unit 5 modern concepts 4spp
TRANSCRIPT
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1
Unit5
ModernConce
pts
--
ANNA
UNIVERSITY
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UNIVERSITY
Objective
Thestudentswillbeabletounderstandand
applythe
followingconcepts:
Manaementb
ObectivesMBO
Managementby
Exception(MBE)
StrategicManagement-PlanningforFutured
irection
Evolvingdevelo
pmentstrategies,information
technologyin
management
ecsons
upp
or
ysem
ManagementGames
BusinessProce
ssRe-engineering(BPR)
EnterprisesResourcePlanning(ERP)
SupplyChainM
anagement(SCM)
2
Objective[contd.]
Activity
BasedManagement(ABM)
GlobalP
erspective:
PrinciplesandSteps
Advantagesanddisadvantages
3
4
Unit5.1
Ma
nagementByObjectives
(MBO)
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Introductio
n
Definition
:
ManagementbyObjectives(MBO)isa
processofdefining
objectiveswithinanorganizationsoth
atmanagementand
employe
esagreetotheobjectivesandunderstandwhattheyare
intheor
ganization
Aim:
istoincreaseorganizationalperforma
ncebyaligninggoalsand
subordinateobjectivesthroughoutthe
organization.
,
,
timeline
sforcompletion,
etc
Proposed
by:
eer
rucer
e
racceo
anag
emen,
.
5
FeaturesofAdva
ntage
Motivation
BettercommunicationandCo-ordination
Subordinatestendtohaveahighercommitmenttoobjectives
theysetforthem
selvesthanthoseimposed
onthemby
anotherperson.
Managerscanensurethatobjectivesofthe
subordinatesare
linkedtotheoranization'sobectives.
6
SettingOb
jectivesinMBO
ForeffectiveMBO,
individualmanagersmustunderstandthe
specifico
bjectivesoftheirjobandh
owthoseobjectivesfitin
withtheo
verallcompanyobjectivessetbytheboardof
directors.
Themana
gersofthevariousunitsor
sub-units,orsectionsof
unitbutshouldalsoactivelyparticipateinsettingthese
objectivesandmakeresponsibilityfo
rthem.
7
SettingObjective
sinMBO[contd.]
Thereviewmechanismenablesleaderstom
easurethe
performanceof
theirmanagers,
especially
inthekeyresult
areas:
marketing
innovation
financialresour
ces
physicalresources
Productivity
socialresponsibilityand
rofitreuirements.
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StagesofMBO
Defineco
rporateobjectivesatboard
level
Analyzem
anagementtasksanddeviseformaljob
secificationswhichallocateresonsibilitiesanddecisions
toindividualmanagers
Setperformancestandards
Agreeandsetspecificobjectives
Alignindividualtargetswithcorporateobjectives
achievem
entsagainstobjectives
9
Limitations
Itover-emphasiz
esthesettingofgoalsovertheworkingofa
planasadriverofoutcomes.
Itunderem
hasizestheim
ortanceofthee
nvironmentor
contextinwhich
thegoalsareset.
Companiesevaluatedtheiremployeesbyc
omparingthem
"
"
.
employeesshou
ldbe,
notatwhattheyshou
lddo.
Thedevelopmen
tofobjectivescanbetime
consuming,
leavingbothmanagersandemployeesless
timeinwhichto
dotheiractualw
ork.
10
Limitations
[contd.]
Theelabo
ratewrittengoals,
carefulcommunicationofgoals,
anddetailedperformanceevaluation
requiredinanMBO
programincreasethevolumeofpaperworkinan
organizat
ion.
11
CaseinPoint
MBOinActionatIntel
AManager'sGu
ideatIntelprovidesthefollowingdirections.
-
.
Setyoursubord
inatesobjectivesthatfitinwithyouroverriding
objectives.
themtomeetth
eirobjectives.
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Unit5.2
ManagementByException
--
ANNA
UNIVERSITY
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UNIVERSITY
Introduction
Definition:Mana
gementbyexception
isamanagementstylethatwheremanagerso
nlyintervenewhen
employeesfailt
omeettheirstandardsofperformancestandards
orwhenplanso
rbudgetsgoawry.
Objective
'
strategictasks.
tomakethedec
isionthatcannotbemadeatonelevelof
.
tofreemanage
rsofordinaryorinsignificant
mattersthatcanbog
themdown.
.
14
Manageme
ntByException
CharacteristicsOfMBE
Managersdoaslittleaspossible,
insteadtheydelegateitto
peopleb
elowthem
Rathert
hanmonitoringeverymoveof
theiremployees,a
managershouldencourage,
andseta
path,
thenonlystepinif
thereis
abigdeviationfromthepath.
ExpertsView:
Frederic
kTaylor
.
His"exceptionprinciple'statedthatrou
tinedecisionmakingshouldbe
handle
dbylower-levelmanagerswhoreportonlyexceptionalcasesto
hiher
manaement.
15
ManagementByException
PhyllisG.
Holland,
PhD,
ProfessorandHead,Departmentof
Management,LangdaleCollegeofBusiness,ValdostaState
University,Vald
osta,
GA
Allorganizationscanusemanagementbyexcep
tion.
Whenroutinew
orkresultsinacceptableperform
ance,
no
managementa
ttentionisrequired.
