DIP20 Assignment 4 Submission 1 Arun Kannath

CMI LEVEL 5 DIPLOMA IN MANAGEMENT AND
LEADERSHIP
Assignment Number 4
By
Arun Kannath
Candidate Number: 4155738
Centre: AEA Group
Arun Kannath-4155738 Assignment 4 AEA Group
List of Abbreviations
SWOT Strengths, Weaknesses, Opportunities and Threats
SMART Specific, Measurable, Achievable, Realistic and Time-

Related
LMC Local Management Committee
ATEX Explosive Atmosphere
PESTLE Political, Economic, Social, Technological, Legal and

Environmental
KTP Knowledge Transfer Partnership
NCP Non-Conforming Products

CMI LEVEL 5 DIPLOMA IN MANAGEMENT AND LEADERSHIP
Assignment Number 4
Introduction
The report presented here has been submitted as assignment number 4 towards partial
fulfilment of the requirements of CMI Level 5 Diploma in Management and Leadership.
As part of my KTP training I had recently attended a week long residential module 3 in
Bath, during which time I was exposed to various aspects of project management
including financial control and leadership management. This report is intended to
demonstrate my knowledge and understanding of the various learning outcomes listed
below that were dealt with during the residential module. It is my firm belief that in
trying to demonstrate my understanding of the above mentioned management principles,
I have tried to incorporate instances and examples of their actual application in my KTP
project management as well as in my personal development.
Unit 5007 Financial Control

Learning Outcome 1) Be able to understand, use and control a financial system to
meet objectives
1.1) Assess relationship between a financial system or function and other systems or
functions in an organisation
Finance plays a key role in the functioning of any organisation because a steady flow of
funds is required to make planned expenditure for delivering products and services and
the sale of these products and services generates the necessary funds to make a profit.
Any activity undertaken by any of the other departments without proper financial
consideration can have a detrimental effect. For instance, if the sales team decides to
offer extended credit or discounts to increase sales, this will affect cash flow and finance
will not be able to collect cash for the business when the need arises. Similarly, purchase
may decide to pay suppliers quickly or place bulk orders in order to avail a discount, but
there may not be sufficient funds available immediately. This may affect relationship
with the suppliers.
The financial situation of the company inturn dictates activities of the other departments.
For example, if there is a shortage of funds with the finance department, the sales team
may not be able to offer prospective customers attractive discounts and extended credit,
thereby making the competitors’ offer more attractive. Shortage of funds may also affect
marketing thereby reducing overall income. Also prioritisation of planned projects will be
required and this may affect overall strategy of the company. Hence a two-way
dependence is observed. In order to avoid such problems, it is therefore important to have
effective communication between the finance and other departments.
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Marketing
Sales
Finance
Production Purchasing
At Geotech, the recent economic recession had resulted in a drop in sales and overall
turnover. This affected the company cash flow and hence the finance director had to
convene a meeting to chalk out a strategy to meet this issue. It was later decided to
maintain the operating profits at previous levels despite the drop in turnover. Hence,
more funds were made available for increased sales and marketing of higher margin
products although fewer numbers were actually sold. Hence, the marketing strategy had
to be revamped to meet this new situation. Also the launch of a new product, G100, was
brought forward since there was a possibility of obtaining a higher margin on it. The NPI
(New Products Introduction) section thus had to modify their deadlines and prioritise
their current activities accordingly. The financial situation of the company thus impacts
the functioning of all its departments.
1.2) Describe the systems of accounts and financial statements used to control a
financial system
The three most important systems of accounts and statements used to control a financial
system are:
1. Profit and Loss Account
A company may produces an annual profit and loss account which indicates the total
profit or loss made during that period. Some companies also produce a monthly profit
and loss statement. The various entries in the statement and their brief description is
given below.
a) Total Sales or Revenue or Turnover: This is the total value of sales achieved over
the period.
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b) Direct Costs or Variable Costs: These are costs directly related to and vary with the
sales achieved in the period such as cost of raw materials, transportation cost, cost of
production and wages of production staff.
c) Gross Profit: This is equal to Total Sales (a) – Direct Costs (b). It is also expressed as
a percentage of total sales and is called Gross Profit Margin.
d) Indirect costs or Fixed costs: These are costs that do not vary with sales such as
administration expenses and other overheads such as rent, travel, training, depreciation
etc.
e) Operating Profit: This is equal to Gross Profit (c) – Indirect Costs (d) and is a
measure of profits earned by the company through its trading activities.
f) Pre-Tax Profit: This is obtained by either adding interest received on cash deposits in
bank or deducting interest payable on loans from the operating profit.
g) Post-Tax Profit: This is calculated after payment of taxes on any interest made.
h) Retained Profit: For a limited company, some amount of the post-tax profit can be
distributed among the shareholders as dividend. What is left is called retained profit.
If the board of directors themselves are shareholders, they can reduce their wages
(increase operating profits but pay more corporation tax) and take more dividends
instead. This retained profit is then added to previous years profit and recorded in the
balance sheet.
2. Balance Sheet
A balance sheet summarises the Assets (what is owned) and Liabilities (what is owed) of
the business. Both these can be split into long term and short term. Long term assets or
fixed assets include plant, machinery, land etc and short term assets include cash in bank,
debtors and current stock. Long term liabilities include owners’ funds such as retained
profit or shareholders capital. Long term loans also come under long term liabilities.
Short term liabilities mainly include creditors and short term loans repayable within 12
months. In a balance sheet, the total assets should always balance the total liabilities.
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Assets Liabilities
Owners’ Funds
Retained profit
Fixed Assets Share capital
Plant, machinery
Long Term Loans
Current Assets
Current Liabilities
Debtors, current stock, cash Short term loans, creditors
A useful way of presenting data is using the formula:
Fixed Assets + Current Assets – Current Liabilities = Owners’ Funds + Long Term Loans
Fixed assets are usually stated at their cost price minus any depreciation. From the
balance sheet it is possible to evaluate the Working Capital which is the difference
between current assets and current liabilities. Another useful measure is Return on
Capital Employed which is the ratio of Operating profit to the capital invested (owners’
funds plus long term loans).
3. Cash Flow Statement
A cash flow statement shows the amount of money coming in and going out over a period
of time. It has an opening and closing balance. If all the business transactions are done
through a bank, then the bank statement becomes the cash flow statement. These are not
necessarily a good measure of performance because items such as machinery and capital
expenditure or raw materials are meant to be used over a longer period of time although
their costs appear immediately. Organisations sometimes prepare a cash flow forecast to
predict the expected cash flow over a coming period. This helps them to determine if they
will have enough cash in hand to pay their bills when they become due. If the forecast
shows a shortage of funds, the company can then prepare themselves by altering the
purchasing plans and other planned activities. Sales revenue in a particular month may
actually relate to sales made the previous month because most businesses offer credit to
its customers. For a new business, immediate payment for raw materials may be required
by the suppliers. After the company has established a track record, it may be able to make
purchases on credit and this will be reflected in the cash flow statements. Ideally a
business should collect money from its customers faster than it is paying its suppliers.
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The closing balance each month becomes the opening balance for the next month. Table
1 below shows how a cash flow forecast will look like.
Month 1 Month 2 Month 3

