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M92 > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

How is strategy defined

A

A proposal for long-term deployment of resources to meet objectives against competition

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2
Q

A - How long are the goals for strategic planning normally cover

A

Between three and 10 years depending on the nature of the industry

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3
Q

What industries require long-term strategic planning

A

Life and pensions businesses as well as industries such as oil exploration and production

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4
Q

What does a strategy implementation stage involve

A

The development of detail tactical plans policies and procedures in operation plans and decisions

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5
Q

What will the Strategy tactical plan involves

A

Include medium term Policies designed to implement some of the key elements of the strategy i.e. developing new insurance products recruitment or downsizing of staff

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6
Q

What does a strategy operational plan involves

A

Routine day-to-day matters and is concerned with ensuring that the strategic goals and objectives are met I.e. cost and revenue targets

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7
Q

What should be the point of implementing business plans

A 
The objectives of the plan
The strategy for achieving those objectives
The specific activities which will be undertaken
Allocation of specific responsibility
The start and finish date
The estimated resource requirement
Expected cost
Expected results
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8
Q

A - What does smart stand for

A

Specific, measurable, achievable, relevant and time defined

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9
Q

What are some examples of smart objectivities that are being monitored

A 
Sales revenue
Overheads and expenses
Turnover of staff
Market performance
Customer satisfaction surveys
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10
Q

When implementing the business plan what is the control process

A

A series of milestones identifies overtime benchmark valuation strategic and operational performance

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11
Q

A - What are examples of control models

A 
Management accounting
Budgeting
Critical success factors
Key performance indicators
Balance scorecard
Management by objectives
Benchmarking
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12
Q

What is a practice of management accounting

A

Enables managers to track progress of the financial performance of the business from the financial year

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13
Q

How do managers use management accounting

A

They will analyse the performance of things such as sales and expenses and the analyst will show recent historical development to help predict income and cost the remainder of the financial year

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14
Q

How old the management accounting team insurance operate

A

Take responsibility for the regulatory reporting a financial transactions and the firms balance sheet

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15
Q

A - What are critical success factors

A

Certain factors that are critical to realising its mission either by exploiting opportunities or by finding of the dangers posed

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16
Q

A - What are usually derived from critical success factors

A

Swot analysis (strengths, weaknesses, opportunities and threats)

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17
Q

What are critical success factors mostly commonly associated with

A

Strategic plan based on overcoming competition from rival organisations.

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18
Q

What can be identified as a critical success factors

A

The alleviation of an organisations weaknesses and threats in the face of competition for example weak distribution systems. The improvement of these becomes a CSF

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19
Q

Do you see CSF’s need to be SMART

A

Yes like objectives

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20
Q

A - What are key performance indicators

A

Are those quantifiable points in the development of a company strategy to show whether or not the company is reaching its target and objectives

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21
Q

A - Can KPIs be results orientated or effort orientated

A

Key performance indicators can be both

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22
Q

What do results orientated measures usually represent

A

The bottom line

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23
Q

What does Effort orientated measures usually represent

A

They indicate the level of effectiveness being achieved

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24
Q 
What are these an example of: 
sales volumes and/ or revenues
Rates of return on investment
Market share
Asset growth
A

Results orientated performance measures

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25
Q 
What are these an example of:
Number of potential customers contacted
Number of complaints actions within a planned timeframe
Actions taken to improve staff relations
Actions pursuing of debtors
A

Effort orientated performance measures

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26
Q

What happens in KPIs is the performance being achieved is unfavourable

A

Action must be taken

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27
Q

What should key risk indicators cover

A 
IT down time
Fraud (internal and external)
Complaints
Property loss or damage
Employee injury or illness
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28
Q

A - What are the four perspectives of a balance scorecard

A

Internal perspective
Customer perspective
Learning and growth
Financial perspective

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29
Q

A - What do balanced scorecard identify

A

The knowledge, skills and systems that employees will need in order to innovate and build the right strategic capabilities and efficiencies that deliver specific value to market Place which are eventually lead to a higher shareholder value

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30
Q

What two things must an organisation know to achieve on the balance scorecard

A

Mission statement

Strategic plan/vision

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31
Q

After the mission statement/strategic plan and vision what other thing to the balance scorecard organisation need to know

A

The financial strength of the organisation
How do you organisation is currently structured and operating
The level of expertise of its employees
Customer satisfaction level

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32
Q

What do Balanced scorecard show when they are Mapped

A

Accompanies subsidiary objectives building up from the bottom level to the top they can be used as blueprint for the achievement of accompanies aims

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33
Q

Why do people think that Balance scorecard framework is still relevant

A

Tether the company to strategy execution
Present the health of an organisation
Enhances transparency

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34
Q

A - What is benchmarking

A

A process that allows a company to compare its own progress with that of a comprehensive standard

