UNIT 2 – MANAGEMENT FUNCTIONS

Objectives
 Describe four key management functions & their relationship to FBOs
 Explain the elements of a successful business plan
 Discuss delegation pitfalls
 Provide insight into effective management practices, e.g. time management
FOUR KEY MANAGEMENT FUNCTIONS
Size of an FBO makes the manager responsible for all key management functions:
Planning
Organizing
Directing
Controlling
PLANNING & ORGANIZING
Planning & Organizing is central in a volatile environment:
 New equipment
 Changing regulations
 Advancing technology
 Volatile marketplace
Role of the Business Plan
 Provides clear long/short term objectives to be accomplished
 Necessary to attract suitable lenders & investors
Role of Operational Plan (to be discussed in another unit)
 Provides the methods to accomplish stated objectives
 Policy, procedures, rules & standards to run a business
RATIONALE FOR A BUSINESS PLAN
Selecting a market niche ensures prioritization of time and energy
Stating services available enables customers to plan their own future needs & refer
other customers
Setting achievable goals is a self-fulfilling prophecy
Attracting suitable lenders & investors
Enabling modification to incorporate new business project
COMPONENTS OF A BUSINESS PLAN
Mission Statement
Values
Market Niche
Company History & Background
Industry Overview
Products
Marketing Analysis
Marketing Plan
Legal Requirements
Personnel
Operations
Management
Financial Information
Appendices (Goals, Objectives, Schedules, Information Systems)
MISSION STATEMENT
Can be written for the entire business as well as business segments or profit centers
Example: “To be the best quality repair facility within a thirty mile radius of Airport X.”
Answers the questions:
 Who are we?
 What do we do?
 Why we’re
VALUES
Successful businesses focus on treating employees well as it leads to customer
satisfaction
Direct correlation between employee morale & productivity
Example: At FBO X, our priority is customer satisfaction in the areas of quality, reliability,
speed of service & friendliness. We achieve these things by treating our employees
with respect & dignity, and by providing them with all the tools that they need to do
their job to the highest standards.
Values can include:
 Customer satisfaction
 Employee Morale
 Quality
 Reliability
 Speed of Service
 Friendliness
COMPANY HISTORY & BACKGROUND
Can be used:
 to interest potential financial backers
 for new customers
 to orient new employees
INDUSTRY OVERVIEW
Periodic evaluation of the industry is critical in:
 Establishing goals/Redefining goals (e.g. rentals, fractured aircraft ownership)
 Identification of major factors & trends affecting the industry (e.g., The GAO & SUPs,
the FAA & Operational Control)
 Examining national economic & demographic trends (e.g., depressed economy,
aging population)
MARKETING ANALYSIS
Address each product line separately
Consider if the market is local, interstate or national (e.g. flight school vs. major
overhaul)
MARKETING PLAN
Use market research to determine what a client group may want, e.g. charter services
vs. fuel for local acrobatic team
Determine best way of spreading news, e.g. local flying club, flyers, social media, etc.
Consider required tasks:
 Segment into individual tasks
 Assign staff responsibility
 Determine deadlines
 Determine quotas
LEGAL REQUIREMENTS
Determine need for business license and/or certification from local, state, & federal
authorities
Review environmental requirements, e.g. underground fuel storage, bird strikes, etc.
Rules regarding incorporation and indemnity
PERSONNEL
Develop an organizational chart showing titles & reporting relationships
Develop job descriptions & address overlapping functions as well as back-up in the
absence of primary personnel
OPERATIONS; PRODUCTION PLAN
Describe overall function of each division of the business
Describe individual tasks/work assignments
Review & Consider
 Physical requirements
 Supplies, materials
 Labor
 Office equipment
MANAGEMENT
Defined as “things getting done through others”
Include:
 A review of key people & include their strengths/weaknesses
 Ongoing resources available, e.g., legal or financial consultant on retainer
 Ownership information when employees are shareholders
 Succession in a small or family-owned business
FINANCIAL INFORMATION
Set up a financial plan
Key it to an appropriate target date, e.g. FBO lease expiration/renewal
New FBO business should have a five-year plan with year one presented month to
month
Include the following in the financial plan:
 Profit/loss statement
 Balance sheet
 Cash flow analysis showing breakeven point
 Criteria for new expenditures related to production or sales volume
STRATEGY & OBJECTIVES
Strategy is needed to pursue market opportunities with
specific, measurable objectives & dates

