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Slide 1
Last ABQ Chapter Ms Marshall 1 Chapter Eight: Management
Activities: Planning, Organising and Controlling
Slide 2
Outcome Ms Marshall 2 According to the syllabus, by the end of
this chapter, you should be able to: Discuss the nature of
management activities and their linkages.
Slide 3
Planning Key Terms Ms Marshall 3 PlanningMission Statement SWOT
AnalysisStrategic Plan ObjectivesTactical Plan Low Cost
LeadershipContingency Plan DifferentiationSMART NicheOperational
Plan Manpower Planning Cash flow forecasting
Slide 4
Planning What you need to know Ms Marshall 4 Steps Involved in
Planning Types of Planning & their impact Advantages of
Planning Planning involves setting goals and coming up with
strategies to achieve these goals.
Slide 5
Ms Marshall 5 Steps involved in Planning Conduct a SWOT
Analysis Set SMART Objectives Devise Strategies and Plans Implement
and Review Note: you could link types of planning in with devise
strategies if it is a question worth high marks
Slide 6
2010 Sample Answer Ms Marshall 6 (A) (i) What is meant by the
term SWOT analysis? A management technique/strategic planning
method. It is used to assess/evaluate a business in terms of
strengths, weaknesses, opportunities and threats. In a SWOT
analysis, strengths and weaknesses are internal factors while
opportunities and threats are external factors. The aim is to
maximise the potential of strengths and opportunities while
minimising the impact of weaknesses and threats. (6 marks)
Slide 7
SWOT Analysis: Guinness Ms Marshall 7 Strengths: Internal
factors that give an advantage Strong advertising and marketing
department. Wide variety of high quality merchandise. Guinness
storehouse the most visited tourist attraction in Dublin. Strongly
associated with Ireland (the Harp). Widget. Quality Team.
Weaknesses: internal factors that are a disadvantages. Perceived as
a very heavy drink. Perceived as an acquired taste. Opportunities:
External factors that may give an advantage Cheaper than other
drinks good in a recession. Arthurs Day becoming a major event.
Gathering 2013 increase sales and visits to Storehouse. Threats:
External factors that may give a disadvantage. Increased popularity
of artisan beers and wine. Increased availability of a variety of
products. Have failed to capture the female market despite the fact
that women are drinking more. Alcohol advertising may be
banned???
Slide 8
Set SMART Objectives Ms Marshall 8 SMART Specific: clear and
precisely expressed Measurable: easily measured, quantifiable.
Agreed: by the management team. Input from employees very valuable.
Realistic: capable of being achieved with the resources available.
Timed: timescale set for the achievement of the objective OBJECTIVE
The goal a business is trying to achieve
Slide 9
Strategies Ms Marshall 9 Low Cost Leadership Strategy: the
company keeps its costs to a minimum so that it can sell its
products as cheaply as possible, e.g. Ryanair, Aldi.
Differentiation Strategy: the company makes their product stand out
so achieve its goals. Many companies will built up a brand
associated with high quality so that customers will pay extra for
their product compared to a competitor. E.g. Ralph Lauren,
Kelloggs. Niche Strategy: the company is successful because it has
a product that serves a particular need or want that the market has
not previously catered for, e.g. there was a big increase in
organic food during the Celtic Tiger when people were willing to
pay more.
Slide 10
Implement and Review Ms Marshall 10 The manager must now put
the plan into action. He must break the plan into manageable parts
and communicate it to employees. Performance needs to be reviewed
on a regular basis to change plans if not on target.
Slide 11
Ms Marshall 11 Types of Planning Manpower Planning Contingency
Plan Tactical Plan Cash flow Forecast Strategic Plan Mission
Statement Operational Plan
Slide 12
Types of Planning - Definitions Ms Marshall 12 Manpower
Planning: this involves making sure that the business has the right
amount of workers with the right skills to do all the jobs needed.
E.g. a Principal must make sure there is enough Maths teachers for
the upcoming year. Manpower planning involves: - Forecasting Future
Demand - Calculating Existing Supply - Recruit employees if there
is availability or make unneeded employees redundant. Cash flow
forecasting: where the manager plans out the money the business
expects to receive and spend in the future. The main objective is
to make sure the business will have enough money to pay its bills
as they fall due. If not, this planning gives them the time to take
corrective action. E.g. arrange an overdraft. Contingency Plan:
prepared to cope with emergency situations e.g. a disruption in
supply of essential raw materials. Operational Plan: short term
plans for daily or weekly issues. Conducted by frontline
supervisors.
