Statistical Techniques in Economy Sectors - Coursework Example

PAPER WEEK 4 Statistics and Statistical Techniques Statistics can be used to understand the key sectors in an economy so as to help in controlling the inflation rate that may arise from within or outside a country. Inflation can affect many organizations within a country if the prices of inputs go up. Multivariate variance analysis which is a statistical technique can be used to explore data in different organizations to determine which organization is the source of general increase in price of a given commodity (Om Sai Ram Centre for Financial Management Research, 2006). Profit ratios among different industries can lead to differences in terms of financial characteristics. Through exploration of these ratios using statistics, can help in limiting the inter-industry effect of inflation. Statistics also help in giving data in a summary form the prices of foreign currencies. This information is useful in controlling inflation rate from outside the country, and thus leads to the success of domestic industries. Statistics are helpful when doing comparison of different economy sectors or organizations Sai Ram Centre for Financial Management Research, 2006). Multinational Companies carry out Research and Development (R&D) to determine their share of R&D in foreign countries. By comparing the ratios, the MNCs are able understand which sector or organization to give more effort in terms of resources, or which country to increase their share of R&D. This has boosted many business organizations as R&D has helped to come up with innovative means of doing business Sai Ram Centre for Financial Management Research, 2006). To increase shareholder value in an organization, correlation is used to quantify association of the shareholder value and the earnings per share or net income. Statistics are important in valuation and monitoring of business operational alternatives (Narayanan, 2004). From previously recorded statistics a manger can alter or adjust a business strategy. However, in making decision regarding the shareholder value, the share price should not be used to make decision as this has no causation relationship with the shareholder value (Glene, 2003). References: Glene, Suter. Appropriate Use of Statistics. Office of Research & Development, 2003, 2 Narayanan, M. Finance for Strategic Decision Making: What Non-Financial Managers Need to Know. University of Michigan Business School Management Series, 27, 2004, 1-10 Om Sai Ram Centre for Financial Management Research. Financial Management Indicators to Aid Decision Making(Statistics). Journal of Financial Management & Analysis; 19.1, 2006, v-ix PAPER #2 WEEK 4 Scenario Forecasting Scenario forecasting is important in any organization that wishes to have a successful planning in future. Scenario forecast prompts team members in an organization to think outside the box by trying to anticipate dynamics that may affect business activities or the team. Scenario forecast goes past simple, straight-line extrapolation of the project performance of a company to portray how different factors interact to yield great change scenarios (Barner, 2001). When scenario forecast technique is carried out properly, an organization comes up with a business plan that can accommodate many interacting change factors. It offers a significant tool for establishing alignment among managers on threats and opportunities to come. Also this technique helps team members in an organization to understand how the conflicting ideas on major issues are usually based on assumptions that are quite different regarding the future (Barner, 2001). Scenario forecast assists business organizations to manage uncertainties properly. In this case, the managers and other team members are able to open up their field of view and see things in a wider perspective. This enables the team to avoid discontinuities which uncertainties may pose to the organization (Pannenbaecker, 2007). However, in some circumstances scenario forecast tends to treat uncertainties as an enemy to organizations. This leads to constraining of business options. The organization in this case may end up ignoring the change factors that later interfere with the business settings. Scenario forecast tends to make team members to treat options in a business with fear, where by this impedes implementation of important business strategies (International Institute of Forecasters, 1996). References: Barner, Robert. Scenario Forecast: Methodology Forum. 2001, 1(1) International Institute of Forecasters. International Journal of Forecasting. Holland: North-Holland 1996 Pannenbaecker, Tilo. Turning Uncertainties into Success- The Use of Scenario-based Strategy Development in Semiconductor Business, Bremen. 2007 < http://www.wfs.org/barner.htm> PAPER #1 WEEK 6 Market Positioning and Core Competence Market positioning is very important if an organization has to maintain its competitive advantage. Positioning a market will involve developing vision and mission that relate to the product to be marketed. To develop vision and mission that will enhance a strong competitive advantage in the process of market position an organization should consider the following principles: clear value propositions, right goals, different chains of values, trade-offs, and maintaining the discipline of the strategy. Competitive advantage resulting from marketing advantage will always keep off other companies from replicating the organization’s ideas, as the competitor will find it expensive to follow suit (Drejer, 2002). Also an organization can maintain its competitive advantage by adopting the core competence approach. The organization here may set its