Unit 3 - Management Activities - Past Paper Questions (PDF)

Unit 3 – Management Activities Unit 3 – Management Activities: Planning, Organising & Controlling Planning SWOT Analysis Organising Organisational Structures Controlling Controlling Finances, Credit, Quality & Stock...

Unit 3 – Management Activities Unit 3 – Management Activities: Planning, Organising & Controlling Planning SWOT Analysis Organising Organisational Structures Controlling Controlling Finances, Credit, Quality & Stock Past Paper Questions W: www.ExamRevision.ie | © ExamRevision 1  Unit 3 – Management Activities Planning Planning à This involves a business setting specific goals and objectives and then outlining strategies that allows it to achieve them. Steps involved in planning – Analyse the situation – Set an objective – Draft a plan – Implement & Review the plan Analyse the Situation SWOT Analyse – Strengths, Weakness, Opportunities & Threats Set an Objective – Goals can be short-term. For example, hiring anew employee. – Goals can be long-term. For example, expanding your product range from 2 products to 10 products. – The most important goal for a business is called their mission statement. – Mission statements are short but precise statement used by companies to summarise “who we are, what we do and what direction are we heading in”. W: www.ExamRevision.ie | © ExamRevision 2  Unit 3 – Management Activities Draft a Plan A strategic plan - refers to the long-term plan for the company. It normally covers up to 5 years or more. A tactical plan - breaks the general strategic plan down into shorter more specific, manageable steps, usually of one or two-year periods. Tactical plans - are short-term plans that set targets for weeks or months ahead. Operational planning – This is the planning of the day-to-day activities of the business including timetabling of the staff or deciding on production quantities for the business. Contingency plans - are special plans prepared to cope with emergencies or unexpected events. For example, flooding of the shop premises. Implement & Review the plan – Once the plan has been agreed, it must be shared with all employees of the company. – This is vital for a clear vision for the company. – Plans are broken down into smaller more manageable amounts and responsibilities are handed out down the organisational chart. – Lastly, it is important that management have review meetings on a consistent basis to clarify the plan is on time and all aspects of the plan are being carried out correctly. Principles of a good plan Plans à This plans should be SMART targets. S – Specific – important to have clear goals - example Mercedes will regain its position as the best-selling luxury car brand. M – Measurable – should be easily measured - example Mercedes will sell more cars per year than BMW. A – Agreed or Achievable – it should have the agreement of all staff in the business – example all Mercedes managers and staff know about the plan and agree with the goal. R – Realistic – it must be possible to achieve the goal given the resources available – example Mercedes will invest in improved quality control. T – Timely – sufficient time must be allowed for proper implementation of the target – example Mercedes wants to achieve its goal within five years. W: www.ExamRevision.ie | © ExamRevision 3  Unit 3 – Management Activities Organising Organising à Organising means bringing people and resources together effectively to implement plans. Chain of Command à The chain of command and required span of control will largely determine the organisation structure. Organisational Structure à The organisation structure identifies the different levels of authority in a business. It defines the chain of command i.e. who manages which subordinate. An example would be Apple – Tim Cook CEO of Apple at the top and the employees at the bottom. Span of Control à The span of control is the number of subordinates (people below), who are delegated authority and report to the manager above them. This is a typical functional structure, i.e. each person below the CEO has a function to perform. Narrow Span of Control – Clear communication is more difficult – Increased costs to the firm – Time wasted with meetings – Suits larger multinational companies more Wide Span of Control – Clearer communication paths – Reduces costs – Workload could be increased for supervisors – Less chance of promotion W: www.ExamRevision.ie | © ExamRevision 4  Unit 3 – Management Activities Delayering - this refers to reducing the number of layers in an organisational structure. Functional Organisational Structure à A functional structure divides a business into different departments according to the management functions of marketing, production, human resource and finance. It is the most common organisational structure. Advantages – Departments specialise – Clear chain of command – Better communication – Promotional Opportunities – Wider span of control possible Disadvantages – Isolation – Harder to co-ordinate – Poor Communication Matrix Organisational Structure à A matrix structure is when each department has a manager but the business adopts an approach whereby teams made up of staff from different departments work on projects together. Advantages – Greater unity in the business – Improved decision-making – Improved relationships – Responsibility is shared Disadvantages – Disagreement amongst teams – Unclear chain of command – Disagreement on resources – Slower decision-making Importance of Organising – Facilitates clear communication within the business. – Chooses the right span of control for the organisation. – Establishes a clear and concise chain of command. – Creates a suitable structure for your business. W: www.ExamRevision.ie | © ExamRevision 5  Unit 3 – Management Activities Controlling Controlling à This involves measuring any deviations away from the business’ plans and objections by acting in a way to correct them. Areas Controlled 1. Finances 2. Stock 3. Quality 4. Credit 1. Financial Control à This is vital for a business. A business must control their liquidity so it can pay their bills as they fall due in the short term. An example is by doing a ratio analysis such as acid-test ratio. 2. Stock Control à This is ensuring that a business have the correct levels of stock at all times. It is vital that the business has enough stock to meet demand but not too much stock that too much money is been held up in stock. Holding too much stock means – Opportunity cost – Increased in costs – Stock may go out of date – Takes up space Risks of Not Having Enough Stock – Disruption in production – Loss of customers – Loss of discounts – Underutilised storage space Ways to control stock 1. Computerised System 2. Just in Time W: www.ExamRevision.ie | © ExamRevision 6  Unit 3 – Management Activities 3. Quality Control à Making sure that the quality of a business’ products meets the standards set down by the business. It aims: To ensure that the products meet or surpass customer expectations Maintaining consistent levels of quality To prevent/avoid problems occurring To detect before the goods, reach the customer If mistakes are discovered, the business can take corrective action Improved quality means happier customers Ways to control quality Inspection: Physically examine the products before they leave the factory. Sampling: the inspector picks products at random from a batch if they pass the standard set then that batch passes Quality Circle: group of employees come together to discuss quality problems and ways to solve those problems Quality Standards 1. Q Mark 2. ISO 9001 4. Credit Control à This monitors the amount of goods sold on credit and ensures that bills are paid within a reasonable time which helps to minimise the risk of bad debts. Credit Controller: The person responsible for managing credit given to debtors in a business Checks Customers’ Credit History Set credit limits Set out a policy on debt collection Decide on discounts & penalties Ensures organised communication with debtor Advantages of controlling 1. Helps the business achieves its objectives 2. Helps to reduce costs 3. Improves cash flow in the business 4. Helps to increase profits 5. Identifies deviations from the plan which was set out 6. Bad debts are kept to a minimum with credit control W: www.ExamRevision.ie | © ExamRevision 7  Unit 3 – Management Activities Past Exam Paper Questions Click here for all Past Paper Questions & Marking Schemes broken down into specific topics. W: www.ExamRevision.ie | © ExamRevision 8