U3 Ch.10-12 Activities Flashcards
SMART plans
All plans should be SMART:
-Specific
-Measurable
-Achievable [realistic]
-Relevant [to business goals]
-Timed [target date]
Steps in planning
- Assess the current situation (SWOT)
- Set a goal (short/long term)
- Create plan
- Implement plan
- Review plan
mission statement
short written statement that sets out the firm’s overall goal for the lifetime of the business
Types of plan
Strategic
Tactical
Operational
Contingency
Human Resource / Manpower
Financial
Mission statement
Marketing plan
Strategic Plan
usually up to 5 years long term goals written by senior management. Breaks down mission statement into long-term plans. E.g. Increase market share by 25% in the next five years
Tactical Plan
1-2 years short term goals written by middle management. Breaks strategic plan into short-term plans. Makes the strategic plan possible. E.g. Launch new advertising campaign in the next 12 months
Operational Plan
Outline daily, weekly or monthly targets written by all management levels. Plans for daily running of a business. E.g. weekly and monthly objectives for marketing/production
Contingency Plan
0-1 year written by all management levels. Back-up plans used to deal with unforeseen events or emergencies. E.g. if suppliers cannot provide raw materials, source materials from another supplier
Human Resource (Manpower) Plan
0-1 year written by HR manager. Ensures business has correct no. of employees, with correct skills and qualifications to fill all roles
Financial Plan
0-1 year written by Finance manager. Prepare cash flow forecasts to predict income received and spent in a period.
Stakeholders and Planning
- Investors (financial plan shows business can repay loans. It also shows projected profits which could lead to more dividends for shareholders)
- Employees (HR planning can indicate promotion opportunities and encourage them to work harder)
- Suppliers (Strategic+Tactical plans can indicate intention to expand allowing them to prepare more raw materials)
Benefits of planning
- Create Awareness & Give Direction. (All staff aware of targets)
- Helps decision making (long term objectives help make the most effective decisions)
- HR planning (avoids shortages and identifies when staff recruitment is needed)
- Benchmarking (monitor progress by comparing target with results)
- Obtain Finance
Types of organisation structure
- Functional
- Geographic
- Product
- Matrix/team-based
Functional Organisation Structure
Firm divided based on functions performed
1. Shareholders
2. Board of Directors
3. CEO
4. Production/Finance/etc. Director
5. Production Assitants/Accountants/etc.
Functional Organisation Structure Advantages
- Employee Motivation (clear promotional path)
- Expertise in departments
- Responsibilities are clear for all employees
Functional Organisation Structure Disadvantages
- Only focus on department goals
- Slow com. between departments
- Lack of Teamwork
Geographic Organisation Structure
Divided into geographical areas
1. Shareholders
2. Board of Directors
3. CEO
4. Ireland/England/France Directors
5. Ireland/England/etc. Production/FInance/etc. Managers
Geographic Organisation Structure Advantages
- Able to target local needs
- Friendly competition between geogrpahic units
- Prepares managers for promotion by training on national level before international
Geographic Organisation Structure Disadvantages
- Work Duplication
- Conflict (senior decisions may affect certain areas negatively)
- Poor communication between geographic units
Product Organisation Structure
Units based on type of product provided
1. Shareholders
2. Board of Directors
3. CEO
4. Pepsi / Pepsi Max Directors
5. Pepsi/Pepsi Max Finance/Production Managers
Product Organisation Structure Advantages
- Meet demand more effectively when specified
- Compare performance of each product through the unit
- Expert Knowledge
Product Organisation Structure Disadvantages
- Work Duplication
- Units in direct competition
- Poor Com. between units
Matrix Organisation Structure
Combines functional with a team-based approach. Employees work in individual Departments and come together to work in cross-functional teams. Employees have both department and project Managers.
Structure is the same as functional but there are project teams going horizontally that join staff from different departments
Matrix Organisation Structure Advantages
- Motivation (part of team)
- Com. (between departments with common goals and understanding)
- Better decisions (more knowledge + skills)
Matrix Organisation Structure Disadvantages
- Multiple Managers (conflicting instructions don’t know which to prioritise)
- Training Employees (teamwork+com.)
