4. IMPORTANCE OF INFORMATION
Information is one of the most important assets of any modern organisation. Without information businesses would cease to function. It has to become obvious to most businesses that information is a vital resource which has to be managed properly and utilised to the full.
Information is also essential in the global market as organisations buy and sell products outside their home countries, and organisations open subsidiaries, plants and distribution centres around the world, and only by using appropriate information management strategies supported by appropriate technologies have organisations been able to support their internationalisation of their activities. In organisations managers have to make decisions, prepare plans and control the activities, to do this they require relevant information which will increase their knowledge, reduce uncertainty and is usable for the intended purpose. (Internet site 4).
Benefits of Information
- By providing information about performance and the extent of deviations from planned levels of performance, management are better able to control business operations.
- Allows communication between various departments.
- Simplifies situations by reducing uncertainty and enhances understanding, making problematic situations more manageable.
Organisations employ various resources in order to achieve their objectives. Managers are the people responsible for supervising the use of an organisations resources to meet its goals. (Internet site 3).
5. FINANCE
Before the industrial revolution finance was not considered important in business organisations because methods of production were simple as labour was more important than capital and finance in those days and it didn’t create problems. (Internet site 5).
After industrial revolution when methods of production were introduced finance became important. Finance nowadays is considered as the life blood of every business. Every business regardless of size requires finance for its operations. Money is a universal lubricant for any enterprise, man and machine work. (Internet site 5).
The reason finance is important in every organisation is because the success of every business depends mostly on finance. Many business firms fail or bankrupt without efficient financial planning, no business can achieve its goals. (Internet site 5).
Every organisation requires money for the payment of different things, if there is sufficient funds an organisation can operate therefore the promotion of any organisation depends upon the determination and condition of adequate finance. (Internet site 5).
Most organisations main aim is to earn a profit, to achieve this managers require financial control and they mite carefully analyze quarterly income statement for excessive expenses. . They might also perform several financial ratio tests to ensure that sufficient cash is available to pay on going expenses. (Robbins, 2005)
Organisations require a finance department as they deal with all the accounts of the organisation and see how much income the organisation is generating.
The finance department deals with all the financial affairs of an organisation and their main activities are:
- Financial planning – predict future financial requirements and the amount of income that will be generated for decision making, strategic planning and plans for raising the finance required to support the business strategy. (Armstrong, 1999).
- Financial accounting – recording all financial transactions, preparing balance sheets, profit & loss, value added statements, handling depreciation and inflation accounting. (Armstrong 1999).
6. RAW MATERIALS
Most organisations have a control system which is inventory control. (Bartol, 1998).
Inventory is a stock of materials that are used to facilitate production or to satisfy customer demand. (Bartol, 1998).
There are three major types of inventory:
- Raw materials
- Work in process
- Finished goods
Raw materials inventory – is the stock of parts, ingredients and other inputs to a production or service process, for example, the raw materials inventory at Mc Donald’s would be the hamburgers, cheese slices and buns. (Bartol, 1998).
Work in process – is the stock of items being transformed into a product or service. At Mc Donald’s that would be the hamburgers being assembled and the salads being made. (Bartol, 1998).
Finished goods inventory – is the stock of items that have been produced and are awaiting sale to a customer. At Mc Donald’s the finished goods inventory is the hamburgers waiting on the warmer, the salad in the refrigerated case. (Bartol, 1998).
Inventory has major purposes in organisations. It helps deal with uncertainties in supply and demand. For example, having extra raw materials may prevent shortages that would delay the production process. (Bartol, 1998). Having extra finished goods inventory makes it possible to serve customers better. Inventory can also be a useful way of dealing with anticipated changes in demand or supply, such as seasonal fluctuations or unexpected shortages. (Bartol, 1998).
