UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, Information

Technology in Management Decisions support system

Management Games Business Process Re-engineering (BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages.

CONTENTS:

Definition of MBO Objectives Types of objectives Steps in setting up of MBO Advantages Disadvantages

Definition
MBO is peter ducker's concept.
MBO is defined as a comprehensive managerial system that
integrated many key managerial activities in a systematic manner and consciously directed towards all levels of hierarchy for effective and efficient achievement of

organizational & individual objectives.

Overview:
Management by Objectives (MBO) is a strategy wherein the management sets specific goals for the employees to accomplish within a fixed time period. Regular feedback is taken on the work progress in the aforesaid time period.
MBO operationalizes the process of consolidating objective centric work atmosphere in the organization. It also facilitates performance management of individual employees. Management by objectives is a dynamic system which seeks to integrate the companys need to clarify and achieve its profit and growth goals with the managers need to contribute and develop himself. It is a demanding and rewarding style of managing a business.

MBO PROCESS CYCLE:

First, companies need to set corporate objectives. Some goals are then set for the employees to meet those
objectives. The employee performance is then measured through the performance cycle and evaluated at the end.

Finally, the employee is rewarded for his or her performance and the cycle is repeated.

DEFINITION & CONCEPT:

Many approaches have been utilized to integrate individual and group goals with overall goals of an enterprise. MBO is a process whereby the superior and subordinates of an enterprise jointly, a. Identify its common goals, b. Define each individuals major areas of responsibility in terms of results expected of him and c. Use these measures as guides for operating the unit (or enterprise) and assessing the contribution of each of its members.

The goals are jointly established by the manager and his subordinates and agreed upon in advance.
At the end of the pre-decided time period, the subordinates performance is reviewed in relation into present goals. Both superior and the subordinates participate in this review/evaluation.

If, after evaluation, it is found that there is some discrepancy between the work planned (to be done) and the work accomplished, steps are suggested to overcome the problems or to make necessary adjustments in the original plan. To conclude, MBO implies managing by properly identifying the objectives of an organization.

Objectives may be a. Short term Example : Expediting the works lagging behind the schedule a. Long term Example : Planning for diversification

b. Specific
Example : Decision of pricing policies c. General Example : Objective of increment of productivity

Types: 1. Broad objectives: It is also known as corporate objectives It is a wordy statement of the standing the company wishes to achieve.

2. Major objectives: It set the tactical areas into which company wishes to move It may include Market shares, product plans and plans to expand the customer population.

3. Lesser objectives: These are targets, budgets and departmental objectives, including those governing the performance standards of managers and other members of the staff.

STEPS IN SETTING UP MBO:

Performance appraisal system (PAS): PAS helps the management to fix targets in identified key responsibly area (KRA) or key performance areas. Steps in PAS: Fixing of KRA based on role and need (by appraiser to appraisee) 1. Goal setting by appraiser based on organizational goals 2. Agreements on KRAs and goal setting (between appraiser to appraise) 3. Recording of performance by appraise. 4. Mid team review 5. Employee performance appraisal by task accomplishment . 6. Rating of performance and communicating the same to employee. 7. Appeal, if any,

8. Final rating of employee for the current year 9. Rating is given in varies scale such as very poor, poor, good, very bad, superior, excellent.

USES OF MBO For identification of training needs of employees based on their rating

For identifying people for promotions, incentives, foreign training or

any special / additional responsibility. Benefits of MBO to Organization Improvement of managing process by effective control. Classification of organizational roles and structures Encouragement of personel commitment Development of effective controls at all levels

ADVANTAGES OF MBO:
It keeps company objectives/targets constantly in view It coordinates the efforts of various departments of an organization It provides motivation for people because they work on objectives decided with their consent It forces management to think ahead in respect of its short term and long term goals It helps an enterprise to focus on the areas where it is vital that management should be effective and isolate the problems preventing the progress towards company objectives It leads to better understanding between superiors and the subordinates.

LIMITATIONS:

Management working by objectives may follow too rigid a pattern in thinking and action

There is always need for flexibility in management thinking

and the provisions of written objectives should not be allowed

to affect it adversely.

Contents: Definition
Characteristics

Disadvantages Remedies

Definition: It is a concept which states that routine decisions and decision making process should be handled by lower level managers only.

