Chapter Eight: Management Activities:
Planning, Organising and Controlling
Last ABQ Chapter
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Outcome
According to the syllabus, by the end of this chapter, you should
be able to:
 Discuss the nature of management activities and their
linkages.
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Planning – Key Terms
Planning
SWOT Analysis
Objectives
Low Cost Leadership
Differentiation
Niche
Manpower Planning
Cash flow forecasting
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Mission Statement
Strategic Plan
Tactical Plan
Contingency Plan
SMART
Operational Plan
Planning – What you need to know
 Steps Involved in Planning
 Types of Planning & their impact
 Advantages of Planning
Planning involves setting goals and coming up with strategies
to achieve these goals.
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Conduct a SWOT
Analysis
Steps involved in
Planning
Set SMART Objectives
Devise Strategies and
Plans
Note: you could link
types of planning in
with “devise
strategies” if it is a
question worth high
marks
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Implement and
Review
2010 Sample Answer
 (A) (i) What is meant by the term SWOT analysis?
 A management technique/strategic planning method. It is
used to assess/evaluate a business in terms of strengths,
weaknesses, opportunities and threats. In a SWOT analysis,
strengths and weaknesses are internal factors while
opportunities and threats are external factors. The aim is to
maximise the potential of strengths and opportunities while
minimising the impact of weaknesses and threats.
 (6 marks)
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SWOT Analysis: Guinness
 Strengths: Internal factors that give an advantage
Strong advertising and marketing department. Wide variety of high
quality merchandise. Guinness storehouse the most visited tourist
attraction in Dublin. Strongly associated with Ireland (the Harp).
Widget. Quality Team.
 Weaknesses: internal factors that are a disadvantages.
Perceived as a very heavy drink. Perceived as an “acquired” taste.
 Opportunities: External factors that may give an advantage
Cheaper than other drinks – good in a recession. Arthurs Day becoming
a major event. Gathering 2013 increase sales and visits to Storehouse.
 Threats: External factors that may give a disadvantage. Increased
popularity of artisan beers and wine. Increased availability of a variety of
products. Have failed to capture the female market despite the fact that
women are drinking more. Alcohol advertising may be banned???
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Set SMART Objectives
 SMART
 Specific: clear and precisely expressed
 Measurable: easily measured, quantifiable.
 Agreed: by the management team. Input from employees
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very valuable.
Realistic: capable of being achieved with the resources
available.
Timed: timescale set for the achievement of the objective
OBJECTIVE
The goal a business is trying to achieve
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Strategies
 Low Cost Leadership Strategy: the company keeps its costs to
a minimum so that it can sell its products as cheaply as possible,
e.g. Ryanair, Aldi.
 Differentiation Strategy: the company makes their product
stand out so achieve its goals. Many companies will built up a
brand associated with high quality so that customers will pay extra
for their product compared to a competitor. E.g. Ralph Lauren,
Kelloggs.
 Niche Strategy: the company is successful because it has a
product that serves a particular need or want that the market has
not previously catered for, e.g. there was a big increase in organic
food during the Celtic Tiger when people were willing to pay
more.
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Implement and Review
 The manager must now put the plan into action.
 He must break the plan into manageable parts and
communicate it to employees.
 Performance needs to be reviewed on a regular basis to
change plans if not on target.
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Cash flow
Forecast
Manpower
Planning
Mission
Statement
Strategic Plan
Types of
Planning
Contingency
Plan
Tactical Plan
Operational
Plan
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Types of Planning - Definitions
 Manpower Planning: this involves making sure that the business has the
right amount of workers with the right skills to do all the jobs needed. E.g. a
Principal must make sure there is enough Maths teachers for the upcoming year.
Manpower planning involves:
- Forecasting Future Demand
- Calculating Existing Supply
- Recruit employees if there is availability or make unneeded employees
redundant.
 Cash flow forecasting: where the manager plans out the money the business
expects to receive and spend in the future. The main objective is to make sure
the business will have enough money to pay its bills as they fall due. If not, this
planning gives them the time to take corrective action. E.g. arrange an
overdraft.
 Contingency Plan: prepared to cope with emergency situations e.g. a
disruption in supply of essential raw materials.
 Operational Plan: short term plans for daily or weekly issues. Conducted by
frontline supervisors.