Opening Balance 0 61,600 79,200
Income
Sales 5,000 8,000
Shareholders 100,000
Investment
Loan 20,000
Expenditure
Equipment 25,000 1,000
Raw Materials 4,000 4,000 4,000
Wages 3,000 3,000 3,000
Utilities 400 400 400
Rent 6,000
Closing Balance 61,600 79,200 78,800

Table 1
Appendix A1 shows actual financial statements for Geotechnical Instruments for the year
ending 31 December 2008.
1.3) Analyse financial information contained in a set of accounts or financial

statements
Analysis of information present in the financial statements helps the organisation to:
 Assess real performance against budget
 Prioritise activities and reallocate funds
 Identify areas of strength and weakness
This analysis mainly involves calculation of various ratios that allows comparison of
performance with previous periods or with other similar organisations. Some of the
important ratios have been calculated below with reference to the financial statements in
Appendix A1.
1) Gross Profit Margin = Gross Profit/Sales x 100%
The higher this value the better as it indicates that more money is available to cover
overheads and other expenses and also to invest in future growth.
Gross Profit Margin (2008) = 3,547,234/5,786,858 x 100 = 61.3%.
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In 2007, this figure was 51.3%. Hence there has been an increase in gross profit margin
last year with a slight increase in the turnover figure.
2) Operating Profit Margin = Operating Profit/Sales x 100%
A higher operating profit margin means more money is available to pay impending
interests on loans and possibly pay dividends to the shareholders.
For 2008, the figure is 20.02% compared to 9.1% in 2007. So it has more than doubled in
the last one year. This is a very healthy figure and is a direct consequence of a reduction
in direct costs while achieving an increase in the overall turnover.
3) Return on Capital Employed (ROCE) = Operating Profit/(Owners’ Funds + Long

Term Loans) x 100%
ROCE indicates the amount of profit earned for every £100 put into the business by the
investors. This can be used to compare different companies or industries and helps
potential investors in gauging the risks involved in investing.
For 2008, total owners’ funds = 1,547,670

Long term loans = 73,882
∴ ROCE = 71.46%
This is a very healthy ROCE and makes the company attractive for potential investors.
The figure for 2007 was 32.27%. This huge increase is mainly due to doubling of the
operating profits and a significant drop in long term loans.
Possible reasons for such high ROCE are:
 Increased profit margin on products
 Efficient utilisation of available funds
4) Current Ratio = Current Assets/Current Liabilities
A ratio greater than one (surplus of Current Assets) indicates that the company has
sufficient funds to pay all its debtors as and when they fall due.
For 2008, Current Ratio = 2,374,551/1,039,809 = 2.28.
This is again a healthy ratio to have although it less compared to 2007 when it was nearly
3. This is mainly due to an increase in the current liabilities.
5) Acid Test = (Current Assets – Stock)/Current Liabilities
Here all stock is excluded from current assets and only those that can be quickly
converted to money are considered.
For 2008, Acid Test = (2,347,551-763,522)/1,039,809 = 1.52
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A ratio greater than 1:1 is considered good and hence this value reflects a healthy
financial position for Geotech.
6) Gearing = (Current Liabilities + Long Term Loans)/Owners Funds
This shows the ratio between shareholders’ funds and funds from other sources.
A high gearing means more money from outside sources are invested and this generally
makes the business risky. However, it is beneficial to have high gearing when the
business is making profits since the amount of interest payable does not increase with
increasing profits and this means more money is available for the shareholders. But when
the business is not doing well, a high gearing can be detrimental.
For 2008, gearing = (1,039,809 + 73,882)/1,547,670 = 0.72

This shows that owners have more money invested into the business than is provided
from other sources. However, for 2007, the value was 1.1 indicating more money had
been invested from outside sources than from the owners’ funds.
_______________________________________________________________________
Learning Outcome 2: Be able to identify and use a range of financial controls
2.1) Construct a budget for an area of management responsibility
A budget is a detailed plan dealing with the allocation of physical resources expressed in
quantitative terms. It needs to be prepared and approved in advance of its use. Budgets
can be fixed or flexible in terms of the money allocated. It can be prepared either for the
whole organisation and/or for a section within it.
Budgets can be either Zero Based where it is built to start fresh without any previous
historical inputs or it can be Incremental where the current budget is used a reference
point for next year. Both these systems have their own merits and demerits as shown
below.
Incremental Budgeting Zero Based Budgeting
Advantages Advantages
 Quick and easy  Fund allocation based on current
 Lower skill level required and future needs.
 Data easily available  Provides only sufficient funds to
achieve specific objectives.
 Investigation and analysis can
identify opportunities for
improvements and waste reduction.
Disadvantages Disadvantages
 Covers up inefficiencies.  Time consuming
 Can result in poor allocation of  Requires higher skill level
limited resources.  Reliability of outcome depends on
 Results in waste (people tend to use quality of forecasting data.
up all their resources for fear of  Difficult to identify all possible
getting less money next year) costs.
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The process of creating a budget can be explained in the context of my KTP project. The
objective of the project was to create a laser based gas analyser for methane. The first
step is to prepare a sales forecast. For this purpose Geotech had conducted a market
survey that looked into the various factors such as environmental, political, legislations,
demand from customers and also other competitors. Based on this, an estimate of the
expected sales for each year after the launch and the unit price was determined as shown
below.
Methane analyser Target price: £2000
Margin: 70%
Yr1 Yr2 Yr3
Target sales volume: 40 80 80
Contribution: £56K £112K £112K
The KTP budget was then constructed for the realisation of this objective and this is
shown in Appendix A2. Separate funds have been allocated for salary, travel,
consumables, training etc. Apart from this, additional company contributions were also
included in the budget to cover the cost of management supervision, additional associate
salary top-up etc. These are shown below in table 2 below.
Description Estimate of Costs (£)

Associate salary top-up Over entire project time 21,600
Management supervision Supervisor avg. 0.5 15,000
day/week @ £250/day
Facilitator avg. 0.25 7,500

day/week @ £250/day
Staff costs Prototype build 110 man 27,500
days @ £250/day
Steering group 20 man days 5,000

@ £250/day
Attendance at conference 1,050

Materials Small parts, PCB layout 10,000
Capital equipment Estimate 20,000
Total 107,650
Table 2
The above figures assume significance because it directly impacts the production cost of
each instrument and hence the profit margin. This is related to the feasibility of the
project and the expected sales forecast mentioned earlier. The sales forecast is used by
various departments to determine what needs to be done in order to achieve the sales
target. For this purpose, an internal audit will be beneficial as it identifies the cost
incurred by each department. This will take into account the availability of raw materials,
current stock levels and also the number of staff required to meet the target. When sales
forecasts are made, it is important to specify all the assumptions made so that in the event
of any variation from the budget values, it becomes easier to identify what went wrong
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and helps to improve future forecasts. Once the budget was prepared, it has to be
approved by the people concerned. In the present case, the LMC authorised and approved
the budget and it was decided to periodically review the financial situation of the project
during each LMC. Besides, a steering committee was also formed within the company to
keep a track of the expenses.
2.2) Develop budgetary control systems and compare actuals with planned
expenditure.
The benefits of a formalised budgetary control system are:
 Reflects the objectives of an organisation as a whole in financial terms.

