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2023 M92 Business and Finance > Chapter 3 - Planning And Control > Flashcards

Chapter 3 - Planning And Control Flashcards

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1
Q

Strategic planning covers what time range?

A

3-10 years

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2
Q

What does the tactical plan cover?

A

Medium term company policies, implements key elements of the strategy such as new insurance products, recruitment, investing in services etc. project appraisal and project management important here.

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3
Q

What is the timescale for tactical plans?

A

One to three years

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4
Q

What does operational plans look at?

A

Routine day to day matters And is concerned with making sure strategic goals are met, for example hitting revenue targets, service levels etc. Detailed action plans are put in place to make sure objectives achieved. Action plans will show allocation of responsibility And resources. Budgets also important here.

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5
Q

Give a list of 8 control models

A
  1. Management accounting
  2. Budgeting
  3. Critical success factors
  4. Key performance indicators
  5. Key risk indicators
  6. Balanced scorecards
  7. Benchmarking
  8. Management by objectives
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6
Q

The practice of management accounting is based on the concept that information should be made available to…

A

Managers to enable them to track the progress of the financial performance of the business throughout the financial year.

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7
Q

Critical success factors are usually derived from a …

A

SWOT analysis ( strengths, weaknesses, opportunities, threats )

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8
Q

How will a company find its critical success factors?

A

These will be the factors that are critical to realising its mission, can be exploiting opportunities, fending of dangers posed by external threats and internal weaknesses.

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9
Q

If an organisation decides it will only survive if say for example its distribution systems are improved, the improvement of these systems will be a?

A

Critical success factor

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10
Q

Key performance indicators are quantifiable points in the development of a company’s strategy that show…

A

Whether or not the company is reaching its targets and objectives.

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11
Q

Key performance indicators can be in what two types?

A

Result orientated and effort orientated

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12
Q

Give examples of result orientated key performance measures

A
  • sales
  • rates of return in investment
  • market share
  • asset growth
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13
Q

Give examples of effort orientated performance measures

A
  • number of potential customers contacted
  • number of complaints resolved within planned timeframe
  • extent of relationships with customers
  • effort applied to improving staff relations, such as surveys
  • staff turnover or absence rates
  • active pursuing of debtors
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14
Q

Give some examples of key risk indicator measures

A
  • it downtime
  • examples of fraud
  • complaints
  • property loss or damage
  • employee injury or illness
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15
Q

A balanced scorecard is defined as?

A

A strategic planning and management system used to align business activities to the vision statement of an organisation.

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16
Q

How does balanced scorecards measure an organisations performance? List them also.

A

Looking at the activities of the organisation from four perspectives. These are internal perspective, financial perspective, learning and growth and customer perspective.

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17
Q

Defined, benchmarking is a process that allows a company to…

A

Compare its own progress with that of a comprehensive standard.

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18
Q

What are the three types of benchmarking?

A
  1. Internal - compares the performances of divisions and departments within the same organisation
  2. External - contrasts the company’s overall performance with competing firms e.g growth, profitability, roce
  3. Functional - covers an assessment of company’s main functions and processes and compares these against the same functions and processes in other organisations but not necessarily competitiors.
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19
Q

To ensure benchmarking is successful it is essential that:

A
  • use of comprehensive and accurate information on competing or comparable companies
  • benchmarked based on industry best practice
  • benchmarks used are flexible and can be altered if the external environment changes
  • benchmarks relate to the company’s corporate strategies and plans
  • there are sound internal audit processes in place
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20
Q

Management by objectives is the process of…

A

Defining objectives within an organisation so that both management and employees agree to the objectives and understand what they need to do in order to achieve them.

21
Q

Management by objectives is suitable for companies such as insurance companies, why is this?

A

Because these are knowledge based organisations

22
Q

Management by objectives requires managers and employees to have a…

A

Clear understanding of the roles and responsibilities expected of them so that they can understand how their activities relate to the achievement of the organisations goals.

23
Q

What are some of the important features and advantages of management by objectives?

A
  • motivation, by involving employees in the goal setting process they will be more satisfied and committed.
  • better communication and coordination, having reviews and interactions with managers helps maintain relationships and solve problems
  • clarity of goals using SMART methodology
  • employees tend to have higher commitment to goals they set themselves
  • managers can ensure the objectives of the employees are linked to the organisations objectives
  • common goals for the organisation means it is a directive principle of management
24
Q

What are the remaining 3 essential features of management by objectives? The first are:

  • clarification of results to be achieved
  • agreement with each manager of job improvement plan
  • provision of conditions which will help managers to achieve their results and job improvement plans e.g team spirit, effective management information systems
  • performance review of managers results
A
  • potential reviews to see which mamagers can advance in the company
  • development of mangement training plans to improve management skills
  • motivation of managers by effective salary, selection and career development plans
25
Q

Management objectives must link to the …

A

Corporate plan

26
Q

What can a budget be defined as?

