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Questions and Answers
What is the significance of comparing actual performance to a standard cost reduction of 15%?
What is the significance of comparing actual performance to a standard cost reduction of 15%?
It helps identify any deviations from expected performance, enabling management to assess effectiveness and implement necessary corrections.
How can deviations from the standard 15% cost reduction be analyzed effectively?
How can deviations from the standard 15% cost reduction be analyzed effectively?
Deviations can be analyzed by calculating the percentage difference between the actual reduction and the standard, helping to pinpoint areas of concern.
What corrective actions can be taken if actual performance does not meet the 15% standard?
What corrective actions can be taken if actual performance does not meet the 15% standard?
Management can review processes, provide additional training, or adjust resource allocations to correct the deviations.
In what way does controlling contribute to goal achievement in a business?
In what way does controlling contribute to goal achievement in a business?
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How does effective stock control contribute to reduced costs?
How does effective stock control contribute to reduced costs?
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What role does budgeting play in improving cash flow?
What role does budgeting play in improving cash flow?
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Explain how quality control can lead to higher sales and profits.
Explain how quality control can lead to higher sales and profits.
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Identify a major benefit of implementing credit control.
Identify a major benefit of implementing credit control.
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What are the four types of control mentioned in relation to business operations?
What are the four types of control mentioned in relation to business operations?
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Why is it important to periodically check a business's progress towards its objectives?
Why is it important to periodically check a business's progress towards its objectives?
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Study Notes
Contingency Plans
- Address potential issues such as market competition, equipment failure, power outages, and natural disasters.
- Aim to reduce chaos in operations during unforeseen circumstances.
- May involve finding alternative sources for raw materials if primary suppliers face disruptions.
Planning Benefits
- Reduces Risk/Uncertainty: Enables identification of future threats and weaknesses, allowing for preemptive action on issues like cash flow or stock shortages.
- Future Focused: Encourages long-term strategic thinking, helping businesses set goals like entering foreign markets or diversifying.
- Attracts Investors: Well-crafted business plans aid in securing funding, highlighting forecasts and visions for growth.
Nature of Work
- Simple, repetitive tasks can have a broader span of control, while complex projects might require a narrower focus for more supervision.
Management and Employee Skills
- Experienced managers can effectively handle larger spans of control; inexperienced managers should start smaller to build confidence.
- Highly trusted employees can be managed with a wider span, whereas new staff may need more direct supervision.
Organisational Structure Importance
- Clarifies levels of authority and establishes a clear chain of command.
- Enhances communication and operational efficiency.
Organisational Structures
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Functional/Line Structure: Divides the organization by department, each led by a manager.
- Benefits: Promotes departmental specialization, provides a clear chain of command, focuses resources effectively, and increases flexibility to adapt to market changes.
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Product Organisational Structure: Organizes divisions based on specific products.
- Disadvantages: Leads to resource duplication and intra-company competition, which may hinder collaboration. Products may cannibalize each other’s market.
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Geographical Organisational Structure: Divides services by geographical regions.
- Example: Starbucks tailors offerings according to local market needs.
- Benefits: Responds quickly to local trends, customizes operations based on regional preferences, and allows for effective resource management.
- Disadvantages: Increased resource duplication and potential conflict within management over brand consistency and market demands.
Controlling
- A management function ensuring business objectives are consistently met.
- Involves performance monitoring, setting standards, measuring actual results, comparing with targets, and making corrections as needed.
Control Process
- Establishes standards (e.g., a 15% cost reduction).
- Measures actual performance against these standards.
- Analyzes discrepancies and implements corrective actions.
Benefits of Controlling
- Goal Achievement: Ensures alignment with objectives set during planning.
- Cost Reduction: Facilitates beneficial controls in stock, budgets, and credit management.
- Improved Cashflow: Enhances financial health through robust control mechanisms.
- Higher Sales and Profits: Contributes positively to revenue through effective quality and resource management.
Control Types
- Stock Control: Monitors inventory levels to optimize business operations.
- Credit Control: Manages customer credit to minimize bad debts and improve cash flow.
- Quality Control: Ensures products/services meet quality standards to maintain customer satisfaction.
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Description
This quiz covers the essential elements of contingency planning in business, including strategies to address unexpected challenges such as competitors, equipment failures, and natural disasters. Learn how effective planning can minimize chaos and reduce risks within an organization.
