Chapter 3 Flashcards
1
Q
How is strategy defined
A
A proposal for long-term deployment of resources to meet objectives against competition
2
Q
A - How long are the goals for strategic planning normally cover
A
Between three and 10 years depending on the nature of the industry
3
Q
What industries require long-term strategic planning
A
Life and pensions businesses as well as industries such as oil exploration and production
4
Q
What does a strategy implementation stage involve
A
The development of detail tactical plans policies and procedures in operation plans and decisions
5
Q
What will the Strategy tactical plan involves
A
Include medium term Policies designed to implement some of the key elements of the strategy i.e. developing new insurance products recruitment or downsizing of staff
6
Q
What does a strategy operational plan involves
A
Routine day-to-day matters and is concerned with ensuring that the strategic goals and objectives are met I.e. cost and revenue targets
7
Q
What should be the point of implementing business plans
A
The objectives of the plan The strategy for achieving those objectives The specific activities which will be undertaken Allocation of specific responsibility The start and finish date The estimated resource requirement Expected cost Expected results
8
Q
A - What does smart stand for
A
Specific, measurable, achievable, relevant and time defined
9
Q
What are some examples of smart objectivities that are being monitored
A
Sales revenue Overheads and expenses Turnover of staff Market performance Customer satisfaction surveys
10
Q
When implementing the business plan what is the control process
A
A series of milestones identifies overtime benchmark valuation strategic and operational performance
11
Q
A - What are examples of control models
A
Management accounting Budgeting Critical success factors Key performance indicators Balance scorecard Management by objectives Benchmarking
12
Q
What is a practice of management accounting
A
Enables managers to track progress of the financial performance of the business from the financial year
13
Q
How do managers use management accounting
A
They will analyse the performance of things such as sales and expenses and the analyst will show recent historical development to help predict income and cost the remainder of the financial year
14
Q
How old the management accounting team insurance operate
A
Take responsibility for the regulatory reporting a financial transactions and the firms balance sheet
15
Q
A - What are critical success factors
A
Certain factors that are critical to realising its mission either by exploiting opportunities or by finding of the dangers posed
16
Q
A - What are usually derived from critical success factors
A
Swot analysis (strengths, weaknesses, opportunities and threats)
17
Q
What are critical success factors mostly commonly associated with
A
Strategic plan based on overcoming competition from rival organisations.
18
Q
What can be identified as a critical success factors
A
The alleviation of an organisations weaknesses and threats in the face of competition for example weak distribution systems. The improvement of these becomes a CSF
19
Q
Do you see CSF’s need to be SMART
A
Yes like objectives
20
Q
A - What are key performance indicators
A
Are those quantifiable points in the development of a company strategy to show whether or not the company is reaching its target and objectives
21
Q
A - Can KPIs be results orientated or effort orientated
A
Key performance indicators can be both
22
Q
What do results orientated measures usually represent
A
The bottom line
23
Q
What does Effort orientated measures usually represent
A
They indicate the level of effectiveness being achieved
24
Q
What are these an example of: sales volumes and/ or revenues Rates of return on investment Market share Asset growth
A
Results orientated performance measures
25
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What are these an example of:
Number of potential customers contacted
Number of complaints actions within a planned timeframe
Actions taken to improve staff relations
Actions pursuing of debtors
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Effort orientated performance measures
26
What happens in KPIs is the performance being achieved is unfavourable
Action must be taken
27
What should key risk indicators cover
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IT down time
Fraud (internal and external)
Complaints
Property loss or damage
Employee injury or illness
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28
A - What are the four perspectives of a balance scorecard
Internal perspective
Customer perspective
Learning and growth
Financial perspective
29
A - What do balanced scorecard identify
The knowledge, skills and systems that employees will need in order to innovate and build the right strategic capabilities and efficiencies that deliver specific value to market Place which are eventually lead to a higher shareholder value
30
What two things must an organisation know to achieve on the balance scorecard
Mission statement
| Strategic plan/vision
31
After the mission statement/strategic plan and vision what other thing to the balance scorecard organisation need to know
The financial strength of the organisation
How do you organisation is currently structured and operating
The level of expertise of its employees
Customer satisfaction level
32
What do Balanced scorecard show when they are Mapped
Accompanies subsidiary objectives building up from the bottom level to the top they can be used as blueprint for the achievement of accompanies aims
33
Why do people think that Balance scorecard framework is still relevant
Tether the company to strategy execution