Slide 13
Types of Planning - Definitions Ms Marshall 13 Mission: the
mission of a company is the overall fundamental objective of the
business, i.e. their reason for existing. It states who they are,
what they do and where they are going. E.g. Google: To organise the
worlds information and make it universally accessible and useful.
Strategic Plan: a major plan for the entire business it breaks up
the mission into achievable plans of action. It is drawn up by the
senior managers and should be achieved within five years. E.g. an
Irish company may plan to expand into the UK market. A strategic
plan would be to gain a 10% market share in five years. Tactical
Plan: A short term plan for one section of the business, it is
written by the middle managers. It breaks a strategic plan into
smaller steps and should be achieved within one year. E.g. The
Irish company opening their first outlet in the UK.
Slide 14
2010 Sample Answer Ms Marshall 14 (B) Analyse the contributions
that strategic and tactical planning can make to the successful
management of a business. Use examples in your answer. (20 marks
2@10m, 4+3+3) Strategic planning is a major plan, made by top
management. They take the mission and break it up into major plans
of action to be achieved within 5 years. A strategic plan clearly
defines the purpose of the business and establishes realistic goals
that are consistent with that of the mission statement of the
business. Strategic plans help businesses to identify opportunities
which may lead to increased market share and new markets. E.g. Aer
Lingus Mission: To become the biggest airline in the world.
Strategic Plan: To control 10% of the US Market in five years
time.
Slide 15
2010 Sample Answer Ms Marshall 15 Tactical planning is short
term where the long-term plan is broken down into shorter more
manageable short-term objectives. The tactical plan is developed by
a management team who deals with getting the work done to carry out
the strategic plan. They draw up a tactical plan that will deal
with the now part of the plan. Tactical plans outline a set of
action items or tactics to help a business achieve a number of key
objectives or goals. If these are achieved it helps a business to
achieve its long-term goals. Examples of a tactical plan could be
adding a group of new customers in the next year, improving
customer service levels through specific tactics, reducing employee
turnover, or lowering operational costs.
Slide 16
Ms Marshall 16 Advantages of Planning Future Orientated
Essential to raise capital Motivates employees and management
Requires realistic analysis - Identifies weaknesses Reduces
Uncertainty
Slide 17
Advantages of Planning Ms Marshall 17 Future Orientated: the
managers anticipate problems and take the necessary steps to deal
with those problems. E.g. bt preparing a manpower plan you can
avoid be understaffed for a busy time of year. Requires Realistic
Analysis: a SWOT analysis identifies the weaknesses of a business,
i.e. the internal factors that are a disadvantage to the business.
Once identified these can be improved and overcome. Motivates
Employees and Managers: Plans set out goals for everyone to achieve
and deadlines to achieve them by. In many cases there may be a
reward for meeting your targets. This motivates all staff. Reduces
Uncertainty: Planning provides clear direction for the business.
Those at all levels have a clearer understanding of what is
expected by them. Essential to Raise Capital: the existence of a
business plan is essential when applying for loans. Businesses
would include a cash flow forecast to prove they could afford the
repayments.
Slide 18
Organising Ms Marshall 18 The business needs to get organised
to achieve the goals they set out in their plans. This involves
organising their resources into the most suitable form by drawing
up an organisational structure. An organisational structure
involves splitting all the work to be done and appointing people to
be in charge and to achieve the objectives. The four main types are
functional, product, geographic and matrix.
Slide 19
Functional Ms Marshall 19 CEO Marketing Director Finance
Director Production Director Human Resources Director Sales
RepsAccountants Factory Workers Personnel Assistants Arranged by
different jobs Also called a Line Structure Staff depts provide
expert advice to the line dept. e.g. legal team, IT team.
Frequently a short question
Slide 20
Functional Ms Marshall 20 Advantages Clarity: Responsibilities
are well defined and so this type of structure is easily
understood. Specialisation: organised by job so each dept becomes
an expert. Makes them more efficient. Accountability:
accountability flows upwards. Each director is responsible for each
dept. Disadvantages Isolation: Each dept operates by itself and may
have little interaction with other departments. Co-ordination: It
can be difficult to get all departments working along the same
lines.