They have to report exceptionally important cases only to their

higher managers.

The principal aim of this concept is to free managers from ordinary and insignificant matters that adds as a hurdle.

An organizational system in which managers

intervene only when employees fail to meet performance standards or when plans or budgets go awry. Managers compare results with plans and
take action when serious differences occur.

Characteristics of MBE: It is a major time saver

It is a career development process It motivates / encourages the subordinates

It helps managers to evaluate their subordinates on the job It avoids delay

Disadvantages of MBE:
Sometimes, poor decision making by subordinates leads to heavy loss Subordinates may fail miserably problem solving due to their inexperience Potential problems sometimes may not come to the managers attention Management relations may some time suffer

Remedy : Clarify the level of authority

Make sure the lower level managers are comfortable in decision making and problem solving by proper training

Have constant review

Summary: MBO concept -Characteristics -Objectives -Advantages and disadvantages MBE -Definition -Characteristics -Disadvantages -Remedies

UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, information

technology in management Decisions support system

Management Games Business Process Re-engineering(BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages

Strategies in product and service area

What is our company business? Who are our customers?

What do our customers want?

How much they buy? At what price?

What is our competitive advantage?

What is our present technology? Weather it will last? Whether we have to go for buy a make? What is our profit expected in coming years?

Strategic management
It can be seen as a set of managerial decisions and actions that
determine the long term performances of a firm It includes analysis of both Internal environment (within the firm) and external environment (competitions and others) Formulation of strategies Implementation Evolution &control

Strategic planning
Just like organizational planning is a process of deciding on the objectives of the organization, changes in these objectives, resources used or to be used, to manage resources based on

the analysis (Input analysis , Organizational analysis , Industry

analysis , Environmental analysis (based on vision), etc.

Components of strategic planning

Product market scope Growth Competitive advantage Team output scope

Types of strategies
1. Corporate strategy: A corporate strategy provides overall direction to the firm as it is based on analysis of industry as a whole business strategy. 2. Business strategy: Business strategy followed at business unit or production unit level. 3. Functional strategy: Functional strategy refers to an approach in functional area to growth and basic survival.

Few development strategies in Marketing area

Where are our customers? Why do they buy our product? How to sell best? What is our best pricing strategy?

UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, information

technology in management Decisions support system

Management Games Business Process Re-engineering(BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages

SWOT Analysis
A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors which are internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those are external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive operates. As such, it is instrumental in strategy formulation and selection. environment in which it

The following diagram shows how a SWOT analysis

fits into an environmental scan:

Strengths
A firm's strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. Examples of such strengths include:

Patents, strong brand names, good reputation among

customers, cost advantages from proprietary, know-how, exclusive access to high grade natural resources, favorable access to distribution networks

Weaknesses The absence of certain strengths may be viewed as a weakness.

For example, each of the following may be considered weaknesses: Lack of patent protection A weak brand name Poor reputation among customers High cost structure Lack of access to the best natural resources Lack of access to key distribution channels In some cases, a weakness may be the flip side of a strength. Take the case in which a firm has a large amount of manufacturing capacity. While this capacity may be considered a strength that competitors do not share, it also may be a considered a weakness if the large investment in manufacturing capacity prevents the firm from reacting quickly to changes in the strategic environment.

Opportunities
The external environmental analysis may reveal certain
new opportunities for profit and growth. Some examples

of such opportunities include: An unfulfilled customer need arrival of new technologies,

Removal of regulations in international trade barriers.

Threats Changes in the external environmental also may present threats to the firm. Some examples of such threats include: Shifts in consumer tastes away from the firm's products, emergence of substitute products, new regulations increased trade barriers, etc.

 The SWOT Matrix A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a better chance at developing a competitive advantage by identifying a fit between the firm's strengths and upcoming opportunities. In some cases, the firm can overcome a weakness in order to prepare itself to pursue a compelling opportunity. To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below:

SWOT matrix (also known as a TOWS Matrix

SWOT matrix (also known as a TOWS Matrix)

S-O strategies pursue opportunities that are a good fit to the company's strengths. W-O strategies overcome weaknesses to pursue opportunities. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats. W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats.

Star Cash cows

? Weak

UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, Information

Technology in Management Decisions support system

Management Games Business Process Re-engineering(BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages.

