Chapter 7 What is planning? 20/09/2018 Chapter 7 What is planning? Planning is all about establishing goals and then setting out policies or pathways to achieving them. This is the Title Slide © Edco 2012   It’s the Business R. DELANEY

The importance of planning Take stock of all resources available. Helps implement change in a business By including staff in the plan they will feel more motivated and unified A business plan will give the company and clear focus and direction which reduces uncertainty Planning is necessary for bank loans, government grants, EU loans etc. 2

The importance of planning 20/09/2018 The importance of planning Reduces uncertainty Provides greater unity Helps raise finance Facilitates change Improves control This is the Title and Content Slide © Edco 2012   It’s the Business R. DELANEY

Effective plans - SMART 20/09/2018 Effective plans - SMART Specific Measurable Agreed Realistic Timed This is a comparison slide © Edco 2012   It’s the Business R. DELANEY

20/09/2018 Specific- they must be clear and precisely expressed/quantifiable Measurable-the success of the plan should be easily measured Agreed the plan must be agreed by all the management team Realistic- the plan must be capable of being achieved with the resources available Timed-there must be a timescale for achieving the objectives SMART R. DELANEY

Types of plans Strategic plans Operational plans Tactical plans 20/09/2018 Types of plans Strategic plans Tactical plans Operational plans Contingency plans This is the Section Header Slide © Edco 2012   It’s the Business R. DELANEY

Strategic plans Also known as long term plans 20/09/2018 Strategic plans Also known as long term plans They are developed over the long term and normally cover five years or more They are drawn up by senior management and focus on the organisations mission or purpose. They provide a guide for where the business is going in the long term and how it’s going to get there. Examples: Achieving entrance into a new/foreign market Achieving an increase in market share Becoming a market leader. R. DELANEY

20/09/2018 Mission statement A mission statement is the overall fundamental objectives and purpose of the business, the reasons for its existence and what it sees for itself in the future. It details it’s core values and commitments The school has it’s own Mission Statement R. DELANEY

20/09/2018 2. Tactical plans The long term plan is broken down into more manageable short term plans. Short term plans relate to a particular function of the organisation ie advertising. They cover a period of about 1-2 years and are developed by a management team which deals with getting the work done to carry out the strategic plan. Examples Launch a new advertising campaign aiming to increase sales by 10% Open a new branch of the business Reduce employee turnover Launch a new product R. DELANEY

20/09/2018 3. Contingency Plan These are special plans prepared to deal with unexpected circumstances or emergencies. Most well managed firms have contingency plans ready to deal with unexpected situations such as: A breakdown in production A disruption in supply of essential raw materials. Bankruptcy or bad debt of a large customer Quality control errors requiring the recall of faulty goods already sold R. DELANEY

The steps in the planning process 20/09/2018 The steps in the planning process Carry out a SWOT analysis to analyse the present situation. Set objectives Devise strategies Implement plan Review R. DELANEY

SWOT ANALYSIS Internal Strengths Internal Weaknesses Location of business Good product Skills of employees Technology Internal Weaknesses Not enough capital Out of date machinery Too much credit given Lack of resources Obsolete production methods External Opportunities Expansion New countries to join EU New product to meet customer demand Diversification into new industry External Threats Competition from new EU countries New consumer laws New marketing inventions i.e. Social marketing 12

20/09/2018 SWOT Strengths – the things the company are good at or important assets that give the company a competitive advantage. A firm should take advantage of these Weaknesses-Theses are the things that the business lacks or things that make it difficult for the business to achieve its objectives or puts it at a competitive disadvantage to other firms. R. DELANEY

20/09/2018 Opportunities -These are the things the business can take advantage of in the future. They offer the possibility of assisting or expanding the business and should be exploited as soon as possible. Threats -These could undermine the well being and profitability of the firm. They prevent the firm achieving its objectives and may pose problems in the future. R. DELANEY

Group Exercise Strengths Weaknesses Internal Strengths Company Name: _______________________________________ Mission Statement: _______________________________________ SWOT ANALYSIS Strengths Weaknesses Internal Strengths Internal Weaknesses Opportunities Threats External Opportunities External Threats 15

What are the stages in the planning process? 20/09/2018 What are the stages in the planning process? Step 1 Analyse the situation-where are we now Step 2 Identify the goal-where do we want to be Step 3 Draft a plan-how will we get there? Step 4 Implement it-Do it. Step 5 Review it- Are we there yet 1.Decreasing sales 2.Increase by 10% 3.Improve product Quality, launch advertising campaign 4.Design add for TV,radio 5.Monitor any changes in sales to see if plan worked R. DELANEY

