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 MANAGEMENT
ACCOUNTING
FOR DECISION MAKERS

F01 Management Accounting for Decision Makers 49459.indd 1 23/09/2020 17:05

 At Pearson, we have a simple mission: to help people
make more of their lives through learning.

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F01 Management Accounting for Decision Makers 49459.indd 2 23/09/2020 17:05

 TENTH EDITION

MANAGEMENT
ACCOUNTING
Peter Atrill and
Eddie McLaney FOR DECISION MAKERS

Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney
Dubai • Singapore • Hong Kong • Tokyo • Seoul • Taipei • New Delhi
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F01 Management Accounting for Decision Makers 49459.indd 3 23/09/2020 17:05

 PEARSON EDUCATION LIMITED
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Tel: +44 (0)1279 623623
Web: www.pearson.com/uk

First published 1995 by Prentice Hall Europe (print)

Second edition published 1999 by Prentice Hall Europe (print)
Third edition published 2002 by Pearson Education Limited (print)
Fourth edition published 2005 (print)
Fifth edition published 2007 (print)
Sixth edition published 2009 (print)
Seventh edition published 2012 (print and electronic)
Eighth edition published 2015 (print and electronic)
Ninth edition published 2018 (print and electronic)
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ISBN: 978-1-292-34945-9 (print)

978-1-292-34946-6 (PDF)
978-1-292-34951-0 (ePub)
British Library Cataloguing-in-Publication Data
A catalogue record for the print edition is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Atrill, Peter, author. | McLaney, E. J., author.
Title: Management accounting for decision makers / Peter Atrill and Edward
McLaney.
Description: Tenth edition. | Harlow, England ; New York : Pearson, 2021. |
Includes bibliographical references and index. | Summary: “In this
edition, we have taken the opportunity to improve the book. We have
expanded on the changing role of management accountants to enable them
to retain their place at the centre of the decision-making and planning
process. In Chapter 1, we have included the recently developed statement
of Global Management Accounting Principles. These principles have been
identified (by the leading management accounting professional bodies in
the UK and US) as those to be followed when determining the information
that managers need. In Chapter 7, we have brought in a discussion of
current thinking and practice in the area of management control.
Throughout this new edition, we have included additional, and more
up-to-date, examples of management accounting in practice. We have also
added more in-chapter questions and diagrams”-- Provided by publisher.
Identifiers: LCCN 2020032735 | ISBN 9781292349459 (hardback)
Subjects: LCSH: Managerial accounting. | Decision making.
Classification: LCC HF5657.4 .A873 2021 | DDC 658.15/11--dc23
LC record available at https://lccn.loc.gov/2020032735
10 9 8 7 6 5 4 3 2 1
25 24 23 22 21
Front cover image Singora/Shutterstock
Print edition typeset in 9.25/13 pt Helvetica Neue LT W1G by SPi Global
Printed in Slovakia by Neografia
NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION

F01 Management Accounting for Decision Makers 49459.indd 4 23/09/2020 17:05

 Brief contents

Preface xvii
How to use this book xix
Acknowledgements xxi

1 Introduction to management accounting 1

2 Relevant costs and benefits for decision making 42
3 Cost–volume–profit analysis 66
4 Full costing 107
5 Costing and cost management in a competitive environment 154
6 Budgeting 197
7 Accounting for control 243
8 Making capital investment decisions 286
9 Managing risk 333
10 Strategic management accounting: performance
evaluation and pricing in a competitive environment 360
11 Measuring divisional performance 413
12 Managing working capital 459

Appendix A Glossary of key terms 513

Appendix B Solutions to self-assessment questions 522
Appendix C Solutions to critical review questions 534
Appendix D Solutions to selected exercises 544
Appendix E Present value table 584

Index 587
Credits 601

BRIEF CONTENTS v

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F01 Management Accounting for Decision Makers 49459.indd 6 23/09/2020 17:05
 Contents

Preface xvii
How to use this book xix
Acknowledgements xxi

1 Introduction to management accounting 1

Introduction 1
Learning outcomes 1
What is the purpose of a business? 2
How are businesses organised? 3
How are businesses managed? 6
Establish mission, vision and objectives 7
Undertake a position analysis 9
Identify and assess the strategic options 10
Select strategic options and formulate plans 10
Perform, review and control 10
The changing business landscape 11
What is the financial objective of a business? 12
Balancing risk and return 14
What is management accounting? 16
How useful is management accounting information? 18
Providing a service 18
Weighing up the costs and benefits 20
Management accounting as an information system 22
It’s just a phase 23
What information do managers need? 25
Reporting non-financial information 27
Influencing managers’ behaviour 28
Reaping the benefits of information technology 29
From bean counter to team member 30
Reasons to be ethical 32
Management accounting and financial accounting 34
Summary 36
Key terms 39
References 39
Further reading 39
Critical review questions 39
Exercises 40

CONTENTS vii

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 2 Relevant costs and benefits for decision making 42
Introduction 42
Learning outcomes 42
Cost–benefit analysis 43
What is meant by ‘cost’? 44
Relevant costs: opportunity and outlay costs 46
Irrelevant costs: sunk costs and committed costs 49
Sunk cost fallacy 50
Determining the relevant cost of labour and materials 51
Labour 51
Materials 54
Non-measurable costs and benefits 56
Summary 58
Key terms 59
Further reading 59
Critical review questions 59
Exercises 60

3 Cost–volume–profit analysis 66
Introduction 66
Learning outcomes 66
Cost behaviour 67
Fixed cost 67
Variable cost 69
Semi-fixed (semi-variable) cost 70
Analysing semi-fixed (semi-variable) costs 70
Finding the break-even point 72
Contribution 78
Contribution margin ratio 79
Margin of safety 79
Achieving a target profit 81
Operating gearing and its effect on profit 82
Profit–volume charts 84
The economist’s view of the break-even chart 85
The problem of breaking even 87
Weaknesses of break-even analysis 87
Using contribution to make decisions: marginal analysis 90
Pricing/assessing opportunities to enter contracts 91
The most efficient use of scarce resources 93
Make-or-buy decisions 95
Closing or continuation decisions 97
Summary 100
Key terms 101
Further reading 101
Critical review questions 101
Exercises 102

viii CONTENTS

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 4 Full costing 107
Introduction 107
Learning outcomes 107
What is full costing? 108
Why do managers want to know the full cost? 108
Single-product businesses 110
Process-costing problems 111
Multi-product businesses 113
Direct and indirect cost 114
Job costing 115
Full costing and cost behaviour 116
The problem of indirect cost 118
Overheads as service renderers 118
Job costing: a worked example 118
Selecting a basis for charging overheads 123
Segmenting the overheads 126
Dealing with overheads on a cost centre basis 127
Batch costing 137
Non-manufacturing overheads 139
Full (absorption) costing and estimation errors 140
Full (absorption) costing and relevant costs 141
Full (absorption) costing versus variable costing 142
Which method is better? 144
Summary 146
Key terms 148
Reference 148
Further reading 148
Critical review questions 148
Exercises 149

5 Costing and cost management in a

competitive environment 154
Introduction 154
Learning outcomes 154
Cost determination in the changed business environment 155
Costing and pricing: the traditional way 155
Costing and pricing: the new environment 155
Cost management systems 157
The problem of overheads 157
Taking a closer look 157
Activity-based costing 158
Assigning overheads 159
ABC and the traditional approach compared 160
ABC and service industries 161
Benefits and costs of ABC 165
ABC in practice 167

CONTENTS ix

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 Managing costs over the product life cycle 169
Total life-cycle costing 170
Target costing 172
Kaizen costing 175
Other approaches to managing costs in the modern environment 178
Value chain analysis 178
Benchmarking 180
Total quality management 184
Managing quality costs 186
An alternative view 188
Summary 191
Key terms 192
Reference 192
Further reading 192
Critical review questions 193
Exercises 193

6 Budgeting 197
Introduction 197
Learning outcomes 197
How budgets link with strategic plans and objectives 198
Exercising control 199
Time horizon of plans and budgets 201
Budgets and forecasts 202
Periodic and continual budgets 202
Limiting factors 203
How budgets link to one another 203
How budgets help managers 206
The budget-setting process 208
Step 1: Establish who will take responsibility 208
Step 2: Communicate budget guidelines to relevant managers 208
Step 3: Identify the key, or limiting, factor 208
Step 4: Prepare the budget for the area of the limiting factor 209
Step 5: Prepare draft budgets for all other areas 209
Step 6: Review and coordinate budgets 209
Step 7: Prepare the master budgets 210
Step 8: Communicate the budgets to all interested parties 210
Step 9: Monitor performance relative to the budget 210
Using budgets in practice 211
Incremental and zero-base budgeting 213
Preparing budgets 216
The cash budget 216
Preparing other budgets 220
Activity-based budgeting 222
Non-financial measures in budgeting 225
Budgets and management behaviour 225
Problems with budgets 226
Beyond conventional budgeting 228
The future of budgeting 230

x CONTENTS

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 Summary 233
Key terms 234
References 234
Further reading 234
Critical review questions 235
Exercises 235