Inventory is important to organisations because it represents considerable costs. There is item cost, the price of an inventory (costs of handlebar or seats), the ordering costs, the expenses involved in placing an order (paperwork, postage and time) there is also the carrying costs the expenses associated with keeping an item on hand (shortage, insurance, breakage) and finally there is stock out cost this is the economic consequences of running out of stock. (Bartol, 1998).
7. PEOPLE
Organisations are made up of individual members. Groups exist in all organisations and are an important factor to their working and performance. Organisations are comprised of groups of people and almost everyone in an organisation is a member of one or more groups (Mullins, 1993).
Individuals and groups interact within the structure of formal organisation. Structure is created by management to establish the relationship between individuals and groups. It is through this structure that people carry out their organisational activities to achieve their organisations aims and objectives. (Mullins, 1993).
The one very important factor of any successful manager is the ability to handle people effectively. Managers need to be conversant with social and human skills and have the ability to work with and through other people, without people there can’t be an organisation and no meaningful activity. Behind every action or document in an organisation there are people. (Mullins, 1993). Unlike physical resources, people are not owned by an organisation.
People bring their own perceptions, feelings and attitudes towards an organisation, systems and styles of management, their duties and responsibilities and the conditions under which they are working in. (Mullins, 1993).
People respond to the way they are being treated. If you give a little you will invariably get a lot back. It is important in every organisation to make people feel important and give them a sense of personal worth. Staff will respond constructively if treated with consideration and respect, and as responsible individuals who wish to serve the organisation well. (Mullins, 1993).
In organisations it is an important factor to praise people of their success and give full recognition and credit to let people know you appreciate them. People in organisations should be treated fairly, as people are what make an organisation. (Mullins, 1993).
8. PLANT AND EQUIPMENT
Production strategy is involved in investment decisions. Decisions made today provide guidelines for future production operations.
(Appleby, 1994).
The following points should be noted when developing a strategy:
- Should resources be placed in production or another area in an organisation. (Appleby, 1994)
- Decide the capacity needed to meet production and the corporate objectives and also decide when the production should start. (Appleby, 1994)
- Decide where plant should be located and the type of technology to use. (Appleby, 1994)
The size of production should be considered wisely, bearing in mind the uncertainty of long term forecasts. If maximum expected demand is met, this can lead to surplus capacity, which may or may not be able to be utilised, as under utilised plant is not economical. (Appleby, 1994).
Factors critical to the decision of the location should be carefully considered. Conventional location reasons are, raw materials, skilled labour availability, financial incentives and transport. (Appleby, 1994).
Organisations must ensure that they pay a great deal of attention to the maintenance of the plant and equipment as failure to do so may lead to plant failure and consequent delays in production. (Appleby, 1994).
Organisations should make sure the maintenance of buildings, plant and machinery to ensure efficient working order and make sure regular inspection is done and attention is paid to any breakdowns and that tools and equipment are in good working order. (Appleby, 1994).
9. CONCLUSION
As it has been discussed there are many important factors in an organisation in order for them to achieve their objectives. They employ various resources to become successful organisations. The role of management has been analysed and what the main functions of management are and how they operate to ensure everything in the organisation runs efficiently and effectively. Information has also been assessed and why is information important and what it is used for in organisations and how it helps organisations to achieve their objectives.
REFERENCES
BOOKS
Appleby, Robert C., (1994), Modern Business Administration 6th edition. Pitman.
Armstrong, Michael., (1999), Managing Activities 3rd edition. People and organisations.
Bartol, Kathryn M. Martin, David C., (1998), Management 3rd edition. Irwin/Mcgraw-Hill.
Coulter, Mary. Robbins,Stephen P.,(2005), Management 8th edition. Prentice Hall.
Mullins, Laurie J., (1993), Management and Organisational Behaviour 3rd edition. Pitman.
INTERNET SITES
Internet site 1: URL
[15 November 2006]
Internet site 2: URL
[15 November 2006]
Internet site 3: URL
[10 November 2006]
Internet site 4: URL
[accessed 10 November 2006]
Internet site 5: URL
November 2006]
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