 Provides indicators by which to measure efficiency for various parts of the
organisation.
 Reveals the extent of variation of actual results from defined objectives.
 Provides a guide for corrective action.
 Facilitates centralised control with delegated responsibility.
Companies place great emphasis on budgets as a means of managing their operation and
hence a system of cost codes and cost centres are often used. Here, different types of
costs are assigned different codes to identify the money allocated and spent for each type.
For instance, all staff costs will be assigned a particular code, all IT related expenses will
have another code and different departments will have individual codes to track the
individual expenses. These can then be compared with the budget value. At Geotech, a
similar cost code system is followed as indicated in the figure below. The left most
column contains the code for each department (44 for IT and 45 for NPI) and several sub
codes for various activities within the department. The level of complexity used in the
coding system determines the level of detail that can be obtained from them.
Similarly, a separate code has been assigned for the KTP project that helps the
management team to quickly retrieve all details pertaining to the project and assess its
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current financial position. Most organisations produce monthly accounts in which all of
the financial data is recorded and shows the actual expenditure and the original budget
plan. This helps the management to perform a variance analysis to compare how much is
the deviation from the expected value (budget value). This variance can either be positive
(favourable) or negative (adverse) and helps in identifying areas that need improvement.
For the KTP project, a financial report is presented at each LMC that compares actuals
with budget figures (Appendix A3). Although a variance analysis cannot be performed
since it is an ongoing project, the comparison helps to identify where money has been left
unspent and where money transfer from one section to the other is possible and prudent.
It also helps to forecast imminent expenses that were not included in the initial budget.
Hence modifications to the original budget plan are also presented. For instance, it can be
seen that money meant for Associate Development has not been spent at all. This
prompted the LMC to identify additional training requirements for the associate in order
to use the available money.
2.3) Discuss corrective actions to be taken in response to budgetary variations
The type of response to budgetary variations depends on two factors: the type of variance
observed (favourable or adverse) and the type of cost to which the variance is related
(controllable or uncontrollable). The figure below shows the type of response required for
each case.
Type of Cost
Controllable Uncontrollable
Favourable Give positive feedback Do nothing or find ways to
Encourage or promote make the cost controllable
Give bonus
Type of Recognition
Variance
Identify responsibility Do nothing or find ways to
Identify reasons make the cost controllable
Discuss remedial action
Adverse Set new targets, amend
budget
Monitor performance
In the case of a favourable variance, it is important that the management gives

appropriate recognition and do whatever is necessary to keep the trend continuing. This
can be in the form of additional perks and bonuses to the staff involved which will help to
keep their morale high. It may also be the result of adoption of new technologies or
practices in which case, this should be continued with and replicated across various
departments. If, however, the variance is negative the management should strive to
identify what went wrong and where. This may be a result of faulty assumptions when
the original budget was prepared in which case an amendment to the budget is required
taking into account previous observations. It is a good practice to identify any trends that
may appear by viewing a series of monthly accounts. For instance, upon analysing the
KTP financial report (Appendix A3), it was realised that over the course of the entire
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project period, a significant amount of travel expenses will be incurred including

expenses for conference attendance and there was a possibility that it may exceed budget
allocation. Hence it was decided to use the associate development budget for conference
expenses since any unused money under this cannot be utilised for other general travel
purposes. This will free up money for general travel and subsistence and also ensure a
judicious utilisation of associate development funds.
Similarly timing of the budgets is also crucial and they can be misleading if the entire
picture is not considered. Hence, certain organisations encourage maintenance of a
monthly budget as well as a half yearly budget to get a longer term view of the expenses.
For instance Appendix A4 shows the profit and loss account of Geotech for the month of
July 2009. It also shows the monthly as well as year to date (YTD) variance for various
categories. It can be observed that marketing shows a negative variance for the YTD
value. Upon further analysis it was realised that this was a result of increased marketing
expenditure at the beginning of the year and it was expected that as each month goes by,
this variance will turn positive which will finally reflect in a positive variance at the end
of the year. As a result no particular action was deemed necessary at this juncture.
In the case of uncontrollable costs, it is no use trying to blame anyone in particular since
it is not under their influence. This can have negative repercussions such as growing
resentment and frustration. All organisations try to reduce their controllable costs as
much as possible. It is very important to clearly allocate responsibility for each cost to
avoid any confusion. Budget holders have the authority to issue purchase order numbers
and can reject expenses that are not required. This way they can keep a control over the
costs that come under their influence.
2.4) Identify conflicts that can occur with management control systems and how
these could be resolved or minimised.
Although management control systems are beneficial and essential for the healthy
financial position of the organisation, it can often lead to a conflict of interests and
priorities within an organisation. Some possible scenarios and methods to resolve them
are discussed below.
Conflict between short term and long term
By cutting down immediate expenses or delaying bulk payments, the short term
profitability of the company can be maintained. However, this may be contradictory to
the long term vision of the company or the expectation of its stake holders. At Geotech,
the vision of the management is to be at the forefront of gas detection technology
especially for landfill purposes. Although the company enjoys market leadership, other
competitors are catching up with new technology devices. Hence, in spite of the current
global economic downturn, the management took a firm decision to continue investing in
R&D for the development of laser diode technology which will pay huge dividends in the
long run. This decision was made easier due to the relatively healthy financial position of
the company.
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Conflict between different departments
It is highly likely that the requirements of one department may contradict directly with
those of the others and these become more visible at the time of setting budgets for
various activities. Each department manager will argue their needs are more important
and hence request for a greater share of the available resources. This can be resolved if
the management sticks firmly to its decision. Also, it helps to make all departments
understand that they are working towards a common organisational objective.
Conflict between control and flexibility
Although management controls are essential and beneficial, they can sometimes be
detrimental and act as a hindrance for speedy implementation of certain actions. This
could lead to lost opportunities. Strict policies and procedures may also prevent creative
ideas from being developed and put to practice. Hence, it is essential to have a set of
management control systems that offers sufficient flexibility so that the organisation is
ready to respond to changing circumstances. As an example, in the profit and loss
account shown in Appendix A4, the effect of exchange rate fluctuations has been factored
while calculating monthly accounts. Depending on the observed trend, there is also a
provision to re-budget at the half year stage to reflect a more realistic scenario.
Conflict between controllable and uncontrollable costs
It is not a good practice to allocate costs to a manager’s budget over which they have no
control. This will lead to resentment and frustration. But at the same time, these
uncontrollable costs need to be allocated somehow. The management needs to constantly
monitor such costs without actually holding one person responsible. They should have
periodic review meetings to discuss on how to minimise these costs, to monitor any
variations or to make them controllable.
Conflict between following the set out rules and benefits in stepping out of those
rules
Conflict between targets
Different departments may have different targets that may sometimes contradict each
other. For instance, the sales department may have a sales target to achieve at the end of
each year. However, if proper consideration is not given to the type of product, the
overall profit may drop despite an increase in the sales revenue. This may affect ongoing
R&D activities which relied on the profit generated to speed up their activities. Hence,
various departments must be made aware of the overall strategy of the organisation
departments should synergise their operations to meet it.
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Conflict between budget plans and reality
As is the case most often, initial budget plans may need to be amended to include real life
situations or changing scenarios. There is no point in sticking to the original budget if it is
not realistic. The management should be prepared to periodically review and amend the
budget by keeping a close watch on emerging trends and future forecasts. At Geotech,
budgets are re-valued at the half year stage based on the observed trends.
________________________________________________________________________
Learning Outcome 3: Be able to understand the sources and availability of finance
to an organisation
3.1) Identify current and potential sources of finance that support organisational
objectives
There are various sources of finance available to support organisational objectives. These
are:
1) Owners’ funds: The type of owners’ funds depends on the type of organisation. For
very small businesses operating as sole traders, the owner can put some money in a bank
account for business activities. Separate records need to be maintained for personal and
business transactions. The same applies for partnership companies where the owners’
funds are credited to an account. For private limited companies, the owners can introduce
funds into the business by buying capital shares. In return they are issued with a share
certificate that indicates the number of shares held and the total worth. In these cases, the
owners have a limited liability for the debts of the company and hence the name. Most of
the larger businesses are run as public limited companies (PLCs). These have to comply
with a greater level of regulation. Apart from the shares brought by the owners, some
shares must also be available for the general public to buy.
2) Banks: Another common source of funds is the banking sector. They provide two
types of funds, loans and overdrafts. Loans are provided for a fixed term and the
repayment terms are also decided at the beginning of the term. The interest rate charged
by the bank may be fixed or variable. However, banks may require a security in return for
the loans provided. Besides the interest will have to be paid irrespective of whether the
company does well or not. Banks may also offer an overdraft limit for a certain period of
time. As long as the balance remains within the agreed limit, the bank will pay the debits
written by the business. Here the business only pays for the actual amount of overdraft
and not for the overdraft limit which may be much higher. These may have higher
interest rates.
3) Venture Capital Companies: Venture capitalists are another potential source of