7 Accounting for control 243

Introduction 243
Learning outcomes 243
Budgeting for control 244
Types of control 245
Variances from budget 247
Flexing the budget 247
Sales volume variance 248
Sales price variance 251
Materials variances 252
Labour variances 253
Fixed overhead variance 254
Reconciling the budgeted profit with the actual profit 255
Reasons for adverse variances 259
Variance analysis in service industries 261
Non-operating-profit variances 261
Investigating variances 261
Variance analysis in practice 264
Compensating variances 264
Standard quantities and costs 265
Setting standards 266
Who sets the standards? 266
How is information gathered? 266
What kind of standards should be used? 267
The learning-curve effect 267
Other uses for standard costing 268
Some problems 269
The new business environment 271
Making budgetary control effective 272
Behavioural issues 273
Failing to meet the budget 274
Budgets and management autonomy 275
Types of management control 275
Direct control 275
Indirect control 276
Summary 278
Key terms 280
Reference 280
Further reading 280
Critical review questions 281
Exercises 281

CONTENTS xi

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 8 Making capital investment decisions 286
Introduction 286
Learning outcomes 286
The nature of investment decisions 287
Investment appraisal methods 288
Accounting rate of return (ARR) 290
ARR and ROCE 291
Problems with ARR 292
Payback period (PP) 294
Problems with PP 296
Net present value (NPV) 298
Why does time matter? 299
Interest lost 299
Risk 299
Inflation 300
What should managers do? 300
Dealing with the time value of money 301
Calculating the net present value 303
Using present value tables 304
The discount rate and the cost of capital 305
Why NPV is better 306
NPV and economic value 306
Internal rate of return (IRR) 307
Problems with IRR 310
Some practical points 311
Investment appraisal in practice 314
Investment appraisal and strategic planning 317
Managing investment projects 318
Stage 1: Determine investment funds available 318
Stage 2: Identify profitable project opportunities 319
Stage 3: Evaluate the proposed project 319
Stage 4: Approve the project 319
Stage 5: Monitor and control the project 320
Summary 323
Key terms 324
References 325
Further reading 325
Critical review questions 325
Exercises 326

9 Managing risk 333

Introduction 333
Learning outcomes 333
Dealing with risk 334

xii CONTENTS

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 Assessing the level of risk 334
Sensitivity analysis 334
Strengths and weaknesses of sensitivity analysis 341
Scenario analysis 343
Expected values 343
Reacting to the level of risk 351
Summary 352
Key terms 353
Further reading 354
Critical review questions 354
Exercises 354

10 Strategic management accounting: performance

evaluation and pricing in a competitive environment 360
Introduction 360
Learning outcomes 360
What is strategic management accounting? 361
Facing outwards 362
Competitor analysis 362
Customer profitability analysis 366
Competitive advantage through cost leadership 370
Non-financial measures of performance 372
The balanced scorecard 373
Scorecard problems 380
Measuring shareholder value 380
The quest for shareholder value 381
How can shareholder value be created? 381
The need for new measures 382
Economic value added (EVA®) 383
Shareholder value-based management in practice 388
Just another fad? 389
Pricing 389
Economic theory 389
Some practical considerations 397
Full cost (cost-plus) pricing 398
Pricing on the basis of marginal cost 400
Target pricing 402
Pricing strategies 402
Summary 406
Key terms 407
References 407
Further reading 407
Critical review questions 408
Exercises 408

CONTENTS xiii

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 11 Measuring divisional performance 413
Introduction 413
Learning outcomes 413
Divisionalisation 414
Why do businesses divisionalise? 414
Devolving decisions 414
Divisional structures 416
Is divisionalisation a good idea? 416
Measuring divisional profit 421
Contribution 421
Controllable profit 422
Divisional profit before common expenses 422
Divisional profit for the period 423
Divisional performance measures 424
Return on investment (ROI) 424
Residual income (RI) 428
Looking to the longer term 429
Comparing performance 431
EVA® revisited 432
Transfer pricing 433
The objectives of transfer pricing 434
Transfer pricing and tax mitigation 436
Transfer pricing policies 438
Market prices 438
Variable cost 439
Full cost 439
Negotiated prices 440
Divisions with mixed sales 441
Differential transfer prices 443
Transfer pricing and service industries 445
Non-financial measures of performance 445
What is measured? 446
Choosing non-financial measures 449
Who should report? 449
Summary 451
Key terms 453
Further reading 453
Critical review questions 454
Exercises 454

12 Managing working capital 459

Introduction 459
Learning outcomes 459
What is working capital? 460
Managing working capital 461
The scale of working capital 461

xiv CONTENTS

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 Managing inventories 464
Budgeting future demand 466
Financial ratios 466
Recording and reordering systems 466
Levels of control 469
Inventories management models 471
XYZ inventories management 477
Managing trade receivables 478
Which customers should receive credit and how much should they be
offered? 479
Length of credit period 480
An alternative approach to evaluating the credit decision 483
Cash discounts 484
Debt factoring and invoice discounting 485
Credit insurance 485
Collection policies 485
Reducing the risk of non-payment 489
Managing cash 490
Why hold cash? 490
How much cash should be held? 490
Controlling the cash balance 491
Cash budgets and managing cash 492
Operating cash cycle 493
Cash transmission 497
Bank overdrafts 498
Managing trade payables 498
Taking advantage of cash discounts 499
Controlling trade payables 500
Managing working capital 500
Summary 503
Key terms 505
Further reading 506
Critical review questions 506
Exercises 507

Appendix A Glossary of key terms 513

Appendix B Solutions to self-assessment questions 522
Appendix C Solutions to critical review questions 534
Appendix D Solutions to selected exercises 544
Appendix E Present value table 584
Index 587
Credits 601

Lecturer Resources ON THE

WEBSITE
For password-protected online resources tailored to
support the use of this textbook in teaching, please visit
go.pearson.com/uk/he/resources

CONTENTS xv

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F01 Management Accounting for Decision Makers 49459.indd 16 23/09/2020 17:05
 Preface

Welcome to the tenth edition of Management Accounting for Decision Makers. This book is
directed primarily at those following an introductory course in management accounting. Many
readers will be studying at a university or college, perhaps majoring in accounting or in another
area, such as business studies, IT, tourism or engineering. Other readers, however, may be
studying independently, perhaps with no qualification in mind.
The book is written in an ‘open learning’ style, which has been adopted because we believe
that readers will find it more ‘user-friendly’ than the traditional approach. Whether they are
using the book as part of a taught course, or for personal study, we feel that the open learning
approach makes it easier for readers to learn.
In writing this book, we have been mindful of the fact that most readers will not have studied
management accounting before. We have tried to make the topic accessible to readers in a
number of ways. This includes avoiding unnecessary jargon. Where technical terminology is
unavoidable, we have given clear explanations. At the end of the book (in Appendix A) there
is a glossary of technical terms, which readers can use to refresh their memory if they come
across a term whose meaning is in doubt. In the book, we also introduce topics gradually,
explaining everything as we go. We have included frequent questions and tasks of various
types to try to help readers to understand the subject fully, in much the same way as a good
lecturer would do in lectures and tutorials. These questions and tasks have been framed in a
way that is designed to encourage readers to help improve their critical thinking. Many of the
questions and tasks require readers to think beyond the material in the text and/or to link the
current topic with material covered earlier in the book. More detail on the nature and use of
these questions and tasks is given in the ‘How to use this book’ section immediately following
this preface.

A note to students from the authors

Management accounting is concerned with providing information to those who need to make
financial/economic decisions about their organisation. Such decisions could involve such
things as:

■ assessing how much inventories (stock) a retail outlet should hold for optimal profitability;
■ deciding whether to abandon a particular product by a manufacturing business on the basis
of its profitability:
■ appraising the economic desirability of investing in new equipment that would enable a
business to provide a new service to its customers; and
■ a government weighing the costs and benefits of building a high-speed rail link from London
to Birmingham and the North.