Managerswho
haveproperlytrainedtheirsubordinatesshouldhave
noproblemsdelegatingauthorityandallowingp
eopletomanagetheir
ownwork.
-
routineproblems.
Somemanage
rshavetroubleallowingtheirsub
ordinatestomake
decisionsbeca
useofcontrolissuesbutthiss
choloicalbarrierwill
hindertheirca
reers.
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Implement
ation
Combine
MBEwithMBWA(managem
entbywalkingaround).
Managementbyexceptiondoesnotmeansittinginanoffice
waitingforbigproblemstowalkin.
WithMB
Einplace,
itismoreimperativ
ethanevertobewherethe
actionis
,toknowwhat'sgoingon.
responsib
ility.
LevelAmightbe,
"Doit.
Youdon'thavetotellanyone.'
eve,
o
.
eneme
nowaou
.
eve
,
o
ony
aftercheckingwithme.'
Remember,though,
thatthelevelofauthoritymayhavetochange
omee
newcrcumsances.
17
Implementation[
contd.]
Forexample,fis
calconstraintscouldaffecthowmuchlatitude
supervisorshav
eingrantingovertime.
Makesurelower
-levelmanaersarecomfortablewiththeir
expandedauthority.
Reviewpolicies,
practices,andprocedures.
.
Enlargethedefinitionof"exceptions'
toincludefavorablevariancesthatshouldbe
reportedtohigher
managemen.
Showinterestinbehaviorandresultsthatexc
eedexpectations.
18
Disadvantages
DespiteM
BE,
someinsecureindividualsmaypersistin
seekingd
ecision-makingassistance
andbecomeoverly
stressediftheassistanceisdenied.
Managersmaygetinhot
wateriftheirsubordinatesmakepoo
rdecisionsorfailto
solveproblems.
'
attention
beforetheybloomintobigtrouble.
Confusionresultswhenmanagersco
ntinuetomakedecisions
asuppose
y
ave
een
eegae
,orw
eno
ers
ave
notbeenadequatelytrainedandbrie
fedtotakeoverdecision
making.
19
Advantages
Itisamajortimesaverforthemanagerwhoshiftsauthority
fordecisionmak
ingandproblemsolvingdo
wnward.
Itsavestimefor
thereciientsofthisauthorit.
The
no
longerhavetodelayactionwhileawaitinginputfromabove.
MBEservesasacareerdeveloperandmotivator.Italsogives
abilityoftheirassistants.
Conclusion:
Managementby
exceptionwillworkonlywhenemployeesare
well-trainedand
havetheircareerinthatpart
icularsection.
Otherwiseitwo
uldresultinfailureofachievin
gtask.
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Unit5.3
StrategicManagement
annngoruure
recon
--
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UNIVERSITY
Introduction
Definition:Strategy
Facingrisksanduncertainty
Seizin
theo
ortunities
resentedb
enviro
nment
Usingdistinctiv
ecompetencesofresourcesoforganization
DefinitionofStrategicManagement:
Isanongoingpracticeofestablishingabroad
programof
organizationalg
oalsandthemeanstoachievethem.
Itisthedeterminationofthebasiclong-termgoalsandobjectives
ofanenterprise,
andtheadoptionofcourses
ofactionandthe
allocationofresourcesnecessaryforcarryin
goutthesegoals.
22
StrategicP
lan&Management
Strategyplanvs.Operationalplan
Timehorizons
Scoe
Degreeofdetail
Whentom
anagestrategically?
Increasingrateofchanges.
Complexityofmanagersjobs.
Increasingimportanceoffittingtheorganizationintoitsexternal
environment.
Increasinglagbetweenthepreparatio
nofplansandtheir
impleme
ntationinthefuture.
23
ComponentsofS
trategicManagement
Goalsoforganiz
ations
wherearewegoing?
whatarewedoing?
Strategyoforga
nizations
inwhatdirectionareweheaded
andwhatrouteshaveweselected?
Policiesoforanizations
providesguides
forgettingthere.
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Type&Lev
elofStrategicManagem
ent
Typesofstrategicmanagement
Employe
es
Customers
Suppliers
Stockho
lders
ommuny
Corporate-levelstrategy
morethanonelineofbusiness.
Business-unitstrategy
lineofb
usiness.
uncona
-evesraegy
tocarry
outthetoplevels.
25
StrategicManagementProcess
Strategic
planning
oase
ng
Strategy
formu
lation
Adm
inis
tration
imp
lementat
ion
26
Guidelines
togoodstrategy
Opportun
itiesavailableinmarket?
Distinctiv
ecompetencesheldbyfirm
?
regulations,technologicaldevelopments,
changesin
consumerlifestyles,andcyclicaleconomicconsiderations?
Societys
ethical,political,andculturalframework?
Personalaspirationsandinterestsofowners?
27
28
Unit5.4
SWOTAnalysis
--
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Introductio
n
SWOT:Strength
Weakness
OpportunityThreatAnalysis.
Awidely
usedframeworkfororganizin
gandusingdataand
informationgainedfromsituationanalysis
Encomp
assesbothinternalandexternalenvironments
Oneoft
hemosteffectivetoolsintheanalysisofenvironmental
dataand
information.
ASWOT
analysisgeneratesinformatio
nthatishelpfulinmatching
anorganizationsoragroupsgoals,p
rograms,andcapacitiesto
thesocialenvironmentinwhichtheo
erate
Itisaninstrumentwithinstrategicplanning
Whencombinedwithadialogue,
itisaparticipatoryprocess.
