Chapter 3 Flashcards
What is strategic planning?
Strategic planning is a process where a business develops a statement detailing long-term goals and the strategies and policies to achieve them, typically covering a period of 3 to 10 years.
What is the role of operational plans in strategic planning?
Operational plans are created to implement the strategic plan by outlining short- and medium-term objectives, helping to achieve the long-term goals set by the strategic plan.
What is a key factor in setting objectives within a strategic plan?
Key factors include setting clear and achievable goals, identifying the necessary actions to achieve those goals, and aligning the overall strategy with the company’s mission and vision.
What should be included when creating an operational/business plan?
An operational plan should include setting objectives, allocating responsibilities, agreeing on management style, establishing budgets, setting sales targets, and identifying contingencies.
Why is a contingency plan important in strategic planning?
A contingency plan helps to address unforeseen challenges or changes in the business environment, ensuring the strategy can adapt and continue toward its goals despite setbacks.
You are tasked with creating a strategic plan for a company, and you need to outline its long-term objectives. Which of the following is a key aspect of strategic planning?
A) Creating an immediate sales plan
B) Defining long-term goals and methods for achieving them
C) Organizing daily staff schedules
D) Establishing short-term budget allocations
B - Defining long-term goals and methods for achieving them.
Your company is reviewing its current strategy and needs to consider adjustments. Which of the following is essential in revising a strategic plan?
A) Setting short-term deadlines
B) Identifying and adjusting the contingency plans
C) Revising the immediate daily operational tasks
D) Allocating bonuses for staff performance
B - Identifying and adjusting the contingency plans.
You’ve been assigned to allocate management responsibilities in a new strategic plan. Which of the following should you focus on in this step?
A) Ensuring consistent management style across all levels
B) Setting up quarterly operational reviews
C) Directing all attention toward achieving sales targets
D) Focusing solely on the budget and finances
A - Ensuring consistent management style across all levels.
In a strategic planning session, you are asked to set a timeline for achieving long-term goals. What aspect is most critical in developing the timeline?
A) Deadlines must be set by the highest-ranking officers only
B) Timetables should consider realistic milestones and flexibility for adjustments
C) Focus entirely on short-term deadlines to keep the team focused
D) Timelines should only be set after sales targets are met
B - Timetables should consider realistic milestones and flexibility for adjustments.
As a manager, you are reviewing an operational plan and need to ensure efficient resource use. What should be included in this plan?
A) Focusing only on human resource allocation
B) Identifying key areas for efficient material resource use
C) Ignoring the budget to allow for flexible spending
D) Allocating all resources toward sales growth
B - Identifying key areas for efficient material resource use.
What does SMART stand for in the context of business plan objectives?
SMART stands for Specific, Measurable, Achievable, Relevant, and Time-defined.
What should be included when outlining the strategy for achieving objectives in a business plan?
The strategy should detail the approach, steps, and methods that will be used to achieve the set objectives.
Why is allocating specific responsibility important in implementing a business plan?
Allocating responsibility ensures accountability, clear ownership of tasks, and efficient execution of activities.
What role do milestones play in a business plan?
Milestones represent the expected results or key points of progress upon completion of specific activities, helping to track and measure success.
What should be considered when estimating the resource requirements for implementing a business plan?
Resource requirements should include the necessary materials, personnel, and time needed to successfully complete the activities outlined in the plan.
You are tasked with developing a business plan for a new project. What is a key component you need to ensure the objectives are clear and actionable?
A) Setting general, broad objectives
B) Creating objectives that are SMART (Specific, Measurable, Achievable, Relevant, Time-defined)
C) Focusing only on the project’s final result
D) Avoiding timelines to keep flexibility
B - Creating objectives that are SMART (Specific, Measurable, Achievable, Relevant, Time-defined).
You are reviewing a business plan for a specific division. What should be included to clearly define the scope of activities for that division?
A) A list of all the company’s goals
B) A detailed list of specific activities and their responsible personnel
C) Only high-level objectives with no details
D) A budget outline without any activity breakdown
B - A detailed list of specific activities and their responsible personnel.
You are assigned to a business plan that requires specific resource allocation. Which of the following should be included in the plan?