Slide 21
Product Ms Marshall 21 CEO Coke Zero ManagerDiet Coke Manager
Coke Zero HR Manager Coke Zero Production Manager Diet Coke HR
Manager Diet Coke Production Manager Based on the product Leads to:
Focus on the customer, Intercompany competition (lower costs,
improves quality) Leads to: Duplication Brand Cannibalisation
Slide 22
Geographic Ms Marshall 22 CEO UK Manager Germany Manager UK HR
Manager UK Finance Manager Germany HR Manager Germany UK Manager
Organised by area Leads to: Better local knowledge, competition
between regions (Leading to lower costs) Leads to: Duplication,
Conflict between local manager and senior management)
Slide 23
Matrix Ms Marshall 23 Frequently a short question Used for
temporary inter departmental projects CEO Production DeptFinance
DeptSales Dept Production StaffSales StaffFinance Staff PROJECT
TEAM Improves employee motivation and relationships between
departments Divided Roles: Employee reports to their team leader
for the project and to their normal manager for anything outside
the project. Increases costs as people need to be trained to be
project leaders
Slide 24
Span of Control Ms Marshall 24 Span of Control: This refers to
the number of employees that report directly to a manager. i.e. how
many they can effectively supervise. This can be: Wide (supervise
many employees) Narrow (only a few) It depends on: Managers
experience and ability Employees experience and ability The type of
work Location of the employees
Slide 25
Chain of Command Ms Marshall 25 Chain of Command: the path on
which orders/instructions/decision s are passed down from the top
to the bottom of the hierarchy and feedback is passed back up. It
also illustrates how many levels of management are involved.
Delayering: the process of stripping away layers of management. It
is often an attempt to improve the speed at which information is
communicated throughout the business.
Slide 26
2010 Sample Answer Ms Marshall 26 (C) Discuss the benefits of a
functional organisational structure in a business. Refer to the
Chain of command and Span of Control in your answer. (Benefits 2@5,
definitions 2@5) A functional organisational structure organises
departments by the type of job to be done. This leads to: 1)
Specialisation: each department concentrates on the same job and so
become experts at it. The Span of control refers to the number of
employees that report directly to a manager. A wide span of control
means they supervise a lot of employee, whereas a narrow span of
control means they only supervise a few. Several factors effect
this including the experience and ability of the both the managers
and employees. Functional organisation allow for specialisation,
therefore a wider span of control may be feasible as both manager
and employees are experts in their area. 2) Accountability: the
director of each department is responsible for everything that goes
on it. The chain of command is the path on which
orders/instructions/decisions are passed down from the top to the
bottom and feedback is passed back up. In a functional organisation
accountability flows upwards and instructions flow downward.
Slide 27
Controlling: Key terms Ms Marshall 27 ControllingQuality
Control Stock ControlPhysical Inspection Optimum LevelQuality
Circles Buffer StockISO 9000 Award Maximum stock levelSampling
Minimum stock levelCredit Control Re-order pointDebtor Re-order
quantityCreditor Just-in-time
Slide 28
Controlling Ms Marshall 28 Types of Control Stock Control
Quality Control Credit Control Controlling involves measuring
performance by comparing actual outcomes to plans, and taking
corrective action if necessary.
Slide 29
Stock Control: Key Terms Ms Marshall 29 Stock Control: the aim
of stock control is to make sure that the business has the optimum
level of stock in the shop at all times. It is bad for the business
if it has too much or too little stock. Too much stock could go out
of date before it is sold, too little will lead to a loss in sales
and customers. Maximum Stock Level: the business should never have
more than this amount of stock. Minimum Stock Level: the business
should never have less than this amount in stock. Re-order Level:
the point at which the stock has to be re-ordered. This should take
into account time for delivery, i.e. the lead time. Re-order
Quantity: the correct amount of stock you should buy each time.
Buffer Stock: a small level of safety stock.
Slide 30
Stock Control: Key Terms Ms Marshall 30 Just-in-Time: the aim
of this system is to keep the minimum amount of stock possible in
the factory while at the same time never running out of stock. In
involves buying from a supplier who delivers exactly the right
amount of perfectly made stock at exactly the time when it is going
to be used by the business. Materials come into the factory just
before they are needed. Use of EDI makes this possible. E.g. Dell
use JIT
Slide 31
2011: Sample Answer Ms Marshall 31 Describe how stock control
achieves efficiencies in a business (10 marks: 2+4+4) Stock Control
is concerned with keeping optimum stock levels so that it doesnt
have too much stock or too little stock. Effective stock control
means that you have the optimum level of stock in your business.