29
FactorsofSWOT
Factorsaffectinganorganizationcanusuallybeclassifiedas:
Internalfactors
Weaknesses(W
)
Externalfactors
Opportunities(O)
Threats(T)
Strengths
Weaknesses
Opportunities
Threats
30
Strength(Internal)Factor
Strengths
Positive
tangibleandintangibleattributes,internaltoan
organization.
Theyarewithintheorganizationscontrol
Yourspecialistmarketingexpertise.
Anew,innovativeproductorservice.
.
Qualityprocessesandprocedures.
Anyotheraspectofyourbusinesstha
taddsvaluetoyourproduct
orservce.
31
Weakness(Internal)Factor
Weaknesses
Factorsthatare
withinanorganizationscontrolthatdetractfrom
itsabilitytoatta
inthecoregoal.Inwhichareasmightthe
organizationimprove?
Damagedreputation.
Lackofmarketin
exertise.
Undifferentiatedproductsorservices(i.e.in
relationtoyour
competitors).
.
Poorqualitygoodsorservices.
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Opportunity(External)Factors
Opportun
ities
Externalattractivefactorsthatrepresentthereasonforan
organizationtoexistanddevelop.
Whatopportunitiesexistinthe
environmentwhichwillpropeltheorganization?
Identify
thembytheirtimeframes
Adevelo
in
marketsuchastheInter
net.
Mergers
,jointventuresorstrategicalliances.
Movingintonewmarketsegmentsthatofferimprovedprofits.
newn
ernaonamare.
Amarke
tvacatedbyanineffectivecompetitor.
33
Threat(External)Factor
Threats
Externalfactors
,beyondanorganizationscontrol,whichcould
placetheorgan
izationsmissionoroperation
atrisk.
The
organizationma
ybenefitbyhavingcontingen
cyplanstoaddress
themshouldthe
yoccur
Classifythembytheirseriousnessandpro
babilityof
occurrence
Anewcompetitorinyourhomemarket.
Pricewarswithcompetitors.
Acompetitorh
asanew,
innovativeproductorservice.
Competitorshavesuperioraccesstochannelsofdistribution.
Taxationisintroducedon
ourroductorservic
e.
34
ActionPlanforSWOTAnalysis
ForaneffectiveactionplaninSWOT
analysis,
thefollowing
stepsmustbetakenintoconsideration:
Caitalizeon
ourstrenths
Overcom
eorminimizeyourweakness
es
Takeadvantageofsomenewopportunities
Setgoals
andobjectives,likewithan
yotherplan.
35
ForaProductive
SWOTAnalysis
Stayfocused.
Bespecificand
avoidgreyareas.
Kee
ourswot
shortandsim
le.
Avoidcomplexityandoveranalysis.
ItcanbeamistaketocompletejustonegenericSWOTanalysis
WhenwesaySWOTanalysis,
wemeanSWOT
analyses
Collaboratewith
otherfunctionalareas.
Informationgen
eratedfromtheSWOTanalysiscanbeshared
acrossfunction
alareas
SWOTanalysiscangeneratecommunicationbetweenmanagers
thatordinarilyw
ouldnotcommunicate
Createsanden
vironmentforcreativityandinnovation.
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ForaProductiveSWOTAnalysis[co
ntd.]
Examineissuesfromthecustomers
/stakeholders
perspective.
Whatdo
stakeholdersandnon-stakeholdersbelieveaboutusas
anorganization?
Whatdo
stakeholders(andnon-stakeholders)thinkofourproduct
ualit,
service
ualit,
customerserv
ice,
rice,
overallvalue,
convenience,
andpromotionalmessagesincomparisontoour
competitors?
Whatistherelativeim
ortanceoftheseissuesasstakeholders
seethem
?
Takingthestakeholdersperspectiveisthecornerstoneofawell
doneSW
OTanalsis
37
ForaProductive
SWOTAnalysis[contd.]
Lookforcauses,
notcharacteristics
CausesforeachissueinaSWOTanalysiscan
oftenbefoundin
theorganizationsandcompetitorsresources
Majortypesofresources:
Financial
Oranizational
Intellectual
Informational
Relational
Human
38
ForaProductiveSWOTAnalysis[co
ntd.]
Separate
internalissuesfromexternalissues
Failuret
ounderstandthedifferenceb
etweeninternaland
externalissuesisoneofthemajorrea
sonsforapoorly
conductedSWOTanalysis
Knowyourself
Knowyourcustomer/stakeholder
Knowyourcompetitors
Knowyourenvironment
39
SWOT-Drivenpla
nning
Theassessment
ofstrengthsandweaknessesshouldlook
beyondproducts,servicesandresourcestoexamine
processesthatm
eetcustomersorstakeho
ldersneeds
Achievinggoals
andobjectivesdependson
transforming
strengthsintocapabilitiesbymatchingthem
with
Weaknessescanbeconvertedintostrengthswithstrategic
investment.Threatscanbeconvertedinto
opportunitieswith
erg
resourc
es
Weaknessestha
tcannotbeconvertedbeco
melimitations
whichmustbem
inimizedifobviousormeaningfulto
customersorstakeholders
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SWOTMatrix
41
Merits&DemeritsofSWOT
Merits:
Simplicity
Flexibilit
Integrationand
synthesis
Collaboration
owercoss
Demerits&Wartning:
SWOTanalysiscanbeverysubjective.