IT in Management
Data once processed becomes information and processed information becomes knowledge. Process means to make it more usable.

Characteristics of IT in management

Use of IT is most prevalent in management today It helps managers to communicate, to control, to create a knowledge society, to make easy access to information at low cost, for wide spread ease of using global e-commerce and online trading, digital auction, etc.

Management and Use of IT

Management Domain Planning Use of IT and PC Scenario Planning DSS and MIS Consumer Access to Product & Service Information on JV (Joint venture) Merger and Amalgamation Outsourcing Online organizing Lesser supervision Manufacturing process improvement Internet and Intranet

Organizing

Staffing

Helps in knowledge workers upward mobility Consultancy work Outsourcing man power Training and Educating people
IT gives power to knowledge workers, consumers Lower communication cost Helps team work Ease of control Timely deduction and deviation Worldwide selling Promoting partnership Controlled intranet Financial control made easy by Electronic spreadsheets

Leading

Controlling

Use of IT at different levels :

Supervisory level (Junior management grade) :
Very wide spread use, high programmable, very often repetitive

Middle level managers:

Very widely used for administration, co-ordination, information system, controlling subordinates Top level managers: It can be used for formulating strategies, polices, information and

knowledge and apply of decision models

Challenges of IT
Resistance to computerization (use of graphics, uses friendly software, etc.,) Speech recognition devices (Use voice or speech instead of keyboard)

Networking (using LAN, WAN, at a which are cost effective)

Telecommuting - working with computers at home instead of office.
It helps in mobilizing more time of reason and avoids cost and delay in transportation

Other networks (Intranet, Internet, Groupware it is teleconferencing by three or more people of time) IT in management is a welcome feature. However, the information security (using firewalls, etc.,) should always be taken care of and has to be embedded into each IT application.

UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, information

technology in management Decisions Support System

Management Games Business Process Re-engineering(BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages

MANAGEMENT INFORMATION SYSTEM (MIS)

MANAGEMENT INFORMATION SYSTEM

A system of obtaining, abstracting, storing and analysing data to produce effective information for use in planning, controlling and decision making process.

MIS is used for decision making in the functional areas of business. it has brought accuracy and speed to the

management.

CHARACTERISTICS OF GOOD MIS

Information must be clear and conciseness The information should be relevant to the business organisation It must be simple and easy to understand Helps in the process of decision-making and corrective actions MIS should help in solving the complicated problems effectively

NEED FOR MIS

1.INTERNAL FACTORS : RESOURCES PLANNING AND CONTROL INFORMATION OPERATIONAL INFORMATION PRODUCTION FUNCTION MARKETING FUNCTION

EXTERNAL FACTORS
I. POLITICAL AND GOVERNMENT II. ECONOMIC CONDITION III. TECHNOLOGY IV. COMPUTER HARDWARE V. SOFTWARE VI. DATA VII.PEOPLE

IMPLEMENTATION OF MIS
INPUT DATA INFORMATION S STORES AND RETRIEVALS ANALYSIS

OUTPUT

DECISION MAKING

ACTIONS

ROLE OF MIS
a) MIS increases knowledge of manager and he can function effectively. b) MIS provides decision-making process. c) MIS provides successful achievement of the organisation objectives.

INFORMATION

APPROPRIATE DECISIONS

EFFECTIVE MANAGEMENT PERFORMANCE

ACHIEVEMENT OF ORGANISATION

ROLE OF MIS
SL.NO MAJOR SUBSYSTEM APPLICATION SALES PLANNING , SALES ANALYSIS , SALES FORECASTING PRODUCTION PLANNING , COST CONTROL ANALYSIS PLANNING AND CONTROL COST ANALYSIS , PLANNING , INCOME MEASUREMENT STRATEGIC PLANNING , POLICY , RESOURCE ALLOCATION

1 2 3

MARKETING MANUFACTURING LOGISTICS FINANCE AND ACCOUNTING TOP MANAGEMENT

4 5

APPLICATION OF MIS
TO PROVIDE : Planning and control Sales forecasting Effective managerial activities Long term plans Government policy and regulation Allocate resources To find out new opportunities Help management decision about quality, quantity and market price, etc