A) Only human resources required
B) The estimated resource requirements for the entire period of implementation, including materials and personnel
C) General expectations for resources without specifics
D) Only financial resources with no detailed activity plans
B - The estimated resource requirements for the entire period of implementation, including materials and personnel.
In the process of implementing a business plan, you need to set dates for each activity. Why is this step important?
A) To maintain a loose schedule that can adapt
B) To ensure each activity is time-defined, helping track progress and deadlines
C) To focus on the long-term outcome without worrying about specific dates
D) To create a general timeline without specifying start or finish dates
B - To ensure each activity is time-defined, helping track progress and deadlines.
You are reviewing a business plan and notice there are no expected results outlined for activities. How should you proceed?
A) Skip defining the results, as they are unnecessary
B) Define expected results or milestones to track the completion and success of each activity
C) Focus only on the cost estimation
D) Remove milestones and focus on the timeline
B - Define expected results or milestones to track the completion and success of each activity.
What is the primary goal of monitoring a business plan?
The primary goal is to track whether the original objectives and expected results have been achieved.
What is a key feature of SMART objectives?
SMART objectives are Specific, Measurable, Achievable, Relevant, and Time-defined, providing clear targets for monitoring and evaluation.
Why is it important to track factors such as sales revenue and customer satisfaction?
Tracking these factors helps measure performance against set objectives, providing insights into whether the business plan is on track.
What role do control models play in monitoring business plans?
Control models help management monitor the achievement of business objectives by setting benchmarks and tracking performance, without creating excessive bureaucracy.
What is the function of milestones in the control process?
Milestones serve as benchmarks for evaluating strategic and operational performance, offering early warning signals of deviations from expected outcomes.
You are asked to implement a control system for tracking a business plan’s performance. Which of the following would be the most useful?
A) A general timeline without specific objectives
B) SMART objectives and measurable factors such as sales revenue and customer satisfaction
C) A focus on only tracking expenses
D) A system that only looks at long-term goals
B - SMART objectives and measurable factors such as sales revenue and customer satisfaction.
You are reviewing a business plan’s performance and need to assess market performance. Which of the following would be most appropriate to measure?
A) Only internal factors like overheads
B) Market performance against the competition
C) The number of staff hired
D) Sales revenue from previous periods only
B - Market performance against the competition.
As part of the control process, you identify key performance indicators (KPIs) to track. What is their purpose?
A) To measure progress towards achieving business objectives
B) To create random benchmarks
C) To focus on only internal performance metrics
D) To reduce the number of objectives being tracked
A - To measure progress towards achieving business objectives.
You are implementing a control model using management by objectives (MBO). What is the role of this model?
A) To link corporate goals to management and staff targets
B) To reduce the number of staff members involved
C) To solely focus on financial performance
D) To create a detailed step-by-step plan without flexibility
A - To link corporate goals to management and staff targets.
You are tasked with using a balanced scorecard to monitor performance. What should you include in this model?
A) A focus on sales revenue only
B) A holistic view of business performance across financial, customer, internal process, and learning and growth perspectives
C) A focus only on overheads and expenses
D) A narrow focus on risk management only
B - A holistic view of business performance across financial, customer, internal process, and learning and growth perspectives.
What is the main purpose of management accounting?
The main purpose is to provide managers with information to track the financial performance of the business, allowing for analysis of factors like sales levels, expenses, and operational costs.
How does management accounting help predict income and costs?
By analyzing historical data, management accounting helps forecast future income and costs for the remainder of the financial year, aiding in planning and decision-making.
What responsibility might the management accounting team have in an insurance operation?
The management accounting team may be responsible for regulatory reporting of financial transactions and the firm’s balance sheet.
What are critical success factors (CSFs)?
CSFs are key factors that are crucial for an organization to achieve its mission, often derived from a SWOT analysis, and linked to strategic objectives aimed at overcoming competition or internal weaknesses.
How should critical success factors (CSFs) be defined?
CSFs should be SMART (Specific, Measurable, Achievable, Relevant, Time-defined) to ensure clear and actionable goals for the organization.
As a manager, you are analyzing financial performance for the year. Which of the following would be most useful in tracking this performance?