Donotrelytoomuchonit.
Twopeoplerarelycomeupwiththesamefina
lversionofaSWOT
Useitasaguideandnotasaprescription.
42
43
Unit5.5
EvolvingDevelopmentS
trategiesinIT
Managemen
t
--
ANNA
UNIVERSITY
ANNA
UNIVERSITY
EvolvingDevelopmentStrategies
Introduction:
Companiesmustbeflexibleenoughtorespon
drapidlyto
competitionandmarketchanges.
Thequestforproductivity,
qualityandspeedhasimmensely
increased.
This
uesthassawnedawholelotofmana
ementstrateies
like:
Businessplan
T
M
SixSim
aLeanManufacturin
Benchmarking
BusinessProcessReengineering
Globalization
Outsourcing.
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ITManag
ement
Introduction
Informationinavaluablecorporateresource.
InformationTechnolo
helsbusines
satfourlevels
Atthe
operatinggrouplevel,IThelpsin
developingandsupporting
system
sandprocedures
Atthe
deartmentallevel,ITensuressm
oothflowofinformation
across
departments.
Atthe
interfacelevel,ITensuresflowofinformationacrossthe
operatinggroupsanddevelopsandmaintainsanenterprisewide
databa
se.
Atthe
strategiclevel,ITprovidescritica
lstrategicadvantagetothe
organisation.
45
ManagementInfo
rmationSystem
MISisaformalm
ethodofmakingavailable
tomanagement
theaccurateandtimelyinformationnecess
arytofacilitatethe
decision-making
process.
Thevariousstep
sinvolvedindesigningam
anagement
informationsystemare
Stateexplicitlytheobjectivesforthenewsystem
Constructacon
ceptualdesign
Specifyindetailhowthesystemwillwork
Developthesys
tem
Testandim
lem
ent
46
Guidelines
ForMISDesign
Thedesig
nofaMISshouldbedeterminedbytheusers-
managersandnotdelegatedtoafun
ctionalcomputer
specialist.
Allusersoftheinformationsystemshouldparticipateinthe
developm
entofthenewsystem..
basis.
TheMISs
houldnotonlyincreasethe
quantityofinformation
butshouldalsoselect,condenseandinterpretinformation.
Adequate
trainingtoallusersshould
beprovided.
47
TypesofInforma
tionSystems
TransactionProcessingSystem(TIS)
ATISisaninfor
mationsystemwhichrecords
transactionsthat
takeplacebetw
eentwoormorebusinessent
ities.
ManagementInformationSystem(MIS)
MISisageneralpurposesystemthatprovide
managerswithvital
.
DecisionSupportSystem(DSS)
DSSprovidema
nagerswithdataandtoolsformakingdecisions
onspec
csem
-srucure
an
unsrucure
pro
ems
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TypesofIn
formationSystems[Contd.]
Executive
SupportSystem(ESS)
AnESSisaspecializeddecisionsupp
ortsystem,
primarily
designedtousedbytopexecutivesof
acompany.
ExpertSy
stem(ES)
Theyare
informationsystemsinwhich
computerprogramsstore
experts
inspecializedfields.
Ithas3maincomponents,
Inferenceengine
UserInterface
49
TypesofInforma
tionSystems[Contd.]
OfficeAutomationSystem
Theyservetheneedsofthosewhoareprimarilyinvolvedin
processingofd
atasuchas
Wordprocessin
g
Desktoppublishing
-
Videoconferencing
Facsimiletransmission.
50
51
Unit5.6
DecisionSupportSystems
(DSS)
--
ANNA
UNIVERSITY
ANNA
UNIVERSITY
DefinitionofDSS
ADSSisaninteractive,
flexible,
andadapta
blesystem,
speciallydevelopedforsupportingthesolu
tionofanon-
structuredmana
gementproblemforimprov
eddecision
making.
Itutilizesdata.
.
Itallowsforthedecisionmakersowninsights.
Itma
utilizemodelsbuiltb
aninteractive
rocess
(frequentlybyend-users).
Itsupportsallth
ephasesofthedecisionmaking.
mayncuea
nowegecomponen.
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Characteristics&CapabilitiesofDSS
Providesupportinsemi-structureda
ndunstructured
situations
,includeshumanjudgmentandcomputerized
information
Supportforvariousmanageriallevels
Supporttoindividualsandgroups.
Supporttointerdependentand/orse
quentialdecisions.
Supporta
llphasesofthedecision-m
akingprocess.
-
.
Areadaptive.
Haveuserfriendlyinterfaces.
53
Characteristics&CapabilitiesofDSS[contd.]
End-userscanb
uildsimplesystems
Utilizesmodelsforanalysis
,
,
types.
Decisionmakers
canmakebetter,morecon
sistentdecisions
inatimelymann
er.
54
DSSComp
onents
DataMan
agementSubsystem
ModelMa
nagementSubsystem
-
UserInterfaceSubsystem
User
55
DataManagementSubsystem
DSSdatabase
Databasemanag
ementsystem
Queryfacility
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ModelMan
agementSubsystem
Analogofthedatabasemanagementsubsystem
Modelbase
Modeling
language
Modeldirectory
Modelexecution,
integration,
andcommandprocessor
57
KnowledgeBase
d(Management)Subsyst
em
Providesexpertiseinsolvingcomplexunstr
ucturedandsemi-
structuredproblems
Exertise
rovid
edb
anexertsstemorotherintellient
system
AdvancedDSSh
aveaknowledgebased(m
anagement)
LeadstointelligentDSS
Exam
le:Datam
inin.