A

A financial or quantitive statement prepared in advance of a specified accounting period.

27
Q

How long does a budget usually cover?

A

A short period of months, up to a year

28
Q

In practical terms, a budget is…

A

A breakdown of anticipated income and expenditure usually month by month which will be earned and incurred when running the business over the period covered by the budget.

29
Q

What is the process where by departments and or individuals provide reasons for any significant variances on the budget?

A

Variance analysis

30
Q

The method by which budgets are put together by directors and senior managers is known as?

A

Forecasting

31
Q

What are the main four advantages of budgeting and explain why?

A
  1. Unification of effort - budgets unify managers and employees to work towards the goals of the company, and create a sense of purpose
  2. Planning - budgets encourage planning and help managers know what resources they need to get to the plan
  3. Financial awareness - makes people more efficient and use resources wisely
  4. Basis of comparison - gives management consistent view of organisation as a whole
32
Q

What are the 5 types of budgets?

A
  1. Top down
  2. Bottom up
  3. Zero based budgeting
  4. Rolling budgets
  5. Flexible
33
Q

What is a top down budget?

A

This is when the top management like senior directors decide on the plans for the individual departments and then these,plans are given to the managers to implement.

34
Q

What is a bottom up budget?

A

This is the opposite of top down and is when department managers pass their own constructed budgets up to senior management.

35
Q

What is zero based budgeting?

A

This method relied on managers to justify their expenditure from a fresh stand point. Any amount a manager decides they need for something must be justified and will go through a formal challenge process. This type of budget setting involves senior managers rather than departments budget holders in making decisions about ZBB issues. ZBB is a method of budgeting usually employed for costing individual and self contained areas of work such as research, machine maintenance and legal services.

36
Q

What are rolling budgets?

A

These are budgets that constantly look forward. Unlike a conventional 12 month budget, as 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 are making alterations to the future budget on a regular basis.

37
Q

The difference between actual and budgeted performance is known as a…

A

Variance

38
Q

What are some causes of variances?

A

Inadequate pricing, higher expenses than planned, random events, operating efficiency

39
Q

Which concept saves the allocation of unnecessary Management time to investigate minor variances?

A

Management by exception

40
Q

What are the three levels of information?

A

Strategic, tactical and operational

41
Q

What is strategic Information?

A

Used by senior mamagers to plan the objectives of their organisation and to asses whether the objectives are being met in practice. Examples are knowing things like profitability, total cash needs, capital needs,manning levels. This information is used in the descion making known as strategic planning.

42
Q

What is tactical information?

A

Information used by middle management. This information ensures the resources of the business are employed to achieve objectives. This information looks at productivity control and variance analysis also. Examples are cash flow and profitability, manning levels etc of certain departments. A lot of this info will come from within the organisation. Tactical information is usually prepared perhaps weekly or monthly whereas strategic is more irregular.

43
Q

What information is operational?

A

Information used by front line managers such as supervisors to ensure that specific tasks are planned and carried out properly.

44
Q

The provision of information occurs by means of a?

A

Management information system.

45
Q

What is knowledge management?

A

Complications and redistribution of an organisations collective skills and experience for the benefit of the organisation as a whole.

46
Q

There are two main approaches to managing knowledge in financial service organisations, these are:

A

Codification strategy and personalisation strategy

47
Q

What is the codification strategy?

A

In most cases when knowledge is on the computer, it is carefully codified and stored in databases where it can be accessed and used easily by appropriate employees.

48
Q

What is the personalisation strategy?

A

In other more specialised financial service organisations, knowledge is closely tied to the person who developed it and is shared mainly through direct person to person contracts and structured training programmes. In these organisations computers are used to chiefly help people communicate knowledge to others rather than to store it.

49
Q

Which two benefits does knowledge management bring to an organisations strategy?

A
  • creates value for customers as organisation will use reliable high quality information system and solutions proven to be successful.
  • operational economies, follow a codification strategy since they rely on economics of reuse. Once a piece of software developed can be used multiple times for a low cost.

2023 M92 Business and Finance (10 decks)

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