Planning and Organizing Business Management Chapter 13 Mrs. Walton
May 12, 2015
Planning and Organizing
Business Management
Chapter 13Mrs. Walton
Objectives
Student will be able to:Justify the value of planning for a businessDifferentiate between the two levels of
planningProvide examples of seven planning tools
used by managers Identify four characteristics of a good
organizationDefine two traditional types and two newer
types of organizational structure.
Vocabulary Power
Strategic planning Operational planning SWOT analysis Mission statement Vision Goal Schedule Standard Policies Procedure Organizational chart responsibility authority
Empowerment Accountability Unity of command Span of control Line organization Line-and-staff organization Matrix organization Team organization Self directed work team Centralized organization Decentralized organization Flattened organization
The Planning Function
Elements of a Business Plan
Nature of the Business Detailed operation of products and services Estimation of risk Size of business Location of business Background of entrepreneurs
Goals and Objectives Basic results expected in short and long run Results expected in terms of sales volume or profit
Elements of a Business Plan (cont.)
Marketing Plan Customers and their demand for the product or service Prices for the product or service Comparison of product or service with competitors
Financial Plan Investment needed Projected income, expenses and profit Cash start-up and cash flow needs
Organizational Plan Legal form of ownership Legal factors – licenses, leases, contracts Organizational chart Job descriptions and employee skills needed Physical facilities
Levels of Planning
Strategic PlanningLong term and provides broad goals and
direction for the entire businessOperational Planning
Short term and identifies specific activities for each area of business
Strategic Planning
Step 1 – External Analysis Managers study factors outside the firm that can affect
effective operations: customers, competitors, the economy, government
Step 2 – Internal Analysis Managers study factors inside the business that can affect
success: operations, finances, personnel, other resources Step 3 – Mission
Managers agree on the most important purposes or directions for the firm based on the information collected
The first 3 steps are referred to as SWOT analysis – the examination of strengths and weaknesses along with opportunities and threats
Strategic Planning (cont.)
Mission Statement – short, specific statement of the businesses purpose
Vision – the companies reason for existing Step 4 – Goals
Managers develop outcomes for the business to achieve that fit within the mission
Step 5 – Strategies Managers identify the effects expected from each
area of the firm if goals are to be achieved
Operational Planning
How will the work be done Who will do the work What resources will be need For a specific area of the business
It can include Developing budgets Planning inventory levels Purchasing raw materials Setting production levels and etc
Planning Tools
Goals Budgets Schedules Standards Policies Procedures Research
Goals
A specific statement of a result the business expects to achieve
Characteristics of goalsGoals must be specific and meaningfulGoals must be achievableGoals should be clearly communicatedGoals should be consistent with each other
and with overall company goals
Budget
A specific financial plan
Financial budget assist managers in determining the best way to use available money
Schedules
A time plan for reaching objectives Valuable in planning the most effective use of
time
Standards
A specific measure against which something is judged
Standard are set for:Goods and services producedQualityAmount of time tasks should take, etc.
Procedures
List of steps to be followed for performing certain work
A flowchart can be used to show the order in the steps in a work procedure
Research
To do a good deal of planning, managers need a lot of information
Research is used to collect data and provide information needed to improve their planning decisions
The Organizing Function
Role of the Organizational Chart
Role of the Organizational Chart
A drawing that shows the structure of an organization, major job classifications, and the reporting relationship among the personnel
The purpose of the organization Show the departments that make up the company Indicate each employee’s department and whom
each reports Identify lines of authority and formal communication
within the organization
Elements of the Organization
The division of workThe facilities and working conditionsThe employees
Characteristics of a Good Organization
Responsibility and AuthorityAccountabilityUnity of commandSpan of Command
Types of Organizational Structure
Line organizationLine-and- Staff OrganizationMatrix OrganizationTeam organization
Line Organization
All authority and responsibility can be traced in a direct line from the top executive down to the lowest employee level in the organization
President
Production Manager
Sales Manager
Controller
Assistant Sales Manager
Branch Manager Branch Manager Branch Manager
Line and Staff Organization
Managers have direct control over the units and employees they supervise but have access to staff specialist for assistance
It is designed to solve the problem of complexity and still retain the advantages of definite and direct lines of authority
Matrix Organization
Combines workers into temporary work teams to complete specific projects
Employees report to a project manager with authority and responsibility for the project
They work with that manager until the project is finished.
Team Organization
Divides employees into permanent work teams
The teams have responsibility and authority for the important business activities and limited management control over their daily work
Improving Business Organization
Centralized OrganizationA few top managers do all major planning
and decision makingDecentralized Organization
Business divided into smaller units, unit managers have almost total responsibility and authority for the operation of the unit
Flattened OrganizationHas fewer levels of management