Chapter 10 - Management Activities 1: Planning Flashcards
What is planning
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.
What does smart stand for
S - specific M - measurable A - achievable R - relevant T - timed
Explain the S in smart
Specific - the plan must clearly state its goals. Everybody should understand what the plan will achieve
Explain the M in smart
Measurable - there should be evidence that the goal has been achieved e.g. measured in percentages
Explain the A in smart
Achievable - this goal must be realistic, it should challenge the business to achieve it but should be possible
Explain the R in smart
Relevant - the goal should be relevant to the overall business goals
Explain the T in smart
Timed - this is the target date when the goal should be achieved by
What are the five steps of planning
- Assess the current situation
- Set a goal
- Create a plan
- Implement the plan
- Review the plan
Explain the 5 steps in planning
- Assess the current situation - swot analysis, identifies the strengths, weaknesses, opportunities and threats
- Set a goal - Analyse the results of the swot analysis and come up with a goal to help the business succeed
- Create a plan - come up with a plan to help the firm achieve its mission statement
- Implement the plan - management choose the plan to be implemented and communicated this information clearly with staff
- Review the plan - regularly review the progress of the plan to ensure that the goal will be met on time.
What is a strategic plan
1-5 years, written by senior management
Breaks down the mission statement into long term business goals
What is a tactical plan
1-2 years, written by middle management
Breaks down strategic plans into short term plans and helps the business to achieve the strategic plan
What is an operation plan
0-1 year, written by all management levels
Plans for the day to day running of a business
What is a contingency plan
0-1 year, written by all management levels
Back up plans used to deal with unforeseen events or emergencies
What is a human resource plan
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
What is a financial plan
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
What is a mission statement
A short written statement that sets out the firms overall goal for the lifetime of the business
How can planning effect the shareholders / investors
Financial planing can show investors that the business is able to repay loans borrowed and create dividends
How can planning effect employees
Human resource planning can indicate to employees if there will be future promotion opportunities in the business
How can planning effect suppliers
Strategic and tactical planning can indicate to suppliers that the business intends to expand
Discuss five benefits of planning
- Anticipate problems - helps firms anticipate future problems and put plans in place to overcome them before they arise
- Identifies swot - helps a business to identify and exploit its strengths and opportunities and helps them to take action against its threats and weaknesses
- Benchmarking - the business monitors its progress by comparing its planned targets with actual results
- Improves motivation - planning ensure that all employees know the future goals of the business
- Financial planning - helps the business to obtain finance
