Contemporary Management Techniques - Essay Example

Running Head: Contemporary Management Techniques Name Course Lecturer Date Contemporary Management Techniques Balanced score card and strategy map This is a strategic planning and management system that is used to align business activities of an organization to the vision statements of that organization. In a more clinical and in a realistic case balanced score card attempts to explain hopes of the organizations vision and mission statement in to practical way of managing the organization better at each and every level. To have a good balanced scorecard an organization must first understand its mission statement and the organizations strategic plan/vision. This will be realized in conjunction with knowing the balanced scorecard approach perspectives of the organization which are financial status of the organization, how the organization is currently operating and structured, the expertise level of the employees and the level of satisfaction of the customers. A good example of an organization with a balanced scorecard is the defense finance and accounting services which has scorecard based strategy plan. The value chain This is a chain of activities that an organization in a certain industry performs in order to produce valuable products and or services for its customers. It describes the activities that take place in a business and relates them to an analysis of a competitive strength of the business. The products pass through several activities of the chain so as to add value to the products. This was highly influenced by Michael porter who suggested that the activities of a business could be grouped in to two categories namely primary activities (directly concerned with creating and developing a product) and secondary activities (for increasing efficiency and effectiveness). The French Physiocrats' Tableau économique is a good example of a value chain. Activity based costing and management This is a cost accounting methodology that works to identify activities in an organization. It then assigns the costs of each activity with the resources to all services and products according to actual consumption by each product and or service. This costing method deals more with the overheads of an organization or a company where it assigns those (indirect costs) in to direct costs. This helps a company to thoroughly estimate costs of the entire product activities as well as the services. This in turn will help the company to do away with non profitable products and services and as well lower the unit costs of the over priced products. It also helps a company to eliminate production processes that are ineffective and allocate processing concepts to the products at better outcome. A good example where activity based costing and management is used is in manufacturing industry where there are management costs and production costs. Business intelligence These are a set of processes, methodologies, technologies and architectures that transform raw data in to a useful and meaningful information for business purposes. It allows a company to gather, access, store and analyze its data to aid in decision making. They illustrate the businesses areas of customer support, market research, customer profiling, product profitability, market segmentation, inventory and distribution analysis and statistical analysis just but to name a few. To be able to use business intelligence successfully, it is advisable to have a range of software programs and different software applications for the various departments in the organization throughout. In Australia, managers have made business intelligence their top priority in particular Hardees, Ruby Tuesday, Wendy’s and TGI Fridays are heavy users of business intelligence software. They use it to make business strategic decisions such as what new foodstuffs to add to the carte du jour, which dishes to do away with and which underperforming supplies to close down. Target costing This is a costing system where by a company plans in advance for the product costs, product prices points and profit margins that it wants to attain. It’s a cost management tool for reducing the overall costs of a product over its entire production process (product life cycle). It works to reduce the product target costs (maximum amount of cost that can be incurred on a product). It involves setting costs and subtracting the desired profit margin from the market price. Management has a powerful tool in target costing for continually monitoring products though their life cycle. It is an improvement and a tremendous tool of planning for products that has high profitability levels. Toyota Australia uses target costing for developing its services and products which positions it in the market from its competitors. Life cycle costing This is a production and procurement costing technique that considers all the life cycle costs of a product. In procurement it aims to settle on the lowest costs of possession of a fixed asset (purchase price, operation, installation, maintenance and upgrading, disposal and other costs) during the assets economic life. In manufacturing as well, it aims to approximation the product costs and how much income and the expenses that will be incurred at each stage of value chain during the production life cycle period. It involves the analysis of costs related to building, operating as well as maintaining a project/product over a defined period. The department of sport and culture in west Australia government has successfully implemented the life cycle costing system. It has therefore been able to locate all costs to the various sports activities football, rugby, tennis, cricket among others. Benchmarking This is comparing one business process and performance with the industry best practices and other company practices as well. In most cases benchmarking measures the cost, quality and time aspects of a product. The management identifies the best companies in the industry where there are similar processes and compares the processes and results. It is used to measure performance using specific indicators in strategic management where the management evaluates their processes in relation to the best practices of the industry, usually the peer group companies in the industry. The Australia taxation office uses