Present the health of an organisation
Enhances transparency
34
A - What is benchmarking
A process that allows a company to compare its own progress with that of a comprehensive standard
35
What is this an example of:
Accompanies growth will be measured against the growth of the UK economy as a whole another organisation operating in the same industry
Benchmarking
36
What does benchmarking achieve
It means that the establishment of performance measures that enable a company to analyse it efficiency and performance against competitors or leading companies in industry. It can also be used to compare the performance department within the company
37
A - What are the three types of benchmarking
Internal- compare the performance of divisions and departments internally
External- compares against competing firms
Functional- Compare the main functions of processes against other organisations but not necessarily competitors
38
To ensure that benchmarking successful, it is an essential that:
Comprehensive and accurate information is available or competing or comparable industries
Benchmarks are based on industry best practice
They are flexible and be altered
Relate to the company’s corporate strategies and plans
There are sound internal audit processes in place
39
A - What is management by objectives
A process of defining objectives within an organisation so everybody agrees objectives and understands what they need to do
40
A - When is management by objectives appropriate
The knowledge based organisation such as insurance companies
41
A - Under management by objectives of the success of achievement of organisational goals for quite a number of key management factors, namely that:
They must be complete support from the top management
It’s job is directed towards same goals
Each managers target form it supposed be to ride from targets
Each manager must know what their performance targets are
A managers superior must know what to demand for their manager
42
What are the advantages of management by objectives
Motivation
Better communication and coordination
Clarity of goals easily smart methodology
Employees tend to have a high commitment to objectives
Managers can ensure that objectives of employees are linked to the organisations objectives
A common goal
43
What are the disadvantages of management by objectives
Employees may believe it’s a management ploy
Maybe prone to distort results
Potential for considerable paperwork
More on short-term goals
May not be sufficiently skilled interpersonal interaction
44
What is variance analysis
Where departments or individuals will usually be expected to provide reasons for any significant variances in the budget
45
A - What is forecasting
The method by which  Budget I’ll put together by directors and senior management
46
 What three things does forecasting cover
Levels and types of business all transacted
Turn over the business produces
Income such as investment returns 
47
Will the forecast cash flow from part of the budget plan
Yes, A firm will need to ensure that cash flow is managed so that funds are available to meet expenses as they arise
48
What happened with the longer the forecast in horizon used
Less certainty that will be either results obtained
49
How often weather forecast income and expenses need to be looked at
As a period under review progresses e.g. monthly or annually
50
A - What are the four advantages of budgeting
Unification of effort
Planning
Financial awareness
Basis of comparison
51
A - What does a budget show
The income and expenditure expected during a financial period
52
How are budgets drawn up
For individual departments and functions example sales budget and expense budget as well as the capital expenditure such as IT and also cash flow
53
A - Who begins budgeting process
The chief executive issues general guidelines of the master budget the principal heads of departments
54
What is a budget committee
In large organisations they are made up of the functional department mental managers and chaired by the chief executive
55
When budgeting what do the chief executive guidelines include
A commentary on the organisations performance in the final year which is just finishing,
an explanation of a differences between actual performance and budgeted performance for that year,
if you unexpected changes in the business environment in the coming year
56
What happens when budgeting after chief executive guidelines are released
Each department head discuss them with the relevant members of their team
Each department and strive to put together its own budget ensuring is it matches the objectives of the master budget
57
Once the consultation and preparation has being completed a departmental budgets Are viewed by the committee all or the board to ensure that they :
Conform to the policies of a master budget
Shows how departmental objectives are going to be achieved
Recognise any constraints
Are realistic
Reflect the financial responsibilities of the department concerned
58
What happened with Samantha budget and a departmental budgets have been decided and agreed
They communicated to managers before the start of the appropriate financial period
59
What happened after a budget is agreed for all different levels
Continuous monitoring on a weekly or monthly basis to identify variances from the budget to the corrective action should be taken early
60
What are the four Methods and types of budgeting
Top down budgeting
Bottom up budgeting
Zero-based budgeting
Rolling budgets
61
A - What is top-down budgeting
The owners or directors decide on the individual plans for each department and function and these plans are given to the individual managers to implement. Easy to operate.