58
UserInterface(Dialog)Subsystem
Includesallcommunicationbetween
auserandtheMSS
Graphicaluserinterfaces(GUI)
Tomostu
sers,
theuserinterfaceisthesystem.
59
User
Differentusagepatternsfortheuser,themanager,orthe
decisionmaker
Manaers
Staffspecialists
Intermediaries
Staffassistant
Experttooluser
Businesssste
ma
nalst
GSSFacilitator
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DSSHardw
are
Evolvedw
ithcomputerhardwareand
softwaretechnologies
Mainframe
Workstation
Personalcomputer
Webserversystem
nerne
Intranets
Extranets.
61
DSSClassificatio
ns
HolsappleandW
hinstonsClassification
Text-orientedDSS
Database-orientedDSS
Spreadsheet-or
ientedDSS
Solver-oriented
DSS
ue-orene
CompoundDSS
.
IntelligentDSSC
lassification:
Descriptive
Procedural
Linguistic
62
DSSClassifications[contd.]
Presentation
Assimila
tive
Alternate
CateoriesofIntellientDSS
Symbiotic
Expert-s
ystembased
apve
Holistic
OtherCla
ssifications
InstitutionalDSS
Dealswithdecisionsofarecurringnatu
re
Dealswithspecificproblemsthatareusuallyneitheranticipatednor
recurring(usually,
one-timeonly).
63
IngredientsforD
SSSuccessorFailure
ForDSSSuccess
ManagementSu
pport
UsersInvolvedinDesin&Develoment
EarlyBenefitsS
hown
ForDSSFailure
LackofManage
mentSupport
UsersIgnoredinDesign&Development
NoEarlyBenefitsShown
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65
Unit5.7
ManagementGames --
ANNA
UNIVERSITY
ANNA
UNIVERSITY
Introduction
Managementgames:
Itisagameproblemwhichactsasathinking
tool,giventotrain
managerstosolverealtimeprobleminorder
toimprovedecision
makingandana
lyticalskills.
EdwarddeBono
,
,
,
lateralthinking.
HeauthoredthebestsellingbookSixThinkingHatsandisa
schools.
66
LateralThinking
Itinvolvesthinkingoutsidethebox.
Lateralth
inkingissolvingproblemsthroughanindirectand
creativea
roachusin
reasonin
thatisnotimmediatel
obviousa
ndinvolvingideasthatmay
notbeobtainableby
usingonlytraditionalstep-by-steplogicinbothproblem
.
Lateralth
inkingusesvariousactsof
provocationtorouse
ideasthatarefreefrompreviouslylo
ckedassumptions.
67
LateralThinking[Cont...
]
Thethinkingtoolscanbe:
RandomEntryIdeaGeneratingTool
Chooseanobectatrandom
ProvocationIde
aGeneratingTool
Choosetouse
anyoftheprovocationtechnique
swishfulthinking,
exa
eration
ChallengeIdea
GeneratingTool
Why?
.
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SixValueM
edals
Ithelpspeoplequicklybutthoroughlyscanforvalues,
prioritize
whichvaluesarethemostimportanttopursue,
and
thenensu
rethattopvaluesareaddressedandmaximized
everystepoftheway.
Ithelpsto
noticeandresolveconflictsinvalueswhichhave
.
GoldMe
dal:IncludesHumanValues.
SilverMedal:Whatmatterstotheorga
nization.
ass
ea:tcoverscange,
nnovaton,
smpctyan
creativity.
WoodMedal:Positiveornegativeimpacttotheenvironment.
BrassM
edal:Howwillthisactionbein
terpreted.
73
74
Unit5.8
Busines
sProcessReengineering(BPR)
--
ANNA
UNIVERSITY
ANNA
UNIVERSITY
Introductio
n
Whatisa
Process?
Aspecificorderingofworkactivitiesacrosstimeandspace,
with
abeginn
ing,
anend,
andclearlyidentifiedinputsandoutputs:a
structur
eforaction.
Whatisa
BusinessProcess?
'
provide
customer-orientedresultsins
upportoftheorganization's
objectives.
Reengin
eeringisthefundamentalreth
inkingandredesignof
businessprocessestoachievedramaticimprovementsincritical,
,
,
,
serviceandspeed.
75
BusinessProces
sReengineering
BusinessProcessReengineeringistheana
lysisanddesignof
workflowsandp
rocesseswithinanorganization
BPRVersusProcessSim
lification
ProcessReengineering
ProcessSim
plification
Ra
dical
Trans
formation
Increment
alChange
-
Change
Attitu
des
&Be
hav
iors
Director-
Le
d
Limite
dNu
mbero
fInitiatives
-
Assume
Att
itud
es
&Be
hav
iors
Managem
ent-
Le
d
Var
ious
Simu
lta
neous
Proects
76
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ImportanceofBPR
WhyOrganizationReengineer?
Custome
rs
Deman
ding
Wh
yOrganizationsDont
Reengineer?