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35
Q

What is this an example of:

Accompanies growth will be measured against the growth of the UK economy as a whole another organisation operating in the same industry

A

Benchmarking

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36
Q

What does benchmarking achieve

A

It means that the establishment of performance measures that enable a company to analyse it efficiency and performance against competitors or leading companies in industry. It can also be used to compare the performance department within the company

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37
Q

A - What are the three types of benchmarking

A

Internal- compare the performance of divisions and departments internally
External- compares against competing firms
Functional- Compare the main functions of processes against other organisations but not necessarily competitors

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38
Q

To ensure that benchmarking successful, it is an essential that:

A

Comprehensive and accurate information is available or competing or comparable industries
Benchmarks are based on industry best practice
They are flexible and be altered
Relate to the company’s corporate strategies and plans
There are sound internal audit processes in place

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39
Q

A - What is management by objectives

A

A process of defining objectives within an organisation so everybody agrees objectives and understands what they need to do

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40
Q

A - When is management by objectives appropriate

A

The knowledge based organisation such as insurance companies

41
Q

A - Under management by objectives of the success of achievement of organisational goals for quite a number of key management factors, namely that:

A

They must be complete support from the top management
It’s job is directed towards same goals
Each managers target form it supposed be to ride from targets
Each manager must know what their performance targets are
A managers superior must know what to demand for their manager

42
Q

What are the advantages of management by objectives

A

Motivation
Better communication and coordination
Clarity of goals easily smart methodology
Employees tend to have a high commitment to objectives
Managers can ensure that objectives of employees are linked to the organisations objectives
A common goal

43
Q

What are the disadvantages of management by objectives

A

Employees may believe it’s a management ploy
Maybe prone to distort results
Potential for considerable paperwork
More on short-term goals
May not be sufficiently skilled interpersonal interaction

44
Q

What is variance analysis

A

Where departments or individuals will usually be expected to provide reasons for any significant variances in the budget

45
Q

A - What is forecasting

A

The method by which  Budget I’ll put together by directors and senior management

46
Q

 What three things does forecasting cover

A

Levels and types of business all transacted
Turn over the business produces
Income such as investment returns 

47
Q

Will the forecast cash flow from part of the budget plan

A

Yes, A firm will need to ensure that cash flow is managed so that funds are available to meet expenses as they arise

48
Q

What happened with the longer the forecast in horizon used

A

Less certainty that will be either results obtained

49
Q

How often weather forecast income and expenses need to be looked at

A

As a period under review progresses e.g. monthly or annually

50
Q

A - What are the four advantages of budgeting

A

Unification of effort
Planning
Financial awareness
Basis of comparison

51
Q

A - What does a budget show

A

The income and expenditure expected during a financial period

52
Q

How are budgets drawn up

A

For individual departments and functions example sales budget and expense budget as well as the capital expenditure such as IT and also cash flow

53
Q

A - Who begins budgeting process

A

The chief executive issues general guidelines of the master budget the principal heads of departments

54
Q

What is a budget committee

A

In large organisations they are made up of the functional department mental managers and chaired by the chief executive

55
Q

When budgeting what do the chief executive guidelines include

A

A commentary on the organisations performance in the final year which is just finishing,
an explanation of a differences between actual performance and budgeted performance for that year,

if you unexpected changes in the business environment in the coming year

56
Q

What happens when budgeting after chief executive guidelines are released

A

Each department head discuss them with the relevant members of their team

Each department and strive to put together its own budget ensuring is it matches the objectives of the master budget

57
Q

Once the consultation and preparation has being completed a departmental budgets Are viewed by the committee all or the board to ensure that they :

A

Conform to the policies of a master budget
Shows how departmental objectives are going to be achieved
Recognise any constraints
Are realistic
Reflect the financial responsibilities of the department concerned

58
Q

What happened with Samantha budget and a departmental budgets have been decided and agreed

A

They communicated to managers before the start of the appropriate financial period

59
Q

What happened after a budget is agreed for all different levels

A

Continuous monitoring on a weekly or monthly basis to identify variances from the budget to the corrective action should be taken early

60
Q

What are the four Methods and types of budgeting

A

Top down budgeting
Bottom up budgeting
Zero-based budgeting
Rolling budgets

61
Q

A - What is top-down budgeting

A

The owners or directors decide on the individual plans for each department and function and these plans are given to the individual managers to implement. Easy to operate.