income for larger sums of money. They are looking for a good rate of return on their
investment and are willing to take more risks. They are external investors who target
companies that have a high growth potential. But they may also introduce stricter
deadlines and demand higher targets to be achieved. For smaller amounts less than £1
million, business angels may be able to provide financial assistance.
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4) Grants: Various public bodies may also be willing to provide funds to promote certain
business activities if it promotes their cause eg: UK research funding bodies and other
charitable institutions. The KTP project for instance is funded partly by the Technology
Strategy Board (67%) and the rest comes from the company (33%).
5) Family and friends: These can be useful especially when setting up a new business or
when the amount required is small. They are very flexible with regards to the terms.
However, the burden of repayment falls on the entire family and can often lead to
disputes.
6) Sales of assets: Companies can also sell some of their assets to meet their immediate
requirements. These could be unused machinery or adjoining land or even a subsidiary
company.
7) Retained Profits: In the case of a profit making business, the owners can decide to
either take the profit after taxation in the form of shareholders’ dividend or return it to the
business as retained profit to fund further organisational activities.
In the case of Geotech, its current healthy financial position ensures that it does not need
to look for external sources of funds at the moment. The business is run solely relying on
the retained profits. The owners have not put in extra money although a commitment has
been made to invest extra money if and when required to meet any expansion or growth
strategies. In case of a severe financial crunch, the next best option is to apply for bank
loans. This is because the niche market that the company operates in ensures that it will
be able to quickly generate profits and make quick repayments.
3.2) Evaluate the distribution of finance in support of organisational activities
It is vital for a company to assess its investment options so that it gets the best rate of
return on the investment. Several important factors need to be considered such as:
 Scale of proposed investment
 Pay back period
 Expected profits
Before committing to a particular investment, it must be thoroughly justifiable and it

must be the best use of the finite company resources. For this a thorough evaluation of
the risks involved and the pros and cons need to be done. One common technique used is
pay back period where the time required to cover the initial cost of investment is
evaluated.
Geotech had initially made a similar assessment to explore the merits in investing in the
KTP project. From Appendix A3, it can be seen that the company contribution was
£44,570. In addition to this, the company had agreed to put in an extra £107,650 to cover
additional expenses as shown earlier in table 2. Thus the total investment by Geotech will
add up to £152,220. To calculate the pay back period, it was important to estimate the
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cost of production per unit and the expected sales and profit margin for each year. Based
on market projections, customer feedbacks and audits, these were determined as shown
below:
Methane analyser Target price: £2000
Margin: 70%
Yr1 Yr2 Yr3
Target sales volume: 40 80 80
Contribution: £56K £112K £112K
From the above, it is clear that the by the end of year 2, a cumulative income of £!68,000
would have covered the initial cost of investment. By considering the total amount of
investment and the 2 year payback period, the KTP project seemed an attractive and
judicious investment of the company’s resources. This also met the company’s overall
vision to introduce new technology products to retain the market leadership position. It
will also pave the way for other laser based portable instruments, investments for which
will be considerably less since the technology has already been mastered and adopted. All
this prompted the company to go ahead with the KTP project.
Another major area where Geotech has decided to invest for the current year is in staff
training and related BTP courses. This was a direct result of a SWOT analysis (Appendix
A5) that was performed to assess the current scenario and it emerged that significant
benefits can be reaped by imparting additional technical and non-technical skills to the
staff at various levels. As a result a significant increase in training expenses was incurred
that was not initially accounted for in the budget. This can be observed in the variance
analysis presented in Appendix A4 where staff training shows a negative variance.
However, in view of the long term benefits that can be achieved, this was considered to
be acceptable. Similarly other techniques can be employed to evaluate distribution of
finances such as break-even analysis, discounted payback, accounting rate of return and
cost benefit analysis.
3.4) Discuss monitoring and control of finance employed in support of

organisational activities
To monitor and control the finances employed, organisations need to adopt several
methods. Investment appraisals as mentioned above can be used to identify the best use
of these finances. Previously discussed techniques such as budgeting, purchase order
systems such as cost codes and variance analysis are tools that can be used to monitor and
control expenditure. Example of a variance analysis has been presented as Appendix A4.
Similarly, the use of cost codes to identify expenses incurred by each department and the
level of detail contained in them can be assessed from the figure presented earlier under
section 2.2.
- 15 -
Unit 5012 Being a Leader
Learning Outcome 1) Understand the organisation’s ethical and value-based