It should be clear that these types of decision have a real impact on businesses, those who
work for them and for their customers. Getting these decisions wrong could have profound
effects, perhaps leading to a business collapsing, throwing its employees out of work and

PREFACE xvii

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 depriving customers of a product or service that they wish to buy. In the case of the rail link,
the impact is felt by the taxpayer who will fund the project, people who live on or near the
proposed route and, eventually, those who will travel on the line.
To relate the subject matter of the book to real life, each chapter includes a number of
‘Real world’ examples. These are generally short case studies that examine how a particular
business has approached a particular management accounting issue. In some cases, they are
presentations of research evidence as how organisations, in general, deal with such issues.
Evidence from students who have used past editions indicates that these can help to bring
the subject to life.
When you have completed your studies and are working in an organisation, you will need
to have the ability to solve problems. It is also crucial for you to be able to communicate your
solutions to colleagues and to customers. To do this you will need to develop a capacity to
think critically. ‘Critical thinking’ can be defined as the analysis of facts to form a judgement.
In analysing the facts, it is important that factual evidence is used in a logical way. It is also
important that a sceptical and questioning approach to the evidence is applied. When recruit-
ing, organisations are increasingly looking for evidence that potential employees can think
critically when seeking to solve problems.
In writing this book, we have been aware of the need to encourage critical thinking. The
‘Activities’ (typically short questions) that are interspersed throughout the book are designed,
among other things, to try to develop the appropriate critical thinking skills. This is also true
of the ‘Critical review questions’ at the end of each chapter. Similarly with many of the end-
of-chapter ‘Exercises’.
We hope that students will find the book readable and helpful.

A note to lecturers and tutors from the authors

In this edition, we have taken the opportunity to improve the book. We have expanded on the
changing role of management accountants to enable them to retain their place at the centre
of the decision-making and planning process. In Chapter 1, we have included the recently
developed statement of Global Management Accounting Principles. These principles have
been identified (by the leading management accounting professional bodies in the UK and US)
as those to be followed when determining the information that managers need. In Chapter 7,
we have brought in a discussion of current thinking and practice in the area of management
control. Throughout this new edition, we have included additional, and more up-to-date, exam-
ples of management accounting in practice. We have also added more in-chapter questions
and diagrams.
This text is supported by its own MyLab Accounting which is an environment that gives
unlimited opportunities for practice using a range of questions, and which provides timely
feedback. Updates to MyLab Accounting for the 10th edition include the enhancement of
over 45 previously static questions so that these are now algorithmic, which means that each
student is able to work on a numerical problem that is individual to him or her. In addition to
the Case Studies, useful self-study suggestions in the Study Plan, and vast range of exercises
(over 940) to select from, better feedback has been incorporated in MyLab Accounting for
this edition, providing a greater quality of response to help students learn from their incorrect
answers and make progress in their learning.
For access to MyLab Accounting, students need both a course ID and an access card (see
the advert on the inside back cover of the book).
Peter Atrill
Eddie McLaney

xviii PREFACE

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 How to use this book

Whether you are using the book as part of a lecture/tutorial-based course or as the basis for a
more independent mode of study, the same approach should be broadly followed.

Order of dealing with the material

The contents of the book have been ordered in what is meant to be a logical sequence. For
this reason, it is suggested that you work through the book in the order in which it is presented.
Every effort has been made to ensure that earlier chapters do not refer to concepts or terms
which are not explained until a later chapter. If you work through the chapters in the ‘wrong’
order, you may encounter points that have been explained in an earlier chapter which you
have not read.

Working through the chapters

You are advised to work through the chapters from start to finish, but not necessarily in one
sitting. Activities are interspersed within the text. These are meant to be like the sort of ques-
tions which a good lecturer will throw at students during a lecture or tutorial. Activities seek
to serve two purposes:

■ To give you the opportunity to check that you understand what has been covered so far.
■ To try to encourage you to think beyond the topic that you have just covered, sometimes
so that you can see a link between that topic and others with which you are already familiar.
Sometimes, activities are used as a means of linking the topic just covered to the next one.

You are strongly advised to work through all the activities. Answers are provided immediately
after each activity. These answers should be covered up until you have arrived at a solution,
which should then be compared with the suggested answer provided.
Towards the end of Chapters 2–12, there is a ‘self-assessment question’. This is rather
more demanding and comprehensive than any of the activities. It is intended to give you an
opportunity to see whether you understand the main body of material covered in the chapter.
The solutions to the self-assessment questions are provided in Appendix B at the end of the
book. As with the activities, it is very important to make a thorough attempt at the question
before referring to the solution. If you have real difficulty with a self-assessment question you
should go over the chapter again, since it should be the case that careful study of the chapter
will enable completion of the self-assessment question.

End-of-chapter assessment material

At the end of each chapter there are four ‘critical review questions’. These are short ques-
tions that require you to analyse a topic dicussed in the chapter and to form a judgement. In
providing that answer you will need to apply some critical thinking skills (see ‘Note to students

HOW TO USE THIS BOOK xix

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 from the authors’ in the Preface). The questions attempt to raise many of the key issues in the
chapter concerned. Suggested answers to these questions are provided in Appendix C at the
end of the book. Again, a serious attempt should be made to answer these questions before
referring to the suggested answers.
At the end of each chapter, there are normally eight exercises. These are more demanding
and extensive questions, mostly computational, and should further reinforce your knowledge
and understanding. We have attempted to provide questions of varying complexity.
Answers to five out of the eight exercises in each chapter are provided in Appendix D at the
end of the book. These exercises are marked with a coloured number, but a thorough attempt
should be made to answer these questions before referring to the answers. Answers to the
three exercises that are not marked with a coloured number are given in a separate teacher’s
manual.

xx HOW TO USE THIS BOOK

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 Acknowledgements

The publisher thanks the following reviewers for their very valuable comments on the book:

Martyn Jones, University of Winchester

Ed Tew at the University of Reading
Christos Begkos, University of Manchester
Anis Zras, University of Southampton
Mohamed Fadzly, University of Birmingham
Jatin Pancholi, Middlesex University

ACKNOWLEDGEMENTS xxi

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F01 Management Accounting for Decision Makers 49459.indd 22 23/09/2020 17:05
 Chapter 1
INTRODUCTION TO
MANAGEMENT
ACCOUNTING
INTRODUCTION
Welcome to the world of management accounting! Management
accounting is concerned with collecting and analysing financial and other
information and then communicating this to managers. This information
is intended to help managers within businesses and other organisations
make better decisions. In this introductory chapter, we examine the role of
management accounting within a business. To understand the context for
management accounting, we begin by examining the nature and purpose
of a business. Thus, we first consider what businesses seek to achieve,
how they are organised and how they are managed. Having done this, we
go on to explore how management accounting information can be used
within a business to improve the quality of managers’ decisions. We also
identify the characteristics that management accounting information must
possess to fulfil its role. Management accounting has undergone significant
advances in response to changes in the business environment and to the
increasing size and complexity of business entities. In this chapter we shall
discuss some of the more important changes that have occurred.

Learning outcomes
When you have completed this chapter, you should be able to:
■ identify the purpose of a business and discuss the ways in which a
business may be organised and managed;
■ discuss the issues to be considered when setting the long-term direction
of a business;
■ explain the role of management accounting within a business and
describe the key principles upon which management accounting rests;
and
■ explain the changes that have occurred over time in both the role of
the management accountant and the kind of information provided by
management accounting systems.

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 WHAT IS THE PURPOSE OF A BUSINESS?

Peter Drucker, an eminent management thinker, has argued that ‘The purpose of business is
to create and keep a customer’ (see Reference 1 at the end of the chapter). Drucker defined
the purpose of a business in this way in 1967, at a time when most businesses did not adopt
this strong customer focus. His view therefore represented a radical challenge to the accepted
view of what businesses do. Now, more than 50 years later, his approach forms part of the
conventional wisdom. It is now widely accepted that, in order to succeed, businesses must
focus on satisfying the needs of the customer.
Although the customer has always provided the main source of revenue for a business, this
has often been taken for granted. In the past, too many businesses assumed that the customer
would readily accept whatever services or products were on offer. When competition was weak
and customers were passive, businesses could operate under this assumption and still make a
profit. However, the era of weak competition has passed. Today, customers have much greater
choice and are much more assertive concerning their needs. They now demand higher quality
services and goods at cheaper prices. They also require that services and goods be delivered
faster with an increasing emphasis on the product being tailored to their individual require-
ments. If a business cannot meet these criteria, a competitor often can. Thus, the business
mantra for the current era is ‘the customer is king’. Most businesses now recognise this fact
and organise themselves accordingly.
Real World 1.1 describes how the Internet and social media have given added weight to
this mantra. It points out that dissatisfied customers now have a powerful medium for broad-
casting their complaints.

