Unit 2 & Unit 3 – Question 4

Question Year Due for Exam on this Unit

Higher Level 4 2009, 2004, 2002 13th December Week of 16th Dec
Ordinary Level 4 2009, 2005, 2004 13th December Week of 16th Dec

Chapter 4:
 Enterprise and Entrepreneur (definition of each)

 Role of an Entrepreneur
 Come up with an idea - innovative
 Take a risk
 Make idea a reality
 E.g. Mary Ann O’Brien set up Lily O’ Brien’s Chocolates

 Why become an Entrepreneur

 Own Boss
 Profit
 Need to succeed
 Unemployed

 Characteristics of an Entrepreneur (an enterprising person who starts up a Business)

 Risk Taker
 Decisive
 Need to succeed
 In Control
 Self Confidence
 Self-motivated
 Realism
 Resilient
 Leader
 Flexible
 Creative
 Ruthless

 Skills of an Entrepreneur (an enterprising person who starts up a Business)

o Skills are particular abilities that you have
 Leadership
 Planning
 Problem Solving
 Human Relations
 Time Management
 Risk Management
 Decision Making
 Delegation
 Innovation
 Reality Perception
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Unit 2 & Unit 3 – Question 4

 Enterprise is everywhere
 New Business – Entrepreneur
 Existing Business – Intrapreneur
 Home – Budget, rota, B&B
 School – Fundraising, Green Group, school magazine
 Local Community – Tidy Towns, Neighbourhood Watch, Clubs and societies
 Public bodies/Government – NAMA, the Car Scrappage Scheme introduced in the late 1990s.

 Intrapreneur
 Works in the business
 Comes up with innovative ideas
 Shows entrepreneurial skills and qualities
 E.g. Art Fry (3M) came up with the idea of Post-its.

Chapter 5:
 The difference between Management and Enterprise.

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Chapter 6/7: Management Skills: Leading, motivating and communication

 Leading (definition and leadership styles and their impact )
The ability to direct people and positively influence them, so that they follow and obey you

Autocratic (e.g. Army)
Manager makes all the decisions
Manager expects tasks to be done
Manager often uses fear and threats
Impact/Evaluation
Does not produce good results
Worker resentment -> resignation
Unhappy, employees
No intrapreneurship
May be appropriate in an
emergency/stressful situation e.g.
business facing bankruptcy.
Democratic (e.g. Nursing)
Manager involves employee in
decisions
Manager trusts employees to do the
work (delegates)
Manager uses co-operation with
employees
Impact/Evaluation
Achieves better results
Employees are involved, listened to.
Happier, more productive employees
Employees show intrapreneurship
Appropriate when employees are
knowledgeable & confident & the mgr
wants to encourage team building.
Laissez Faire (e.g. Scientist)
Manager does not interfere
Manager sets goals
Manager uses co-operation with
employees
Impact/Evaluation
Fosters employee creativity and
innovation.
Appropriate only with highly
trustworthy employees. Some
find it difficult to cope with little
supervision, leading to mistakes.

 Delegation (definition and benefits)

 When a manager empowers employees
The manager gives the employees the authority to carry out the work and will hold the employee
responsible for doing a good job. Ultimate responsibility lies with the manager.
 To be successful delegation has requirements
Employees must be competent, there must be a good control system in place, and the manager
should not be afraid to delegate.

 Advantages of delegation
 Manager has more time
 Work is done faster
 Motivates staff

 Importance of effective leadership

 Improved efficiency – Clear instructions and directions are given to employees, time and other
resources are not wasted doing the wrong thing.
 Improved Co-ordination – A good leader inspires employees to share his vision for the future of
the business. They all work as one for the success of the business.
 Employee Retention – A good leader delegates to employees. They are trusteed and involved in
the business and are more likely to continue working for the business.
 Change – A good leader leads by example by putting in the effort needed to make the change
happen. This encourages employees to accept the change as well.

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Motivating
Involves the manager energising employees and providing them with appealing incentives so that
they will willingly co-operate and work harder for the business.

 Maslow’s Hierarchy of Needs (Theory & Impact)

Maslow stated that people’s needs are what drive & influence them to do anything.

*As one need is satisfied the higher becomes the motivator.