MANAGEMENT AND MIS

STRATEGIC PLANNING

TECHNICAL PLANNING

OPERATIONAL CONTROL

OPERTIONAL CONTROL
It provides detailed information and accurate on a daily and weekly basis A market manager must know of past and present sales, record , consumers behaviour, advertising budjet It provide him timely and detailed information obtained from daily operations

MIDDLE MANAGEMENT
Middle level managers such as department heads are concerned with the current anf future performance Information about marketing level problems with customer reduction in sales, quantity of product. They required information from within and outside organisation

TOP LEVEL STRATEGIC PLANNING

MIS must provide information to top management for strategic planning and control External source of information Economic condition Technological conditions Government policy Actions of competitors

MIS INTERTNAL SOURCE OF INFORMATION

Sales volume Financial analysis Human resources Product quality , customers satisfaction The top managers receive overall financial analysis and summarised comparisons of departmental performance.

Decision Support Systems

Decision support systems (DSS)
Offer potential to assist in solving both semistructured and unstructured problems

Characteristics of a DSS
Handles large amounts of data from different sources Provides report and presentation flexibility Offers both textual and graphical orientation. Supports drill down analysis Performs complex, sophisticated analysis and comparisons using advanced software packages Supports optimization, satisfying, and heuristic approaches

Characteristics of a DSS
Performs different types of analyses
What-if analysis
Makes hypothetical changes to problem and observes impact on the results

Simulation
Duplicates features of a real system

Goal-seeking analysis
Determines problem data required for a given result

Integration of MIS and DSS

In many organizations they are integrated through a common database Separation of DSS transactions in the database from MIS transactions may be important for performance reasons

Characteristics
1) Focus

MIS
MIS focuses on structured Focuses and routine decisions tasks also

DSS
on semi-structured and requires

managerial judgment 2) Emphasis Data storage and general Emphasis on data manipulation efficiency Also emphasis on general

effectiveness. 3) Access Indirect access to Direct data and access by

managers & direct access strategies managers only to technical people. 4) Reliance MIS defends on a Depends on managers own judgment managers know in the a

computer expert 5) Understanding

MIS managers need not DSS

understand the full nature decision of data &decisions better way

environment

UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, information

technology in management Decisions support system

Management Games Business Process Re-engineering(BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages

Management or Business Games

Business Games are method of instructions in which organizational people are made to realize,
understand their present potential and available scope in them for further improvement.

Characteristics of BG
All BG orient the mind towards winning which is also necessary in business atmosphere The confidence level of people increases due to this practice

Any failure in BG increases the fighting sprit, it also increase the cognitive
knowledge of learning It augments the theory fear of failure is more harmful than the failure itself. Decision making process is enhanced

Teaming and synergy is also enhanced both as a team member and team leader.

Business Games
Objectives: To provide managers with increased awareness of their own behavior.

How others perceive them Increased understanding of group process

Sensitivity training actually aims for increased empathy improved listing skills, greater openness, increased tolerance levels and increased conflict resolution skills.

Disadvantages
It is termed by people as crude method The weakest individual of the group faces the strongest brunt of all others.

UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, information

technology in management Decisions support system

Management Games Business Process Re-engineering (BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages

BUSINESS PROCESS REENGINEERING (BPR)

BPR refers to analysis and redesign of workflows and
processes within and between organisations. BPR is defined as the fundamental rethinking and radical

redesign (New platform, new methods, new strategy, new

philosophy, etc) of business related process to achieve

dramatic improvements in performance in terms of cost, time, quality, output quantity and responsiveness to
customers.

BUSINESS PROCESS REENGINEERING (BPR)

Present Future

Captive approach
Ineffective systems

Flexible approach
Lean

Inflexibility
Low consumer focus Lack of innovation High overheads Longer lead time

competitive
effective customer focused profitable innovative

Bureaucratic paralysis

creative

WHO WILL Do REENGINEER process?

Leaders Process incharge people Reengineering team Streaming committee

STEPS IN BUSINESS PROCESS REENGINEERING Determining a process vision Define the process to be reengineered Understanding and measuring the existing process Identify the Information technology average level Designing the prototype (approximation) Implementing BPR Review, feedback and modify

Adv of BPR
Improvement of organization as a whole better process improvement Uses IT and other technologies for drastic improvements

UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, information

technology in management Decisions support system

Management Games Business Process Re-engineering (BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages

Enterprises Resource Planning (ERP)

ERP is defined as the process of system integration through network that is capable of planning all the resource of the enterprise to achieve specified goals. ERP integrates all the departments and functions of organizations from supplies to end users, depts. like HR, finance, Marketing, QC, etc.