Real World 1.1

The customer is king

The mantra that the ‘customer is king’ has gained even greater significance among busi-
nesses in recent years because of the rise of the Internet and social media. In the past, a
dissatisfied customer might tell only a few friends about a bad buying experience. As a result,
the damage to the reputation of the business concerned would normally be fairly limited.
However, nowadays, through the magic of the Internet, several hundred people, or more,
can be very speedily informed of the poor service.
Businesses are understandably concerned about the potential of the Internet to damage
reputations, but are their concerns justified? Do customer complaints, which wing their way
through cyberspace, have any real effect on the businesses concerned? A Harris Poll survey
of 2,000 adults in the UK and US suggests they do and so businesses should be concerned.
It seems that social media can exert a big influence on customer buying decisions.
The Harris Poll survey, which was conducted online, found that around 20 per cent of
those surveyed use social media when making buying decisions. For those in the 18 to 34
age range, the figure rises to almost 40 per cent. Furthermore, 60 per cent of those surveyed
indicated that they would avoid buying from a business that receives poor customer reviews
for its products or services.
The moral of this tale appears to be that, in this Internet age, businesses must work even
harder to keep their customers happy if they are to survive and prosper.
Source: Based on information in Miesbach, A. (2015) Yes, the Customer Is Still King, 30 October, www.icmi.com

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 HOW ARE BUSINESSES ORGANISED?

Nearly all businesses that involve more than a few owners and/or employees are set up as
limited companies. Finance will come from the owners (shareholders) both in the form of a
direct cash investment to buy shares (in the ownership of the business) and through the share-
holders allowing past profits, which belong to them, to be reinvested in the business. Finance
will also come from lenders (banks, for example) as well as through suppliers providing goods
and services on credit.
In larger limited companies, the owners (shareholders) tend not to be involved in the daily
running of the business; instead they appoint a board of directors to manage the business on
their behalf. The board is charged with three major tasks:

■ setting the overall direction for the business;

■ monitoring and controlling the activities of the business; and
■ communicating with shareholders and others connected with the business.

Each board has a chairman who is elected by the directors. The chairman is responsible
for the smooth running of the board. In addition, each board has a chief executive officer
(CEO) who leads the team that is responsible for running the business on a day-to-day
basis. Occasionally, the roles of chairman and CEO are combined, although it is usually
considered to be good practice to separate them. It prevents a single individual having
excessive power.
The board of directors represents the most senior level of management. Below this level,
managers are employed, with each manager being given responsibility for a particular part of
the business’s operations.

Activity 1.1
Why doesn’t just one manager manage larger businesses as a single unit? Try to think of
at least one reason.

Three common reasons are:

■ The sheer volume of activity or number of employees makes it impossible for one person
to manage them.
■ Certain business operations may require specialised knowledge or expertise.
■ Geographical remoteness of part of the business operations may make it more practical
to manage each location as a separate part, or set of separate parts.

The operations of a business may be divided for management purposes in different ways.
For smaller businesses offering a single product or service, separate departments are often
created. Tasks are grouped according to functions (such as marketing, human resources and
finance) with each department responsible for a particular function. The managers of each
department will then be accountable to the board of directors. In some cases, a departmental
manager may also be a board member. A typical departmental structure, organised along
functional lines, is shown in Figure 1.1.

HOW ARE BUSINESSES ORGANISED? 3

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 Board of directors

Human
Finance Marketing Operations
resources

This is a typical departmental structure organised according to business functions.

Figure 1.1 A departmental structure organised according to business functions

Departments based around functions permit greater specialisation, which, in turn, can pro-
mote greater efficiency. The departmental structure, however, can become too rigid. This can
lead to poor communication between departments and, perhaps, a lack of responsiveness to
changing market conditions.
The structure set out in Figure 1.1 may be adapted according to the particular needs of
the business. Where, for example, a business has few employees, the human resources func-
tion may not form a separate department but rather form part of another department. Where
business operations are specialised, separate departments may be created to deal with each
specialist area. Example 1.1 illustrates how Figure 1.1 may be modified to meet the needs of
a particular business.

Example 1.1
Supercoach Ltd owns a small fleet of coaches that it hires out with drivers for private group
travel. The business employs about 60 people. It could be departmentalised as follows:

■ Marketing department, dealing with advertising, answering enquiries from potential

customers, maintaining good relationships with existing customers and entering into
contracts with customers.
■ Routing and human resources department, responsible for the coach drivers’ routes,
schedules, staff duties and rotas as well as problems that arise during a particular job
or contract.
■ Coach maintenance department, looking after repair and maintenance of the coaches,
buying spares, and giving advice on the need to replace old or inefficient coaches.
■ Finance department, responsible for managing cash flows, costing business activities,
pricing new proposals, measuring financial performance, preparing budgets, borrowing,
paying wages and salaries, billing and collecting amounts due from customers, and
processing and paying invoices from suppliers.

For large businesses with a diverse geographical spread and/or a wide product range, the
simple departmental structure set out in Figure 1.1 will usually have to be adapted. Separate
divisions are often created for each geographical area and/or major product group. Each
division will be managed separately and will usually enjoy a degree of autonomy. This can
produce more agile responses to changing market conditions. Within each division, however,

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 departments are often created and organised along functional lines. Those functions that
provide support across the various divisions, such as human resources, may be carried out
at head office to avoid duplication. The managers of each division will be accountable to the
board of directors. In some cases, individual board members may also be divisional managers.
A typical divisional organisational structure is set out in Figure 1.2. Here the main basis of
the structure is geographical. Thus, North Division deals with production and sales in the north
and so on.

Board of directors

North South East West

Division Division Division Division

Finance Finance Finance Finance

Operations Operations Operations Operations

Marketing Marketing Marketing Marketing

Other Other Other Other

This is a typical organisational structure for a business that has been divided into separate
operating divisions.

Figure 1.2 A divisional organisational structure

Once a particular divisional structure has been established, it need not be permanent.
Successful businesses constantly strive to improve their operational efficiency. This could well
result in revising their divisional structure. Real World 1.2 includes an extract from a press
release that describes how one well-known business restructured in order to simplify opera-
tions and to reduce costs.

Real World 1.2

Engineering change
Rolls-Royce plc, the engineering business, announced in 2018 that it would simplify its busi-
ness operations. This involved consolidating its five operating divisions into three core units
based around Civil Aerospace, Defence and Power Systems.
Chief Executive Warren East justified the restructuring of the business as follows:
Building on our actions over the past two years, this further simplification of our business means
Rolls-Royce will be tightly focused into three operating businesses, enabling us to act with much
➔

HOW ARE BUSINESSES ORGANISED? 5

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 greater pace in meeting the vital power needs of our customers. It will create a Defence operation
with greater scale in the market, enabling us to offer our customers a more integrated range of
products and services. It will also strengthen our ability to innovate in core technologies and ena-
ble us to take advantage of future opportunities in areas such as electrification and digitalisation.
The business made the restructuring announcement not long after reporting a massive
pre-tax loss of £4.6 billion. It is expected that the move towards a simpler structure will
generate significant cost savings.
Source: Extract from Roll-Royce (2018) Rolls-Royce announces further simplification of business, strategic review of
Commercial Marine operation and plans to restructure support and management functions, Rolls-Royce.com Press
Release, 17 January.

While both divisional and departmental structures are very popular in practice, it should be
noted that other organisational structures will be found.

HOW ARE BUSINESSES MANAGED?

Over the past three decades, the environment in which businesses operate has become
increasingly turbulent and competitive. Various reasons have been identified to explain these
changes, including:

■ the increasing sophistication of customers (as we have seen);

■ the development of a global economy where national frontiers have become less important;
■ rapid changes in technology;
■ the deregulation of domestic markets (for example, electricity, water and gas);
■ increasing pressure from owners (shareholders) for competitive economic returns; and
■ the increasing volatility of financial markets.