 McGregor’s – Theory X & Y (Theory & Impact)

McGregor said there are two types of manager – theory x manager and theory y manager. Each has
certain beliefs about employees and these determine how the manager treats their employees.

Theory x Theory y
Employee Lazy, do not want to work, do not like work. Self-motivated, enjoy work, they want to be there.
Lack ambition Ambition
Resist change Accept responsibility
Positive attitude
Manager Autocratic manager: Democratic Or Laissez Faire manager:
Employees are told what and when to do tasks Managers listen to staff and trust staff to work alone
Impact Impact
Employees resent being treated in this way Employees are motivated with promotion, titles,
Become uncooperative praise & delegation.
Do as little work as possible They are happy, cooperative & productive

 Importance of motivation
 Improved Productivity
 Greater Intrapreneurship
 Employee Recruitment & Retention
 Improved Industrial Relations

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 Communication:
The process of transferring information, messages, ideas and facts between people and organisations.

 Types of Communication
 Written communications: memo, letter, reports, e-mails.
 Oral communications: meeting. Face to face conversations, intercom, telephone, conference
 Visual communications: bar chart, pie chart, pictogram, line graph, breakeven chart, map

 Importance of Good communication

 Employee Trust
Clear, open communication can create a sense of transparency, which builds trust between
employees and makes for a more-positive work environment.
 Relationships
Communication prevents employees from feeling isolated, builds teamwork, and allows for
employees to express their ideas. Employees are able to work together more effectively.
 Clarity
By making roles and responsibilities clear to everyone, businesses give their employees the
information they need to get their jobs done.
 Reduces costs
Communication reduces misunderstandings and cuts the costs associated with mistakes.

 Factors that determine method of communication

 Cost
 Urgency of the message
 Need for confidentiality
 Nature of the message
 Legal requirements – e.g. buying a house must include a written contract

 Barriers to Effective Communication

 Language
 Prejudice
 Information overload
 Poor listening skills
 Timing
 Lack of trust

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 Benefits of ICT
 Fast/Efficiency
Using technology offers fast methods of communication.
E-mail can be anywhere in the world in seconds.
 Low cost
Using technology to communicate messages will reduce a business costs.
Video conference allows business to engage in face to face communication without the cost of
travelling.
 Market research
Businesses need to carry out desk research when doing market research.
WWW – World Wide Web allows business to research competitors, statistics etc.
 Advantage over competitors
A business can gain a competitive advantage by having the most up to date technology.
EDI – Electronic Data Interchange allows businesses control stock in a very quick and efficient manner.

Data Protection Act 1988/2003

 Rights of Data Subjects: If someone has information about you, you are called a ‘data subject’ and you
have the right to:

 Get a copy of data

 Have any errors corrected or deleted
 Remove your details from direct marketing lists
 Right not to be subject to automated decision making
 Compensation

 Obligations of Data Controllers: People & organisations that control the contents and use of your
personal details are called data controllers. Data controllers must:

 Obtain information fairly and openly

 Keep the information safe and secure
 Delete the information once they no longer need it
 Give a copy of her personal data to a person who asks for it

 Data Protection Commissioner: This law set up the office of the Data Protection Commissions whose
function are to:

 Investigate complaints
 Force data controllers to give him any information
 Force data controllers to correct or delete personal data
 Keep a register of data controllers

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Management Activities: MA: POC – Planning, Organising and Controlling.

 Planning: A predetermined course of action

 SWOT Analysis
 A planning tool
Before a manager actually sets objectives for the business, he must first analyse the situation
facing the business
 Strength (internal and present)
Something the business owns or does well that gives it a competitive advantage
 Weakness (internal and present)
Something the business does badly or is lacking altogether that puts it at a competitive disadvantage
 Opportunities (external and future)
Something in the outside world that the business can avail of to make money or benefit from
 Threats (external and future)
Something in the outside world that can prevent the business from succeeding

 Example of SWOT for Supervalu Raheny

 Strength (internal and present)
1. Excellent staff
2. Irish owned brand name
 Weakness (internal and present)
1. Poor parking
2. Expensive
 Opportunities (external and future)
1. Expand the product range with foods from EU countries
2. On-line shopping
 Threats (external and future)
1. Competition from larger supermarkets locating in the area
2. Increase in VAT rates