Complacency
Sophistication
ChangingNeeds
Competition
PoliticalResistance
NewDevelopments
FearofUnknownandFailure.
Local
Global
BP
Rseeksimprovementsof
Cost
ualit
Service
Speed.
77
SystemsPerspec
tive
Transformation
Inputs
Outputs
Env
ironment
78
KeySteps
inImplementingaBPRStrategy
Selecttheprocess&appointprocessteam
Understandthecurrentprocess
Identifyactionplan
Executeplan
79
Step1
SelecttheProcess:
ReviewBusine
ssStrategyandCustomerRequir
ements
SelectCoreProcesses
UnderstandCu
stomerNeeds
DontAssumeAnything
SelectCorrect
PathforChange
RememberAssumptionscanHideFailures
Competitionan
dChoicetoGoElsewhere
Ask-QuestionnairesMeetinsFocusGrou
AppointthePro
cessTeam:
AppointBPRC
hampion
EstablishExecutiveImprovementTeam
ProvideTrainin
gtoExecutiveTeam
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Step1[contd.]
CoreSkillsRequired:
Capac
itytoviewtheorganizationasaw
hole
Ability
tofocusonend-customers
Ability
tochallengefundamentalassumptions
Couragetodeliverandventureintounk
nownareas
UseofC
onsultants:
Usedt
ogenerateinternalcapacity
Appropriatewhenaimplementationisn
eededquickly
initiativeisorganization-ledandnotcon
sultant-driven
Contro
lshouldneverbehandedoverto
theconsultant
81
Step2&3
Understandthe
CurrentProcess
DevelopaProc
essOverview
Clearlydefinetheprocess
Mission
Scope
Boundaries
Setbusinessandcustomermeasurements
Understandcu
stomersexpectationsfromtheprocess(staffincluding
processteam).
eveop
ommuncae
sono
mprove
rocess
Communicatewithallemployeessothattheyareawareofthevision
ofthefuture
waysprove
normaonon
eprogresso
e
n
ave-goo
andbad.
Demonstratea
ssurancethattheBPRinitiativeisbothnecessaryand
.
82
Step4&
5
Identify
ActionPlan:
Develo
panImprovementPlan
AppointProcessOwners
SimplifytheProcesstoReduceProcess
Time
Remov
eanyBureaucracythatmayhind
erimplementation.
Execute
Plan:
Qualify/certifytheprocess
Performperiodicqualificationreviews
Evalua
tethechangeimpactonthebusinessandoncustomers
Bench
marktheprocess
.
83
Disadvantageof
BPR
Processunderreviewtoobigortoosmall
Relianceonexis
tingprocesstoostrong
AllocationofResources
PoorTimingand
Planning
KeepingtheTea
mandOrganizationonTarg
et
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85
Unit5.9
En
terpriseResourcePlanning(ERP)
--
ANNA
UNIVERSITY
ANNA
UNIVERSITY
Introduction
Enterpriseresou
rceplanning(ERP)integratesinternaland
externalmanage
mentinformationacrossanentire
organization
Itattemptstoint
egratealldepartmentsand
functionsacross
acompanyonto
asinglecomputersystemthatcanserveall
.
FunctionsofERP:
1.
EngineeringDesign
2.
Productio
nPlanning
3.
Controlling
4.
Maintenan
ce
5.
Quality
6.
Legal
7.
Finance
8.
Inventor
9.
Sales
10.H
umanResources.
86
WhycompaniesundertakeERP:
Integrate
financialinformation
Integrate
customerorderinformation
.
StandardizeHRinformation
Reducein
ventory
87
EnterpriseSystems
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TraditionalViewofSystems
89
TheOrderFulfillmentProcessinERP
90
BestFeatu
resofanERPsystem
ArchitectureofERPsystemfacilitate
stransparentintegration
ofmodulesprovidingflowofinforma
tionbetweenallfunction
withinenterpriseinrealtime.
Manydifferentsoftwarearereplaced
byoneintegrated
system.
Eliminatesdataandoperationalredu
ndancies(noduplication
ofworko
rdataentriesetc.)
91
PrimeReasonsforImplementingERP
Needforcommo
nplatform
Processimprove
ment.
decisions.
Operationcostr
eductions.
Increasedcusto
merresponsiveness.
Improvedstrategicdecisionmaking
.
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Businessa
ndTechnicalBenefits
Automationofbusinesstransactions
Flexibility
inchangingthesystemcateringtonewerbusiness
rocesses.
Coordinationacrossbusinessfunctions
Coordinationacrossgeographicaldistancesresultingin
betterMa
nagerialcontrol
Consisten
tinformationandinterface
thuseasierto
understandandworkin
Singlesystem.
93
ChallengesofEn
terpriseSystems
Difficulttobuild:Requirefundamentalchan
gesinthewaythe
businessoperates
Technolo
:Re
uirecom
lex
iecesofsoftwareandlare
investmentsoftime,
money,andexpertise
Centralizedorga
nizationalcoordinationand
decisionmaking:
94
95
Unit5.1
0
SupplyChainManagement
(SCM)
--
ANNA
UNIVERSITY
ANNA
UNIVERSITY
Definition
Itisdefinedasthestrategicmanagementin
volving
interconnectednetworkofbusinessactivitiesfrom
acquisitiontoco
nversionofrawmaterialsintofinishedgoods
andfinallydelive
ringtheproducts.