WHAT IS ERP ?
Enterprise Resource Planning systems (ERPs) integrate all data and processes of an organization into a unified system.

A typical ERP system will use multiple components of

computer hardware and software to achieve the integration.

A key ingredient of most ERP systems is the use of a unified database to store data for various system modules.

ERP systems are large computer systems that integrate application programs in accounting (i.e., accounts receivable), sales (i.e., order booking), manufacturing (i.e., product shipping) and the other functions in the firm. This integration is accomplished through a database shared by all the application programs.

ERP HISTORY IN DEPTH

The first software that was designed to assist the manufacturing process happens to be the MRP (Material Resource Planning) in the year 1975. This was followed by another advanced version namely MRP2 which is the acronym for Manufacturing Resource Planning.

None of them yielded benefit of ERP.

DRAWBACKS OF MRP SYSTEMS

These Software's were helpful in manufacturing processes
only. Their benefits do not extend to other sectors.

The MRP solutions did not render the expected results due to
exorbitant costs and practical work problems. MRP systems required huge pool of technical expertise in terms of manpower and machines.

WHY ERP?
Complete integration of systems across the departments in a company as well as across the enterprise as a whole. Only solution for better project management. Better customer service. Automatic introduction of latest technologies.

Expertise database.

PROBLEMS TACKLED BY ERP SYSTEMS

Material Shortages

Productivity Enhancements
Customer Service Cash Management

Inventory problems
Quality Problems

ERP SELECTION
Check whether all functional aspects of business are duly covered. Check whether all the business functions and processes are fully integrated. Check whether all the latest IT trends have been covered.

Check whether the vendor has customizing and implementing

capabilities.

 Ease of use.

ADVANTAGES OF ERP PACKAGES

Readymade solutions for most of the problems.

Integration of all functions already established. Dependency on human resources eliminated. Easy enterprise wide information sharing.

Suppliers and customers can be online communication.

Automatic adaptation to new technologies. Knowledge transfer between industries guarantees innovation.

Why ERP Is Required

It is very essential is this competitive world to perform better, to increase market share, thereby increase efficiency. ERP helps organizations to be cost effective by re-engineering the present business process. It utilities information technology and communication and uses them for organizational effectiveness.

Business modeling for ERP:

It consists of process mapping of business process and subprocess. Diagrammatic representation of business process indicating the sequence, flow, interconnection, path of all subsystem to the main sysytem. Making a cost effective ERP model by planning in line business objectives.

ERP features
Role of consultants is very important here. ERP is managed by the strategy of bringing people together by making available information to everybody for effective DM. It is time bound. ERP success depends on functionality, technology, cost to ERP package (whether customized or not).

 Identification of ERP needs (quick info flow, effective, eliminating paper work and networking) Evaluate the present business situation understanding the present info system, present procedures and methods , present process & technology. Decisions regarding desired situations (by benchmarking resource utilization). Re-engineer the present business process(reduction of cycle time downtime, reducing no. of decision points and stream lining information to flow at all levels) Evolution of various ER package (cost vise, local or global presence, R& D investments, cost of implementing, ease of implementation, etc).

Steps in ERP

Steps in ERP
Finalisation of ERP Package Finalize the consultant Implement ERP in a phased manner followed by post implementation support.

ERP Domains
Materials Management Banking Financial services SCM HR ERP operating software AGILE (HR), People Soft (HR), Oracle (finance)

UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, information

technology in management Decisions support system

Management Games Business Process Re-engineering (BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages

Supply Chain Management (SCM) System It is an extension of distribution logistics and was earlier referred to as physical distribution management. It is primarily an integration of material management, manufacturing and physical distribution by network using information technology. SCM is often interpreted as network of production, distribution and marketing.

Four major drivers of SCM

1. Transportation 2. inventory 3. Facilities and 4. Information

SCM s also seen as a trade off between efficiency and responsiveness. SCM facilities management of high quality inventory most efficiently and effectively (from manufacturing point to sale point)

It is embedded with policies, procedures and organizational structures

(manufacturing organizations spend nearly 54 % of money on raw materials, components of maintenance.) SCM success depends on effective integration of various aspects such as speed, service, volume, scale, cost, operating environment, customization, common polling, etc.