- Lack of trust (between departments may lead to less productivity)
- Conflict (successful teams progress through the f.s.n.p. stages of team development. Conflict may arise during storming potentially leading to IR issues)
Factors for choosing organisation structure
- Demand (Product and Geographic help deal with differing needs of types of consumers)
- Specialisation (Functional allows employees to become experts)
- Intrapraneurship (matrix encourages this)
Span of control
refers to the number of subordinates who report to a manager. May be narrow or wide depending on type of work or experience of manager
Chain of Command
line of authority and communication in a business. Clarifies the heirarchy and who reports to who
Wide span of control
When manager has a large number of subordinates reporting directly to them
Narrow span of control
When manager has a smaller number of subordinates reporting directly to them
Factors affecting Span of Control
- Trust (needed for wide span of control. No close monitoring needed)
- Skills (less skills need more supervision)
- Tasks (Complex tasks need more supervision)
- Managerial Workload
Delayering
Removing one or more management layers in an organisation structure. Increases span of control of senior managers
Delayering Advantages
- Com. (faster)
- Less costs (removing managerial staff wages)
Delayering Disadvantages
- Less Motivation (Employees fear job security)
- More Workload for senior management (wider span)
Advantages of Organising as an activity
- Clear chain of command
- Improves com.
- Able to evenly distribute management workload
- Employee motivation (makes clear promotional path)
Steps in control
- Set standard
- Measure performance
- Compare
- Take action if needed
Types of Control
- Stock
- Quality
- Credit
- Financial
Types of stock
- raw materials
- work in progress (partially completed)
- finished goods (not yet sold)
- merchandise (bought to be sold)
Re-order level for stock
the level of stock at which a new order for stock should be placed taking into account lead time
Lead time
time from order is placed to stock arriving at stock room
Methods of managing stock
- Manual Stock Take
- EDI
- JIT
Manual Stock Take
Physically counted and compared with that recorded on firm’s computer to identify difference. e.g. due to theft
EDI for stock control
Electronic Data Interchange. Enable firms to communicate info like orders, invoices and payments electronically without need for human intervention.
Benefits of EDI for stock control
Quick re-ordering
Low costs (automatically orders stock reduces wage costs)
Automation allows firm to reduce amount of stock they need to carry
JIT
Just In Time. From Japan.
1. Hold minimum amount raw materials and receive regular deliveries to ensure never runs out.
2. Use reliable suppliers.
3. Goods are finished just in time for delivery to consumers. 4. Needs carerful planning
Too much stock problems
- Storage Costs
- Outdated stock risk
- theft risk
- Inefficient use of cash
Too little stock problems
- Consumers shop elsewhere
- No/less economies of scale benefits
- Paying for storage that’s unused
- Unable to meet production deadlines
Benefits of stock control
- Efficiency (computers automate and make less mistakes)
- Feedback (identify fast and slow moving stock)
- Costs (aren’t paying unnecessary storage)
- Theft (easier to identify)
Quality Control
aims to ensure all products reach a specific standard set by the business, the industry or quality organisations.
Purpose of quality control
- Detect
- Prevent
- Correct
- Improve
How to achieve quality control
- Inspections (appointing a quality controler to inspect products, usually sampling a number of products chosen at random)
- Quality Circles
- Quality Awards
- TQM
Quality Circles
Group of employees volunteer to become part. Meet regularly to identify and discuss quality issues and recommend solutions.
Increases motivation, reduces costs and improves quality
Quality Awards
Given by independent organisations for meeting a high standard.
1. Q mark - awarded by EIQA for continuously striving to improve quality
2. Bord Bia Quality Mark - produce and process food meets bord bia standards
3. ISO-9000 series - international. Very high standards with regular spot checks
EIQA
Excellence Ireland Quality Association
TQM
Total Quality Management.Commitment where whole business seeks to promote and ecourage quality in all areas continuously. All employees work together fro ongoing improvements at every stage of production
Benefits of Quality Control
- Customer Satisfaction (loyalty and market share)
- Consumer trust (quality awards good marketing)
- Less costs (less refunds + repairs)
Credit Control
Monitoring which customers are given credit, for how long and ensuring they pay it on time. Involves:
1. Credit limits (for total whole business can give out and for each individual to take out)
2. Check creditworthiness (StubbsGazette / Bank reference)
3. Efficient Administration (invoices and statements are accurate and sent on time)
4. Debt collection process effective (discounts for early payments and interest for not paying on time)
Bad Debt
When a debtor fails to pay the amount owed for good or service
Credit Controller
Person in organisation who decides the amount of credit given to a customer and who is responsible for debt collection procedures
Bankruptcy
When an organisation is declared by law that it is unable to pay its debts
Benefits of Credit Control
- Lower risk of bankruptcy
- Reduce bad debts
- Profit
Financial Control
Measuring financial performance of business against cash flow forecasts and budgets. Aims to ensure business is profitable and liquid
Methods of financial control
- Cash Flow Forecasts
- Ratio Analysis
- Budget Allocation
Importance of control
- Goals (compare performance with standards)
- Maximise resources
- Employee Motivation (involved in improving quality)
- Loyalty (More sales)