Types of planning
 Mission Statement
 The overall fundamental objective of the business.
 A written document setting out:
o What the business does now
o What it plans to do in the future
o The business values and beliefs

 Strategic Planning
 Long term planning
A major plan completed over 5 years for the entire business
 Prepared by:
Top management the decision makers, the controllers
 Plan involves:
Taking the business mission statement and breaking it up into plans of action that will allow the
business achieve its mission

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 Tactical Planning
 Short term planning
Plan completed within 1 year for one section of the business
 Prepared by:
Middle management the department managers responsible for the day to day activities
 Plan involves:
Taking the business strategic plan and breaking it up into plans of action that will allow the
business achieve its long term plans.

Example Airline

Mission Become the biggest airline

Strategic Plan Control 10% of US market

Tactical plan Start flying Dublin to New
York in the next 6 months

 Manpower Planning
 Ensure the business has enough workers with the right skills to do the jobs needed.
 Plan involves:
o Forecast future demands
o Calculate existing supply
o If demand exceeds supply – recruit. If supply exceed demand – redundancies.

 Cash Flow Forecasting

 A written document setting out expected future receipts and payments.
 Plan involves:
o Ensuring the business will have enough cash to pay its future bills
o Expected deficit – increase cash receipts, e.g. sale or cutbacks.

 Importance of Planning
 Guides the business to success
Planning forces managers to focus on the future of the business
 Helps avoid future problems – potential problems are anticipated and dealt with to avoid
business failure e.g. manpower planning.
 Eliminates the businesses weaknesses
A SWOT allow the business to find out what it does badly or what it is lacking in and then take
steps to eliminate these and so become stronger & more successful e.g. cash flow forecast
 Helps secure capital – convincing investors to come on board
 Motivates employees and managers – sets goals/targets for employees & managers
 Encourages staff to accept change
.

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 Organising:
Arranging all the resources of the business into the most suitable form to achieve the objectives

Structures

Functional Organisational Structure

 Splitting the business up into different jobs or functions
 A manager is put in charge of each functional department.
 S/he is responsible for ensuring that the department will achieve its objective.

Shareholders

Board of Directors

CEO / MD

Marketing Director Finance Director Production Director HR Director

Staffx6 Staffx3 Staffx12 Staffx2

 Advantages
 Specialisation
Each department concentrates exclusively on one job, they become an expert at it.
 Accountability
The director of each department is responsible for everything that goes on in it, so it’s easy to
identify the source of any errors & eradiate them quickly.
 Clarity
Everyone knows who they report to and who is responsible for what jobs. This speeds up
communication in the business and save time.

 Disadvantages
 Isolation
People in each depart may know and care little about what goes on in other departments
 Co-ordination
It can be difficult to get all departments to pull together in the same direction.

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Matrix Organisation Structure

 This structure combines two types of organisation structures:
(i) Functional organisation structure
(ii) Project team structure
 Involved in major temporary projects
 Reporting structure – report to project team leader until the project has ended

 Advantages
 Motivation improves
Employees chosen to be on the project team feel special. It satisfies their esteem need and motivates
them to work harder.
 Better co-ordination
Teams are made up of people from each depart who interact with each other. This develops
relationships & means that different dep’s learn to work together for the good of the business .

 Disadvantages
 Two bosses
Team members report to two bosses – their functional manager and project manager. When both
give conflicting orders, employees become stressed.
 Increased cost
The business will have to pay to train managers to become project managers. There will also be
secretarial and administrative costs.

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Features of Organisation Structures

 Chain of Command
 Span of Control

 Span of Control
 The number of employees that report directly to a manager.
o Wide span of control –manager supervises a lot of employees effectively at once.
o Narrow span of control –manager supervises only a few employees effectively at once.

 A managers span of control depends on:

o The manager’s experience & ability
o The employees experience & ability
o The type of work to be done
o Location of employees
o Outside pressure on manager

 Importance of Organising
 Helps solve problems quickly
A clear structure shows everyone what their job is and who they report to. Employees &
customers know exactly who to go to when issues arise.
 Improves efficiency
In a functional structure, the business is split into jobs to be done so employees specialise in
one type of job. They become better & faster at their work.
 Helps the business to cope with change
A matrix structure allows teams to be set up quickly to solve any urgent issues facing the business
(e.g. developing new product ideas), while the normal work of the business continues.
 Minimises waste
The proper assignment of jobs avoids overlapping of work which helps to minimise the wastage
of resources and efforts.