The effect of these environmental changes has been to make the role of managers more
complex and demanding. This, along with the increasing size of many businesses, has led
managers to search for new ways to manage their businesses. One important tool that has
been developed in response to managers’ needs is strategic management. This is concerned
with establishing the long-term direction for the business. It involves setting long-term goals
and then ensuring that they are implemented effectively. To help the business develop a
competitive edge, strategic management focuses on doing things differently rather than simply
doing things better.
Strategic management provides a business with a clear sense of purpose along with a
series of steps to achieve that purpose. The steps taken should link the internal resources
of the business to the external environment of competitors, suppliers, customers and so
on. This should be done in such a way that any business strengths, such as having a skilled
workforce, are exploited and any weaknesses, such as being short of investment finance,
are not exposed. To achieve this requires the development of strategies and plans that take
account of the business’s strengths and weaknesses, as well as the opportunities offered
and threats posed by the external environment. Access to a new, expanding market is an
example of an opportunity; the decision of a major competitor to reduce prices is an example
of a threat.
Real World 1.3 provides an indication of the extent to which strategic planning is carried
out in practice.

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 Real World 1.3

Strategic planning high on the list

A recent survey investigated the use of various management tools throughout the world. It
found that strategic planning is used by 48 per cent of those businesses that took part in the
survey. This made it the most popular management tool. The survey, which is conducted
annually, has ranked strategic planning highly, in terms of both usage and satisfaction,
over many years. Figure 1.3 reveals the level of usage and satisfaction concerning this
technique.

Percentage 5 = highest
of respondents satisfaction
100% 5

80 4

60 3

40 2

20 1

0 0
1996 2017

Total usage Overall satisfaction

The results were based on a survey of 1,268 senior executives throughout the world.
Source: Rigby, D. and Bilodeau, B. (2018) Management Tools and Trends 2018, Bain and Company.

Figure 1.3 The level of satisfaction with, and usage of, strategic planning

We can see that the level of satisfaction with this technique has remained remarkably stable
over time. However, there has been a decline in usage in recent years.

The strategic management process may be approached in different ways. One popular
approach, involving five steps, is described below.

1 Establish mission, vision and objectives

The first step is to establish the mission of a business, which may be set out in the form of a
mission statement. This is a concise declaration of the overriding purpose of the business. It
addresses the question ‘What business are we in?’ To answer this question, managers should
focus on those customer needs that the business seeks to satisfy rather than on the products
currently produced. Thus, a publisher of novels might, for example, conclude that it is really in
the entertainment business. The vision statement is closely connected to the mission state-
ment and declares the business’s aspirations. It addresses the question ‘What do we want
to achieve?’ Once again, it should be in as concise a form as possible. By answering both
questions, managers are provided with a clear focus for decision making. Unless managers
are clear as to what is the overall aim of the business, they have no basis for setting out plans
and making decisions.

HOW ARE BUSINESSES MANAGED? 7

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Another Random Scribd Document
with Unrelated Content
woman at that first dawn at which the reveille used to call him to the
attack of the enemy's tents.
I leave M. Armand Carrel in order to write a few words on our
famous song-writer. You will find my story too short, reader, but I
have a claim on your indulgence: his name and his songs must be
engraved on your memory.
*
M. de Béranger is not, like M. Carrel, obliged to conceal his love-
affairs. After singing the praises of liberty and the popular virtues,
while defying the gaols of the kings, he puts his amours into a
couplet, and behold Lisette immortalized.
Near the Barrière des Martyrs, below Montmartre, you
A flying see the Rue de la Tour-d'Auvergne. In this half-built,
visit to
Paris. half-paved street, in a little house hiding behind a little
garden and calculated upon the modesty of present-day
fortunes, you will find the illustrious song-writer. A bald head, a
somewhat rustic, but keen and voluptuous air announce the poet. I
love to rest my eyes on that plebeian countenance, after looking at
so many royal faces; I compare those so greatly different types: on
the monarchical brows one sees something of an exalted nature, but
blighted, impotent, effaced; on the democratic brows appears a
common physical nature, but one recognises a lofty intellectual
nature: the monarchical brow has lost a crown; the popular brow
awaits one.
One day I asked Béranger (I beg him to forgive me for becoming as
familiar as his fame), I asked him to show me some of his unknown
works:
"Do you know," he said, "that I began by being your disciple? I was
mad on the Génie du Christianisme, and I wrote Christian idylls:
scenes in the life of a country priest, pictures of religious worship in
the villages and in the midst of the harvest."
M. Augustin Thierry has told me that the Battle of the Franks in the
Martyrs suggested to him a new manner of writing history: nothing
has flattered me more than to find my memory occupying a place at
the commencement of the talent of the historian Thierry and the
poet Béranger.
Our song-writer has the several qualities upon which Voltaire insists
for the ballad:

"To succeed well in these little works," says the author of so

many graceful poems, "one needs refinement and sentiment of
intellect, to have harmony in one's head, not to lower one's self
over much, and to know how not to be too long."

Béranger has many muses, all of them charming; and, when those
muses are women, he loves them all. When they betray him, he
does not turn to elegiacs; and nevertheless there is a feeling of
sadness at the bottom of his gaiety: his is a serious face that smiles;
it is philosophy saying its prayers.
My friendship for Béranger earned me many expressions of
astonishment on the part of what was called my party. An old knight
of St. Louis, personally unknown to me, wrote to me from his distant
turret:
"Rejoice, sir, at being praised by one who has slapped the face of
your King and your God."
Well said, my gallant nobleman! You are a poet too.
At the end of a dinner at the Café de Paris which I gave
Béranger. to Messieurs de Béranger and Armand Carrel before my
departure for Switzerland, M. Béranger sang us his
admirable printed song:
Chateaubriand, pourquoi fuir ta patrie,
Fuir son amour, notre encens et nos soins[360]?
In it occurred this stanza on the Bourbons:
Et tu voudras t'attacher à leur chute!
Connais donc mieux leur folle vanité:
 Au rang des maux qu'au ciel même elle impute,
Leur cœur ingrat met ta fidélité[361].
To this song, which belongs to the history of my time, I replied from
Switzerland by a letter which is printed at the head of my pamphlet
on the Briqueville[362] Motion. I said to M. de Béranger:

"From the place whence I wrote to you, monsieur, I can see the
country-house where Lord Byron lived and the roofs of Madame
de Staël's château. Where is the bard of Childe-Harold? Where
is the author of Corinne? My too long life is like those Roman
roads bordered with funeral monuments[363]."

I returned to Geneva; I next took Madame de Chateaubriand to Paris

and brought back the manuscript directed against the Briqueville
Motion for the banishment of the Bourbons, a motion which was
taken into consideration in the sitting of the Deputies of the 17th of
September of this year 1831: some attach their lives to success,
others to misfortune.
Paris, Rue d'Enfer, end of November 1831.
Returning to Paris on the 11th of October, I published my pamphlet
at the end of the same month; it is entitled, De la nouvelle
proposition relative au banissement de Charles X. et de sa famille,
ou suite de mon dernier écrit: De la Restauration et de la Monarchie
élective.
When these posthumous Memoirs appear, will the daily polemics, the
events of which men are enamoured at this present hour of my life,
the adversaries against whom I am fighting, will even the act of
banishment of Charles X. and his Family count for anything? There
you have the drawback of all diaries: you find in them ardent
discussions of subjects that have become indifferent; the reader
sees pass, like shadows, a host of persons whose very names he
does not remember: silent supernumeraries, who fill the back of the
stage. Yet it is in these dryasdust portions of the chronicles that one
gathers the observations and facts of the history of mankind and
men.
I placed first at the commencement of the pamphlet the decree
brought forward successively by Messieurs Baude and Briqueville.
After examining the five courses that lay open after the Revolution
of July, I said:

"The worst of the periods through which we have passed seems

to be that in which we are, because anarchy reigns in men's
reasons, morals and intellects. The existence of nations is longer
than that of individuals: a paralytic man often remains stretched
on his couch for many years before disappearing; an infirm
nation lies long on its bed before expiring. What the new
Royalty needed was buoyancy, youth, intrepidity, to turn its back
upon the past, to march with France to meet the future.
"All this it neglects: it appeared before us reduced and
debilitated by the doctors who were physicking it. It arrived
piteous, empty-handed, having nothing to give, everything to
receive, playing the poor thing, begging everybody's pardon,
and yet snappish, declaiming against the Legitimacy and aping
the Legitimacy, against republicanism and trembling before it.
This abdominous 'system' beholds enemies only in two forms of
opposition which it threatens. To support itself it has built itself
a phalanx of re-enlisted veterans: if they bore as many stripes
as they have taken oaths, their sleeves would be more motley
than the livery of the Montmorencys.
"I doubt whether liberty will long be content with this stew-pot
of a domestic monarchy. The Franks placed liberty in a camp; in
their descendants it has retained the taste and love of its first
cradle; like the old Royalty, it wants to be raised on the shield
and its deputies are soldiers."
 Charles X.