Key areas of SCM

Ways and means of minimizing uncertainty Reduction of Lead time Improving flexibility &process Quality Minimize variety to maximize economic of sales Proper demand management Taking care of product differentiation Improving the major drivers

Eg of SCM:
Just in time: JIT is maintaining adequate inventory and not keeping stocks more than the requirement.
Hindustan Petroleum Corporation improved their profits by improving supply chain, optimizing procurement process, lower freight charges, etc.

Definition
A supply chain is a network of facilities and distribution functions options that performs of the

of procurement
of these

materials,
into

transformation

materials

intermediate and finished products, and the distribution of these finished products to customers.
107

110

111

UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, information

technology in management Decisions support system

Management Games Business Process Re-engineering (BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages

Activity base Management (ABM):

ABC is activity based costing. It is the basic form of ABM. A type of functional accounting being adopted by leading companies like HP, GE and Union Carbide. Traditional financial accounting identified cost according to the category of expenses such as salary, supply charges,
raw material cost, fixed and variable cost. But ABC determines cost according to what is payable for different tasks employees perform.

Activity base Management (ABM):

Cost associated activities such as sales order processing,
expediting customer orders, resolving delivery problems, re-

tooling of machines, cost of advertising, publicity, etc are

separately calculated. ABC provides decision makes a much more accurate breakdown of the cost data and the time taken for each item. Such as analysis can help mangers to understand the

significance levels of activities within a process and help them

to reduce cost.

Characteristics of ABM
ABM based on ABC is adopted where there is increase in overhead levels where increasing in labour cost Eg. Of overhead charges : Salaries for employees, electricity and maintenance, taxes and other duties to be paid to government., rent for premises, etc.,

Steps in ABC

Costing of each activity is taken up Identity cost driver for each of the activity Establish cost driver rate Apply required rate to the products Advantages of ABC It supports cost control measures It produces products with better cost for managers to make proper decisions

UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by Exception

(MBE), Strategic Management - Planning for Future direction

SWOT Analysis Evolving development strategies, information

technology in management Decisions support system

Management Games Business Process Re-engineering (BPR) Enterprises Resource Planning (ERP) Supply Chain Management (SCM) Activity Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages

Global Perspective of Management

Global perspective consists of

1) International management or Oversees management:

International or oversees business takes place between a

parent country and host countries

2) Global or trans-national corporations: Views the world as one market irrespective of place of functioning 3) MNC (Multi-national corporations): MNCs have their head quarters in one country but operate in many countries Eg: Ford of USA operates in INDIA, UK etc.

Types of International Business: The various types are Exports Licensing Management contracts JV (joint venture) Strategic alliances Subsidiaries

Transformation of International Business

1. Ethnocentric: It is an approach found in international firms where nationals

from the parent country dominate the organization at home

and abroad. In terms of decision-making, the subsidiaries have very little autonomy, and control resides in head office. This ethnocentric attitude stems from the belief that the parent-country nationals are best suited to run the business, irrespective of the local circumstances.

EG: Earth movers.

Polycentric : These are foreign subsidiaries staffed by local people who have great managerial freedom Eg: Hyundai motors It is an approach found in international firms where host-country nationals manage the subsidiaries. Decision-making is given to the subsidiaries, although head office in the parent country controls the overall business strategy.

From this perspective, host-country nationals are considered

important because they can bring local knowledge and understanding to the day-to-day operations of the subsidiary businesses.

3. Geocentric: Geocentric management involves a global view of the organization's international operations. Here the entire organization is viewed as inter dependent system operating in many countries. The top level managers are either from local countries or other nations. However, a two way communication is a must (between head quarters & other locations Eg: Philips, Asea Brown Boveri (ABB) The best managers, regardless of their nationality or location, are selected for the assignments that fit their skills and abilities, the various units are connected by a coordinated plan that allows for local needs and actions in the context of overall organizational performance.

Adv of global management

Money can be easily raised throughout the world by its

operations at different locations Eg: Hyundai

It utilities the business opportunities available in many countries

Cost effective products can be made (by using low cost labor)
Large MNC & can receive managers and personals from a world wide managers bank.