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 Unit 2 & Unit 3 – Question 4

 Controlling (stock control, quality control and credit control) and importance of each.
Making sure the business stays on target to achieve the objects that were set during planning.

Types of Control

Stock Control
 Ensure adequate stock levels
o Too much stock – money is wasted, stock deteriorates and becomes obsolete.
o Too little stock – Business will run out (stockout) and customers are unhappy.
 To control stock, stock levels can be set.
o Method: Maximum stock level. To prevent: too much stock
o Method: Minimum stock level. To prevent: too little stock
o Method: Re-order point. To prevent: too little stock
o Method: Re-order quantity. To prevent: too much stock
 Additional method: Just in time (JIT)
Aims to keep the minimum amount of stock possible in the factory while at the same time
never running out of stock
Advantage: business does not hold any stock.

 Advantages of stock control

 Lowers business costs – e.g. insurance, storage
 Helps to eradicate theft – e.g. by staff, customers
 Customers are always happy – e.g. there’s always the right amount of stock in the shop.

Quality Control
 Ensures good quality products
Aims to ensure that the businesses products meet & surpass the expectations of customers
 Quality can be controlled in various ways:
1. Physical Inspection: a trained inspector physically examines products before they leave the factory
E.g. Louis Vuitton inspects every single product before it leaves the factory.
2. Quality Circles: Employees spot quality problems in the factory & come up with suggestions to
solve these problems.
3. ISO 9000 Awards: Internationally recognised award that’s given to businesses that can consistently
prove to an independent team of inspectors that their products meet the highest quality standards.

 Advantages of quality control

 Ensures products are consistently of the highest standard
Leads to repeat purchasing and thus increased sales
 Lower costs – e.g. less repairs & refunds
 Improved marketing – e.g. ISO9000 award reassures brand quality, customer trust

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Credit Control
 Ensures that all the businesses debtors pay their bills in full and on time.
It seeks to eliminate bad debts and to make late paying customers pay their bills now.
 It involves businesses:
S1: Setting an overall limit for the maximum amount of credit to be given to customers
S2: Customers should be vetted to ensure they can be trusted with credit
S3: Once purchases are made by customers, invoices should be sent out immediately
S4: A collection procedure should be in place for customers who won’t pay e.g. adding interest

 Advantages of credit control

 Ensures cash flow in the business
Ensure the business receives the cash from its customers that is needs to pay bills on time
 Reduces costs – avoids bad debts.
 Ensures credit is only given to trustworthy customers
The business maintains and increases sales by being able to offer credit to customers, while at the
same time keeping losses from such credit to a minimum.

Financial Control
 Seeks to avoid bankruptcy
Aims to make sure the business is profitable & has enough money available to pay its bills
 Departmental budgets
 Cash flow forecasts
Managers can compare cash flow forecasts with actual cash-flow and take correction action when
necessary e.g. make cutbacks
 Ratio Analysis
The business can compare the businesses actual ratios with its budgeted ratios to see of its on
target or off target and take correction action when necessary

 Importance of Controlling
 Makes sure that the business achieves its objectives
o Good stock control will ensure the business meets its objective of customer satisfaction and
to make profits as areas such as theft will be eliminated.
o Good credit control will ensure the commercial business meets its objective to make a
profit and not go bankrupt
o Quality circles help the business achieve its objective of Total Quality Management. Staff
will give feedback if standards are not reached.
 Reduces the businesses costs
o By controlling stock the business will reduces costs such as storage and insurance.
o By making sure debts are paid by debtors the business will avoid the cost of bad debts.
o By using quality inspectors the business will avoid wastage cost.
 Improves the businesses cash flow
o By using a Just in time system in the business they will not have cash tied up in stock
o By making sure debtors pay on time (send bill promptly, sending letters,
making phone calls etc) then the business have cash to pay creditors
 Increases a business’s sales & profits
o Quality is remembered long after price and business with good quality products will have
returning custom and thus increased receipts.

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