A) Analyzing historical sales data alone
B) Using management accounting to analyze sales levels, expenses, and operational costs
C) Only focusing on external market conditions
D) Ignoring expenses and focusing only on profits
B - Using management accounting to analyze sales levels, expenses, and operational costs.
Your organization is identifying key areas to address for its survival in a competitive market. Which of the following could be considered a critical success factor (CSF)?
A) Improving distribution systems to overcome weaknesses
B) Lowering prices without considering operational costs
C) Reducing staff without assessing impact on operations
D) Ignoring competition and focusing only on internal operations
A - Improving distribution systems to overcome weaknesses.
You are tasked with monitoring the performance of an insurance company. What type of information would be most beneficial for tracking financial performance?
A) Only analyzing the company’s sales revenue
B) Analyzing sales levels, staff costs, raw materials, and operational costs
C) Ignoring operational costs and focusing solely on income
D) Focusing on market trends without internal data
B - Analyzing sales levels, staff costs, raw materials, and operational costs.
Your organization is facing competitive pressure, and you need to identify key areas for improvement. Which tool is best for identifying critical success factors (CSFs)?
A) SWOT analysis
B) Sales data analysis only
C) Only focusing on market share
D) Randomly setting objectives
A - SWOT analysis.
Your company needs to ensure its critical success factors (CSFs) are measurable and achievable. How should these factors be defined?
A) They should be vague to allow flexibility
B) They should be SMART (Specific, Measurable, Achievable, Relevant, Time-defined)
C) They should focus only on long-term objectives
D) They should be set without any specific timeline
B - They should be SMART (Specific, Measurable, Achievable, Relevant, Time-defined).
What are Key Performance Indicators (KPIs)?
KPIs are measurable objectives that help track the progress of an organization in achieving its strategic goals.
What is the difference between results-oriented and effort-oriented KPIs?
Results-oriented KPIs represent the final outcomes (e.g., sales volumes, market share), while effort-oriented KPIs measure the actions taken to achieve those outcomes (e.g., number of potential customers contacted).
How do KPIs link to an organization’s strategy?
KPIs are linked to the critical success factors of an organization’s strategy, ensuring that performance is tracked against targets and that corrective actions can be taken if necessary.
What is an example of a results-oriented KPI?
Examples include sales volumes, rates of return on investment, market share, and asset growth.
What is the key factor when working with KPIs?
The key factor is that KPIs are not just for information; they are actionable measures that require management intervention if an unfavourable position is indicated.
Your company is tracking performance through KPIs. Which of the following would be an effort-oriented KPI?
A) Sales revenue
B) Number of potential customers contacted
C) Market share
D) Asset growth
B - Number of potential customers contacted.
An insurance company identifies the need for an enhanced social media presence. What is a related action point for this KPI?
A) Track sales revenue
B) Create a job description for a social media manager
C) Monitor employee productivity
D) Focus only on customer complaints
B - Create a job description for a social media manager.
During a monthly meeting, a firm notices an increase in technology risks. What should be done next according to the KRI process?
A) Ignore the trend and continue as planned
B) Investigate the circumstances and review the effectiveness of controls
C) Track only the sales revenue
D) Reduce efforts in marketing
B - Investigate the circumstances and review the effectiveness of controls.
Your company is monitoring key risks. Which of the following is a potential Key Risk Indicator (KRI)?
A) Sales revenue
B) IT downtime and technology risks
C) Number of new customers acquired
D) Employee productivity rates
B - IT downtime and technology risks.
You are reviewing your company’s KPIs and notice a downward trend in market share. What action should be taken?
A) Ignore the trend as it’s a temporary fluctuation
B) Investigate the causes of the decline and take corrective action
C) Focus solely on increasing marketing budget
D) Wait until the trend becomes more significant before acting
B - Investigate the causes of the decline and take corrective action.
What is the purpose of a balanced scorecard (BSC)?
The balanced scorecard is a strategic planning and management system that aligns business activities with the organization’s vision statement by measuring performance from four perspectives: financial, customer, internal processes, and learning and growth.
What are the four perspectives measured by a balanced scorecard?
The four perspectives are:
Financial perspective
Customer perspective
Internal perspective
Learning and growth perspective
What does a balanced scorecard aim to achieve for an organization?
