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

Types of Interest Rate Risk

Due to the very nature of its   business, a bank should accept interest rate risk not by chance but by choice and when the bank has to take a risk as a choice, then it should ensure that the risk taken is firstly manageable and secondly it does not get transformed into yet another undesirable risk. As stated earlier, the focal point in managing any risk will be to understand the nature of the risk. This is especially essential for interest rate risk management. Interest rate risk is the gain/loss that arises due to sensitivity of the interest income/interest expenditure or values of assets/liabilities to the interest rate fluctuations. Types of Interest Rate Risks The sensitivity to interest rate fluctuations will arise due to the mixed affect of a host of other risks that comprise the interest rate risk. These risks when segregated fall into the following categories. Rate Continue reading

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Modes of Entry into International Business with Advantages and Disadvantages

The different types of entry modes, to penetrate a foreign market, arise due to globalization. The latter has drastically changed the way business conduct at international level. Owing to advances in transportation, technology and communications, nowadays practically every business of any size can supply or distribute goods, services, or intellectual property. However, when companies deal with international markets, it is complicated as the companies must be prepared to surmount differences in currency issues, language problems, cultural norms, and legal and regulatory regimes. Only the largest companies have the capital and knowledge to overcome these complications on their own. Many other businesses simply do not have the means to efficiently and affordably deal with all those variables in foreign jurisdictions, without a partner in the host country. Foreign market entry mode has been defined as an institutional arrangement that makes possible the entry of a company’s products, technology, human skills, management, Continue reading

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Cancellation and Extension of Forward Exchange Contracts

The customer may approach the bank for cancellation when the underlying transactions becomes infructrious, or for any other reason he wishes not to execute the forward contract. If the underlying transaction is likely to take place on the day subsequent to the maturity of the forward contract already booked, he may seek extension in the due date of the contract. Such requests for cancellation or extension can be made by the customer on or before the maturity of the forward contract. Cancellation on Due Date When the forward purchase contract is cancelled on the due date, it is taken that the bank purchases at the rate originally agreed and sells the same back to the customer at the ready TT rate. The difference between these two rates is recovered from/paid to the customer. If the purchase rate under the original forward contract is higher than the ready TT selling rate, Continue reading

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The Competitive Profile Matrix (CPM)

The Competitive Profile Matrix (CPM) identifies a firm’s major competitors and their particular strengths and weaknesses in relation to a sample firm’s strategic position. The Competitive Profile Matrix  resembles an External Factor Evaluation (EFE) Matrix  with a comparison to other organizations and/or companies.  The weights and total weighted scores in both a CPM and EFE have the same meaning. However, the factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness. There are some important differences between the EFE and CPM. First of all, the critical success factors in a CPM are broader; they do not include specific or factual data and even may focus on internal issues. The critical success factors in a CPM also are not grouped into opportunities and threats such Continue reading

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Financial Planning – Meaning, Objectives and Process

The financial planning refers to the projection of future financial course of action to be carried for efficient execution of operating plans and effective accomplishment of corporate objective. Financial planning begins with the preparation of strategic plans that in turn guides the formulation of operating plans and budgets. Financial planning provides road map for guiding, coordinating and controlling firm’s financial action in order to achieve the objectives.  Therefore, a planning that spells out future course of action, budgets and capital expenditures required for execution of operating plans is known as financial planning. Objectives of the Financial Planning Most corporate organizations spend significant time and labor in preparing the financial plan as it enables a firm: To identify significant actions to be taken in various aspects of firm’s finance functions. To develop various options in the field of finance functions, which can be exercised as condition change. To state clearly the Continue reading

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History of Commodity Futures

Commodities futures trading have evolved from the need for ensuring continuous supply of seasonal agricultural crops. In Japan, merchants stored rice in warehouse for future use. In order to raise case warehouse holders sold receipts against the stored rice. These were known as rice tickets. Eventually such rice tickets became accepted as a kind of general commercial currency Rules came into being, to standardize the trading in rice tickets. The futures contract, as we know it today, evolved as farmers (sellers) and dealers (buyers) began to commit to future exchanges of grain for cash. For instance, the farmer would agree with the dealer on a price to deliver to him 5,000 bushels of wheat at the end of June. The bargain suited both parties. The farmer knew how much he would be paid for his wheat, and the dealer knew his costs in advance. The two parties may have exchanged Continue reading

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