Chapter 8-Management Activities Flashcards
Manager carries out 3 main tasks (activities)
Planning
Organising
Controlling
Planning
Planning involves SETTING OBJECTIVES / GOALS to achieve and
How will we achieve those goals STRATEGIES
Steps of Planning
-Step 1 SWOT Analysis
Step 2: Set Objectives
Step 3: Devise Strategies
Step 3: Devise Strategies
Low Cost Strategy
Differentiation
Niche Strategy
Step 2: Set Objectives
Use the results of the SWOT analysis to help set objectives that are realistic.
Step 3: Devise Strategies
Low Cost Leadership Strategy: Keep costs as low as possible so we can sell products as cheap as possible and attract price conscious consumers. EG Pennys, Ryanair
Differentiation: Make the product different so it stands out from the competition.People will pay more for something different. The most common form of differentiation is a ‘brand name’ EG Tommy Hilfiger, Rolex
Niche: Spotting a gap in the market and catering to a group of customers with specific needs. EG Ferrari
Manpower planning
Manpower planning involves making sure the business has enough workers with the right skills to achieve the business objectives.
Manpower planning avoids being understaffed and overstaffed
Manpower planning Steps
Step 1: Forecast future Employee Demand: How many employees and what skills do we need?
Step 2: Calculate existing Employee Supply: Who currently works for the business.
Step 3: If demand exceeds supply then recruit more staff. If supply exceeds demand then make redundancies.
Cash Flow Forecast
A Cash flow forecast plans out the cash the business expects to spend and receive in the coming months
Make sure the business has enough cash to pay its bills.
If the business looks like it will not have enough cash it will try increase cash coming in and decrease cash going out
The benefits of CFF
The benefits of CFF are spotting deficits in advance and taking corrective action.
Also spot surpluses and plan how to invest this money to gain a return.
Mission
Mission is the overall purpose of the business
It gives the business a sense of direction
Mission is the overall fundamental objective of the business and the reason the business exists
What the business does now? In the future?
And the values and beliefs that govern its existence
strategic plan
A strategic plan is a long term plan of action
Its written by the most senior managers
They look at the mission statement and they break it up into major strategic plans.
Tactical Plan
A short term plan Often applies to a particular department Written by middle managers Break up the Strategic plan into pieces for each department to fulfil Feeds back into the strategic plan
Advantages of Planning
Guide the business to success: Set out objectives and strategies to achieve them. Acts like a road map.
Avoid future problems: Anticipate problems and take steps, now, to avoid them. EG Cash flow forecast or manpower planning.
Eliminate the business weaknesses: Analyse the results of SWOT analysis and take steps to eliminate or guard against weaknesses
Secure Capital: Show investors and banks your plans to prove you can repay it.
Motivates managers and staff: Having objectives motivates staff to achieve them and creates a sense of satisfaction when they are achieved
Organising
The structuring of the business is called organising
Organising involves arranging all the resources in the most suitable form to achieve the objectives. This means drawing up an Organisational Structure
Splitting the work into departments and putting people in charge to ensure departments achieve their goals
Organisational Structures
Functional Organisational Structure
- Geographical Structure
Product Organisation Structure
- Matrix Structure
- Functional Organisational Structure
Split the job into functions (Departments) with a manager responsible for each department.
Functional Organisational Structure Advantages
Specialisation: Each department is expert and can do the job quickly and to a high standard
Clarity: Everyone knows who to report to.
Accountability: Identify and eradicate errors quickly
Functional Organisational Structure Disadvantages
Isolation: People do not care what is happening in other departments
Co-ordination: Difficult to get departments to pull together.
Product Organisation Structure
Split the organisation up based on products
2) Product Organisation Structure Advantages
Focus on Customer: Concentrate on delivering the best product to customers.
Competition: All departments compete against each other and strive to be the best.
Lower Costs: Incentive for departments to keep costs low.
2) Product Organisation Structure
Disadvantages
Duplication: Business ends up with multiple Marketing, Finance, HR departments which leads to wasteful costs.
Brand Cannibalisation: Product Directors try steal customers from other products within the company to try be the most successful.
Geographical Organisation Structure
Split the business based on geographic location
Geographical Organisation Structure Advantages
Serves Local Needs Better: Local Departments know what local customers want.
Competition: Leads to improved performance
Lower Costs: Due to competition to outperform other regions
Geographical Organisation Structure Disadvantages
Duplication: Wasted money
Conflict: Between senior and local management on needs of customers
4) Matrix Organisation Structure
Combines Functional and Project/Team structure. Use this structure when we require MAJOR TEMPORARY PROJECTs
Employees have a project leader and their functional / department manager. Projects teams formed from expertise of multiple departments.
Matrix Organisation Structure Advantages
Motivation Improves: Feel special being part of a project / team. Esteem needs
Better Coordination: Develop an understanding of the work other departments do.
Matrix Organisation Structure Disadvantages
Two Bosses: Could lead to conflicting orders and stress for employee.
Increased Costs: Extra admin costs, extra training costs to train up project managers as well as department managers.
Span of Control:
The number of employees you have direct control over.
