement the plan - management choose the plan to be implemented and communicated this information clearly with staff
5. Review the plan - regularly review the progress of the plan to ensure that the goal will be met on time.

Question 10

What is a strategic plan

Answer 10

1-5 years, written by senior management

Breaks down the mission statement into long term business goals

Question 11

What is a tactical plan

Answer 11

1-2 years, written by middle management

Breaks down strategic plans into short term plans and helps the business to achieve the strategic plan

Question 12

What is an operation plan

Answer 12

0-1 year, written by all management levels

Plans for the day to day running of a business

Question 13

What is a contingency plan

Answer 13

0-1 year, written by all management levels

Back up plans used to deal with unforeseen events or emergencies

Question 14

What is a human resource plan

Answer 14

0-1 year, written by human resource manager
Ensures that the business has the correct number of employees with the correct skills and qualifications to fill all roles in the firm

Question 15

What is a financial plan

Answer 15

0-1 year, written by finance manager
Business prepare a cash flow forecast to predict the amount of income they will receive and spend in a particular period of time

Question 16

What is a mission statement

Answer 16

A short written statement that sets out the firms overall goal for the lifetime of the business

Question 17

How can planning effect the shareholders / investors

Answer 17

Financial planing can show investors that the business is able to repay loans borrowed and create dividends

Question 18

How can planning effect employees

Answer 18

Human resource planning can indicate to employees if there will be future promotion opportunities in the business

Question 19

How can planning effect suppliers

Answer 19

Strategic and tactical planning can indicate to suppliers that the business intends to expand

Question 20

Discuss five benefits of planning

Answer 20

1. Anticipate problems - helps firms anticipate future problems and put plans in place to overcome them before they arise
2. Identifies swot - helps a business to identify and exploit its strengths and opportunities and helps them to take action against its threats and weaknesses
3. Benchmarking - the business monitors its progress by comparing its planned targets with actual results
4. Improves motivation - planning ensure that all employees know the future goals of the business
5. Financial planning - helps the business to obtain finance