Theorganisation
aldecisionsandactivitiesaretriggeredby
.
Supplier
Management
Customer
Management
INFORMATION
FLOW
Schedule/
Conversion
Stock
Deliver
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Basicsteps
Plan
Source
Make
Deliver
Buy
Suppliers
Manufacturers
W
arehouses&
Customers
s
ruon
eners
Mater
ialCosts
Transportation
Costs
Transportation
Costs
Transportation
97
Costs
HistoryofSupplyChainManagement
1960s-InventoryManagementFocus,CostControl
1970s-MRP&B
OM-OperationsPlanning
-
,
-
,
1990s-SCM-ERP-IntegratedPurchasin
g,
Financials,
Manufacturing,OrderEntry
2000s-OptimizedValueNetworkwithRe
al-TimeDecision
Support;Synchr
onized&CollaborativeExte
ndedNetwork.
98
ImportanceofSCM
Nemesis:
Uncerta
intyinsuppliersandconsume
rs
Traveltime
Machine
breakdowns
Naturalcatastrophe
ocousan
sres
HenceSC
Maddressesindealingwit
h
Minimisingcosts
Minimisinguncertainties
Movethecompanytowardscustomer-centric
99
SupplyChainDrivers
Thefollowingfa
ctorsnecessitatetheimple
mentationofSCM
inanorganisatio
n
Demandin
cus
tomers
Shrinkingprodu
ctlifecycles
Proliferatingproductofferings
Doctrineofcorecompetency
Emergenceofs
pecializedlogisticsproviders
Globalization
Informationtechnology
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BullwhipE
ffect
Theslightvariationsindemandatthecustomerlevel
increases
theinventoryaswemoveupstream
Thiscreatesverhihburdenonthe
com
ansstockand
storagesystem
Alsothed
elaytimetoreachtheplantresultsintheoutdated
.
FactorsC
ontributingtotheBullwhip
Demand
forecastingpractices
Leadtim
e
Batchordering
Lackof
centralizedinformation.
101
IllustrationforBu
llwhipEffect
102
SCMKey
Issues
CustomerService/
urcasng
anuacurng
sr
uon
Sales
-
High
Lowpur-
overs
Stable
schedules
inventories
High
service
chaseprice
Multiple
vendors
Low
invent-
orie
s
Longrun
lengths
levels
Regional
stocks
Low
trans-
portation
SOURCE
MAKE
DE
LIVER
SELL
103
SupplyChainMa
nagementBenefits
A1997Integrate
dSupplyChainBenchmark
ingSurveyof331
firmsfoundsignificantbenefitstointegratin
gthesupplychain
DeliverPerformance
InventoryReduction
ForecastAccuracy
LowerSupply-C
hainCosts
FillRates
ImprovedCapacityRealization
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SupplyChainImperativesforSucce
ss
Viewthesupplychainasastrategicassetandadifferentiator
Wal-Mar
tspartnershipwithProctor&
Gambletoautomatically
replenis
hinventory
Dellsinnovativedirect-to-consumers
alesandbuild-to-order
manufacturing
Forecas
ting
Collaboration
Integration
105
106
Unit5.1
1
ActivityBasedManagem
ent
--
ANNA
UNIVERSITY
ANNA
UNIVERSITY
Introductio
n
Activity-b
asedmanagement(ABM)
Itisamethodofidentifyingandevaluatingactivitiesthata
businessperformsusingactivity-base
dcostingtocarryouta
valuech
ainanalysisorare-engineeringinitiativetoimprove
strategicandoperationaldecisionsin
anorganization.
Activit-b
asedcostin
ABC:
Itisam
ethodologythatmeasuresthe
costandperformanceof
activities,resources,andcostobjects
.Resourcesareassignedto
activitiesthenactivitiesareassined
tocostobectsbasedon
theiruse.
Itrecognizesthecausalrelationships
ofcostdriverstoactivities.
107
TypesofABM
OperationalABM:
Itisaboutdoin
gthingsright,
usingABCinformationtoimprove
efficiency.Thos
eactivitieswhichaddvalueto
theproductcanbe
identifiedandim
proved.
Activitiesthatdontaddvaluearethe
onesthatneedtobereducedtocutcostswithoutreducing
productvalue.
StrategicABM:
Itisaboutdoingtherightthings,usingABC
informationto
decidewhich
roductstodevelo
andwhichactivitiestouse.
This
canalsobeuse
dforcustomerprofitabilityan
alysis,identifying
whichcustomersarethemostprofitableandfocusingonthem
more.
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ABM:Illustration
109
StagesinABM
Analysisofactiv
ities
Identifyvalueaddedandnonvalueaddedactivities
Analsisofcrit
icalactivities
Compareactivitieswithbenchmarking.
Improvementof
activities
Reducethetimeoreffortrequiredto
performanactivity
Eliminateunnec
essaryactivities
Selectlowcost
activities
Sharingofactiv
ities
Performanceme
asurements
-
Designedtoinfluencethebehaviourofcostm
anagement.
110
Advantage
sofABM
BenefitstypicallyderivedfromABM
include:
Identifica
tionofredundantcosts
-
-
Quantific
ationofthecostofquality
byelement
Summarizingcustomerfocusedactivities
Measurin
gthecostofcomplexity
Providing
processcostsandsuppor
tingprocessanalysis
Tracking
theimpactofreengineerin
gefforts
Betterun
derstandingofcostdrivers
Activity-b
asedbudgeting.