vision and mission by assessing the special competencies it wishes to establish, and consider those market opportunities it can exploit optimally (Tellis, 1996). To maintain a competitive advantage in a multi-business firm a corporate strategy is necessary. The organization should consider the value that corporate strategy could add if the business was a stand-alone, and which business to include in this strategy. If an organization is undergoing organic growth, it will be ideal for strategists pursuing corporate development to adopt the core competence approach (Tellis, 1996). The reason to this is because, the core competence perspective will lead to expansion of product-market diversity in which diversification in products related to the first one can also be pursued, and thus give many options for organic growth compared to stand-alone product-market (Brian, 2006). Market positioning proves to be the best perspective to maintain competitive advantage in a business as it offers how finesse a strategy that is successful can be implemented in order to maximize a distinctive market position once it is recognized (Brian, 2006). However, the two practices in strategic decision making are important as they ensure survival of an organization in any competitive market. References: Brian Leavy. Assessing Your Strategic Alternatives from both a Market Position and Core Competence Perspective. Strategy and Leadership, 31.6, 2006, 1-34 Drejer, Anders. Strategic Management and Core competencies: Theory and Application, New York: Greenwood Publishing Group, 2002 Tellis Gerald, & Golder, Peter. First Market, First to Fail? Real Causes of Enduring Market Leadership. Sloan Management Review, 37.2, 1996, 65-73 PAPER #2 WEEK 6 Policy Formulation and Execution Policy formulation and execution are key factors in business management. Using the scientific way of business management helps organizations to come up with concrete answers to the arising problems in the business setting (Ulrich, 1992). When trying to formulate a business policy, one is often trying to fix aims which are very significant for the prosperity of the business. The aims to be fixed are normally derived from facts or predictions about the future (Ulrich, 1992). Policy formulation must be done through realistic assessment of the situation of affairs. This is done by evaluating the current realities and future scenarios. Situation assessment in this case will involve ordering and weighing up of the possible outcomes of a policy (Ulrich, 1992). Policy formulation will also require an organization first to come up with a series of data that will be used to develop the aims to be fixed. For an organization to come up with data, it can carry out market researches on a particular area of concern that need the policy formation. In the process of policy formulation, business managers are required to visualize what does not exist to realize a fact that is acceptable in the business management. The policy formulation process aims at coming up with a decision that need to be implemented (Ulrich, 1992). After the formulation of a policy the next task left a business manager is to execute the policy. Policy execution is aimed at achieving the aims that have already been fixed in the policy formulation process. At execution stage the business manager has the decisions to be implemented at hand (Foxall, 1991). The execution of the policy may require use of material things to implement the decisions. During the policy execution process decisions are informed to all responsible parties. Also in this process the business managers should be flexible to do changes on the policy where possible (Ulrich, 1992). For effective execution of a policy there is need for continuous control of the process. However, the two processes: policy formulation and execution require co-operation from all members of the organization (Beauchamp, 1983). Policy formulation should be done with a lot of preciseness as it will determine the end results of the policy execution. References: Beauchamp, Tom. Ethical Theory and Business. New York: Prentice-Hall, 1983 Foxall, Gordon. Strategic Marketing Management. Oxford: Oxford University Press, 1991 Ulrich, H. Policy-formation and policy-execution in the business undertaking. (Policy and Planning). Management International Review, 8.9, 1992 PAPER #1 WEEK 7 Economic Indicators The applicable economic indicators to a business are: the retail trade sales and food service index, consumer price index, producer price index, and inflation rates. Such economic indicators play a significant role during the decision making process as they have impact to the whole business setting. Organizations should consider the retail trade sales and food service index as this will determine the consumption rate for the goods by consumers. Using this, organizations can know where they need to apply marketing strategy to increase sales (North, 2005). Consumer price index is important as it measures the ability of the consumers to purchase particular product. Organizations can use this information to provide goods and services that are affordable to consumers by either lowering the prices or packing the goods in quantities that consumers can afford. Producer price index that measures change of prices at the wholesale level can help a business organization to determine prices for its goods (North, 2005). Although inflation rate may not be a factor to be considered by all business organizations, it will be useful for those organizations which rely on goods from different sectors to produce their goods. In this case, business organizations should be able to determine the impact of the inflation rate on their finished goods so that they can determine the prices of the goods to be sold to consumers. All these economic indicators are necessary in making decisions regarding the management of a business as they have effect on business as whole (Tainer, 2006). In determining the external and internal forces of a business, the above economic factors should be considered before any business policy is formulated. The current economic comprising of increasing prices of oils and prices of other goods makes it important to know the effect of each indicator during the decision making process (Mukhopadhyay, 2005). References: Economic indicators to watch and why. Journal of Accountancy. 