©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Planning and Organizing The Planning Function Using Planning Tools The Organizing Function Developing Effective Organizations CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e The Planning Function GOALS ● Recognize the importance of planning to business success. ● Differentiate between strategic and operational planning. 2 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Why Plan? ● The value of a business plan (a written description of the nature of the business, its goals and objectives, and how they will be achieved) ● Poor planning ● Huge losses, failure of existing and/or successful business ● Correct planning ● Larger business, higher profits, personal satisfaction 3 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Why Plan? ● The value of a business plan ● Analyzes the opportunities and risks business face ● Brief and simple for new small businesses ● Large and complex, existing business ● Multinational businesses have more than one plan ● Plans will work toward same overall objective ● Specific plans are for Internet business, operations, marketing, financial management, and human resource decisions ● Bankers look at for loan consideration 4 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Why Plan? ● Elements of a Business Plan (page 82) ● Nature of the Business ● Goals and Objectives ● Marketing Plan ● Financial Plan ● Organizational Plan 5 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Why Plan? ● The importance of planning ● Most important management activity ● Sets direction for the business and specific goals ● Guide for making decisions ● Encourages managers to be more precise and objective 6 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Levels of Planning ● Strategic planning ● Long-term broad goals and direction for the business ● Developing new products ● Building a new factory ● SWOT analysis ● Strength ● Weaknesses ● Opportunities ● Threats 7 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Levels of Planning ● Strategic planning ● Internal factors-with in a business that control and influence plans ● External factors-operating outside of the business, but managers cannot control but may influence the plan 8 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Levels of Planning ● Steps in Strategic Planning (page 83) ● Step 1-EXTERNAL ANALYSIS ● Step 2-INTERNAL ANALYSIS ● Step 3-MISSION ● Step 4-GOALS ● Step 5-STRATEGIES 9 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Levels of Planning ● Strategic planning ● Step 1-managers ● Identify opportunity to expand ● Improve the business and any threats the company faces from competition ● Changes in economy ● New laws and regulations ● Technology improvements 10 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Levels of Planning ● Strategic planning ● Step 2-managers ● Evaluate organizations capabilities to determine strengths and weaknesses 11 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Levels of Planning ● Strategic planning ● Step 3-managers ● Agree on a mission statement (a short, specific statement for the business’s purpose and direction) ● Look at the vision (the company’s reason for existing) 12 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Levels of Planning ● Strategic planning ● Top-executives responsible for strategic planning ● Collect info. From lower-level managers, employees, and other sources ● Small Business Administration (SBA) provide assistance to new and small businesses 13 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Levels of Planning ● Operational planning ● How work will be done ● Who will do it ● Resources needed 14 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Using Planning Tools GOALS ● Identify the characteristics of effective goals. ● Describe several business planning tools and how they are used. 15 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Establishing Direction GOALS ● Characteristics of effective goals ● Specific and meaningful ● Achievable ● Clearly communicated ● Consistent with each other and with overall company goals 16 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Planning Tools ● Budgets-written financial plan for operations developed for a specific time period ● Schedules-a time plan for reaching objectives ● Standards-a specific measure against which something is judged 17 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Planning Tools ● Policies-guidelines used in making decisions regarding specific, recurring situations ● Procedures-a sequence of steps to be followed for performing a specific task ● Research-collect data for managers and to provide information needed to improve planning decisions 18 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Procedure for Admitting Employees and Visitors 19 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e The Organizing Function GOALS ● Describe factors that managers should consider when organizing work. ● Discuss how the characteristics of good organization contribute to a more effective work environment. 20 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Organizing Work ● The role of organization charts (an illustration of the structure of an organization, major job classifications, and reporting relationships among the organization) ● Large organizations provide new employees information though handbook or website to show the organization chart ● Employees know how they fit into the company and how the organization works 21 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Organization Chart For Part of a Retail Business 22 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Organizing Work ● The process of organizing work ● Division of work ● Work divided into units, such as departments ● Varies with size of business, and type of industry and business ● Facilities and working conditions ● Necessary equipment and material must be provided ● Facility layout-arranged to have a smooth flow with little waste and safe working conditions 23 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Organizing Work ● Employees ● Divide work into manageable units providing adequate equipment and facilities ● Establish good relationship among employees so productivity is high 24 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Organization Chart for Ingram Company 25 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Organization Chart for Ingram & Kerr 26 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Organization Chart for Ingram Kerr, Inc. 27 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Characteristics of Good Organization ● Responsibility (obligation to do a task) and authority (the right to make decision about work assignments and to require other employees to perform assigned tasks) ● Must assign responsibility to employees who can do the job ● Empowerment (authority given to individual employees to make decisions and solve problems) 28 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Characteristics of Good Organization ● Accountability (the obligation to accept responsibility for outcomes of assigned tasks) ● Each employee is accountable for achieving the quality and quantity defined by goals and standards ● Unity of command (no employee reports to more than one supervisor at a time or for a particular task) ● Without unity of command, confusion and poor work relations is the result 29 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Characteristics of Good Organization ● Span of control (the number of employees any manager can supervise directly) ● Managers who supervise too many people is overworked and unable to perform duties effectively ● Is larger at lower levels of operation than at higher levels 30 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Developing Effective Organizations GOALS ● Describe the strengths and weaknesses of four types of organizational structures. ● Make recommendations for improving business organization. 31 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Types of Organizational Structures ● Line organization ● Business structure in which all authority and responsibility can be traced in a direct line from the top executive down to the lowest employee level. ● Lines connect individual boxed that indicate the lines of authority 32 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Line Organization 33 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Types of Organizational Structures ● Line-and-staff organization ● Managers have direct control over the units and employees they supervise ● The addition of staff specialists to a line organization. 34 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Line-and-Staff Organization 35 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Types of Organizational Structures ● Matrix organization ● Organizes employees into temporary work teams to complete specific projects ● When assigned to a new project will have a new project manager ● No permanent organizational structure ● Successful for research firms, advertising agencies, and construction companies 36 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Types of Organizational Structures ● Team organization ● Business structure that divides employees into permanent work teams. ● Teams responsible for business activities ● Team leader replaces manager ● Self-directed work team ● A team in which members together are responsible for the work assigned to the team. 37 CHAPTER 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Improving Business Organization ● Decentralized organization ● A business which is divided into smaller operating units, and managers who head the units have almost total responsibility and authority for operations. ● Flattened organization ● An organization with fewer levels of management than traditional structures. ● Improved communication, because information flow through fewer levels 38 CHAPTER 4