Planning and Organizing

Business Management
Chapter 13
Mrs. Walton
Objectives
Student will be able to:
Justify the value of planning for a business
Differentiate between the two levels of
planning
Provide examples of seven planning tools
used by managers
Identify four characteristics of a good
organization
Define 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 Planning
Long term and provides broad goals and
direction for the entire business
Operational 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 goals
Goals must be specific and meaningful
Goals must be achievable
Goals should be clearly communicated
Goals 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 produced
Quality
Amount 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 employees department and whom
each reports
Identify lines of authority and formal communication
within the organization
Elements of the Organization
The division of work
The facilities and working conditions
The employees
Characteristics of a Good
Organization
Responsibility and Authority
Accountability
Unity of command
Span of Command
Types of Organizational Structure
Line organization
Line-and- Staff Organization
Matrix Organization
Team 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 Organization
A few top managers do all major planning
and decision making
Decentralized Organization
Business divided into smaller units, unit
managers have almost total responsibility
and authority for the operation of the unit
Flattened Organization
Has fewer levels of management