Optimum stock levels lead to efficiencies because you have the
right stock, in the right place, at the right time to meet
production requirements and satisfy consumer demand. Efficiencies
(specific examples): An ISDN (Integrated Services Digital Network)
can help you achieve efficiencies by eliminating the costs
associated with having too much stock i.e. Obsolescence, Storage
costs (Light & Heat, Security, Warehouse space, insurance
etc.), Deterioration, Pilferage. Stock control can achieve
efficiencies by eliminating the costs associated with carrying too
little stock i.e. production stoppages due to a lack of raw
materials and components for production, and lost sales orders
because of a lack of finished goods for sale.
Slide 32
Quality Control: Key terms Ms Marshall 32 Definition: involves
making sure that the quality of a businesss products meets the
expectations of legal requirements and consumers. This can be done
through physical inspection, quality circles and ISO 9000 Awards.
Physical Inspection: items are literally examined before being
passed as fit to be sold. For specialised products such as
Waterford Crystal each piece would have to be examined. For mass
produced products like chocolate the inspector uses a method called
sampling, examining a percentage of the products. Quality Circles:
this involves the employees spotting quality problems in the
factory and coming up with solutions to the problem. A small group
volunteer and help to implement solutions that the management agree
to. ISO 9000: this is an internationally recognised award that is
given only to businesses that can consistently prove to an
independent team of inspectors that their products meet the highest
quality standards.
Slide 33
2011: Sample Answer Ms Marshall 33 Describe how quality control
achieves efficiencies in a business (10 marks: 2+4+4) Definition:
involves making sure that the quality of a businesss products meets
the expectations of legal requirements and consumers. This can be
done through physical inspection, quality circles and ISO 9000
Awards. The ISO 9000 symbol is recognised worldwide and would be of
huge benefit to the business in marketing its products
internationally. Efficiencies: Effective Quality control leads to
efficiencies in business because it minimises the costs associated
with selling faulty goods to consumers e.g. Administrative costs
associated with the return of goods. Loss of reputation and the
ensuing lost sales. Lost productivity due to time spent dealing
with complaints. Effective Quality control leads to efficiencies in
business because consistently high quality products are being sold,
resulting in repeat purchasing, consumer loyalty and the ability to
charge higher prices, as the business may become the market
leader.
Slide 34
Credit Control Ms Marshall 34 Credit Control: the aim of credit
control is to make sure that all customers pay their bills in full
and on time. It seeks to eliminate bad debts and to make late
paying customers pay their bills now. The business should have an
established procedure for dealing with customers who wont pay. For
effective credit control a business should 1) Set a limit for
overall credit given 2) Vet each customer. Do a credit check and
ask for a bank reference and a trade reference. The Irish Credit
Bureau would have information on loan repayments. 3) Send out bills
immediately. Offer discounts to those who pay early. 4) Have an
established procedure for dealing with customers who wont pay.
Slide 35
2008: Sample Answer Ms Marshall 35 Evaluate the contributions
that credit control makes to the successful management of a
business. Use examples in your answer. 10 marks: 5+5 (2+3) The aim
of credit control is to make sure that all customers pay their
bills in full and on time. It seeks to eliminate bad debts and to
make late paying customers pay their bills now. The business should
have an established procedure for dealing with customers who wont
pay. Therefore the contributions it makes include: Improved cash
flow: credit control ensures that the business receives its money
in time to pay its own bills. This will ensure they do not go
bankrupt or become over-dependent on bank overdrafts. It will also
allow them to avail of trade discounts offered to them by their own
suppliers. Reduces costs: Expenses are reduced as bad debts
decrease, this increases the profit of the business.
Slide 36
Test Preparation Question Ms Marshall 36 You will be asked one
of the two following exam questions next Thursday: 1) A) What is
meant by the term SWOT Analysis? (ii) Conduct a SWOT analysis on a
business of your choice. (20 marks) B) (i) Explain the term span of
control (6 marks) and outline two factors that affect the width of
the span of control (4 marks) (ii) Draft and label a matrix
organisation structure (10 marks) C) Describe how quality control
and stock control achieve efficiencies in business (20 marks).
Slide 37
Test Preparation Question Ms Marshall 37 2) A) Analyse the
contributions that strategic and tactical planning can make to the
successful management of a business. Use examples in your answer.
(20 marks) B) Discuss the benefits of a functional organisational
structure in a business. Refer to chain of command and span of
control in your answer (20 marks). C) Evaluate the contributions
that credit control makes to the successful management of a
business. Use examples in your answer (10 marks). (ii) Draft and
label a functional organisation structure. (10 marks).