F1_ACCA_Lesson1

© www.accountingclassroom.com A Resource for ACCA Exam Preparation The Business Organisation Topic 1 © www.accountingclassroom.com A Resource for ACCA Exam Preparation Session Objectives � Define organisation � Identify the different types of organisation � Describe the main business functions � Explain the characteristics of the strategic, tactical and operational levels in the organisation in the context of the Anthony hierarchy © www.accountingclassroom.com A Resource for ACCA Exam Preparation Nature of Organisations Nature Meaning TypesNeed © www.accountingclassroom.com A Resource for ACCA Exam Preparation Organisations: Meaning � Group of people working together to achieve common goals � Social arrangements for controlled performance of collective goals - Buchanan and Huczynski © www.accountingclassroom.com A Resource for ACCA Exam Preparation Key Elements � Social arrangements � Controlled performance � Collective goals © www.accountingclassroom.com A Resource for ACCA Exam Preparation Need for organisations � Pool skills and knowledge � Facilitate specialisation � Pool resources © www.accountingclassroom.com A Resource for ACCA Exam Preparation Need for Organisations � Opportunity to save time � Fulfil social needs � Become power centres © www.accountingclassroom.com A Resource for ACCA Exam Preparation How Organisations Facilitate Specialisation � Individual workers can concentrate on a limited type of activity � Allows individual workers to: � build higher skill levels and knowledge � become more efficient � Key aspect of Specialisation is division of labour © www.accountingclassroom.com A Resource for ACCA Exam Preparation Division of labour � “The extent to which the organisation’s work is separated into different jobs to be done by different people.” -Moorhead and Griffin � Concept was first given by Taylor � It was first used in car production at Ford © www.accountingclassroom.com A Resource for ACCA Exam Preparation Division of labour: Benefits � Simple tasks encourage use of highly specific equipment � Semi-skilled labour can be employed in place of expensive highly skilled � Workers are only responsible for one process and so are able to develop a high level of expertise. © www.accountingclassroom.com A Resource for ACCA Exam Preparation Basis of Profit Orientation Basis of Ownership and Control Public Sector Organisations Private Sector Organisations Profit-seeking organisations Not for Profit Organisations Co-operatives Classification of OrganisationsClassification of Organisations © www.accountingclassroom.com A Resource for ACCA Exam Preparation Profit-Seeking Organisation � Companies and partnerships having the main objective as maximising the wealth of its owners � Primary objectives include: � Survival � Growth � Make profit © www.accountingclassroom.com A Resource for ACCA Exam Preparation Objectives of Profit Seeking Organisations: Peter Drucker � Market standing � Innovation � Productivity � Physical and financial resources � Profitability � Manager performance and development � Worker performance and attitude � Public responsibility © www.accountingclassroom.com A Resource for ACCA Exam Preparation Not-for-Profit Organisations (NFPs) � Do not have financial objectives as primary � Seek to satisfy specific needs of their members or specifc sectors � Include: � Schools � Charities � Clubs © www.accountingclassroom.com A Resource for ACCA Exam Preparation Mutual Organisations � Type of Not-for-Profit organisation � Raise funds by the subscriptions of members � Use these funds for providing common services to members � Examples: � Trade unions � Building societies © www.accountingclassroom.com A Resource for ACCA Exam Preparation Public Sector Organisations � Provide basic government services � Controlled by government organisations � Examples: � Royal mail � Police � Military � NHS © www.accountingclassroom.com A Resource for ACCA Exam Preparation Private Sector Organisations � Non-government organisations � Not controlled by government � Examples � Businesses � Charities � Clubs © www.accountingclassroom.com A Resource for ACCA Exam Preparation Co-operatives � An autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise - (International Cooperative Alliance Statement 1995) � Similar to mutual organisations © www.accountingclassroom.com A Resource for ACCA Exam Preparation Main Business Functions � Human Resources � Sales and Marketing � Research and Development � Production/Operations � Purchasing � Customer Service � Finance and Accounts � Administration © www.accountingclassroom.com A Resource for ACCA Exam Preparation Human Resources � Recruitment and retention � Job descriptions � Person Specifications � Dismissal � Redundancy � Motivation � Professional development and training � Health and safety and conditions at work � Liaison with trade unions © www.accountingclassroom.com A Resource for ACCA Exam Preparation Sales and Marketing � Market research � Promotion strategies � Pricing strategies � Sales strategies � The sales team � Product – advice on new product development, product improvement, extension strategies, target markets © www.accountingclassroom.com A Resource for ACCA Exam Preparation Research and Development � New product development � Product improvements � Competitive advantage � Value added � Product testing � Efficiency gains � Cost savings © www.accountingclassroom.com A Resource for ACCA Exam Preparation Production/Operations � Acquiring resources � Planning output – labour, capital, land � Monitoring costs � Projections on future output � Production methods � Batch � Flow � Job � Cell � Efficiency © www.accountingclassroom.com A Resource for ACCA Exam Preparation Purchasing � Acquiring goods and services necessary for business © www.accountingclassroom.com A Resource for ACCA Exam Preparation Customer Service � Monitoring distribution � After-sales service � Handling consumer enquiries � Offering advice to consumers � Dealing with customer complaints � Publicity and public relations © www.accountingclassroom.com A Resource for ACCA Exam Preparation Finance and Accounts � Cash flow � Monitoring income/revenue � Monitoring expenditure � Preparing accounts � Raising finance � Shares � Loans � Links with all other functional areas © www.accountingclassroom.com A Resource for ACCA Exam Preparation Administration � Managing estates � health and safety, maintenance, security � Reception � Clerical work � reporting, recording, record keeping, communication � Overview of quality control © www.accountingclassroom.com A Resource for ACCA Exam Preparation Co-ordination Mechanism in an Organisation � Budget-setting process � Regular meetings between the managers � Inter-department communication � Clear, well-documented reporting lines � Encouraging Direct Supervision � Standardisation of processes, outputs and skills and knowledge © www.accountingclassroom.com A Resource for ACCA Exam Preparation Planning Hierarchy Strategic Planning And Control Operational Planning And Control Tactical Planning And Control © www.accountingclassroom.com A Resource for ACCA Exam Preparation � A process � Of deciding on objectives of the organisation � On changes in these objectives � On resources used to attain these objectives � Policies that govern the acquisition, use and disposition of these resources What is Strategic Planning © www.accountingclassroom.com A Resource for ACCA Exam Preparation Examples: Strategic Planning � Selection of products � Markets to sell the product in � Required level of company profitability � Purchase and disposal of companies � Purchase and disposal of major fixed assets � Total manning needs � Raising new funds © www.accountingclassroom.com A Resource for ACCA Exam Preparation Strategic Planning Process � Strategic Analysis � External analysis of markets, competitors, business environment � Internal analysis of the firm’s resources , competences etc � Stakeholder’s analysis © www.accountingclassroom.com A Resource for ACCA Exam Preparation Strategic Planning Process � Strategic Choice � Basis of strategy � Where do you want to compete � How to get there � Strategic Implementation © www.accountingclassroom.com A Resource for ACCA Exam Preparation Management Control � A process by which the managers assure that resources are obtained ad used effectively and efficiently in the accomplishment of the organisation’s objectives. � Also called Tactical planning � Examples: setting budgets for sales, production etc. © www.accountingclassroom.com A Resource for ACCA Exam Preparation Operational Control � Also called operational planning � Process of assuring that specific tasks are carried out effectively and efficiently � Example: allocation of particular staff to particular tasks, handling customer complaints etc. © www.accountingclassroom.com A Resource for ACCA Exam Preparation Type of Information Requirements Strategic Operational Tactical Control Planning Information Control Information