approach to leadership
1.1) Evaluate the impact of the organisation’s culture and values on leadership
An organisation’s culture relates to a set of shared beliefs and values that has been agreed
by the entire group and thus representing the company’s unique identity. They reflect the
organisation’s core values which are learned, re-learned and passed on to new members.
These include the way people communicate with one another, how information is
exchanged, the procedures and processes followed etc. Roger Harrison defined four types
of organisational culture depending on the level of centralisation and formalisation. This
is indicated in the figure below.
High Formalisation
ROLE TASK
High Centralisation Low Centralisation
POWER ATOMISTIC
Low Formalisation
In a power culture, power is concentrated in the hands of a few from whom control
radiates to others. These are less formal or bureaucratic and hence enable quicker
decision making, eg: family run businesses. In a role culture, there is a definite structure
and everyone is allocated clear responsibilities. This makes it highly hierarchical and
hence power is derived from a person’s position, eg: government departments. A task
culture is one where separate teams are formed to address specific issues and all teams
come together to promote common goals. Power is derived from expert knowledge and
often there are multiple reporting lines which results in a rather flat hierarchy. They also
tend to have flexible working patterns. Finally, in an atomistic culture, all individuals
- 16 -
think they are superior to the organisation. This is usually the case for professional
partnerships where each person brings in a separate form of expertise, eg: GP practice.
At Geotech, the culture is highly task based. There are individual teams to look after
individual problems. The procedures are all well defined and they are usually project
based with review meetings held often. A flat hierarchy exists with deep interaction
between various departments. Profit generation is given high priority and all efforts are
directed towards improving this. In the context of my KTP experience, I have found that
the company follows a relaxed culture when it comes to personal interactions. Meetings
are held with the right level of formalities and they usually have a set agenda. Flexible
working hours is another reflection of the relaxed culture. It is general practice to have
lunch in the common area which usually opens up new topics for discussion. Staff
members are very helpful and friendly and everyone seems to have a clear idea of their
duties and responsibilities. A lot of impetus is given to continuous improvement and
R&D for better quality products and services and this aligns well with the company
vision to be in the forefront of landfill gas analysis. Similarly, staff training is also given
priority and many members have over the years moved up the ladder of responsibility.
Staff welfare is given adequate attention with frequent surveys conducted to improve
general working environment. Generous bonuses are also handed out to the employees
every year as a token of appreciation for their efforts.
The existing culture in an organisation hugely impacts the leadership style. They should
adopt a culture that is in tune with the company culture and also be able to adopt a new
culture if a change is required. At Geotech, team leaders in the manufacturing area follow
an open culture where all issues and problems are discussed on the floor involving the
entire team. This transparency allows leaders to be aware of all issues that need to be
taken care of. Serious issues are then communicated to the next level of management.
Directors are also encouraged to closely interact and involve with their respective
department members. They hold one to one meetings with the general staff within their
department on a regular basis. The new MD of the company has promised to further
reduce barriers between various arms of the company and as an example, he has made
himself approachable by anyone at anytime with an open door policy. This is expected to
improve efficiency and increase productivity. The directors have also decided to allocate
more funds for R&D to develop new technology, despite the current economic slump.
This has the unconditional support from the CEO who is keen on improving and
increasing the portfolio of products in spite of a drop in sales during the current financial
year.
1.2) Discuss how organisational specific, legal, regulatory and ethical requirements
impact on leadership demands
Every company is required by law to follow the regulations and legislations relevant to
them. These are usually issued by the government or in some cases by a regulatory body
responsible for that sector. It is the duty of the directors and senior managers to ensure
that these guidelines are followed in the day to day business activities. This requires them
to adopt appropriate working culture and communicate its importance to all the staff
- 17 -
involved so that it is practiced by all. Some of the major legal and regulatory
requirements that Geotech follows are:
 Health and Safety Work Act (1974) which deals with safety at work and the best
practices to be followed in case of an accident
 ISO 9001:2000 for quality assurance
 ATEX Directive 94/9/EC for explosion compliant
 Environmental Agency regulation for landfill sites (EA) which dictates the quality
and level of measurement precision required
 Companies Act 2006
 Data Protection Act
These requirements hugely influence the leadership style and their working. A Health and
Safety Committee headed by a senior manager is present in the company that looks into
the safety at work. They hold regular meetings to discuss the safety policy and review the
existing procedures. The results are made available on the general notice board. All staff
are given appropriate H&S training and area champions have been appointed for
employees to communicate any issues. A dedicated quality control team has been setup to
monitor adherence to quality standards. A specialist software is used to report any
changes to the guidelines and also to issue NCPs (Non-Conforming Process) and request
for changes. This is then distributed across the company and team leaders are responsible
to convey this information to their team members. Hardware design changes need to first
get ATEX approval from relevant agencies. This involves close coordination between the
R&D, manufacturing and services teams. The directors keep a watch on any
environmental regulations that may affect organisational activities and appropriate
measures are taken to meet them. As part of continuous improvement, staff members are
encouraged to learn and come up with innovative solutions for problems they face.
There are other ethical requirements or codes that the company follows. These are laid
down by the directors and they take a lead in implementing them. These involve adequate
transparency and proper documentation of its monthly and yearly accounts, appropriate
response to customer enquiries, prompt repayment of bills to suppliers etc. Besides,
Geotech also takes a keen interest in developing a good relation with the general public
and neighbourhood. It supports many social events and raises a significant amount for
charitable purposes. They also regularly sponsor social charity events. Employees are
also informed of opportunities to enhance their personal skills and appropriate training is
provided.
- 18 -
1.3) Evaluate current and emerging social concerns and expectations impacting on
leadership in the organisation
Organisations cannot survive on their own without affecting the environment and people
around them and hence it is important for good business leaders to be able to meet current
social pressures and expectations and also be able to predict emerging concerns and be
prepared to meet them. An effective way of doing this is to perform a PESTLE analysis.
Below is one such analysis conducted in the business area of Geotech.
Political: The current political climate is not expected to change or alter company
priorities. Sufficient resources are available for the company to carry out its activities and
no hindrance from the government or additional control is expected in the near future.
Environmental monitoring continues to be a positive area for the government. As a result
of the Kyoto Protocol, methane can now be traded for carbon credits and hence special
focus is given to precise and accurate low level methane measurements.
Economical: The current economic slump has affected all market sectors and
environmental monitoring is no exception. However, due to the strong market position of
Geotech and the niche market it operates in, this effect has been less profound compared
to other market sectors. A fall in sales revenue for the current year has been accounted for
in the budget and the management has allotted priority for high margin products rather
than overall sales volume. Fresh recruitments have been put on hold for the moment
implying greater sharing of responsibility among the current staff. Economic recovery is
expected towards mid 2010.
Social: The company continues to support local events and charities and this has resulted
in a greater sense of appreciation from the general public. Increased budget for staff
training has been approved to meet staff expectations. This enhanced the company value
of investors in people. Periodic safety training and assessment is also carried out.
Technological: To consolidate the market leadership position and to stay ahead of the
competition, it was decided to introduce new laser technology for more precise
measurement of gases. These devices are expected to enter production by early 2011 and
in view of this, steps have been initiated to try and align the laser product with the
existing product manufacturing and calibration processes. Another short term joint
project for the development of H2S sensors has also begun, to address current limitations
and difficulties in measuring them.
Legal: New regulations pertaining to instrument safety especially for N. America will
come into effect early next year. This has prompted a redesign of some of the hardware
which required close coordination between various departments. Concerned line
managers and team leaders had to meet strict deadlines fixed for the implementation of
the new designs. Adherence to H&S at work compelled the NPI director to alter the
design of the planned new NPI wing although this resulted in a cost escalation of about
£15,000.
- 19 -
Environmental: The company is conscious of building its reputation as an environment

