Discuss the role of management
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). 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.
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).