Strategy statement must discuss new product features,

benefits, pricing, production, sales, promotional
activity & launch costs
SETTING STRATEGY OBJECTIVES
Activity target levels include:
- No growth (declining market share)
- Maintenance of market share
- Growth to a higher volume/specific dollar amount by a given
year
- Growth to a point of maximum utilization of facililties, e.g. repair shop
reaches maximum use w/o expense of creating a new hangar
LIMITATIONS TO GROWTH
Consider:
 Competition
 National trends in aviation
 Business cycle
 Profitability of each service or product offered
FUNCTIONAL SCHEDULES
There may be a need to develop more detailed schedules than reflected in the text of
the Business Plan
In those cases, use PERT or Gantt Charts
INFORMATION SYSTEMS
Provides real time data & a means of assessing effectiveness (data that is
categorized = information)
Information enables changes to be made for improved results
Data to be collected includes:
 Competition
 Industry sales
 New clients acquired
 Costs
 Productivity
 Profit by service or area
 Promotion results
DIRECTING AND CONTROLLING
FBO managers who rise through the ranks (pilots, mechanics, flight instructor, etc.)
need to acquire managerial skills of planning, organizing, directing & controlling
others
Most effective managers are those who delegate & oversee tasks
Smaller FBOs may require manager who is both hands-on and a manager (time needs
to be divided into “doing” and “managing”
Critical abilities include:
 Alertness to change
 Ability to adjust
 Ability to attract & hold competent workers
 180 degree vision
 Knowledge of customers/market conditions
DELEGATION STYLES
Management styles from authoritative to participatory
Manager makes a decision & announces it
Manager “sells” a decision
Manager presents “ideas” or a “decision” & invites comments/discussion
Manager offers a tentative decision subject to change
Manager presents a problem, gets suggestions, & then makes a decision
OBJECTIVES OF DELEGATION
Freeing manager by leaving details to others while getting the job done
Improving the quality of managerial decisions
Allowing individual development & skill growth
Improving teamwork & morale through coordination of skills & effort
MANAGERIAL ACCOUNTABILITY
Delegated work must be:
 Spread among skilled & available personnel
 Reviewed to ensure work is correctly accomplished
 Have built-in time to allow for correction if something goes wrong
MANAGERIAL TRACKING
Delegated work can be tracked through:
 Verbal reporting on prearranged dates
 Written progress reports based at specified intervals
 Scheduled conferences to assess progress
 Deadlines to assess results
DETERMINING TASKS TO BE DELEGATED
Instead of listing all tasks for first line managers, FBO owners/managers may list
those tasks that are not delegated:
 Owner approves all financial spending
 Owner is the final approval for hiring & firing
 Owner decides new services to be offered
 Owner approves all public statements
DO’S OF DELEGATION
Delegate using the Rodwell 85/15 rule (people are 85% ready to handle tasks)
Give clear instructions
Establish clear lines of accountability/review
DECISION MAKING
Diagnose problem or issue precisely (not causes or symptoms)
Develop an array of possible solutions using brain storming, mind mapping & other
techniques
Evaluate cost/benefit & pros/cons of each solution
Select best fit to resolve diagnosed problem or issue
Implement & check whether it worked
DECISION MAKING TECHNIQUES
Sampling Theory – effective in analyzing customer satisfaction or potential business
Time Distribution – effective in examining hours of operation & best allocation of
resources
Simulation of Scenarios – effective in examining “what if “ scenarios, e.g. effect of
different interest rates on acquiring a new aircraft
DECISION MAKING TECHNIQUES CONT’D.
Review Figure 2.4 on techniques to be used in assessment of:
 Human Resources
 Financial
 Material
 Aviation Operations
TIME MANAGEMENT ISSUES
Lack of clear priorities
Procrastination
Interruptions
Meetings (too many, too long, no agenda)
Reports (too many, too long, no focused)
Unplanned visitors
Lack/poor delegation
Focus on operational crises as opposed to preventive activities
Delays
TIME MANAGEMENT STRATEGIES
Plan each day – identify your best working time, e.g. AM
Sort priorities (A, B, C tasks)
Divide projects into small pieces, delegate where possible
Eliminate distractions
Use time wisely e.g., write a note, brainstorm a new assignment while waiting
Communicate in writing where possible to avoid “chatter”
MBWA – check on what’s happening, see for yourself
Handle paper once
Set deadlines – hold to deadlines
Standardized tasks where possible – establish procedures
Keep organized – organization leads to less stress
 HOMEWORK ASSIGNMENT

Explain how a manager can overcome the following 12 pitfalls:

 Failure to anticipate industry trends
 Lack of priorities
 Indecisiveness and lack of systems
 Poor time management
 Poor communication skills
 Lack of personal accountability & ethics
 Failure to develop, train, & acknowledge people
 Failure to support company policies in public
 Failure to accommodate people’s work styles
 Failure to focus on profits
 Failure to recognize the role of work in people’s lives
 Failure to establish & adhere to standards