62
Q

A - What is bottom up budgeting

A

Individual department managers construct their own budget within set guidelines. They are then past up to the managers and directors who incorporate individual budget into organisations master budget

63
Q

A - What are the two methods of bottom up budgeting

A

The fixed budget and flexible budget

64
Q

A - What is a fixed budget method of bottom of budgeting

A

It’s not changed once it has been established regardless of any alterations in the organisations performance in reality

65
Q

A - What is a flexible budget method when b bottom up budgeting

A

It’s changed in according to the organisations real activity levels over time i.e. If salary cost increase unexpectedly halfway through the budget period

66
Q

A - What is zero based budgeting

A

Relies on managers to justify their expenditure from a fresh standpoint.

It requires managers to start a position of having nothing in a budget the ultimate question they don’t have to justify what they want going forward

67
Q

A - When is zero-based budgeting normally used

A

The cost of individual and self contained areas of work such as research, machine maintenance and legal services

68
Q

A - What are rolling budgets

A

They are budgets are constantly look forward. With a 12 month rolling budget, are you come to the end of each month a new month is added at the far end of the whole 12 month period. Managers are always looking 12 months ahead and make alterations in the future budget on a regular basis

69
Q

A - What is a budget variance

A

The difference between actual and budgeted performance

70
Q

A - What are the two types of variances

A

Unfavourable variance and favourable variance

71
Q

A - What is an unfavourable variance

A

When budgets or not met

72
Q

A - What is a favourable variance

A

When budgets are exceeded

73
Q

Why do Unfavourable variances need to be investigated

A

So that preventative actually to be implemented to bring the spend back on budget also that effect can’t be minimised

74
Q

Why does a favourable balance need to be investigated

A

Select contributing factors can be nurtured and effect incorporated in the future plans

75
Q

A - What are the causes of variances

A

Inadequate pricing
Higher expenses than planned
Random events for example an IT breakdown
Operating efficiency

76
Q

What is meant by management by exception when investigating budget variances

A

Save the allocation of unnecessary management time to investigate minor variances for example a plus or -3% on sales volume

77
Q

What are the four main steps in decision-making

A
  1. Understanding why decision must be take
  2. Prior consideration and discussion of the options
  3. Taking the most appropriate decision
  4. Review
78
Q

A - What are the five C’s of decision-making

A

Consider, consult, crunch, communicate and check

79
Q

When should contingency plans be putting in the steps in decision making

A

When considering and discussing the options

80
Q

How do the five C’s of decision-making work

A

Consider- preparation stage of which the problem is considered
Consult- which initiatives are taken to involve those affected
Crunch- We need to ensure that something is done
Communicate- explanation to staff
Check- Go back a monitoring result of a decision

81
Q

What is classed as essential information

A

Organisations financial position
Monthly sales revenue
Value of reported insurance claims

82
Q

A - What is the information manager needs

A

Level of productivity
What resources are available
Are objectives being met

83
Q

A - Information within an organisation to be analysed is into what three levels

A

Strategic
Tactical
Operational

84
Q

When a strategic information used

A

By senior managers to planner objectives of their organisation and to assess whether objectives are being met

85
Q

What is this an information example of:
Overall profitability
Future market prospects
Availability and cost of raising new funds Total cash needs

A

Strategic information

86
Q

What is tactical information

A

Used by middle management to ensure that resources of the business are employed to achieve strategic objectives of the organisation

87
Q

What level of information is it an example of:

Productivity control or variance analysis reports and cash flow forecast

A

Tactical

88
Q

Where is tactical information generated from

A

Within the organisation and is likely to have an accounting emphasis it can be prepared regularly

89
Q

What is operational information

A

Used by front line managers such as supervisors to ensure that specific tasks are planned and carried out properly

90
Q

A - What is a management information system

A

A database of financial information organised to produce regular reports on operations for every level of management

91
Q

A - What is the main purpose of a management information system

A

To give managers feedback about their own performance and enable senior management to monitor the company as a whole

92
Q

The basic features of a management information system can be summarised as follows

A

Information flows horizontally and vertically

Reports generate between low-level management and top-level management

93
Q

A - What is the codification strategy

A

Knowledge is carefully codified and stored in database where it can be accessed and use easily by appropriate employees

94
Q

A - What is a personalisation strategy

A

Knowledge is closely tied to the person who developed it and shared mainly for a direct person-to-person contact instructor training programs

95
Q

What two main areas of the organisation strategy does knowledge management have an impact on

A

Creating value for customers

Operational economies

96
Q

How does knowledge management have an impact on creating value for customers

A

The customer should benefit because the financial services organisation to build a reliable, high quality information system

97
Q

How does knowledge management have an impact on operational economies

A

They follow accreditation strategies to rely on economies of reuse. The knowledge can be employed in my task 1 million please because it is now containing documents or electronic form this will save work, reduce communication course and allow companies to take a more projects

98
Q

Which knowledge management system is more appropriate for mature services

A

Codification strategy

99
Q

Which knowledge management is better used for innovative services

A

Personalisation strategy

M92 (12 decks)

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