From this general argument I pass on to the details of the system

followed in our foreign relations. The immense mistake of the
Congress of Vienna is that it placed a military nation like France in a
condition of forced hostility with the neighbouring peoples. I point to
all that the foreigners have gained in territory and power, all that we
could have taken back in July. A mighty lesson! A striking proof of
the vanity of military glory and of the work of conquerors! If one
were to draw up a list of the Princes who have increased the
possessions of France, Bonaparte would not figure on it; but Charles
X. would occupy a remarkable place!
Passing from argument to argument, I come to Louis-
Yet Philippe:
another
pamphlet.
"Louis-Philippe is King," I say; "he wields the sceptre
of the child whose immediate heir he is, of the ward whom
Charles X. placed in the hands of the Lieutenant-general of the
Kingdom as into those of a tried guardian, a faithful trustee, a
generous protector. In that Palace of the Tuileries, instead of an
innocent couch, free from insomnia, free from remorse, free
from ghosts, what has the Prince found? An empty throne
presented to him by a headless spectre bearing, in its blood-
stained hand, the head of another spectre....
"Must we, to finish the business, put a handle to Louvel's blade
in the shape of a law, in order to strike a last blow at the
proscribed Family? If it were driven to these shores by the
tempest; if Henry, too young as yet, had not attained the years
requisite for the scaffold, well then, do you, the masters, give
him a dispensation of age to die!"

After speaking to the French Government, I turn to Holyrood and

add:

"Dare I, in conclusion, take the respectful liberty of addressing a

few words to the men of exile? They have returned to sorrow as
into their mother's womb: misfortune, a seduction from which it
is difficult for me to defend myself, seems to me to be always in
the right; I fear to offend its sacred authority and the majesty
which it adds to insulted grandeurs, which henceforth have
none but me to flatter them. But I will overcome my weakness,
I will strive to voice words which, in a day of ill-fortune, might
give grounds for hope to my country.
"The education of a prince should be analogous to the form of
government and the manners of his native land. Now, there are
in France neither chivalry nor knights, neither soldiers of the
Oriflamme nor nobles barbed in steel, ready to march behind
the White Flag. There is a people which is no longer the people
of other days, a people which, changed by the centuries, has
lost the old habits and the ancient manners of our fathers.
Whether we deplore the social transformations that have arisen
or glorify them, we must take the nation as it is, facts as they
are, enter into the spirit of our time, in order to exercise an
action over that spirit.
"All is in God's hand, except the past, which, once fallen from
that hand, does not return to it.
"The moment will doubtless arrive when the orphan will leave
that palace of the Stuarts, the ill-omened refuge which seems to
spread the shadow of its fatality over his youth: the last-born of
the Bearnese must mix with children of his own age, attend the
public schools, learn all that is known to-day. Let him become
the most enlightened young man of his time; let him be
acquainted with the knowledge of the period; let him add to the
virtues of a Christian of the age of St. Louis the sagacity of a
Christian of our age. Let travel be his instructor in manners and
laws; let him cross the seas, compare institutions and
governments, free peoples and enthralled peoples; let him, if he
find the occasion while abroad, expose himself, as a simple
soldier, to the dangers of war, for none is fit to reign over
Frenchmen who has not heard the hiss of the cannon-ball. Then
you will have done for him all that, humanly speaking, you can
do. But, above all, beware of fostering him in ideas of invincible
right: far from flattering him with the thought of reascending
the throne of his fathers, prepare him never to reascend it;
 bring him up to be a man, not to be a king: those are his best
chances.
"Enough: whatever God's counsel may provide, there will
remain to the candidate of my fond and pious loyalty a majesty
of the ages which men cannot take from him. A thousand years
attached to his young head will always deck him with a pomp
exceeding that of all monarchs. If, in a private condition, he
bear bravely this diadem of days, of memory and of glory, if his
hand raise without effort this sceptre of time which his
ancestors have bequeathed to him, what empire will he be able
to regret?"

M. le Comte de Briqueville, whose motion I thus

The Comte contested, printed some reflections on my pamphlet; he
de
Briqueville. sent them to me with the following note:

"Monsieur,
"I have yielded to the need, to the duty, to publish the
reflections brought to my mind by your eloquent words on my
motion. I obey a feeling no less sincere when I deplore that I
should find myself in opposition to you, monsieur, who add to
the power of genius so many claims to public consideration. The
country is in danger, and from that moment I cease to believe in
a serious dissension between us: this France of ours invites us
to unite to save her; assist her with your genius; we shall work,
we shall assist her with our strong arms. On that field,
monsieur, is it not true that we shall not be long in coming to an
understanding? You shall be the Tyrtæus[364] of a people of
which we are the soldiers, and it will be with the greatest
happiness that I shall then proclaim myself the most ardent of
your political adherents, as I am already the sincerest of your
admirers.
"Your most humble and obedient servant,
 "The Comte Armand de Briqueville.
"Paris, 15 November 1831."

I was not slow in answering, and I broke a second still-born lance

against the champion:

"Paris, 15 November 1831.

"Monsieur,
"Your letter is worthy of a gentleman: forgive me for using this
old word, which becomes your name, your courage, your love of
France. Like you, I detest the foreign yoke: if the question were
that of defending my country, I should not ask to wear the lyre
of the poet, but the sword of the veteran, in the ranks of your
soldiers.
"I have not yet read your reflections, monsieur; but, if the state
of politics led you to withdraw the motion which has so
strangely saddened me, how happy I should be to find myself
by your side, with no obstacle between us, on the field of
liberty, of honour, of the glory of our country!
"I have the honour to be, monsieur, with the most distinguished
regard,
"Your most humble and most obedient servant,
"Chateaubriand."

Paris, Infirmerie De Marie-Thérèse, Rue d'Enfer,

December 1831.
A poet[365], mingling the proscriptions of the Muses with those of
the laws, attacked the widow and the orphan in a vigorous
improvisation. As these verses were by a writer of talent, they
acquired a sort of authority which forbade me to let them pass in
silence; I faced about to meet another enemy[366].
The reader would not understand my reply if he did not read the
poet's lampoon; I invite you, therefore to cast your eyes over those
verses: they are very fine and are to be found everywhere. My reply
has not been published: it appears for the first time in these
Memoirs. Wretched contentions in which revolutions end! See to
what a struggle we come, the feeble successors of those men who,
arms in hand, treated great questions of glory and liberty by shaking
the universe! Pygmies to-day utter their little cry among the tombs
of the giants buried beneath the mountains which they have
overturned upon themselves.

"Paris, Wednesday evening, 9 November 1831.