200.6, 2005, 26 North Douglass. Institutions and the process of Economic change. Management International., 9.3, 2005,1-81 Tainer, Evelina. Using Economic Indicators to Improve Investment Analysis. New Jersey: John Wiley and Sons, 2006 PAPER #2 WEEK 7 Build-To-Order Aligning production with the market demand is an appropriate policy that can be considered by certain business organizations, as it is one way of profit maximization. This policy helps an organization to do production within its limit, where by goods are sold according to the customers’ demand (Mukhopadhyay, 2005). Aligning production with the market demand in this case is referred to as build-to-Order (BTO), as the technique offers an opportunity to a firm to customize productions in relation to the customers’ requirements. This strategy differs from one organization to the other (Anderson, 2004). Even though a firm in this case may have an increasing demand of its products, there are high chances of facing operational difficulties with build-to-order technique. One of the limitations with this policy is connected to the return policy which is a known tool to win the orders from customers (Mukhopadhyay, 2005). In achieving this policy of aligning production with the market demand, there is need to use modularity in the design of the products. From the view point of manufacturers, following the modularization policy and providing a generous return policy would raise revenue. However, this will also increase the cost because of the increased design cost and returns (Mukhopadhyay, 2005). To obtain optimal policy on build-to-order, an organization should come up with a profit optimization model for the modularity level and return policy in terms of parameters reaction to a certain market. Different organization will adopt different guideline managerial numbers for using operational and marketing strategy variables to manipulate the reaction parameters so as to optimize the market benefits (Kochan. 2003). References: Anderson, David. Build-to-order &Mass Customization: The Ultimate Supply Chain Management and Lean Manufacturing Strategy for Low-Cost on-Demand Production without Forecasts or Inventory. London: Routledge, 2004 Kochan Anna. Renault Aligns Production to Market Demand. Assembly Automaton, 2003, 23(4). 331-350 Mukhopadhyay, Samar. Optimal return policy and modular design for build-to-order products. Journal of Operations Management. 23.5, 2005, 496-507 PAPER #3 WEEK 7 Corporate Culture The corporate culture that financial mangers are number oriented may affect business costs by making a value-destroying decision. It has been found that most acquisitions do not create shareholder value in many business organizations. This is because the acquirer may make overpayment. Therefore, organizational policies based on numbers by the financial managers may lead to a failure of a business since as the shareholder value is lost in the process of decision making and policy implementation (Narayanan, 2004). Planning and forecasting Planning and forecasting are effective and essential management aspects that need to be incorporated in policy development. Managers should bear in mind the future effects of a decision that they make regarding a particular policy. When an action is taken, there is need to adjust the forecast so that the impact of an action can be reflected. In policy development, if a forecast is not adjusted it may result to a formulation of misleading policy (Waddell & Sohal 1994). Sarbanes-Oxley Law The SOX laws had impact on public companies in that the cost of being a registered company increased. It is believed that the enactment of SOX delayed the IPO in public companies and made some companies to be acquired by others. Although there no enough evidence SOX are said to have made private companies to maintain their status quo (Lynn, 2006). However, the federal government is considering to extent these laws to the private companies. The SOX has had trickle down effect on private companies as the federal law concerning retaliation against whistleblowers, destruction of documents, increased white-color crime penalties and security fraud, and requirements on blackout notice criminal liabilities apply to both private and public companies. As a legislator creating SOX laws I will ensure that the legislations protect all the investors either in private or public companies. This will create uniformity for investors and encourage companies to practice accountability and transparency. The corporate culture that led to meltdown of many companies before the enactment of SOX was inappropriate accounting practices. References: Lynn, Stephens & Robert Schwartz. The Chilling Effect of Sarbanes-Oxley: Myth or Reality? The CPA Journal, 76.6, 2006, 14-19 Narayanan, M. Finance for Strategic Decision Making: What Non-Financial Managers Need to Know. University of Michigan Business School Management Series, 27, 2004, 1-10 Waddell, Dianne & Sohal, Amrik. Forecasting: The Key to Managerial Decision Making. Management Decision, 32.1, 1994, Read More