Chapter 3 Flashcards
How long are the goals for strategic planning normally cover
Between 3 and 10 years depending on the nature of the industry
What industry requires long-term strategic planning
2 business and 2 industries
Life and pensions businesses as well as industries such as oil and production 
What does Smart stand for
Specific, measurable, achievable, relevant and time defined
When implementing the business plan what is a control process
A series of milestones
Identifying benchmark valuation, strategic and operational performance
What are examples of control models (7 examples listed)
Management accounting Budgeting Critical success factors Key performance indicators Balance scorecard Management by objectives Benchmarking
What are critical success factors
A high level goal that is imperative for a business to meet
Certain factors such a critical to realising it’s mission either by exploiting opportunities or by finding of the dangers posed
What are usually derived from critical success factors
Swot analysis (strengths, weaknesses, opportunities and threats)
What are key performance indicators
A quantifiable measure of performance over time for a specific objective
They are quantifiable points in the development of a company strategy to show whether or not the company is reaching its target and objectives
Can key performance indicators be results orientated or effort orientated
Both
What are the four perspectives of a balance scorecard
Internal, customer, learning and growth, financial
What should key risk indicators cover
IT downtime, fraud, complaints, property loss or damage, employee injury
What does a balance scorecard identify
Is the company/colleagues are following/ enhancing the strategic plan via the objectives set
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 marketplace which are eventually lead to a higher shareholder value
What is benchmarking
A process that allows the company to compare its own progress with that of a comprehensive standard
What is this example of
A companies growth will be measured against the growth of the UK economy as a whole or another organisation or operating in the same industry
Benchmarking
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
What is management by objectives
A process of defining objectives within an organisation so everybody agrees objectives and understand what I need to do
When is management by objectives appropriate
The knowledge based organisation such as insurance company
Under management by objectives of the success of achievement of organisational goals for quite a number of Key management factors, namely that:
- There must be complete support from the top management
- Its job is directed towards same goals
3. each managers target form it supposed to be to ride targets - Each manager was know what their performance targets are
- A manager superior must know what to demand for the manager
What is forecasting
The method by which a budget is put together by directors and senior management
What is variance analysis
Where department or individuals will usually be expected to provide reasons for any significant variances in the budget
What three things does forecasting cover
Levels and types of business or transacted
Turnover the business produces
Income such as investment returns
What are the four advantages of budgeting
Unification of effort
Planning
Financial awareness
Basis of comparison
What does a budget show
The income and expenditure expected during a financial period
Who begins the budgeting process
The chief executive issues general guidelines at the master budget to the principal heads of departments
What happens when budgeting after chief executive guidelines are released
Each department head discusses that with the relevant members of our team
Each department drive to put together its own budget ensuring it matches objective of the master budget
What is top-down budgeting
The owners or directors decide on individual plans for each department and function and these plans are given to the individual manager to implement. Easy to operate
What is bottom up budgeting
Individual department managers construct their own budget within set guidelines.
They are then passed up to the managers and directors individual budget and organisations master budget
What are the two methods of bottom up budgeting
The fixed budget and flexible budget
What is a fixed budget method of bottom up budgeting 
It’s not changed once it has been established regardless of any alterations in the organisations performance in reality
What is a flexible budget method when bottom up budgeting
It’s a change in accordance to the organisation‘s real activity levels over time
I.e If a salary costs increase unexpectedly halfway through the budget period
What is zero based budgeting
Relies on managers to justify their expenditure from a fresh standpoint
Requires manager to start a position of having nothing in a budget the ultimate question they have to justify what they want going forward
When is zero-based budgeting normally used
The cost of individual a self-contained areas of work such as research, machine maintenance and legal services
What are rolling budgets
They are budgets are currently look forward. With a 12 month rolling budget you come to the end of each month and a new month is added at the far end of a whole 12 month period. Managers are always looking 12 months ahead and make alterations in the future budget on a regular basis
What is a budget variance
The difference between actual and budgeted performance
What are the two types of variances
Unfavourable variance and favourable variance
What is an unfavourable variance
When budgets are not met
What is a favourable variance
When budgets are exceeded
Why do unfavourable variances need to be investigated
Preventative measures can actually be implemented to bring the spend back on budget also that effect can be minimised
Why does a favourable balance need to be investigated
Select contributing factors can be nurtured an affect incorporated in the future plans
What are the causes of variances
Inadequate pricing
Higher expenses than planned
Random events for example an IT breakdown
Operating efficiency
What are the 5 C’s of decision making
Consider: preparation of stage of which the problem is considered
consult: which Initative is a taken to involve those affective
Crunch; we need to ensure that something is done
communication; explanation to staff
Check: go back and monitor results of a decision
What information does a manager needs when looking at colleagues
Level of productivity
What resources are available
Are objectives been met
Information within an organisation is to be analysed into what 3 levels
Strategic, tactical, operational
When a strategic information used
By senior managers to plan objectives of their organisations and to assess whether objectives are being met
What are examples of strategic information
Overall profitability
Future market prospects
Availability and cost of raising new funds
Total cash needs
What is tactical information
Used by middle management to ensure that resources of the business are employed to achieve the target objectives of their organisation
What level of information is in example of tactical
Productivity control or variance analysis report and cash flow forecast
Where is the emphasis for tactical information
Generated Within the organisation and is likely to have an accounting emphasis it can be prepared regularly 
What is operational information
Used by front line manager such a supervisors to ensure that specific tasks are planned and carried out properly
What is a management information system
A database of financial information organised to produce regular report and operations for every level of management
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
What is a codification strategy
Knowledge is carefully codified and stored in a database where it can be accessed and used easily by appropriate employees
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
What two main areas of the organisation strategy does knowledge management have an impact on
Creating value for customers and operational economies
What knowledge management system is more appropriate for mature services
Codification strategy
Which knowledge management is best used for innovative services
Personalisation strategy
What is a balance scorecard?
A set of objectives the business follows to align with the strategic plan
Is a management system aimed at translating an organisations strategic goals into a set of performance goals
What is a balance scorecard meant to measure?
The intellectual capital of a company through four main areas
Internal processes
Learning and growth
Customers and finance