friendly organisation and has taken a few measures in this regard. An environmental
management programme has been initiated to monitor implementation and suggest best
practices. A conscious effort is being made to reduce wastage of resources and greater
attention is given to waste disposal. Manufacturing and servicing departments have been
instructed to identify ways of reducing wastage and this has resulted in a revamp in
certain production processes. Team leaders have the additional responsibility to conduct
internal audits to monitor improvements.
________________________________________________________________________
Learning Outcome 2: Be able to understand leadership styles
2.1) Evaluate the relationship between management and leadership
Management and leadership are two concepts that have many features in common and
have been used interchangeably. There are also instances where one can clearly
differentiate between the two.
Managers are expected to take charge of proceedings and monitor progress. They are
assigned several responsibilities that increases with their position in the hierarchy. They
are expected to supervise people, perform administrative functions and succeed in
delivering a task. A successful manager needs to be efficient in the way he functions to
achieve desired results. This involves proper planning, optimum allocation of
responsibilities, proper and efficient utilisation of resources including time, periodic
review of progress and being flexible to incorporate changes to the original plan.
Leadership can either be a process or a position within an organisation. A good leader

must be trustworthy, approachable, respected, understanding, persuasive, confident and
technically competent. A leader must know the characters of the team he is leading, their
individual strengths and weakness and must have a clear vision. He must lead by example
and be able to think and react quickly as the situation demands.
The relationship between management and leadership has many facets to it. It is possible
to be a good leader without possessing all the characteristics of a good manager. In fact a
leader may sometimes find better managers than himself in his team. On the other hand,
it is not easy for a manager to be a good leader without possessing any of the leadership
qualities. This is because unless a manager has the ability to develop the trust and respect
of his team, he will find it difficult to persuade or motivate them and develop a positive
attitude towards the goal.
In my position as a KTP associate, I need to develop and exhibit qualities of both a leader
and a manager as the situation demands. I am responsible for my personal budget,
utilisation of resources, time allocation, preparing for meetings and meeting deadlines. A
degree of self-assessment with regards to the project and its aims and objectives is also
required. All these are essentially managerial skills as also is the ability to plan various
activities especially when it involves people from other departments. I need to be aware
- 20 -
of the time constraints and possible delays in purchasing and machining products in the
machine shop. My leadership qualities become important in situations where I need to
convince a group of people about a particular task and have them all agree to it and work
towards it. This will become more apparent as the project progresses beyond
demonstrator stage and enters the prototype and production stages. At this point I am
expected to lead a team of engineers and technicians from various departments who will
be actively involved with the laser project. I will need to be clear in ideas and
communicate them effectively to the team and ensure they all agree with me. I will have
to give specific orders and instructions to them based on their skills and expertise and
ensure a smooth coordination between all. At the moment, LMC meetings offer me a
chance to exhibit some leadership qualities where I lead the discussion and put forward
new ideas and proposals. To sum up, leadership is about doing the right things whereas
management is about doing things right. Leadership is about effectiveness whereas
management is about efficiency.
2.2) Evaluate leadership styles
Depending on the situation and the leadership qualities exhibited, different leadership
models have been developed and studied. Some of them are also applicable to
management styles. Four such models are discussed below.
a) McGregor’s Theory X and Theory Y
These are based on the manager’s assessment of employee motivation. According to this,
managers who follow approach X assume that employees are naturally lazy and will
avoid working if they can. Their only motivation to work is money or any other tangible
benefits. To manage such employee requires:
 Close supervision and control

 Incentive programme to motivate them
 Threat of punishment for non-compliance.
Managers who follow theory Y believe their employees will seek to work to the best of
their ability given the appropriate conditions. They are assumed to be ambitious, self
motivated and enjoy their work. They may have talents that are not fully recognised or
utilised by the organisation. To manage such employees require:
 Open and honest communication

 Minimum difference between manager and subordinate
 Shared decision making
In reality these two models represent two extremes of management styles and most
organisations follow a model that is somewhere in between.
- 21 -
b) Situational Leadership
According to this model developed by Paul Hersey and Ken Blanchard, different
situations require different leadership skills and hence different leaders may emerge. A
particular leader with a particular set of skills may not be effective in all environments.
More significance was given to the person to be led rather than the leader and based on
this 4 leadership styles were developed. They are:
Directing/Telling: Here there is one way communication from the leader to the employee
(follower) where the leader defines the role played by the follower and tells him what to
do and how to do etc.
Coaching/Selling: Most direction is still provided by the leader but the leader also tries to
get something in return from the follower by encouraging two way communication.
Supporting/Participating: Here both the leader and the follower participate in the decision
making process and together decide on what to do and how to do.
Delegating: Here the leader defines the final outcome expected but leaves it to the
follower to decide how to do it and when to do it.
The above model also defines when each of these are most effective. This is influenced
by the skills and willingness shown by the follower. The higher the level of skill, the
lesser the direction required and hence supporting or delegating will be sufficient. This
will have a positive effect on the follower’s mindset as it shows greater confidence in
their abilities. In a project scenario, the leadership starts off with the telling style, then to
selling, moving to participating and finally delegating as shown below in the figure. It is
good practice to follow this curve as it will have the desired effect on both the follower
and team leader.
Participate Sell
Delegate
Tell
- 22 -
c) Emotional Intelligence
Daniel Coleman measured emotional intelligence on the basis of four capabilities that
dealt with interpersonal and intrapersonal skills. These were self-awareness, self-
management, social awareness and social skills. Based on a research conducted, six
leadership styles were identified as follows:
Style Description
Coercive High drive to achieve task through direct
instructions and a demand for quick
compliance
Authoritative Highly confident and acting as catalyst for
change, but also empathetic and inviting
others to share a common vision
Affiliative Strongly empathetic, build strong
relationship with people
Democratic Seeks collaboration, forges consensus
Pacesetting Sets high standards of performance, acts as
role model for others to follow
Coaching Developing others as primary driver
d) Inspirational Leadership
An inspirational leader has different dimensions which have been tabulated below:
Dimension Attributes
Creating the future Visionary, single-mindedness, opportunity
awareness
Enthusing, growing and appreciating others Team builder, enabler, self belief,
adaptable
Clarifying values Values champion, consistent, customer
champion
Ideas to action Self reliance, keen learner, proactive,
knowing what works, reflective
In summary there is no single leadership style that suits all situations. It may have to
change depending on the personality of the team and the environment. At Geotech,
delegation is the type of leadership followed most often. This is because all the
employees are sufficiently skilled to carry out their duties. Leaders are required only to
allocate time and prioritise tasks for the members to implement. Lot of focus is also laid
on employee satisfaction and certain aspects of authoritative leadership are also visible.
Everyone is aware what the overall vision of the company is and what works best for
them and their efforts are directed towards this. Team leaders share an open and honest
relation with the members with minimum distinction between the superiors and
subordinates.
- 23 -
2.3) Discuss why leadership styles need to be adapted in different situations
It is important for a leader to adopt different leadership styles for various situations. This
not only depends on the type of follower to lead but for the same follower, different
styles maybe needed for different circumstances. For instance, an employer or a team
may have all the necessary skills to carry out a certain task. In this case delegation is the
leadership style that needs to be adopted. However, if there is a drastic change in the
methodology or the process, the leader needs to adopt a different approach. The leader
will have to initially give clear cut instructions as to what is required and how it has to be
done and gradually as the follower develops the necessary skills, participation and
delegation styles can be used.
The leadership style also depends on the organisation culture or the current position of
the organisation. It is vital for the leader to assess this and react accordingly. When the
company is doing well, a leader should employ emotional intelligence to try and keep the
morale of the team high. Proper appreciation for their efforts and allocating greater
responsibility to them will keep their motivational levels high. Open communication and
greater involvement in decision making will enhance their level of confidence in
achieving the set objectives. This inturn will deliver the organisational goals too. On the
other hand, when the company is in crisis and a change in strategy is required, the
leadership needs to be more inspirational and authoritative. The leader should be able to
clarify what the vision is and what actions need to be taken to achieve it. He should show
motivational skills especially when duties and tasks of individual team members have
changed. It is quite natural for people to initially oppose a change and hence a leader
should be convincing and determined to bring about the necessary change. He should set
the example for others to follow and also be empathetic to their concerns.
In my KTP project this change in leadership style adopted by my supervisors is quite