20/09/2018 What is organising? Organising is a management function which involves bringing people and capital resources together to achieve a common goal. © Edco 2012   It’s the Business R. DELANEY

Organisational structures 20/09/2018 Organisational structures Organisational structures set out the ways in which these resources and tasks will be divided. © Edco 2012   It’s the Business R. DELANEY

Types of organisational structure 20/09/2018 Types of organisational structure Functional structure Product structure Geographic structure Matrix/team structure © Edco 2012   It’s the Business R. DELANEY

Functional structure © Edco 2012 It’s the Business 20/09/2018 R. DELANEY

Functional Organisational Structure ADVANTAGES DISADVANTAGES Specialisation – each department concentrates on the same job and becomes experts at that job. Isolation – People on each dept. May know little or care about what’s going on in other depts. Accountability - The director of each dept. Is responsible for everything in each dept. Co-ordination – Can be difficult to get all depts to work together if required. Clarity – Everyone knows who reports to whom and who is responsible for what task.

20/09/2018 The functional structure is also called ‘line organisation’ because each person in the line is answerable to the person above. Responsibilities are well defined and so this type if structure is easy to understand R. DELANEY

32. Product Structure A product structure divides the organisation on the basis of products produced. Each product line has its own production, marketing, finance and human resources manager.

S Product structure © Edco 2012 It’s the Business 20/09/2018 R. DELANEY

Product Organisation Structure Advantages Disadvantages Focus on customer – each dept. Makes sure that it delivers the best possible product to consumers. Duplication – The business end up with a few of the same dept. i.e. Marketing, finance etc. Competition – Healthy competition between depts. Brand Cannibalisation – The product may steal customers from other company products. Lower Costs – Each product is ran almost like a separate business and is judged on the profits.

4. Geographical Structure A geographic structure divided the organisation according to the geographical markets it serves. This structure might be used if a company is selling in many different countries where customers needs and markets are different. Marketing efforts are specialised and carried out by geographical area.

Geographic structure © Edco 2012 It’s the Business 20/09/2018 R. DELANEY

Geographical Organisation Structure Advantages Disadvantages Serves local needs better Duplication – The business end up with a few of the same dept. i.e. Marketing, finance etc. This can lead to wasteful higher costs. Competition – Healthy competition between regional depts. Conflict – Conflict can occur between senior managers and local managers about who knows best for the company. Lower Costs – Each product is ran almost like a separate business,

Matrix Organisational Structure Combines two types of org structure: Functional organisational structure Project team structure This is used when the business is involved in major temporary projects that require expertise from all depts of the business. Employees are temporarily taken out of their normal work and must report to the project team leader.

Matrix/team structure 20/09/2018 Matrix/team structure © Edco 2012   It’s the Business R. DELANEY

Matrix Organisational Structure Advantages Disadvantages Motivation – employees chosen to join the project feel special. Satisfies esteem needs. Two Bosses – employees report to two bosses – functional boss and their project boss. Better relationships – interaction amongst team members from different dept. Increased Cost – must pay to train managers.

20/09/2018 The chain of command The chain of command establishes the hierarchy in the business and shows how instructions flow through an organisation, from top to bottom. It illustrates how many levels (layers) of management are involved. © Edco 2012   It’s the Business R. DELANEY

20/09/2018 Span of control This illustrates the number of workers reporting directly to each manager. © Edco 2012   It’s the Business R. DELANEY

Where a manager has responsibility for a large number of subordinates 20/09/2018 Wide span of control Where a manager has responsibility for a large number of subordinates © Edco 2012   It’s the Business R. DELANEY

Where a manager has responsibility for a small group of employees. 20/09/2018 Narrow span of control Where a manager has responsibility for a small group of employees. © Edco 2012   It’s the Business R. DELANEY

20/09/2018 What is controlling? This is about measuring performance and is carried out by comparing actual outcomes to plans, and taking corrective action if necessary. © Edco 2012   It’s the Business R. DELANEY

There are FOUR key areas which need to be controlled 20/09/2018 There are FOUR key areas which need to be controlled Stock control Quality control Credit control Financial control © Edco 2012   It’s the Business R. DELANEY