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The Management Audit
The Management Audit can be as cursory or detailed
as is desired by management. All major functions and activities of
management are evaluated and recommendations made for implementing new
systems or streamlining and integrating existing systems.
Business Plan Development
For a new enterprise or business thrust, an
Integrated Planning Model is developed that allows the development and
testing of a number of scenarios that will determine the outcome of the
new effort. If there is a currently functioning budgeting system, it is
further integrated to be useful as a flexible planning tool. It is then
used to develop a number of scenarios that will determine the outcome of
the existing effort if certain critical actions are taken. The scope of
this work can be determined by management desire and resource
availability.
Budget Development
The traditional budgeting system is transformed
into Integrated Planning Model (see Integrated Planning Models on the
main menu), the sophistication of which is tailored to the needs and
desires of management and the availability of resources. This model can
tie together financial, operational, economic and human resource factors
that influence the success of the enterprise to allow the development of
a comprehensive plan for the planning period under consideration and to
yield meaningful measures of performance for functional units throughout
the organization.
Strategic Plan Development
Strategic Planning as practiced by IQ is an
extension of the Budgeting Process. A traditional process of elucidating
possible strategic directions is facilitated. Priorities and the
level of resources required are developed. Risks and Opportunities are
clarified, and the magnitude of potential benefits are estimated. Then
the Integrated Planning Model is extended to allow the introduction of
new products, new markets, new divisional structures, and entirely new
merged corporate entities that have been identified as attractive
strategic alternatives. Traditional profitability measures then help
management to see the consequences (both financial and otherwise) of the
new direction being contemplated. The complexity of this effort is
clearly dependent on the complexity of the desires strategic thrusts
that need to be evaluated in the context of the current
operation.
Company Valuation
Three valuations are developed that include: 1. The
value that would result from a straight sale of the assets, 2. The value
that would result from the onging business in terms of a discounted cash
flow analysis of future revenues and costs, and 3. the value that would
be paid by a strategic buyer that would be comparing the cost of
building the functionality of the company "from scratch" versus the
purchase of the company. This third value depends on the existence of
intellectual property the need of the buyer for that property and the
ability of the buyer to utilize alternative pathways that circumvent the
company-owned IP.
Decision Analysis
Decision Analysis can address a vast range of
management issues with an infinite level of sophistication. The nature
of these kinds of efforts are dependent on the needs and desires of the
management as well as the resources available for the effort.
Financial Analysis
As a subset of Decision Analysis, financial
analysis concentrates on the implications of the decision in terms of
future impacts on cash flow and the resulting levels of traditional
financial measures such as discounted cash flow, return on investment,
return on sales, payback, and internal rate of return. Again the "front
end" of the decision tool can be as complex as management requires to
clarify the important factors that will influence the outcome of the
activity being evaluated.
Benefit/Cost Analysis
Benefit/Cost Analysis is a specialized methodology
that requires a detailed understanding of a condition or set of
conditions that exist before a change is made in an aspect of a company
or organization and the conditions that exist after the change is made.
The consequences of the change may be stated in pure financial terms, in
which case the analysis devolves into financial analysis, or may involve
a host of other costs and benefits that are not easily reduces to
financial terms. This kind of exercise is most often useful in
government policy decision making but may also be used in the corporate
setting if management is concerned about issues that do not immediately
translate to the bottom line but may impact the bottom line in the
future.
Integrated Budgeting System Development
Once an Integrated Planning Model has been
developed, there always develops the need to make changes to the chart
of account that support the new understanding of how the quantitative
pieces of the corporate puzzle fit together. Thus a chart of account
analysis is a natural consequence of developing a tightly integrated
budgeting and planning system. Once the proper numbers are being
captured, they must flow seamlessly into the budgeting tool each month
for management evaluation. Once all information flows into the budgeting
process one has an Integrated Budgeting System.
Management System Development
Once the Integrated Planning System is developed,
organizational structure is addressed and the position of each employee
in the organization is clarified in a comprehensive organizational
chart. Employee position descriptions are developed for all key
employees (managers) and of classes of like employees (e.g. sales
personnel). Standards are developed for each position and then a process
is implemented whereby employees in negotiation with there manager
develop a set of specific measures of performance for the planning
period. Many of these measures will flow from the Budgeting and Planning
process. Finally a process is implemented by which managers and
employees evaluate and correct performance throughout the planning
period. Once all of the planning, leading, organizing and controlling
issues have been tied together, one has created an Integrated Management
System that has the potential to thrust the organization to new heights
of productivity and profitability. |
