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

Budgetary Slack – Definition, Causes and Prevention Methods

Meaning and Definition of  Budgetary Slack In an organization when a manager is responsible for planning incomes and expenses for the a future period, they can plan income very low and expenses very high so that this amounts gets approved by senior management. The manager basically does this thing to be sure of meeting the budget with a very low income goal, the manager should be able to achieve it and go over it. With a very high expense budget the manager should be able to easily keep actual expenses within the Budget. If this happens the managers performance in the coming year will look very good, as it doesn’t really give management any idea of what the coming year will actually look like because it’s not realistic. And it doesn’t show the actual evaluation of the manager’s performance. So this is known as the Budgetary Slack. In other words, Continue reading

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Retailing Decisions: Factors To Consider

There are many factors for retailers to consider while developing and implementing their marketing plans. Among the major retailing decisions are these related to (a) Target markets (b) Merchandise management (c) Store location (d) Store image (e) Store personnel (f) Store design (g) Promotion, and (h) Credit and collections. Target Markets: Although retailers normally aim at the mass market, a growing number are engaging in marketing research and market segmentation, because they are finding it increasingly difficult to satisfy everyone. Through a careful definition of target markets, retailers can use their resources and capabilities to position themselves more effectively and achieve differential advantage. The tremendous growth in number of specialty stores in recent years is largely due to their ability to define precisely the type of customers, they want to serve. Merchandise Management: The objective here is to identify the merchandise that customers want, and make it available at the Continue reading

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Four Levels of Uncertainty – Strategic Planning Under Uncertainty

Even the most uncertain business environments contain a lot of strategically relevant information. First, it is often possible to identify clear trends, such as market demographics, that can help define potential demand for future products or services. Second, there is usually a host of factors that are currently unknown but that are in fact knowable-that could be known if the right analysis were done. The uncertainty that remains after the best possible analysis has been done is what we call residual uncertainty. Hugh G. Courtney, Jane Kirkland, and S. Patrick Viguerie  in their article  Strategy Under Uncertainty  have developed a useful framework for dealing with various uncertainties in strategy formulation. Four Levels of Uncertainty The authors present four levels of uncertainty:  1) A predictable future, 2) Alternate futures 3) A range of futures 4) True ambiguity. Level 1: Clear Enough/Predictable Future This would apply to situations where sufficiently precise predictions Continue reading

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Fama and French Three Factor Model

Capital Asset Pricing Model (CAPM) is the backbone of modern portfolio theory. According to CAPM, the expected return on stock is a function of its relationship with the market portfolio defined by its beta. However, Eugene Fama and Kenneth French (1992) brought together two more factors and found that stock return is based on a combination of not just market beta but also firm size and value. They came up with a new model known as Three Factor Model  as an alternative to CAPM. What is Fama and French Three Factor Model? Fama and French three factor model expands on the Capital Asset Pricing Model (CAPM) by adding size and value factors in addition to the market risk factor in CAPM. This model considers the fact that value and small cap stocks out-perform markets on a regular basis. Fama and French attempted to approach and measure equity returns in a Continue reading

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Hierarchy of Effects Model in Consumer Behavior

Another widely used model in marketing that attempts to  explain consumer decision making process is called the Hierarchy of Effects Model.  Originally conceived to explain how advertising affects  consumer’s purchase decisions, the Hierarchy of Effects Model focuses on consumer learning that takes place as he/she  processes information from the external world. Although different researchers developed  slightly different models, the basic idea is the same: people experience a sequence of psychological stages before purchasing  a product. The origins of the Hierarchy of  effects can be traced all the way  back to 1898 and the hierarchy’s  creator, a salesman named Elias St  Elmo Lewis. Lewis believed that  rather than simply closing a sale,  an effective salesperson actually guided a buyer through a series  of stages. He claimed that a  proper salesman must ensure  Attention, maintain Interest,  create Desire and finally spur  the customer to Action  (purchase).  In 1910, the Hierarchy of Effects Continue reading

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Information Systems and Business Forecasting

The business provided support for using Decision Support Systems (DSS) and addressed the following issues: techniques within the DSS, corporation needs and limitations, the forecast cost effectiveness, and the appropriate software system. Sales forecasting is an integral part of marketing DSS. The DSS contains tools to help   the forecaster prepare better forecasts; tools are data, records of previous forecasting, and techniques. Forecasts assist marketing managers improve decision-making. In an organizational design context, forecasting should not be regarded as a self-contained activity, but should be integrated within the planning context of which it is a part. When an organization has its own forecasting expertise (prepares its own forecasts) that expertise should not be separated into a self-contained department. Forecasting and planning functions should be combined. Involvement of the forecasters in planning enables them to select criteria for evaluating forecasting methods that are meaningful within the planning context. Managers must go Continue reading

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