"Sir,
"I received this morning the last number of Némésis which you
have done me the honour to send me. To protect myself against
the seduction of those praises awarded with so much brilliancy,
grace and charm, I need to recall the obstacles that exist
between us. We live in two worlds apart; our hopes and fears
are not the same; you burn what I adore, and I burn what you
adore. You, sir, have grown up amid a crowd of abortions of
July; but, even as all the influence which you attribute to my
prose will not, according to you, raise up a fallen House, so,
according to me, will all the might of your poetry fail to abase
that noble House. Can it be that both you and I are thus placed
in two impossible positions?
"You are young, sir, like the future which you dream of and
which will trick you; I am old, like time, which I dream of and
which escapes me. If you were to come to sit by my fireside,
you obligingly say, you would reproduce my features with your
graver: I should strive to make you a Christian and a Royalist.
Since your lyre, at the first chord of its harmony, sang my
Martyrs and my Pilgrimage, why should not you complete the
course? Enter the holy place; time has stripped me only of my
hair, as it strips a tree of its leaves in winter, but the sap
remains in my heart: my hand is still firm enough to hold the
torch which would guide your steps under the vaults of the
sanctuary.
"You declare, sir, that it would need a people of
Letter to poets to understand my contradictions of 'extinct
Barthélem
y. kingdoms and young republics:' is it likely that you
too have not celebrated liberty and yet found some
magnificent words for the tyrants who oppressed it? You quote
the Du Barrys, the Montespans, the Fontanges, the La Vallières:
you recall royal weaknesses; but did those weaknesses cost
France what the debauches of Danton and Camille Desmoulins
cost her? The morals of those plebeian Catalines were reflected
even in their speech: they borrowed their metaphors from the
piggeries of infamous persons and prostitutes. Did the frailties
of Louis XIV. and Louis XV. send the fathers and husbands to
the gallows, after dishonouring the daughters and wives? Did
his blood-baths do more to render chaste a revolutionary's
lewdness than did her milk-baths to render virginal a Poppæa's
pollution? If Robespierre's hucksters had retailed to the people
of Paris the blood from Danton's bathing-tub, as Nero's slaves
sold to the inhabitants of Rome the milk from his courtesan's
thermæ, do you think that any virtue would have been found in
the rinsings of the obscene headsmen of the Terror?
"The swiftness and the height of the flight of your muse have
deceived you, sir: the sun, which laughs at all misery, must have
struck the garments of a widow; they must have seemed
'gilded' to you: I have seen those garments, they were of
mourning; they knew nothing of pleasure; the child, in the
entrails which bore him, was rocked only to the sound of tears;
if he had 'danced nine months in his mother's womb,' as you
say, he would then have known joy only before being born,
between conception and delivery, between the assassination
and the proscription! 'The pallor of fearsome omen' which you
remarked on Henry's face is the result of his father's blood-
letting, and not of a ball of two hundred and seventy nights.
 The old curse was kept up for the daughter of Henry IV.: In
dolore paries filios. I know none save the Goddess of Reason
whose confinements, hastened by adultery, took place amid the
dances of Death. From her public flanks fell unclean reptiles
which, at that very instant, began to jig in the ring with the
knitting-women around the scaffold, to the sound of the rise
and fall of the knife, the refrain of that devils' dance.
"Ah sir, I entreat you, in the name of your rare talent, cease to
reward crime and to punish misfortune by the sentences
improvised by your muse; do not condemn the first to Heaven,
the second to Hell. If, while remaining attached to the cause of
liberty and enlightenment, you were to afford an asylum to
religion, humanity, innocence, you would see another sort of
Nemesis appear before you in your waking hours, one worthy of
all the earth's homage. And, while waiting to pour over virtue,
better than I know how, 'the whole ocean of your fresh ideas,'
continue, in the spirit of vengeance which you have adopted, to
drag our turpitude to the gemoniæ; overthrow the false
monuments of a revolution which has not built the temple fit for
its cult; turn up their ruins with the plough-share of your satire;
sow salt in that field to make it barren, so that no new vileness
can shoot there. I recommend above all, sir, to your attention,
that Government which has fallen so low that it trembles before
the pride of the obedience, the victory of the defeats, and the
glory of the humiliations of the country.
"Chateaubriand."

Paris, Rue d'Enfer, end of March 1832.

Those travels and those contests came to an end for me in the year
1831; at the beginning of the year 1832, a new annoyance.
The Paris Revolution had left on the streets of Paris a host of Swiss,
of Body-guards, of men of all conditions kept by the Court, who
were now starving and whom certain monarchical dunderheads,
young and foolish under their grey hairs, thought of enlisting for a
surprise.
In this formidable plot there was no lack of serious, pale, lean,
diaphanous, bent persons, with noble faces, eyes still bright, white
heads; that past suggested honour resuscitated, coming to try, with
its shadowy hands, to restore the Family which it had been unable to
maintain with its living hands. Often men on crutches pretend to
prop crumbling monarchies; but, at this period of society, the
restoration of a mediæval monument has become impossible,
because the genius which quickened that architecture is dead: what
we take for Gothic is merely antiquated.
On the other hand, the heroes of July, whom the juste-milieu had
swindled out of the Republic, desired nothing more than to come to
an understanding with the Carlists to revenge themselves on a
common enemy, remaining free to cut each other's throats after the
victory. M. Thiers having extolled the system of 1793 as the work of
liberty, victory and genius, young imaginations became kindled at
the flame of a conflagration of which they saw only the distant
reverberation; they have got no further than the poetry of the
Terror: a mad and hideous parody which sets back the hour of
liberty. This is to disregard at once time, history and humanity; it is
to oblige the world to recoil under the whip of the convict-keeper in
order to escape those fanatics of the scaffold.
Money was needed to feed all those malcontents, dismissed heroes
of July, or servants out of place: people clubbed together. Carlist and
republican cabals were held in every comer of Paris, and the police,
informed of all that went on, sent its spies from club to garret to
preach equality and liberty. I was told of these proceedings, which I
opposed. The two parties wanted to declare me their leader at the
assured moment of triumph: a Republican club asked me if I would
accept the Presidency of the Republic; I answered:
"Yes, most certainly; but after M. de La Fayette."
 This was thought modest and proper. General La Fayette
The used sometimes to come to Madame Récamier's; I used
Marquis de
La Fayette. to make fun of his "best of republics;" I asked him if he
would not have done better to proclaim Henry V. and to
be the real President of France during the minority of the royal
infant. He agreed and took the jest in good part, for he was a well-
bred man. Each time we met, he would say:
"Ah, you are going to pick your quarrel again!"
I used to make him admit that no one had been more caught than
himself by his good friend Philip.
In the midst of this excitement and these extravagant plottings,
arrived a man in disguise. He landed at my door with a tow wig on
his pate and a pair of green spectacles on his nose, hiding his eyes,
which could see quite well without spectacles. He had his pockets
stuffed with bills of exchange, which he displayed; and, suddenly
aware that I wanted to sell my house and settle my affairs, he
offered me his services. I could not help laughing at this gentleman
(a man, otherwise, of intelligence and resource) who thought
himself obliged to buy me for the Legitimacy. When his offers
became too pressing, he saw on my lips a certain scornfulness which
obliged him to beat a retreat, and he wrote to my secretary this little
note, which I have kept:

"Sir,
"Yesterday evening I had the honour to see M. le Vicomte de
Chateaubriand, who received me with his customary kindness;
nevertheless, I seem to have perceived that he no longer
showed his usual geniality. Tell me, I beg of you, what can have
caused me to lose his confidence, which I valued more highly
than anything else. If he has been told 'stories' about me, I am
not afraid to expose my conduct to the light of day, and I am
prepared to reply to anything that he may have been told: he
knows too well the spitefulness of intriguing people to condemn
me unheard. There are timid persons too who make others so;
 but we must hope that the day will come when we shall see
people who are really devoted. Well, he told me that it was of
no use for me to meddle in his business; I am sorry for that,
because I flatter myself that it would have been arranged
according to his wishes. I have little doubt as to the person who
has wrought this change in him; if I had been less discreet at
the time, this person would not have been in a position to injure
me with your excellent 'patron.' However, I am none the less
devoted to him, as you may assure him once more with my
respectful homage. I venture to hope that a day will come when
he will be able to know me and to judge of me.
"Pray accept, sir, etc."

Hyacinthe answered this note with the following reply at my

dictation:

"My patron has nothing whatever in particular against the

person who has written to me; but he wishes to live outside
everything, and does not wish to accept any service."

Shortly afterwards, the catastrophe came.

Do you know the Rue des Prouvaires[367], a narrow,
A Royalist
conspiracy. dirty, populous street, near Saint-Eustache and the
markets? It was there that the famous supper of the
Third Restoration was held. The guests were armed with pistols,
daggers and keys; after drinking, they were to make their way into
the gallery of the Louvre and, passing at midnight through a double
row of master-pieces, go to strike the usurping monster in the midst
of a fête. The conception was a romantic one: the sixteenth century
had returned; one might have believed one's self in the times of the
Borgias, the Florentine Medicis and the Parisian Medicis: only the
men were different.
On the 1st of February, at nine o'clock in the evening, I was going to
bed, when a zealous man and the individual of the bills of exchange
forced my door in the Rue d'Enfer to tell me that all was ready, that
in two hours Louis-Philippe would have disappeared; they came to
enquire if they might declare me the principal chief of the Provisional
Government and if I would consent to take the reins of the
Provisional Government, in the name of Henry V., with a council of
Regency. They admitted that the thing was dangerous, but said that
I should reap all the greater glory, and that, as I was acceptable to
all parties, I was the only man in France in a position to play such a
part.
This was pressing me very hard: two hours to decide upon my
crown! Two hours in which to sharpen the big mameluke's sabre
which I had bought in Cairo in 1806! However, I felt no
embarrassment and I said to them:
"Gentlemen, you know that I have never approved of your
enterprise, which seems to me a mad one. If I were disposed to
meddle in it, I would have shared your dangers and would not have
waited for your victory to accept the prize of your risks. You know
that I have a serious love of liberty, and it is clear to me, to judge by
the leaders of all this business, that they do not want liberty and
that, if they remained masters of the field of battle, they would
begin by establishing the reign of arbitrariness. They would have no
one, they would have me least of all, to support them in these plans;
their success would bring about complete anarchy, and other
countries, profiting by our discords, would come to dismember
France. I cannot therefore enter into all this. I admire your devotion,
but mine is not of the same character. I am going to bed; I advise
you to do the same; and I am very much afraid that I shall hear to-
morrow morning of the misfortune of your friends."
The supper took place; the proprietor of the tavern, who had
prepared it only with the authorization of the police, knew what he
was about. The police-spies, at table, touched glasses to the health
of Henry V. with the best of them; the officers arrived, seized the
guests, and once more upset the cup of the Legitimate Royalty. The
Renaud of the royalist adventurers was a cobbler in the Rue de
Seine[368], a hero of July, who had fought valiantly during the Three
Days and who seriously wounded one of Louis-Philippe's policemen,
even as he had killed soldiers of the Guard to drive out Henry V. and
the two old Kings.
During this business, I had received a note from Madame la
Duchesse de Berry appointing me a "member of a secret
government," which she was establishing in her quality as Regent of
France. I took advantage of this occasion to write the following letter
to the Princess[369]:

My letter.
"Madame,
"I have received with the deepest gratitude the mark
of confidence and esteem with which you have consented to
honour me; it lays upon my loyalty the duty of doubling my
zeal, while not refraining from placing before the eyes of Your
Royal Highness what appears to me to be the truth.
"I will speak first of the so-called conspiracies, the rumour of
which will perhaps have reached Your Royal Highness. It is
asserted that these have been concocted or provoked by the
police. Leaving the fact on one side, and without insisting upon
the intrinsically reprehensible nature of conspiracies, be they
true or false, I will content myself with observing that our
national character is at once too light and too frank to succeed
in such tasks. And so, during the last forty years, this sort of
guilty enterprise has invariably failed. Nothing is more common
than to hear a Frenchman publicly boast of being in a plot: he
tells the whole details of it, without forgetting the day, place and
hour, to some spy whom he takes for a brother; he says aloud,
or rather exclaims to the passers-by:
"'We have forty thousand men all told, we have sixty thousand
cartridges, in such a street, number so-and-so, the corner-
house.'
"And then our Cataline goes off to dance and laugh.
"Secret societies have a long range only because they proceed
by revolutions and not by conspiracies; they aim at changing
doctrines, ideas and manners, before changing men and things;
their progress is slow, but their results certain. Publicity of
thought will destroy the influence of secret societies; it is public
opinion which will now effect in France that which occult
congregations accomplish among unemancipated nations.
"The departments in the West and South, which they seem to
wish to drive to extremities by means of arbitrary measures and
violence, retain the spirit of loyalty for which our old manners
were distinguished; but that half of France will never conspire,
in the narrow sense of the word: it forms a sort of camp
standing at ease under arms. Admirable as a reserve force of
the Legitimacy, it would be insufficient as an advance-guard and
would never assume the offensive successfully. Civilization has
made too much progress to allow of the outburst of one of
those intestine wars, leading to great results, which were the
outlet and the scourge of centuries at once more Christian and
less enlightened than our own.
"What exists in France is not a monarchy; it is a republic: one,
truly, of the worst quality. This republic is plastroned with a
royalty which receives the blows and prevents them from
striking on the Government itself.
"Besides, if the Legitimacy is a considerable force, the right of
election is also a preponderating power, even when it is only
fictitious, especially in this country where men live only on
vanity: the French passion for equality is flattered by the right of
election.
"Louis-Philippe's Government abandons itself to a double excess
of arbitrariness and obsequiousness which the Government of
Charles X. had never dreamt of. This excess is endured; and
why? Because the people more easily endure the tyranny of a
government which they have created than the lawful strictness
of the institutions which are not their work.
"Forty years of storms have shattered the strongest souls:
apathy is great, egoism almost general; men shrivel up to
escape danger, to keep what they possess, to make shift to live
in peace. After a revolution, there remain also cankered men
who communicate their contamination to everything even as,
after a battle, there remain corpses which pollute the air. If, by a
mere wish, Henry V. could be transported to the Tuileries
without trouble, without a shock, without compromising the
slightest interest, we should be very near a restoration; but, in
order to effect it, if one had to spend as much as one sleepless
night, the chances would decrease.
"The results of the Days of July have not turned to the profit of
the people, nor to the honour of the army, nor to the advantage
of literature, art, commerce or industry. The State has fallen a
prey to the professional ministerialists and to the class which
sees the country in its stew-pot, public affairs in its domestic
economy. It is difficult, Madame, for you at your distance to
know what is here called the juste-milieu: Your Royal Highness
must imagine a complete absence of elevation of soul, of
nobility of heart, of dignity of character; you must picture to
yourself people swelled up with their importance, bewitched
with their employs, doting on their money, determined to die for
their pensions: nothing will part them from those; it is a
question of life or death to them; they are wedded to them as
were the Gauls to their swords, the knights to the Oriflamme,
the Huguenots to the white plume of Henry IV., the soldiers of
Napoleon to the tricolour; they will die only when they are
exhausted of oaths to every form of government, after shedding
the last drop of those oaths on their last place. These eunuchs
of the sham Legitimacy dogmatize about independence while
having the citizens bludgeoned in the streets and the writers
crowded into prison; they strike up songs of triumph while
evacuating Belgium at the bidding of an English minister and,
soon after, Ancona by order of an Austrian corporal. Between
the threshold of Sainte-Pélagie and the doors of the Cabinets of
Europe, they strut all puffed out with liberty and soiled with
glory.
"What I have said concerning the temper of the
To the French must not discourage Your Royal Highness;
Duchesse
de Berry. but I wish that the road that leads to the throne of
Henry V. were better known.
"You know my way of thinking as regards the education of my
young King: my opinions are expressed at the end of the
pamphlet which I have laid at Your Royal Highness' feet; I could
only repeat myself. Let Henry V. be brought up for his century,
with and by the men of his century: my whole system is
summed up in those two words. Let him, above all, be brought
up not to be King. He may reign tomorrow, he may reign only in
ten years, he may never reign: for, if the Legitimacy has the
different chances of returning which I will presently set out,
nevertheless the present edifice might crumble to pieces
without the formers rising from its ruins. You have a firm
enough soul, Madame, to be able, without allowing yourself to
be cast down, to suppose a judgment of God which would
thrust back your illustrious House into the popular sources, even
as you have a large enough heart to cherish just hopes without
allowing them to intoxicate you. I must now place this other
side of the picture before you.
"Your Royal Highness can defy, can dare everything at your age;
you have more years left to run than have elapsed since the
commencement of the Revolution. Now, what have these latter
years not seen? When the Republic, the Empire, the Legitimacy
have passed, shall the amphibious thing known as the juste-
milieu not pass? What! Was it to arrive at the wretchedness of
the men and things of the present moment that we have gone
through and expended so many crimes, so much misfortune,
talent, liberty and glory? What! Europe overturned, thrones
tumbling one over the other, generations hurled into the
common ditch with the steel in their breasts, the world
labouring for half a century, and all this to bring forth the sham
Legitimacy? One could conceive a great republic emerging from
this social cataclysm: it would at least be fitted to inherit the
conquests of the Revolution, that is, political liberty, liberty and
publicity of thought, the levelling of ranks, the admission to all
offices, the equality of all before the law, popular election and
sovereignty. But how can we suppose a troop of sordid
mediocrities, saved from shipwreck, to be able to employ those
principles? To what a proportion have they not already reduced
them! They detest them, they hanker only after laws of
exception; they would like to catch all those liberties in the
crown which they have forged, as in a trap; after which they
would fiddle-faddle sanctimoniously with canals, railways, a
mish-mash of arts, literary arrangements: a world of machinery,
loquacity and self-sufficiency denominated 'a model society.'
Woe to any superiority, to any man of genius ambitious of
preferment, of glory and pleasure, of sacrifice and renown,
aspiring to the triumph of the tribune, the lyre or arms, who
should rise up some day in that universe of boredom!
"There is but one chance, Madame, for the sham Legitimacy to
continue to vegetate: that is, if the actual state of society were
the natural state of that very society at the period in which we
live. If the people, grown old, found itself in sympathy with its
decrepit government; if there were a harmony of infirmity and
weakness between the governors and the governed, then,
Madame, all would be over for Your Royal Highness and for the
rest of the French. But, if we have not come to the age of
national dotage and if the immediate Republic be impossible,
then the Legitimacy seems called to be born again. Live your
youth, Madame, and you shall have the royal tatters of the poor
thing known as the Monarchy of July. Say to your enemies what
your ancestress, Queen Blanche[370], said to hers during the
minority of St. Louis:
"'No matter; I can wait.'