evident. In the initial stages of the project, my academic supervisor provided me with
clear instructions and directions on what needs to be done. As I started to develop my
own skills, these began to reduce and now I am given greater freedom to decide for
myself what is best. There is a greater sense of shared decision making in terms of the
type of experiments I need to conduct, the type of materials to be used and the design of
various components. This has also increased my self-confidence and my ability to work
on my own. This is expected to further change in the future once the project moves in to
the production stage where I will assume greater leadership role in managing the project.
It will eventually lead to the formation of a small team of my own within the company
where I will be responsible in holding team meetings and defining the role played by
each individual.
________________________________________________________________________
Learning Outcome 3: Be able to secure achievement of team involvement and

objectives through leadership
3.1 Develop a culture of professionalism, mutual trust, respect and support within
the team
- 24 -
It is important for a leader to develop the right environment within a team in order to
achieve the target goals. A leader should essentially focus on three components such as:
 Getting the task done
 Developing the individual
 Building and maintaining a team
Inadequate attention to any of the above can lead to frustration and dissatisfaction which
will eventually lead to a negative result. As part of building and maintaining a team, a
leader should strive to develop a culture of professionalism, mutual trust, respect and
support within the team. When my KTP project enters an advanced stage where I am
expected to lead a KTP team, I intend to take necessary steps to ensure the above cultures
within the team.
Professionalism: I intend to standardise certain procedures such as reporting of results
and raising any issues that may affect the team. These can be done online through a
common forum or a shared workspace where common issues can be discussed. Meeting
deadlines is crucial and in case it is not possible to meet them, advance notification will
be useful so that necessary adjustments can be made to the project plan. Weekly meetings
to review progress on various aspects will be a useful practice.
Mutual trust: I will encourage team members to place trust on each other and on their
commitments. This will help them to focus on their individual responsibilities and meet
their deadlines. Privacy and confidentiality will be respected at all times. In case of
problems or issues with other team members, I will encourage them to openly discuss it
with each other or with me and try and settle the issue, keeping in view the larger interest
of the team.
Respect: Team members should respect each other’s opinions and their view points. As a
leader, I shall set an example for others to follow. I will encourage shared decision
making to promote collective responsibility. I will make sure that no particular individual
is over-burdened with work. A procedure to book appointments will be encouraged so
that it does not affect the normal working schedule of any particular individual. I will
ensure the team gives proper appreciation and acknowledgement for the members’
efforts.
Support: I will seek support from the other members as and when required and also
provide them the same when appropriate. All the team members are likely to be more
experienced than I am and hence I will draw upon their experience to come up with
effective solutions. This will set an example for others to follow. When an individual is
relatively free, he or she will be encouraged to share duties of another member whose
task may have run behind schedule for various reasons. A collective sense of
responsibility will be beneficial for proper coordination of all team activities.
- 25 -
3.2 Evaluate the impact of a leader’s clear focus in leading the team in the
achievement of these objectives
It is extremely important for a leader to have a clear focus on the target ahead and the
objectives of the team. According to Huszczo, one of the key components of effective
team building is for the leader to have a clear sense of direction. Although the team
members might be aware of how to get a particular job done or the specific steps
involved, it is the leader who sets the goal and defines the objectives. This defines the
very purpose of having a team in the first place. A leader who is not certain on the goals
and the way ahead cannot be successful despite the best efforts from its members. Such
leaders also stand a chance of quickly losing respect of his team. While setting objectives
for the team, the leader should make sure they are SMART and commensurate with the
team he has chosen. During the course of the project, it is quite possible for many minor
issues to crop up and attract focus of the team. In such circumstances, the leader should
ensure that too much time is not devoted to matters that do no serve the purpose of the
team or help it in achieving the defined objectives. From the point of view of the
members, it is equally beneficial for them to know where they are heading and what the
expected outcome is. This helps them to modify and adjust their tasks accordingly.
If a leader does not have a clear sense of direction, this will result in declining working
standards, budget overspending and missing of deadlines thereby affecting team morale
and prestige.
At work, although I am in charge of my day to day activities and plan my experiments,

my company supervisor ensures the project is aimed at achieving the company’s
objective. He recommends procedures and options that will serve the larger interest of the
company in terms of time and cost for production. It is not entirely difficult to produce a
laser system for methane detection. However, to make it a portable low cost device needs
innovative designs and solutions. When the project enters an advanced stage, I will be
leading a KTP team and it will be my responsibility as team leader to ensure everyone in
the team is aware of what we are trying to achieve. For instance, a firmware engineer in
my team will need to know what is being achieved in the long run and hence I need to
have a clear understanding of what modifications and add-ons are likely in the future.
This will help the firmware engineer to incorporate the required flexibility in the software
codes written into the microprocessor and will inturn save future time and effort for the
team and the company.
3.3 Evaluate how the leader supports and develops understanding of the
organisation’s direction
As mentioned above it is important for a leader to have a clear understanding of the goals
and aims of the team. It is also equally important for a leader to communicate this
effectively to the team members. This can be done in many ways such as:
Holding one-to one meetings

Team meetings
Organising presentations and seminars
- 26 -
Writing reports and emails

