Leaving Cert Business Management Activities: Discuss three types of managemen

Question

Discuss three types of management control that you would recommend Liam put in place to secure the future of RES Ltd.

**Stock Control**  
This is the monitoring of stock levels to ensure that there is enough stock to meet demand while keeping stock holding costs to a minimum. Establishing the optimum stock level reduces the costs associated with being over-stocked or under-stocked.

*Benefits of Stock Control:*  
- Ensures adequate stock levels to satisfy customer demand thus avoiding potential loss of sales  
- Assists future sales and profits  
- Minimizes storage costs, while making effective use of storage space available  
- Identifies stocking needs  
- Reduces risk of stock going out of date/becoming obsolete/goods being damaged/stolen  
- Aids working capital management – less money tied up in stock  
- Reduces insurance costs

*Link to Text*  
Rising stock levels in the warehouse are also causing troubles.

**Quality Control**  
This is the process of checking the quality standard of the goods or services provided by a business to ensure they are up to required standards/needs and maintain the company’s reputation. Poor quality of goods and services will result in loss of customers and sales.

*Benefits of Quality Control:*  
- Consistent quality – enhances the reputation of the business, helps maintain customers and win new customers  
- Reduces complaints for faulty goods e.g. returns, refunds, court cases, damage to reputation, and business loss of customers.
  
*Link to Text*  
A number of customers have recently returned solar panels, as a result of damage caused while in storage or when in transit.

**Credit Control**  
It involves checking credit worthiness of customers, setting credit limits and periods, deciding penalties for late payments in an effort to avoid or minimize bad debts. Goods are sold on credit and payment is not made until a future date. A trade debtor is created, leading to the possible risk of bad debts. The business will incur costs in the administration of credit accounts e.g. invoices, credit notes etc. Cash flow/liquidity will be adversely affected where credit control is not strictly monitored.

*Benefits of Credit Control:*  
- Firm controls amount of goods sold on credit  
- Firm controls to whom goods are sold on credit – credit worthiness of potential customers is checked  
- Debtors pay debts on time  
- Reduces risk of bad debts  
- Reduces cost e.g. interest/administration etc  
- Assists Cash Flow Management

*Link to Text*  
Cash flow is tight and Liam is particularly concerned by the fact that two of his largest customers have not paid their bills on time.

Discuss three types of management control that you would recommend Liam put in place to secure the future of RES Ltd - Leaving Cert Business - Question B - 2009

Worked Solution & Example Answer:Discuss three types of management control that you would recommend Liam put in place to secure the future of RES Ltd - Leaving Cert Business - Question B - 2009

Stock Control

Quality Control

Credit Control

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