62
A - What is bottom up budgeting
Individual department managers construct their own budget within set guidelines. They are then past up to the managers and directors who incorporate individual budget into organisations master budget
63
A - What are the two methods of bottom up budgeting
The fixed budget and flexible budget
64
A - What is a fixed budget method of bottom of budgeting
It’s not changed once it has been established regardless of any alterations in the organisations performance in reality
65
A - What is a flexible budget method when b bottom up budgeting
It’s changed in according to the organisations real activity levels over time i.e. If salary cost increase unexpectedly halfway through the budget period
66
A - What is zero based budgeting
Relies on managers to justify their expenditure from a fresh standpoint.
It requires managers to start a position of having nothing in a budget the ultimate question they don’t have to justify what they want going forward
67
A - When is zero-based budgeting normally used
The cost of individual and self contained areas of work such as research, machine maintenance and legal services
68
A - What are rolling budgets
They are budgets are constantly look forward. With a 12 month rolling budget, are you come to the end of each month a new month is added at the far end of the whole 12 month period. Managers are always looking 12 months ahead and make alterations in the future budget on a regular basis
69
A - What is a budget variance
The difference between actual and budgeted performance
70
A - What are the two types of variances
Unfavourable variance and favourable variance
71
A - What is an unfavourable variance
When budgets or not met
72
A - What is a favourable variance
When budgets are exceeded
73
Why do Unfavourable variances need to be investigated
So that preventative actually to be implemented to bring the spend back on budget also that effect can’t be minimised
74
Why does a favourable balance need to be investigated
Select contributing factors can be nurtured and effect incorporated in the future plans
75
A - What are the causes of variances
Inadequate pricing
Higher expenses than planned
Random events for example an IT breakdown
Operating efficiency
76
What is meant by management by exception when investigating budget variances
Save the allocation of unnecessary management time to investigate minor variances for example a plus or -3% on sales volume
77
What are the four main steps in decision-making
1. Understanding why decision must be take
2. Prior consideration and discussion of the options
3. Taking the most appropriate decision
4. Review
78
A - What are the five C’s of decision-making
Consider, consult, crunch, communicate and check
79
When should contingency plans be putting in the steps in decision making
When considering and discussing the options
80
How do the five C’s of decision-making work
Consider- preparation stage of which the problem is considered
Consult- which initiatives are taken to involve those affected
Crunch- We need to ensure that something is done
Communicate- explanation to staff
Check- Go back a monitoring result of a decision
81
What is classed as essential information
Organisations financial position
Monthly sales revenue
Value of reported insurance claims
82
A - What is the information manager needs
Level of productivity
What resources are available
Are objectives being met
83
A - Information within an organisation to be analysed is into what three levels
Strategic
Tactical
Operational
84
When a strategic information used
By senior managers to planner objectives of their organisation and to assess whether objectives are being met
85
What is this an information example of:
Overall profitability
Future market prospects
Availability and cost of raising new funds Total cash needs
Strategic information
86
What is tactical information
Used by middle management to ensure that resources of the business are employed to achieve strategic objectives of the organisation
87
What level of information is it an example of:
| Productivity control or variance analysis reports and cash flow forecast
Tactical
88
Where is tactical information generated from
Within the organisation and is likely to have an accounting emphasis it can be prepared regularly
89
What is operational information
Used by front line managers such as supervisors to ensure that specific tasks are planned and carried out properly
90
A - What is a management information system
A database of financial information organised to produce regular reports on operations for every level of management
91
A - What is the main purpose of a management information system
To give managers feedback about their own performance and enable senior management to monitor the company as a whole
92
The basic features of a management information system can be summarised as follows
Information flows horizontally and vertically
| Reports generate between low-level management and top-level management
93
A - What is the codification strategy
Knowledge is carefully codified and stored in database where it can be accessed and use easily by appropriate employees
94
A - What is a personalisation strategy
Knowledge is closely tied to the person who developed it and shared mainly for a direct person-to-person contact instructor training programs
95
What two main areas of the organisation strategy does knowledge management have an impact on
Creating value for customers
| Operational economies
96
How does knowledge management have an impact on creating value for customers
The customer should benefit because the financial services organisation to build a reliable, high quality information system
97
How does knowledge management have an impact on operational economies
They follow accreditation strategies to rely on economies of reuse. The knowledge can be employed in my task 1 million please because it is now containing documents or electronic form this will save work, reduce communication course and allow companies to take a more projects
98
Which knowledge management system is more appropriate for mature services
Codification strategy
99
Which knowledge management is better used for innovative services
Personalisation strategy
