Finance Structure Flashcards
What is the Mintzberg Structure and how is it set out?
Ideology Middle line Operating core Techno structure (left oval) Support Staff (right oval)
What Are Mintzberg’s 6 co-ordinating mechanisms?
Mutual Adjustment- co-ordination through informal contact
Direct supervision- co-ordination through formal hierarchy
Standardisation of work processes- standardisation of processes and operating procedures
Standardisation of outputs- product and service specifications
Standardisation of skills and knowledge- identify training needs and the skills base needed to do the work
Standardisation of norms- cultural norms and expectations
What is the entrepreneurial structure?
Entrepreneur - Employees
What is the functional structure?
Board of directors
Marketing - production - finance- HR
What is the divisional structure?
Board of directors
Division 1 - Division 2 - Division 3
Functions
What does a longer scalar chain have?
Many levels of management
What does a short scalar chain have?
Few levels of management
Centralisation has?
Upper levels of the company’s hierarchy have authority to make decisions
Decentralisation has?
The authority passed down to people at lower levels enabling them to make decisions
Advantages of decentralisation
- Senior management free to concentrate of strategy
- Better local decisions due to local expertise
- Better motivation due to increased empowerment of employees and a more defined career path
- Quicker responses and flexibility due to increased autonomy
What factors affect the amount of centralisation?
- Management style
- Ability of management and employees
- Geographical spread
- Size of the organisation
What is a stakeholder?
Anyone who has an individual or collective that has an interest or is concerned with the actions of a business to an extent where they may be affected by it or they may be able to influence it
Name some internal stakeholders
Employees
Managers
Shareholders
Name some connected stakeholders
Distributors
Stockholders
Name some external stakeholders
Government Media Environmentalists Local Communities Competitors
What is Mendelows Power matrix index?
(Low level of power and interest)Minimal effort
(high level of interest and low level of power) Keep informed
(High level of power, low level of interest) Keep Satisfied
(high level of power and interest) Key players
What is the definition of ethics and business ethics?
Ethics is the system of moral principals that examine the concept of right and wrong.
Business ethics is the application of ethical values to business behaviour
What are the fundamental principals of Ethics?
- Integrity
- Objectivity
- Professional competence and due care
- Confidentiality
- Professional behaviour
What are some examples of ethical behaviour?
Paying staff good wages and pensions Good working conditions Paying suppliers within the agreed terms Sourcing suppliers carefully Using sustainable and renewable resources Being open and honest with customers
What is CSR?
The idea that a company should be sensitive to the needs and wants of all stakeholders and not just shareholders.
What are somer examples of CSR?
Environmental impact Health impact of consumers Fair treatment of employees Wether animal testing should be done Safety of products and the production process
What is corporate Governance?
The set of processes and policies that control, direct and administer a company
What are the two basic accounting assumptions?
Does it have a monetary unit?
Economic entity- boundary between owners providing resources and doing business
What is agency theory?
Maximise shareholder wealth
Done by owners being separated from day-to-day management
What is the accounting equation?
Resources = Related to creditors + related to owners Assets = Liabilities + Capital
What is an agent in the agency theory?
The agent represents another person or party (principal) in day-to-day transactions
What is a problem with the agency theory?
Conflict of interest between the agent (management) and the principal (business owner)
What is the hierarchical finance structure?
Triangle:
Bottom broad base: finance workers operational work reporting further up the chain
Middle: Narrow set of management level finance workers
Top: Very small group of senior finance staff
What is the evolution of traditional shape to todays digital age shape?
Traditional is triangle today’s shape is diamond
What is the diamond shape?
Lower Level assembly & processing tasks now being
carried out by technology rather than professionals
2. Finance Prof. works as part of a multi-disciplinary team offering higher valued services
3. Collaborative finance leadership approach, CFO & other senior finance staff working alongside with the CEO
What are the parts of the diamond shape finance function?
Senior finance team: leading and organisational impact
Strategic business partnering: work with internal and external stakeholders to create and preserve value
Digital centres of excellence: Specialist make further insight into value creation and preservation specific specialist areas
Smart Finance “Factories”: Assemble an extract data to provide information
What does the evolution to diamond shape show?
Increases emphases on professional level roles required to support management
Continued emphasis on specialist knowledge (Automation, technology) leading to the formation of multi-disciplinary teams who will become members of the finance team
Which parties are interested in financial information and why?
Owners- interested in profitability and how well it is being run
Managers- interested in financial situation so that they can plan effectively
Banks- may wish to whether the business can afford repayments
Employees- interested in financial position and how it will affect job Security and wages
Suppliers and customers-check financial stability to be able to make payments and supply goods as needed
Government- Check that they are obeying relevant laws and reporting and taxation
What is management accounting?
The provision of informations to help managers and other internal users in their decision making, performance measurement, planning and control
What is treasury management?
Management of the funds of a business, namely cash and other working capital items, plus long-term investments, short-term and long-term debt and equity finance
What is internal audit?
An independent activity, established by management to examine and evaluate the organisations risk management processes and system of control, and to make recommendations for the achievements of company objectives
What are the level 3 specialist areas?
Digital centre of excellence
Financial planning and analysis
Taxation
Project management
Project appraisal
What are the level 2 specialist areas?
Strategic business partnering
Communicating insight to influence users
Business partnering
What are level 1 senior finance team roles?
Strategic leadership
What are the level 4 key role areas?
Financial reporting
Management accounting
Treasury management
Internal audit
What is the 5A framework?
The basic activities that finance professionals perform are the 5As – assemble, analyse, advise, apply and acumen.