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Types of Planning - Definitions
 Mission: the mission of a company is the overall fundamental
objective of the business, i.e. their reason for existing. It states
who they are, what they do and where they are going. E.g. Google:
“To organise the worlds’ information and make it universally
accessible and useful.”
 Strategic Plan: a major plan for the entire business it breaks up
the mission into achievable plans of action. It is drawn up by the
senior managers and should be achieved within five years. E.g. an
Irish company may plan to expand into the UK market. A strategic
plan would be to gain a 10% market share in five years.
 Tactical Plan: A short term plan for one section of the business,
it is written by the middle managers. It breaks a strategic plan
into smaller steps and should be achieved within one year. E.g. The
Irish company opening their first outlet in the UK.
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2010 Sample Answer
(B) Analyse the contributions that strategic and tactical
planning can make to the successful management of a
business. Use examples in your answer. (20 marks – 2@10m,
4+3+3)
Strategic planning is a major plan, made by top management. They take
the mission and break it up into major plans of action to be achieved
within 5 years.
 A strategic plan clearly defines the purpose of the business and
establishes realistic goals that are consistent with that of the mission
statement of the business.
 Strategic plans help businesses to identify opportunities which may lead
to increased market share and new markets.
 E.g. Aer Lingus Mission: To become the biggest airline in the world.
Strategic Plan: To control 10% of the US Market in five years time.
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2010 Sample Answer
 Tactical planning is short term where the long-term plan is broken
down into shorter more manageable short-term objectives. The
tactical plan is developed by a management team who deals with
getting the work done to carry out the strategic plan. They draw
up a tactical plan that will deal with the “now” part of the plan.
 Tactical plans outline a set of action items or tactics to help a
business achieve a number of key objectives or goals. If these are
achieved it helps a business to achieve its long-term goals.
 Examples of a tactical plan could be adding a group of new
customers in the next year, improving customer service levels
through specific tactics, reducing employee turnover, or lowering
operational costs.
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Requires
realistic analysis
- Identifies
weaknesses
Future
Orientated
Advantages
of Planning
Essential to
raise
capital
Reduces
Uncertainty
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Motivates
employees
and
management
Advantages of Planning
 Future Orientated: the managers anticipate problems and take the
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necessary steps to deal with those problems. E.g. bt preparing a
manpower plan you can avoid be understaffed for a busy time of year.
Requires Realistic Analysis: a SWOT analysis identifies the
weaknesses of a business, i.e. the internal factors that are a disadvantage
to the business. Once identified these can be improved and overcome.
Motivates Employees and Managers: Plans set out goals for
everyone to achieve and deadlines to achieve them by. In many cases
there may be a reward for meeting your targets. This motivates all staff.
Reduces Uncertainty: Planning provides clear direction for the
business. Those at all levels have a clearer understanding of what is
expected by them.
Essential to Raise Capital: the existence of a business plan is essential
when applying for loans. Businesses would include a cash flow forecast
to prove they could afford the repayments.
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Organising
 The business needs to get organised to achieve the goals they
set out in their plans. This involves organising their resources
into the most suitable form by drawing up an organisational
structure.
 An organisational structure involves splitting all the
work to be done and appointing people to be in charge and
to achieve the objectives.
 The four main types are functional, product,
geographic and matrix.
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Frequently a
short question
Functional
Staff dept’s provide expert
advice to the line dept. e.g.
legal team, IT team.
Arranged by different jobs
Also called a Line Structure
Marketing
Director
Sales Reps
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Finance Director
Accountants
CEO
Production
Director
Factory Workers
Human
Resources
Director
Personnel
Assistants
Functional
 Advantages
 Clarity: Responsibilities are
well defined and so this type
of structure is easily
understood.
 Specialisation: organised
by job so each dept becomes
an expert. Makes them more
efficient.
 Accountability:
accountability flows upwards.
Each director is responsible
for each dept.
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 Disadvantages
 Isolation: Each dept
operates by itself and may
have little interaction with
other departments.
 Co-ordination: It can be
difficult to get all
departments working along
the same lines.
