Diploma in Management & Leadership Level 5 Week- 5 Resource Management By Anjum Sattar 11/10/2011 Water Only

Aims and Objectives. Aim (s) Recap of previous lesson Relevant organisational objectives and legal requirements and your responsibilities (relating to non-financial resources) the importance of sound financial management and budgetary control commonly used financial terminology (e.g. income/ expenditure; cost/profit centre) the differing ways in which organisations manage their finances, sources of funding available to organisations the financial interdependency of the different parts of an organisation how budgets are built and expenditure managed, and your role in that process. Learner will be able to…. Define budgetary control Identify sources of finance 11/10/2011

Recap activity.

Activity for recap

Negotiating with suppliers As discussed negotiating with suppliers. Close working relationships are important, as are clear lines of communication. It is also essential that there are precise agreements between you and the supplier that lay out what you expect and what penalties can be exacted should these  expectations not be met.  Formal contracts should lay out the following:  requirements  delivery dates  quality standards  systems for returns  schedules for payment.

Solving supplier problems If communication between you and your suppliers breaks down, then the relationship between you and your external customers will be affected. It is therefore in everybody’s interest to try to anticipate supply problems before they arise. Should these problems prove unavoidable, you need to develop ways in which both you and the supplier can work together to remedy them.

The budgeting process in practice Most organisations have a formalised process they go through to prepare budgets, such as the following. 1. A financial strategy is set that includes financial objectives. 2. Managers are asked to forecast their income and expenditure needs within the parameters set by the overall financial objectives. 3. All the forecasts are reviewed, and adjusted if necessary to make sure that the financial objectives of the organisation can be met. Senior management then assembles all the information and prepares a ‘master budget’ for the whole organisation. 4. Individual budgets are finalised and given to managers.

Budgetary control

Budget Sales / Income budget

Sales Budget

Break Time ! 20 Min Break time allowed … Back in 11/10/2011

Components of DSS Model Management systems – Stores and accesses models that managers use to make decisions e.g. manufacturing facility,analysing financial status, forecasting demand for product or service, determining quality of products. Expert knowledge – Expert systems (Artificial Neural Network –knowledge based) Support tools -Online help, pull-down menus,user interfaces, graphical analyses, error- correction mechanisms – facilitates user’s interactions with the system. Interfaces – important support tools -

Retrieve information elements Analyze entire files Prepare reports from multiple files Estimate decision consequen- ces Propose decisions Degree of problem solving support Degree of complexity of the problem-solving system LittleMuch DSS Types DSS Types Make decisions 13-13

Three DSS Objectives 1. Assist in solving semistructured problems 2. Support, not replace, the manager 3. Contribute to decision effectiveness, rather than efficiency 13-14

Functions of a DSS Model building –Decision makers identify input variables, interrelationsips amongst variables, problem assumptions and constraints E.g. sales forecasting- input variables such as demand, cost and profit, assumptions (e.g. prices of raw materials increase by 5% over forecasting period), identify constraints e.g. production capacity of plant. All information integrated within system

Functions of a DSS What-if-analysis – Assess Impact of changes to model variables. Used for semi-structured and unstructured problems. Develop(best-case scenario, worst-case scenario and realistic scenario) -Spreadsheet packages such as Excel, Lotus 1-2-3

Functions of a DSS Goal seeking –determining input values to achieve goals Risk analysis-Assess risks. Decisions can be low-risk, medium- risk and high-risk. Graphical analysis-Visualize impacts of action, forecast activities, detect trends - e.g. line or bar charts, grouped line or bar charts

Development of a DSS SQL –relational database systems such as ORACLE, ACCESS 3 methods of developing a DSS -DSS generator- data management tools, spreadsheets, report generators,statistical packages, graphical packages, model-building tools - Excel -DSS shells – Program to build customized DSS e.g. financial software to forecast incomes,project cash flow, balance sheets, analyze financial data -Custom made software- Use language such as C to develop procedures. Expensive and time-consuming

Organizational goals Organizational effectiveness Organizational efficiency Decision-making effectiveness Decision making efficiency Quality of use Attittude of DSS Intelligence Quality Information Quality Process Quality

Organizational Measures Organizational effectiveness – greater growth, better innovation, increased profitability, technical excellence, return on investment Organizational Efficiency- Cost savings, increased productivity, greater team work, time savings Decision making effectiveness – Ability to carry out ad hoc analysis, examination of alternatives, rationality of process

Organizational Measures Decision making efficiency- reduction in time taken for decision making, improvements in predictive accuracy, greater focusing on key issues Attitude to DSS- enhanced employee welfare, satisfaction with procedures Quality use of DSS- Application in major problem area, repeat use, widespread use, utilization Information Quality- Accuracy, communication, timeliness

Organizational Measures Intelligence Quality- Better understanding of organization, generation of ideas Process Quality-Confidence in decision,enhancement of processes such as transparency, equal participation etc Validity-Content validity

GDSS software MathematicalModels Other group members group members Database GDSSsoftware Environment Individual problem problem solvers solvers Decision support system Environment Environment Legend : DataInformation Communication A DSS Model Reportwritingsoftware 13-23

11/10/2011 Assignment discussion Summary. Q & A

11/10/2011 Next Session. In Next Session we are going to Learn …… Swot Analysis PEST Analysis How SWOT and PEST help in decision Making. Wednesday 23/11/ :00 – 13:00