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

Innovation – Definition and Types

Innovation is an important concept to understand as a manager and for an organisation as a whole. Used in the correct manner, innovation can give an organisation the competitive advantage they need to be a success in their market. Firstly, it is useful to look at innovation in general. Innovations are ideas that are developed into new products or processes. They result in changes that customers recognize as new. Put in even simpler terms, innovation is the process of making improvements by introducing something new. Therefore, the two words that sum innovation up are ‘process’ and ‘new’. Defining Innovation Innovation is doing things in new ways in order to achieve significant results and make a huge difference in performance compared to others. Innovation’s goal is to have a positive change, to make someone or something better. Testing and evaluation of ideas is critical in achieving this goal. The ideas that Continue reading

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Advantages and Disadvantages of Activity Based Costing (ABC)

Activity based costing (ABC) is a costing model that recognizes activities in a company and assigns the cost of each activity resource to all products and services according to the actual use by each: it assigns more indirect costs overhead into direct costs. In this method a company can exactly estimate the cost of its individual products and services for the purposes of recognizing and reducing those which are unbeneficial and lowering the prices of those which are overpriced. In a business organization, the Activity based costing method assigns an organization’s resource costs through activities to the products and services given to its consumers. It is commonly used as a device for understanding product and consumer cost and profitability. As such, Activity based costing has predominantly been utilized to support strategic decisions such as pricing, outsourcing and recognition and measurement of procedure enhancement initiatives. Activity based costing is basically a Continue reading

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Volume-Profit Analysis

Volume-Profit Analysis  is very similar to the break-even analysis and is based on the relationship of profits to sales volume. The profit-volume graph shows the relationship of firm’s profit to its volume. Total profit or loss is measured on the vertical axis above the X-axis and the loss below it. The volume is measured on the X-axis, which is drawn at the point of ‘Zero-Profit’. Volume is usually expressed in  tons of percentage of full capacity. The maximum loss, which occurs at zero sales volume, is equal to the fixed cost and is shown on the vertical axis below the X-axis. The maximum profit is earned when the firm works at full capacity. The point of maximum profit is shown on the vertical axis above the X-axis. The two points of maximum loss and the maximum profit are joined by a line, which is known as the profit line. The Continue reading

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Important Recommendations for Ensuring Good Corporate Governance

Historically attention was paid to the subject following the collapse of Savings and Loan companies in USA in the mid 1980’s and the SEC of USA taking a tough stand on the same.   It is ironical that once again it was the US which brought in Sarbanes Oxley Act and along with it very stringent measures of Corporate Governance.   In passing, we may add that there is no corresponding legislation in India. Later, Adrian Cadbury report was an important milestone, which spelt out 19 best practices called the “Code of Best Practices”, which the companies listed on the London Stock Exchange, began to comply with. Some of those guidelines applicable to the Directors, Non-executive Directors, Executive Directors, and others responsible for reporting and control are as follows; Relating to the Directors the recommendations are: The Board should meet regularly, retain full and effective control over the company and Continue reading

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Export Bills of Exchange

Export Bills of Exchange are the drafts or bills of exchange, drawn by the shipper of goods or the provider of services in one country, on people in another country who are buying the goods or using the services, that constitute the chief supply of international currency. A draft or a bill of exchange performs two or three functions. A draft payable at first sight is a demand for payment due and a receipt for payment made. A draft payable at some future period after sight becomes a demand for payment by the seller, a promise of payment by the buyer on the agreed date, and a receipt for payment after such payment has been made. The person who makes out the draft (i.e., the person who receives the money) is said to draw the draft and is called the drawer. The person to whom the draft is addressed and Continue reading

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Trading Participants in the Derivatives Market

The trading participants in the derivatives market are as follows: 1. Hedgers The process of managing the risk or risk management is called as hedging. Hedgers are those individuals or firms who manage their risk with the help of derivative products. Hedging does not mean maximizing of return. The main purpose for hedging is to reduce the volatility of a portfolio by reducing the risk. 2. Speculators Speculators do not have any position on which they enter into futures and options Market i.e., they take the positions in the futures market without having position in the underlying cash market. They only have a particular view about future price of a commodity, shares, stock index, interest rates or currency. They consider various factors   like demand and supply, market positions, open interests, economic fundamentals,   international events, etc. to make predictions. They take risk in turn from high returns. Speculators are Continue reading

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