Planning and organizing


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Chapter 13 Business Principles of Management

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  • Planning must be done carefully in order to make the best decisions about starting and managing a business. Poor planning could result in huge losses and failure of the business. The correct decision could result in a much larger business, higher profits and a great deal of personal satisfaction. One way to plan is to develop a business plan
  • Careful planning encourages managers to be more specific and objective in their decisions
  • Planning and organizing

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