Posters
In the NPI section at Geotech, my director is the leader of the entire team. He organises
team meetings every fortnight to discuss the progress on various projects. This is
particularly useful to exchange different views since many members are involved in more
than one project. Hence it offers a common platform for all to communicate the present
status of their work to a wider audience. At times this leads to a fruitful discussion where
members who are not involved with a particular project may come up with a useful
comment or two. The meetings are recorded and the minutes are sent around. Similarly,
the director also holds one to one meetings with each member to discuss in detail their
progress and related issues. This offers a chance to review the direction of a particular
individual’s work and helps to prioritise his various activities. I have also been asked to
make company wide talks and seminars to present my findings. This way people who are
likely to be part of the future KTP team can keep track of the developments and assess
their likely role in future. Posters and project charts are very informative and portray the
actual current state of a particular project. This helps to synergise the tasks and prioritise
them according to deadlines.
3.4 Discuss how leadership styles are adapted to meet changing needs, and to enable
team development and commitment
The style of leadership changes depending on the situation and the type of people to be
led. This gives rise to situational leadership which has been discussed previously. A
leader may have to adopt different styles to suit the need of the hour. For instance, a
beginner in the team will require closer supervision and will be need to be told exactly
what needs to be done and how. However, for an experience member, mere delegation of
duties will be sufficient. Also, the leadership style may vary for the same individual
depending on the task at hand. If the team is adopting a totally new operational
procedure, even experience members will need proper guidance and support to help them
understand the various changes. When the morale of the team is low, the leader will have
to adopt a more inspirational leadership style and set an example for others to follow.
Improving the motivation levels is also equally important. The needs of each individual
and the team will have to be addressed to get the best out of them. This will increase their
commitment levels and ensure success of the team. More on this has been dealt with
under section 2.3 above.
________________________________________________________________________
Conclusion
In view of the above, I hope this report will provide you with an understanding of the
level of training I have been imparted as part of my KTP programme and convince you of
the knowledge and skills gained thereof which could be directly employed towards a
successful completion of my KTP project and in achieving the organisation’s objectives
as a whole.
- 27 -
Appendix A1
Appendix A2
KTP BUDGET
Directly Incurred costs KTP Partnership Budget, £

a) Associate Employment Costs 54,000
b) Associate Development 3.938
c) Travel and Subsistence
Academic to company 40 times/year 3,816
Associate to university 430
Conference travel 950
Attendance to national meeting on gas
sensing 1,000
Total 6,196
d) Consumables
Laptops and general software 1,550
Instrumentation software license
LABVIEW 1,450
Books 375
Total 3,375
Directly Allocated Costs
Knowledge Base Supervisor 23,327
Indirect Costs
Additional Associate Support 44,226
Total 135,062
Appendix A3
FINANCIAL STATEMENT for period 14 October 2008 - 28 February 2009
KTP Prog. No. KTP006825 University ref. no E1520N/V Date 27-Feb-09

Company Geotechnical Instruments Ltd Associates Awarded 1 Period 14/10/08-13/1/11
University Cranfield University In Post 1 Grant Value £90,492
Department School of Engineering Former 0 Contribution 67%
BUDGET EXPENDITURE FORECAST PROJECTED TOTALS

(Approved by LMC)
Expenditure Headings To previous Since previous To date commitment Accrued costs Planned spend Total (Over)/
statement statement as proportion Available
A B C B+C=D of total E F D+E+F=G A-G=H
£ £ £ £ £ £ £ £
a. Associate Empoyment Costs 54,000 £1,252 £8,792 £10,044 £65,556 £75,600 -£21,600
b. Associate Development 3,938 £0 £0 £3,938 £3,938 £0
c. Travel & subsistence 6,196 £1,137 £1,137 20% £100 £4,959 £6,196 £0
d. Consumables 3,375 £790 £103 £893 ~100% £2,400 £82 £3,375 £0
e. KB Supervisor 23,327 £432 £3,024 £3,456 £19,871 £23,327 £0
f. Associate Estate Costs 0 £0 £0 £0
g. Mentoring Support 0 £0 £0 £0
h. Additional Associate Support 44,226 £819 £5,733 £6,552 £37,674 £44,226 £0
j. Total £135,062 £3,292 £18,789 £22,082 £2,500 £132,080 £156,662 -£21,600
Income Headings
k. Grant £90,492 £90,492

l. Company contribution £44,570 £44,570
m. Associate top up £21,600
n. Total £156,662 £0 £135,062
Effort measured in associate months 27 0.5 4.0 4.5 22% 0 0 4.5 22.5
Appendix A4
Appendix A5

DIP20 Assignment 4 Submission 1 Arun Kannath

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CMI LEVEL 5 DIPLOMA IN MANAGEMENT AND

SWOT Strengths, Weaknesses, Opportunities and Threats

SMART Specific, Measurable, Achievable, Realistic and Time-

LMC Local Management Committee

ATEX Explosive Atmosphere

PESTLE Political, Economic, Social, Technological, Legal and

KTP Knowledge Transfer Partnership

NCP Non-Conforming Products

CMI LEVEL 5 DIPLOMA IN MANAGEMENT AND LEADERSHIP

Unit 5007 Financial Control

1. Profit and Loss Account

Long Term Loans

A useful way of presenting data is using the formula:

3. Cash Flow Statement

Month 1 Month 2 Month 3

Closing Balance 61,600 79,200 78,800

1.3) Analyse financial information contained in a set of accounts or financial

1) Gross Profit Margin = Gross Profit/Sales x 100%

Gross Profit Margin (2008) = 3,547,234/5,786,858 x 100 = 61.3%.

2) Operating Profit Margin = Operating Profit/Sales x 100%

3) Return on Capital Employed (ROCE) = Operating Profit/(Owners’ Funds + Long

For 2008, total owners’ funds = 1,547,670

4) Current Ratio = Current Assets/Current Liabilities

For 2008, Current Ratio = 2,374,551/1,039,809 = 2.28.

5) Acid Test = (Current Assets – Stock)/Current Liabilities

6) Gearing = (Current Liabilities + Long Term Loans)/Owners Funds

For 2008, gearing = (1,039,809 + 73,882)/1,547,670 = 0.72

2.1) Construct a budget for an area of management responsibility

Description Estimate of Costs (£)

Facilitator avg. 0.25 7,500

Steering group 20 man days 5,000

Attendance at conference 1,050

The benefits of a formalised budgetary control system are:

 Reflects the objectives of an organisation as a whole in financial terms.

2.3) Discuss corrective actions to be taken in response to budgetary variations

In the case of a favourable variance, it is important that the management gives

project period, a significant amount of travel expenses will be incurred including

Conflict between short term and long term

Conflict between different departments

Conflict between control and flexibility

Conflict between controllable and uncontrollable costs

Conflict between targets

Conflict between budget plans and reality

3) Venture Capital Companies: Venture capitalists are another potential source of

3.2) Evaluate the distribution of finance in support of organisational activities

Before committing to a particular investment, it must be thoroughly justifiable and it

3.4) Discuss monitoring and control of finance employed in support of

Unit 5012 Being a Leader

Learning Outcome 1) Understand the organisation’s ethical and value-based

High Centralisation Low Centralisation

 ISO 9001:2000 for quality assurance

 ATEX Directive 94/9/EC for explosion compliant

 Companies Act 2006

 Data Protection Act

Environmental: The company is conscious of building its reputation as an environment

Learning Outcome 2: Be able to understand leadership styles

2.1) Evaluate the relationship between management and leadership

Leadership can either be a process or a position within an organisation. A good leader

2.2) Evaluate leadership styles

a) McGregor’s Theory X and Theory Y

 Close supervision and control

 Open and honest communication

2.3) Discuss why leadership styles need to be adapted in different situations

In my KTP project this change in leadership style adopted by my supervisors is quite