Concepts of Throughput Accounting and Theory of Constraints

Financial Management

Kaizen – Understanding the Japanese Business Philosophy of Continuous Improvement

Operations Management

Role of Leaders in Shaping Organizational Culture

Management Principles

Organizational Culture – Development and Importance

Management Principles

Five Important Organizational Cultural Models

Management Principles

Steps Involved in Strategic Management Process

Strategic management is a particular course of action that is meant to achieve a corporate goal. The Strategic Management Process defines the goals and objectives for a business, it creates the action plan so that a company can reach them and then it follows the plan. There are nine steps in Strategic Management Process which managers need to follow; which are defined as under: Identify the Organization’s Current Mission, Objectives and Strategies: It is important to identify the goals and objectives of the company. It defines the present purpose of the organization as a mission and the strategies currently being followed. The mission statement becomes the identification of an organization so it is very much necessary to identify it. Analyze the Environment: It is a process of monitoring the organizational environment to identify competitor’s actions and to confirm if it is suitable to let the firm goes to already set Continue reading

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Adoption of Strategic Human Resource Development (SHRD) Practices in Organizations

Management requires that all organizations and businesses get the available resources together to enable them to accomplish their goals, objectives, and aims effectively and efficiently. This means that there must be the act of planning, staffing, controlling, and directing the organization’s manpower for the realization of these purposes as set by the organization. The act of developing human resources is cited as an opportunity through which the employees can develop their own personal skills and other organizational skills needed for the successful operation of the business. Strategic Human Resource Development (SHRD) is the linkage between the strategic goals and objects with the resources available in the organization. This is the trend that most companies are adopting in the recent past. Human resource development has become a strategic application of policies and practices that will ensure a company reaches the peak of its performance by utilizing what it has, for its Continue reading

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Profit Maximization Objective of a Firm

In the conventional theory of the firm, the principle objective of a business firm is to maximize profit. Under the assumptions of given taste and technology, price and output of a given product under competition are determined with the sole objective of maximization of profit. Profit maximization refers to the maximization of dollar income of the firm. Under profit maximization objective, business firms attempt to adopt those investment projects, which yields larger profits, and drop all other unprofitable activities. In maximizing profits, input-output relationship is crucial, either input is minimized to achieve a given amount of profit or the output is maximized with a given amount of input. Thus, this objective of the firm enhances productivity and improves the efficiency of the firm. The conventional theory of the firm defends profit maximization objective on the following grounds: In a competitive market only those firms survive which are able to make Continue reading

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Theories of Capitalization

Capitalization is the total amount of a company’s long-term financing. Such financing may include retained earnings, preferred and common stock and other forms of long-term debt (bonds and debentures).  Capitalization can be distinguished from capital structure. Capital structure is a broad term and it deals with qualitative aspect of finance. While capitalization is a narrow term and it deals with the quantitative aspect. The two main theories of capitalization which are used to determine the amount of capitalization are as follows: 1. Cost Theory of Capitalization According to the cost theory of capitalization, the value of a company is arrived at by adding up the cost of fixed assets like plants, machinery patents, etc., the capital regularly required for the continuous operation of the company (working capital), the cost of establishing business and expenses of promotion. The original outlays on all these items become the basis for calculating the capitalization Continue reading

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Why Wealth Maximization is Considered to be Better Operating Goal?

The wealth maximization objective is almost universally accepted goal of a firm. According to this objective, the managers should take decisions that maximize the shareholders’ wealth. In other words, it is to make the shareholders as rich as possible. Shareholders’ wealth is maximized when a decision generates net present value. The net present value is the difference between present value of the benefits of a project and present value of its costs. A decision that has a positive net present value creates wealth for shareholders and a decision that has a negative net present value destroys wealth of shareholders. Therefore, only those projects which have positive net present value should be accepted. For example, suppose a firm invests $ 10,000 in a project that generates net cash flow $ 3,000 each year for five years. If the firm requires 10% return on its capital, the net present value of the Continue reading

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External Communication in Business

Communication with people outside the company is called “external communication”. Supervisors communicate with sources outside the organization, such as vendors and customers. External communication comprehends all information developed by the company, which is related to its activity that is released in the press, for public knowledge. Such information is crucial in order to promote the company’s image. When it comes to business communication, or for that matter, any aspect, the most important thing is the customer. We need to ensure that we deliver what the customer wants. Even when it comes to things like marketing or advertising, we need to show what the customer appreciates and likes. Different customers accept different kinds of marketing. It all depends on us to ensure that via business communication, we are able to cater to the choices of a wide range of people. If we are able to master the art of impressing many Continue reading

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