Product
CEO
Coke Zero Manager
Coke Zero HR
Manager
Based on the product
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Coke Zero
Production
Manager
Diet Coke Manager
Diet Coke HR
Manager
Leads to:
Focus on the customer,
Intercompany
competition (lower costs,
improves quality)
Diet Coke
Production
Manager
Leads to:
Duplication
Brand
Cannibalisation
Geographic
CEO
UK Manager
UK HR
Manager
Organised by area
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Germany Manager
UK Finance
Manager
Germany HR
Manager
Leads to: Better local
knowledge, competition
between regions (Leading
to lower costs)
Germany UK
Manager
Leads to: Duplication,
Conflict between local
manager and senior
management)
Used for
temporary inter
departmental
projects
Frequently a
short question
Matrix
CEO
PROJECT
TEAM
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Improves employee
motivation and
relationships between
departments
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Production Dept
Sales Dept
Finance Dept
Production Staff
Sales Staff
Finance Staff
Divided Roles: Employee reports
to their team leader for the project
and to their normal manager for
anything outside the project.
Increases costs as
people need to be
trained to be
project leaders
Span of Control
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 Span of Control: This
 It depends on:
refers to the number of
employees that report
directly to a manager. i.e.
how many they can
effectively supervise.
 This can be:
 Wide (supervise many
employees)
 Narrow (only a few)
 Managers experience and
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ability
 Employees experience and
ability
 The type of work
 Location of the employees
Chain of Command
 Delayering: the process of
 Chain of Command: the
path on which
orders/instructions/decision
s are passed down from the
top to the bottom of the
hierarchy and feedback is
passed back up. It also
illustrates how many levels of
management are involved.
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stripping away layers of
management. It is often an
attempt to improve the
speed at which information
is communicated
throughout the business.
2010 Sample Answer
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
(C) Discuss the benefits of a functional organisational structure in a business. Refer
to the “Chain of command” and “Span of Control” in your answer. (Benefits 2@5,
definitions 2@5)
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A functional organisational structure organises departments by the type of job to be done. This leads
to:
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1) Specialisation: each department concentrates on the same job and so become experts at it.
The Span of control refers to the number of employees that report directly to a manager. A wide
span of control means they supervise a lot of employee, whereas a narrow span of control means
they only supervise a few. Several factors effect this including the experience and ability of the both
the managers and employees. Functional organisation allow for specialisation, therefore a wider
span of control may be feasible as both manager and employees are experts in their area.
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2) Accountability: the director of each department is responsible for everything that goes on it.
The chain of command is the path on which orders/instructions/decisions are passed down from
the top to the bottom and feedback is passed back up. In a functional organisation accountability
flows upwards and instructions flow downward.
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Controlling: Key terms
 Controlling
 Stock Control
 Optimum Level
 Buffer Stock
 Maximum stock level
 Minimum stock level
 Re-order point
 Re-order quantity
 Just-in-time
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Quality Control
Physical Inspection
Quality Circles
ISO 9000 Award
Sampling
Credit Control
Debtor
Creditor
Controlling
Stock Control
Types of Control
Quality
Control
Credit
Control
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Controlling involves measuring performance by
comparing actual outcomes to plans, and taking
corrective action if necessary.
Stock Control: Key Terms
 Stock Control: the aim of stock control is to make sure that the
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business has the optimum level of stock in the shop at all times. It is bad
for the business if it has too much or too little stock. Too much stock
could go out of date before it is sold, too little will lead to a loss in sales
and customers.
Maximum Stock Level: the business should never have more than
this amount of stock.
Minimum Stock Level: the business should never have less than this
amount in stock.
Re-order Level: the point at which the stock has to be re-ordered.
This should take into account time for delivery, i.e. the lead time.
Re-order Quantity: the correct amount of stock you should buy each
time.
Buffer Stock: a small level of safety stock.
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Stock Control: Key Terms
 Just-in-Time: the aim of this system is to keep the
minimum amount of stock possible in the factory while at the
same time never running out of stock. In involves buying
from a supplier who delivers exactly the right amount of
perfectly made stock at exactly the time when it is going to
be used by the business. Materials come into the factory just
before they are needed. Use of EDI makes this possible. E.g.
Dell use JIT
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2011: Sample Answer
 Describe how stock control achieves efficiencies in a business (10 marks:
2+4+4)
 Stock Control is concerned with keeping optimum stock levels so that it doesn’t have
too much stock or too little stock. Effective stock control means that you have the
optimum level of stock in your business.
 Optimum stock levels lead to efficiencies because you have the right stock, in the right
place, at the right time to meet production requirements and satisfy consumer demand.