benchmarking to tax businesses in the same industry where it has been working well. Firms and small businesses in the same level pay the same tax on their income. This has increased the amount of tax collected by the office. Business process improvement This is an orderly action taken by an organization to ensure that all processes involved in running an organization are in line with needs and wants of their clients. It ensures that a business is flexible to changes that may occur in an organization and hence making it more efficient and effective. It involves looking at the current process in the organization and controlling it. For example, in the common wealth of Australia mainly in the Department of Finance and Administration they use the following steps in management of activities: Foremost, planning on how to carry out their activities and setting strategies on how to achieve their goals. Secondly, analyzing the plans and strategies set to see if they fit in the organizational structure. Thirdly, it’s designing the business process which includes incorporating the plans in running of the business. Monitoring and evaluation must be done to see the effects that the plans have in managing the business. Lastly, mistakes noted are corrected for the organization to be productive. Total quality management This is a nonstop process for improving quality of products and all process involved in an organization to meet customers’ needs. In Australia, the construction industries involve all employees in the construction process since their efforts determine the end product. Consumers are too involved in the process because they determine whether the efforts by the producers are worthwhile or not. A process to be followed to get the final product must be well defined. The process is actually a step by step use of resources from suppliers and converting them into products that are used by consumers. The management must provide a favorable environment for this process to go on. Proper communication must be maintained too. Due to ongoing competition, improvements must be made on this process to always ensure the quality of the end product is the best. Lean accounting This is a term used to refer to changes that need to be done in accounting, management, control and measurement process to ensure that all available resources are used to their maximum. This involves thinking of all possible ways resources can be used without much wastage. Lean accounting is mainly used by the Toyota Company in Australia. It is very important because it increases sales since better decisions are made especially in pricing the product. It also helps in reducing wastage of money by reducing the cost in all ways possible. It also enables the companies to make more money due to using strategies that realizes area that will give maximum profit. The theory of constraints This helps one identify factors that limit one from achieving set goals. In every organization no matter how strong it is, it has at least one force that affects the normal performance. However, there are ways one can eliminate this constraints. Identifying the constraint, this is done by going back to the process used regularly and checking the weak point. Another way is getting to understand the constraint and ways of managing it. Various actions can be implemented at this point. Lastly, a review can be done to see if the simple fixes done are working. At this point, right decisions are made that eliminate the constraint. Once the constraint is not a problem anymore, you can go ahead to look for more constraints. The organization can adapt ways of detecting a constraint once it occurs to prevent great harm to the company. Enterprise sustainability This is a mechanism of ensuring that the business carried out has little or no effect to the environment or the community. All sustainable business produces and supply products that are environment friendly. In Australia, sustainable wildlife enterprise use wildlife to help in conserving the environment. Land owners use kangaroos to manage their farms financially. Sustainable businesses are on process to be established. However not all companies can easily adapt to this system and hence various strategies have been laid to help corporate sustainability. For one, company must focus on its ability to change products and services in a way that will reduce wastage. Secondly, companies producing the same products can come together to assist each other especially in knowledge sharing. Also, an ongoing process can be established to survey on waste management. Finally, it’s important to have regular reports on companies’ performance in relation to set goals. Enterprise risk management This is the process of organizing, planning, controlling and leading organizations activities in order to minimize the effects of risk on the capital and earnings of that organization as well as seizing opportunities related to the achievement of business objective of that organization. This includes a holistic approach to risk where it accounts for the accidental losses, strategic risks, financial risks, and operational risks as well as other risks. It’s nearly becoming mandatory for companies and organizations to have effective risk management policies and procedures. Enterprise risk management addresses the needs of all stakeholders of the organization. This has made companies to scrutinize risks facing them to ensure that they are managed well. By managing enterprise risk, business enterprises create and protect value for their stakeholders. SWOT analysis This is a structured method of planning that is used to evaluate the strength, weaknesses, opportunities and threats that a business face. Strength and weaknesses are internal to a business while opportunities and threats are external to a business. For strength and weaknesses a business must have strong product line, skillful and expertise management, adequate research and development resources, vibrant marketing and have strategic plans on how to continuously improve the product. For opportunities and threats a business must counter barriers to market entry, address the intensity in the market, the presence of substitute goods and lower the bargaining power of the suppliers and customers. This will help a business have a competitive edge in the market. Read More