MBA Knowledge Base

Concepts of Throughput Accounting and Theory of Constraints

Goldratt’s ‘Throughput Accounting’ revolutionized the methods by which companies viewed their costs and associated them with profits. Unlike the traditional cost accounting methods, Goldratt argues that accounting should seek to maximize the movement of products through an organization to eliminate potential bottlenecks that prevents efficiency and speed. Goldratt argues that the current costing systems in use were developed almost a hundred years ago based upon the business practices and business designs of that particular era. The traditional accounting system therefore can be understood in the context of a “Cost World”. This cost world focuses all aspects of business value and decision making upon the cost of products themselves. In order to connect all of the subsequent aspects of business to costs, very elaborate allocation of expenses had to flow through to products. These “cost schemes” in effect have many different errors and assumptions that impacts the accuracy of accounts and Continue reading

Abey Francis

Kaizen – Understanding the Japanese Business Philosophy of Continuous Improvement

Kaizen is a Japanese term meaning “continuous improvement,” referring to an approach of constantly making small, incremental changes for the better. Originating in post-World War II Japan, Kaizen emerged as a key principle in the Toyota Production System and later gained global recognition as a foundation of lean manufacturing. The concept was introduced to the Western world by Masaaki Imai in his 1986 book Kaizen: The Key to Japan’s Competitive Success, which highlighted how a focus on ongoing improvement helped Japanese industries outperform their competitors. At its core, Kaizen is more than a one-time initiative – it is a philosophy and culture that engages all levels of an organisation in continually finding ways to improve processes, reduce waste, and increase quality. Indeed, Kaizen involves everyone from top management to frontline workers in the quest for better methods, embodying the idea that many small changes can yield substantial results over time. Over the decades, this approach Continue reading

Abey Francis

Role of Leaders in Shaping Organizational Culture

An organizational culture entails the organization’s philosophy, expectations, experiences, and the values that guide member behavior and is expressed in member self-image, future expectations, interactions with the outside world, as well as inner workings. Culture is shared on written and unwritten rules that are not only developed over time but also considered valid, beliefs, customs, and attitudes. In an organization, culture also entails the organization’s language, habits, beliefs, symbols, vision, systems, norms, values, as well as assumptions. It basically means the manner in which things are done in an organization. The organization culture impacts the way in which people and groups interact, with clients, as well as with stakeholders and it further influences how much employees identify themselves with the organization. The foundation of organizational culture is the management but the culture can also be built by a leader. Culture is important in the success of the organization and thus Continue reading

Abey Francis

Organizational Culture – Development and Importance

When coming into or starting an organization, many things need to be decided upon for that organization. The organization’s mission statement, its business plan, and its structure are a few of the many things that need to be decided for that organization. One element that is extremely important to establish within an organization is the organization’s culture. An organization’s culture is extremely significant within an organization, and an organization’s culture can be determined from a variety of different types of cultures. Organizational culture can also be called a corporate culture and is defined as the set of shared, taken-for-granted implicit assumptions that a group holds and that determines how it perceives, thinks about, and reacts to its various environments. Each and every organization has its own type of organizational culture that sets it apart from other organizations. One reason organizational culture is vital to an organization is because the type Continue reading

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Five Important Organizational Cultural Models

Culture is often said “to eat strategy for breakfast” the implication that, regardless of how good a strategy is, unless specific initiatives are concentrated on changing people’s attitudes, behaviours and work practices, the strategy will fail. Understanding culture of an organisation can be quite the task especially in large companies with a number of employees and staff being very diverse culturally. With the help of Cultural Models, understanding the cultural situation becomes easier. Following are some of the existing Cultural Models. 1. Edgar Schein’s Model Edgar Schein’s model is one such which helps interpret what the cultural position is within the firm. To Schein, culture is dynamic and multi-faceted; it cannot be easily judged as good/bad, strong/weak, or effective/ineffective. Culture is contextual and lives within us as individuals as well as within groups of people. Edgar Schein believed that as employees go through various changes and adapt to the external Continue reading

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The Customer Satisfaction Model – Based on American Customer Satisfaction Index (ACSI)

The Customer Satisfaction Model is a set of causal equations that link perceived quality, perceived value and customer expectations to customer satisfaction. The customer satisfaction model is linked, in turn, to its consequences in terms of customer complaints and customer loyalty. This model is based on the American Customer Satisfaction Index (ACSI), which is one of the best-in-breed solutions for customer satisfaction measurement that is tied directly to financial performance. The American Customer Satisfaction Index (ACSI) is the leading national indicator of customer satisfaction with goods and services in the U.S. economy. The ACSI was developed by the University of Michigan’s Stephen M. Ross School of Business. The dependent variable in this conceptual model is customer satisfaction, while the independent variables are perceived quality, perceived value and customer expectations. Customer complaints and customer loyalty are the results (consequences) of this conceptual framework. Perceived quality is the first determinant of customer satisfaction, Continue reading

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