A balanced scorecard helps align an organization’s resources to improve efficiencies, foster innovation, and deliver value to customers, ultimately leading to higher shareholder value.
Your company wants to ensure its activities align with its mission and vision. Which tool would be most effective for measuring performance across different perspectives?
A) SWOT analysis
B) Balanced scorecard
C) Benchmarking
D) Market research
B - Balanced scorecard.
A company is looking to improve its internal processes, customer satisfaction, employee learning, and financial performance in a holistic way. Which approach would help the company achieve this?
A) Management by objectives
B) Balanced scorecard
C) Key performance indicators (KPIs)
D) Risk management framework
B - Balanced scorecard.
Your company is using the balanced scorecard to track performance. Which of the following would be part of the financial perspective?
A) Employee training programs
B) Sales revenue and profit margins
C) Customer satisfaction surveys
D) Number of new policies sold
B - Sales revenue and profit margins.
What is benchmarking in business?
Benchmarking is the process of comparing a company’s performance with a comprehensive standard, such as the growth of the UK economy, a competitor, or an industry leader, to assess its efficiency and effectiveness.
What are the three types of benchmarking commonly used?
The three types of benchmarking are:
Internal benchmarking: Comparing performance within divisions or departments of the same organization.
External benchmarking: Comparing the company’s performance with competing firms.
Functional benchmarking: Comparing the company’s functions and processes with those of other organizations, regardless of whether they are competitors.
What are the key elements for successful benchmarking?
Successful benchmarking requires:
- Comprehensive and accurate information on competitors or comparable industries
- Benchmarks based on industry best practices
- Flexibility to adapt to external changes
- Alignment with the company’s corporate strategies
- Sound internal audit processes
Your company is assessing its performance against competitors to identify areas of improvement. Which type of benchmarking are you using?
A) Internal benchmarking
B) External benchmarking
C) Functional benchmarking
D) Employee benchmarking
B - External benchmarking.
Your company compares the performance of its customer service department with similar departments in other organizations. Which type of benchmarking is being applied?
A) Functional benchmarking
B) Internal benchmarking
C) External benchmarking
D) Competitor benchmarking
A - Functional benchmarking.
A company is comparing the performance of its various departments to identify best practices and improve efficiency. What type of benchmarking is this?
A) Internal benchmarking
B) External benchmarking
C) Functional benchmarking
D) Competitor benchmarking
A - Internal benchmarking.
What is Management by Objectives (MBO)?
MBO is a process where both management and employees agree on objectives and understand what they need to do to achieve them. It aligns individual goals with the organization’s overall goals, promoting clarity and motivation.
What are some advantages of Management by Objectives (MBO)?
Advantages of MBO include:
Increased motivation and job satisfaction through employee involvement in goal setting
Better communication and coordination within the organization
Clear and measurable goals (SMART methodology)
Higher commitment to self-set objectives
Alignment of employee objectives with organizational goals
What are some disadvantages of Management by Objectives (MBO)?
Disadvantages include:
Potential for employees to see it as a management ploy
Possible excessive paperwork and meetings
Focus on short-term goals at the expense of long-term objectives
Difficulty in evaluating subjective goals
Managers may lack skills in interpersonal interaction
Risk of employees distorting results to meet individual goals
Your company has implemented MBO, and employees are setting their own objectives. What is the primary benefit of this approach?
A) Employees are less likely to achieve their goals.
B) Employees tend to be more committed to objectives they set for themselves.
C) Employees have no involvement in goal setting.
D) Managers set all goals for the employees.
B - Employees tend to be more committed to objectives they set for themselves.
A manager is focusing only on short-term objectives, ignoring the long-term vision of the company. What is a potential disadvantage of this focus within the MBO framework?
A) It enhances long-term organizational growth.
B) It leads to an overemphasis on short-term goals.
C) It improves employee morale.
D) It reduces the need for goal setting.
B - It leads to an overemphasis on short-term goals.
In an MBO system, what is essential for managers to effectively link employee objectives with organizational goals?
A) Extensive training and strong interpersonal skills
B) A rigid, mechanistic control system
C) Complete focus on achieving personal goals
D) Ignoring employee input during goal setting
A - Extensive training and strong interpersonal skills.