 Efficiencies (specific examples):
 An ISDN (Integrated Services Digital Network) can help you achieve efficiencies by
eliminating the costs associated with having too much stock i.e. Obsolescence, Storage
costs (Light & Heat, Security, Warehouse space, insurance etc.), Deterioration, Pilferage.
 Stock control can achieve efficiencies by eliminating the costs associated with carrying
too little stock i.e. production stoppages due to a lack of raw materials and components
for production, and lost sales orders because of a lack of finished goods for sale.
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Quality Control: Key terms
 Definition: involves making sure that the quality of a business’s products
meets the expectations of legal requirements and consumers. This can be done
through physical inspection, quality circles and ISO 9000 Awards.
 Physical Inspection: items are literally examined before being passed as fit
to be sold. For specialised products such as Waterford Crystal each piece would
have to be examined. For mass produced products like chocolate the inspector
uses a method called sampling, examining a percentage of the products.
 Quality Circles: this involves the employees spotting quality problems in the
factory and coming up with solutions to the problem. A small group volunteer
and help to implement solutions that the management agree to.
 ISO 9000: this is an internationally recognised award that is given only to
businesses that can consistently prove to an independent team of inspectors that
their products meet the highest quality standards.
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2011: Sample Answer
 Describe how quality control achieves efficiencies in a business (10
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marks: 2+4+4)
Definition: involves making sure that the quality of a business’s products
meets the expectations of legal requirements and consumers. This can be done
through physical inspection, quality circles and ISO 9000 Awards.
The ISO 9000 symbol is recognised worldwide and would be of huge benefit to
the business in marketing its products internationally.
Efficiencies:
Effective Quality control leads to efficiencies in business because it minimises
the costs associated with selling faulty goods to consumers e.g. Administrative
costs associated with the return of goods. Loss of reputation and the ensuing
lost sales. Lost productivity due to time spent dealing with complaints.
Effective Quality control leads to efficiencies in business because consistently
high quality products are being sold, resulting in repeat purchasing, consumer
loyalty and the ability to charge higher prices, as the business may become the
market leader.
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Credit Control
 Credit Control: the aim of credit control is to make sure that
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all customers pay their bills in full and on time. It seeks to
eliminate bad debts and to make late paying customers pay their
bills now. The business should have an established procedure for
dealing with customers who wont pay.
For effective credit control a business should
1) Set a limit for overall credit given
2) Vet each customer. Do a credit check and ask for a bank
reference and a trade reference. The Irish Credit Bureau would
have information on loan repayments.
3) Send out bills immediately. Offer discounts to those who pay
early.
4) Have an established procedure for dealing with customers who
wont pay.
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2008: Sample Answer
 Evaluate the contributions that credit control makes to the
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successful management of a business. Use examples in your
answer. 10 marks: 5+5 (2+3)
The aim of credit control is to make sure that all customers pay their
bills in full and on time. It seeks to eliminate bad debts and to make late
paying customers pay their bills now. The business should have an
established procedure for dealing with customers who wont pay.
Therefore the contributions it makes include:
Improved cash flow: credit control ensures that the business receives its
money in time to pay its own bills. This will ensure they do not go
bankrupt or become over-dependent on bank overdrafts. It will also
allow them to avail of trade discounts offered to them by their own
suppliers.
Reduces costs: Expenses are reduced as bad debts decrease, this
increases the profit of the business.
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Test Preparation Question
 You will be asked one of the two following exam questions
next Thursday:
 1) A) What is meant by the term SWOT Analysis? (ii)
Conduct a SWOT analysis on a business of your choice. (20
marks)
B) (i) Explain the term ‘span of control’ (6 marks) and
outline two factors that affect the width of the span of
control (4 marks)
(ii) Draft and label a matrix organisation structure (10
marks)
C) Describe how quality control and stock control achieve
efficiencies in business (20 marks).
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Test Preparation Question
 2) A) Analyse the contributions that strategic and tactical
planning can make to the successful management of a
business. Use examples in your answer. (20 marks)
 B) Discuss the benefits of a functional organisational
structure in a business. Refer to chain of command and span
of control in your answer (20 marks).
 C) Evaluate the contributions that credit control makes to
the successful management of a business. Use examples in
your answer (10 marks).
 (ii) Draft and label a functional organisation structure. (10
marks).
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