Span of Control[why wide vs narrow
Managers Experience-Managers who lack experience will have a narrow span of control
Employees experience / ability-Poor employees will need closer attention therefore manager will require narrow span
Type of work-Complicated work will mean manager needs to pay closer attention which results in a narrow span
Location of employees-If employees are spread out over different locations managers will have narrow span
Personal Life-If manager is under a lot of pressure he might be struggling to cope and need a narrow span
Line Organisation Vs Staff Organisation
Line organisation refers to employees who are directly responsible for making the products
Staff Organisation refers to employees who provide services EG Accounting
Advantages of Organising
Organising helps solve problems quickly as employees know exactly who to go to with a problem.
Organising improves efficiency, employees specialise in one department and do the job really well.
Organising helps the business cope with change. Matrix structure means project teams can be set up quickly to deal with any problems or opportunities that arise.
Proper organisation avoids duplication and waste of resources.
Controlling
Controlling involves the manager making sure that the business stays on target to achieve the objectives that were set during planning. The manager checks up periodically on the business performance to see whether it is off target or on target.
Steps to Controlling
Set goals for the business to achieve e.g. manager sets goal of 10% increase in sales over next 12 months
Measure the businesses actual performance regularly e.g. after first month sales have fallen by 2%
Measure any changes and investigate them e.g.the manager now realises the business is off target
Take corrective action to ensure the business stays on target e.g. the manager needs to advertise more and reduce price
Types of Control
Stock Control
Quality Control
Credit Control
Financial Control
Stock Control
Aim: to make sure that the business has exactly the right amount of stock in the shop factory at all times.
Too much Stock = money wasted, gone off,
going out of date (obsolete)
Too little Stock = sales missed, unhappy customers
Stock Control Strategies
To Prevent too much Stock
Maximum Stock Level: The business should not have more than this amount.
Re-order Quantity: This is the correct amount of stock you should buy each time
To Prevent too little Stock
Minimum Stock Level: The business should never have less than this amount.
Re-order Point: When the stock falls to this level, it is time to put in a new order.
Just In Time (JIT)
Aim: keep the minimum amount of stock as possible in the factory while at the same time never running out of stock.
This involves buying from a supplier who delivers exactly the right amount, exactly at the time that it will be used and products are shipped immediately to the customer.
This means the business does not hold stock
Advantages of Stock Control
Lower Insurance Premium: Holding less stock means less of a risk
Reduced Risk of Theft: Holding less stock means less of a risk burglary
Customer Satisfaction: the business will always have enough stock to meet customer demand
Reduced Costs: Holding less stock means less of a risk of obsolete stock and high storage costs
- Quality Control
Aim: to make sure that the quality of the businesses products meets very high standard set by the business. This is to ensure the products surpass the expectations of customers.
Quality Control Strategies
Inspections
Quality Circles
ISO9000
Quality Inspections
Inspections: This involves a trained inspector physically examining the products before they leave the factory. Products that meet the standards are shipped out to shops. Those that do not are sent back to factory to be fixed/scrapped.
Example: Butlers inspects its chocolates by hand to ensure high quality.
sampling: this means making a batch of products and the inspector picks out a sample (at random) to see if they meet the standard. If the sample passes the whole batch passes. If the sample fails, the whole batch fails
Quality Circles
Quality Circle is a way to control quality in a business that uses the employees to spot quality problems in the factory and come up with suggestions to solve these problems.
How it works:
Employees meets to discuss quality problems identified
Employees recommend a solution to the manager
If the manager approves, the Quality Circle will help implement the change
ISO 9000
is an internationally recognised award that is only given to businesses that can consistently prove to independent inspectors that their products are the highest quality.
Advantages of Quality Control
Customer Satisfaction: high quality products means customers are happy. This leads to increased sales for the business.
Lower Costs: high quality products means money is not wasted on repairing and/or refunds on faulty products.
Marketing: if a business has the ISO 9000 quality award it will stand out from competitors and catch the interest of customers
Credit Control
Aim: to make sure that all of the business’s customers pay their bills on time. It is to ensure that bad debts are eliminated and late-paying customers pay their bills now
Keyword: Bad Debts: customers who go bankrupt and don’t pay their bills
Steps to Credit Controlling
Set Maximum Credit Limit to be offered
This ensures that it never loses more than this amount
Conduct Credit Check of Customers
This can be done by asking for trade and bank references
Offer discounts to pay early
This encourages customers to pay quickly
Create collection procedure for non-paying customers
This involves ringing and calling customers who have not paid and taking them to court if necessary.
Advantages of Credit Control
Reduced Risk of Bankruptcy: credit control ensures that the business receives cash from its customers on time.
Reduced Risk Bad Debts: credit control ensures that customer’s credit worthiness is checked in advance. This reduces the risk of non payment by customers.
Financial Control
to make sure the business is profitable and always has enough money available to pay its bills. If a business cannot pay its bills it will go bankrupt.
Budget
Cash Flow Forecast
Ratio Analysis
Advantages of Controlling
Make sure the business achieves its objectives. Periodically check on the business progress to ensure its meeting targets set out at the planning stage.
Reduce Business Costs. ISO 9000 type of quality within a business reduces repairs to stock and refunds to customers.
Improve Cash Flow. Effective credit control can reduce bad debts and speed up being paid.
Increase Sales and Profits. Quality control can increase the price we charge and amount of sales and stock control means we have the right amount of stock to sell at all times.
