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