Engineering Business Environment - Assignment Example

Business for Engineers By Lecturer’s and Task Engineering business functions Engineering business functions have to do with the process of designing and structuring the business processes and operations into a machine, as well as delivery of a more reliable repeat cycle of the customers’ value generation. Simply, it is all about the act of doing things in a proper manner so as to find the optimal gateway through various important business operations, thereby maximising the production value at a very minimal cost. It also encompasses consideration of the organisation’s structure, necessary business functions, grouping and management of particular functions, measurement of those functions, the processes that they operate, and the optimality of such processes (TAYLOR & WORSHAM, 2005). There are five main functions of an engineering business, which includes; Marketing, Financing, Logistics, Risk management and the IT and process management. Marketing: This function gathers and analyse information about the business trends, variation in financial products, market conditions and provision of legal advice and business customs and values. Financing: This has to do with procurement of capital which is necessary for maintaining, expanding and launching new businesses. Logistics: The logistics expertise is a main source of customers support. It majorly adds up towards the efficiency of various transactions within a business unit. Risk management: Proper risk management strategies are essential for enabling the customers to conduct their businesses with proper peace of minds in terms of their financial security. It and process development: This function works towards enhancing the business efficiency and effectiveness. Task 2: The inter-relationship between the different processes and functions of an engineering organisation: An engineering organisation has to adopt a functional organizational structure so as to ensure efficiency and effectiveness in terms of its output. Different functions merge into various departments that rather operate under departmental managers, who in turn report to the top management (TAYLOR & WORSHAM, 2005). Adoption of a functional structure is advantageous since it ensures clear categories of authority, thereby allowing each and every employee to concentrate on specific missions. Organizational processes and structures are often confusing but the fact is that they are different in terms of influence towards each other. A process shows the task that is performed in an organization. An organization mainly determines the effectiveness of deploying workers to various specialities and support towards getting work done. For instance, such an organization should have functional interrelated departments that might include; product development, sales and marketing, as well as the finance department. All these departments are interrelated in that; they depend on each other in terms of their functionality towards attaining common organizational goals and objectives. Task 3: Importance of developing standards that ensure that both the customers’ specification and that of the company are maintained: The organization should set out distinct standards that govern the design and specification procedures that are deemed to ensure that goods and services are in consistent realization of the intended performance output. Standards give an organization and consumers great confidence on the safety and security of the developed goods and services. Simply, it assists consumers make every day’s choices between various products. Standards, on the other hand, provide a platform for building and implementing new ideas. New standards tend to touch on the latest technologies, innovations, and even the community needs, which are very essential for the organizations output. Standards can also work towards ensuring that the cost of production is cut to a greater extent. This is due to the fact that it offers a proper platform that ensures maximum production using minimum input. On the other hand, standardisation ensures that a company thrives well in a competitive environment. This is due to the fact that it enhances the capability of providing clear distinctions of the company products. Finally, establishment of proper company standards tend to reward the company’s employees in a very autonomous manner. This is due to the fact that it increases their knowledge, competitive advantages and attainment of stronger business networks. Generally, the development of company standards relies mainly on accurate modes of measurements to express conformance methodologies and specifications. Each component plays a key role in ensuring that the company’s conformance measurement and standards infrastructure tend to deliver high level of accuracy and quality; and is accepted consistently with confidence by the entire organization (PIRES, CARVALHO & MOREIRA, 2006). So, conformance and standards are the keys elements towards ensuring the consistency and quality of physical, biological and chemical measurements throughout the organizations’ functions and processes. Task 4: The financial planning process in an engineering business: In order to achieve its goals and objectives, an engineering business organization must have adequate financial plan that has to be put in place. According to TAYLOR & WORSHAM (2005), financial planning process basically refers to the means by which an individual or a business defines financial objectives and hence creating a proper strategy to attain them. A financial plan does not only serve as an organization’s checklist of various actions, but is also used as a document that can be used to check the progress so as to see if a change of strategy is required. Financial planning process varies depending on the unique features of the business and its goals, but basically there are various general steps and guidelines that form the basis of the process of planning. These include: Current Financial Situation Determination: This step has to do with determination of financial situations by considering the savings, income, debts and other minor expenses through preparation of a balance sheet. Step 2: Development of Financial Objectives: This can be achieved through should periodical analysis of the financial goals and values that are vital for the planning process. Step 3: Identifying Alternative Courses of Action: This tends to ensure proper planning and decision-making process. Step 4: Evaluation of alternatives: This ensures that adequate information that can be used for proper decision-making process is attained. Step 5: Creation and Implementation of Financial Action plan: This has to do with the choice of ways for attaining the organization’s goals and objectives. Step 6: Plan re-evaluation and revision: This enables an organization to make adequate adjustments that can lead towards realization of its goals and objectives. Task 5: Factors influencing decision-making process during financial planning: Decision making happens to be a very essential and critical process in running of each and every organization. This is because it involves the process of identifying and choosing alternatives based on the value choices to be considered and in such case, an organization want not only to identify as many of these alternatives as possible but to choose the one that best fits with our goals, desires, lifestyle and values (TESAR, GHOSH, ANDERSON, et.al.,2008). Decision-making is influenced by various factors such as; the environmental factor, budgetary allocation, market orientation, future developments and even in case of the impending risks that totally affects the organization’s stability (TESAR, GHOSH, ANDERSON, et.al, 2008). All these factors tends to influence decision-making processes in various ways, since they influence the initial plans and thoughts of the decision-makers since decisions are supposed to be reached at after massive discussions and consultations. Task 6: Analyse Standard Costing Techniques Our company will be called Hi-Tech Ltd. Company and now just about to introduce a new widget into the market. Given the variable and fixed cost elements the aim to determine whether the company should go ahead to produce and distribute the widgets. This we will do by calculating the selling price based on the marginal costing and absorption techniques. Marginal costing is an accounting technique where the changeable costs are charged to cost units and fixed costs are written off against the overall contribution for the period. Absorption costing, on the other hand, is a technique where the full cost of a product are built and added to direct costs and the proportion of production overhead costs with the use of one or more overhead absorption rates. Category Absorption costing (20,000 units) Marginal costing (20,000 units) Variable; material, labour, etc. (20,000 @ 19) 380,000 380,000 Factory Overhead (V. FOH) (F. FOH) 28,000 49,000 28,000 ---------- Product cost 457,000 408,000 Fixed cost (period expense) -------------- 49,000 Cost per unit under Absorption costing = 457,000 / 20,000 = 22.85 Cost per unit under Marginal costing = 408,000 / 20,000 = 20.4 Since the company wishes to make a 47% profit on each unit cost, the selling price for both methods will be as follows. Under Absorption costing---- S.P = cost + profit = 22.85 + (47% of 22.85) = 33.59 Under Marginal costing---- S.P = cost + profit = 20.4 + (47% of 20.4) = 29.99 Most Appropriate Costing Method Under Absorption costing (20,000 × 33.59) – 457,000 = 214,800 Under Marginal costing (20,000 × 29.99) – 408,000 = 191,800 In this case, the Absorption costing produces more profits and hence the most appropriate for the company. Reference List PIRES, L. C. M., CARVALHO, J. D. A., & MOREIRA, N. A. (2006). Virtual Enterprise Organization. TAYLOR, D. A., & WORSHAM, C. B. (2005). Financial planning: process and environment. Bryn Mawr, Pa, American College press. TESAR, G., GHOSH, S., ANDERSON, S. W., & BRAMORSKI, T. (2008). Strategic technology management building bridges between sciences, engineering and business management. Singapore, World Scientific. http://lib.myilibrary.com/Browse/open.asp?ID=186770. Read More