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Mgmt Activities: Controlling: A management activity that measures how well…

- - - - Financial plan setting out future income/expenditure
    - - current assets
        -
        current liability
    - - Budgeting for each department, firm can easily control spending in different areas
- - - - Benefits
        
        Marketing (competitive advantage)
        
        International sales (e.g. ISO 9000)
        
        Increased consumer trust
        
        Increasing prices becomes justifiable
  - - - Benefits
        
        Quality awards; can be used in marketing and to increase consumer trust
        
        Reduced costs due to increase in product quality (less returns of faulty products)
        
        Increased customer satisfaction
    - - System put in place in order to guarantee quality at each stage of production from design to customer sales
- - - - Check creditworthiness
      - Efficient administration (send reminders and invoices)
      - Credit limits
      - Collection procedure (discounts for early payments, interest on late)
      - Benefits of credit control
        
        Lower risk of bankruptcy
        
        Reduces bad debts
        
        Increased sales and profts
- - - - Too much stock
        
        Inefficient use of money
        
        Lower profts / Excess costs
        
        Stock can become obsolete
        
        Greater risk (damage, theft)
      - Too little stock
        
        Loss of sales
        
        Production delays
        
        Inefficient use of storage costs
        
        Loss of economy of scale
    - - Feedback
        
        (instant feedback on every item's stock level)
      - Reduced costs
        
        (stock surplus/deficiency costs are reduced)
      - Increased efficiency
        
        (stock control systems = more accurate than humans)
      - Theft identification
        
        (stock is accurately monitored)
    - - EDI is an automated system . method of processing transactions between suppliers and customers e.g. ordering of stock, invoicing, payment. It is a faster, more cost effective method of
        processing transactions.
        
        A more effective stock control system using EDI means less stock needs to be held or too much won’t be ordered, reducing costs e.g.insurance, storage costs etc.
    - - JIT