111
Disadvantages
Implementingan
ABCsystemisamajorpro
jectthatrequires
substantialresources.Onceimplemented
anactivitybased
costingsystemiscostlytomaintain.
Dataconcerning
numerousactivitymeasuresmustbecollec
ted,
checked,
and
enteredintothe
system.
,
oddswiththenu
mbersproducedbytraditio
nalcosting
systems.Butma
nagersareaccustomedtousingtraditional
costingsystems
areoftenusedinperforma
nceevaluations.
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Disadvantage[contd.]
Activitybasedcostingdatacanbeeasilymisinterpretedand
mustbeu
sedwithcarewhenusedin
makingdecisions.Costs
assigned
toproducts,
customersandothercostobjectsare
onlypotentiallyrelevant.Beforemak
inganysignificant
decisionusingactivitybasedcosting
data,
managersmust
identifw
hichcostsarereallreleva
ntforthedecisionsat
hand.
Reportsg
eneratedbythissystemsd
onotconformto
.
Consequently,anorganizationinvolv
edinactivitybased
costingshouldhavetwocostsystem
s-oneforinternaluse
.
113
114
Unit5.1
2
GlobalPerspective
--
ANNA
UNIVERSITY
ANNA
UNIVERSITY
Globalization
Definition
ofglobalization
Globaliz
ationdealswiththeintegratio
nofvariouscountry-
strategiesandthesubordinationofthesecountry-strategiesto
oneglob
alframework.
Reasonsforglobalization
Globaliz
ingtocompeteinhomogeneo
usmarkets
Globaliz
ingforaddedsynergies
Levelsof
globalization
Globaliz
ationatcustomerlevel
Globaliz
ationatmarketlevel
Globaliz
ationatindustrylevel
Globaliz
ationatcompetitorlevel
115
Globalization[Co
ntd.]
GlobalStrategie
s
Integratedglobalmarketingstrategy
Globalroduct
strate
Globalbranding
strategies
InternationalBusinessManagement
Internationalbu
sinessimpliesbeingengaged
intransactions
acrossnational
boundaries
Theinteraction
ofafirminahostcountrycan
takemanyforms,
Theexportation
ofgoodsandservices
Enteringinalic
ensingagreementforproducinggoodsinanother
country
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Globalization[Contd.]
Forming
ajointventurewithafirmina
hostcountry
Multinationalsmaysetupwholly-ownedsubsidiariesorbranches
withpro
ductionfacilitiesinthehostcountry
Multinatio
nalcorporations
TheMNCscantakeadvantagesofbusinessopportunitiesinmany
differentcountries
Compan
ieswithworldwideoperations
haveaccesstonatural
resourcesandmaterialsthatmaynot
beavailabletodomestic
TheMNCscanrecruitmanagementan
dotherpersonnelfroma
worldwidelaborpool
117
Casestudy:SuccessofToyota
14Principlesof
theToyotaWay
SectionI:Long-TermPhilosophy
Baseyourmanagementdecisionsonalong-termphilosophy,
evenattheexpenseofshort-termfinancialgoals.
SectionII:TheR
ightProcessWillProducet
heRightResults
Principle2
Createacontinuous
rocessflowtobrin
ro
blemstothe
surface.
Principle3
"
"
.
118
Casestudy:SuccessofToyota[Contd.]
Principle
4
Levelou
ttheworkload(Worklikethetortoise,
notthehare).
Buildac
ultureofstoppingtheproduc
tionlinetofixproblems,to
getqualityrightthefirsttime.
rncpe
Standardizedtasksandprocessesarethefoundationfor
continuousimprovementandemploye
eempowerment.
Principle
7
Usevisu
alcontrolsonoproblemsare
hidden.
119
Casestudy:SuccessofToyota[Contd.]
Principle8
Useonlyreliable,
thoroughlytestedtechnologythatservesyour
peopleandprocesses.
SectionIII:Add
ValuetotheOrganizationb
yDevelopingYour
People
Growleadersw
hothoroughlyunderstandthe
work,
livethe
philosophy,and
teachittoothers.
Principle10
Developexceptionalpeopleandteamswhofo
llowyour
company'sphilosophy.
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study:SuccessofToyota[Contd.]
ciple
11
spectyourextendednetworkofpartnersandsuppliersby
alleng
ingthemandhelpingthemim
prove.
ionIV
:ContinuouslySolvingRoo
tProblemsDrives
nizationalLearning
oand
seeforyourselftothoroughly
understandthesituation
enchi
Genbutsu).
ciple
13
akedecisionsslowlybyconsensus,
thoroughlyconsideringall
tions;implementdecisionsrapidly(nemawashi).
121
Casestudy:SuccessofToyota[Contd.]
Principle14
Becomealearn
ingorganizationthroughrelentlessreflection
(hansei)andcontinuousimprovement(kaizen
).
122
usion
alizationdemandsmanagement
principlestobeflexible
iffere
ntcountries.
lob
alersectivemanaemen
trincilesneedtoaim
com
mongoalofimprovingtheorganizationcontinuously
pproa
chingitthroughdistinctmethodswhichwillsuitthat
.
123
References
HeraldKoontzandHeinzWeihrich,
Essentialsof
Management,M
cGrawHillPublishingCom
pany,Singapore
InternationalEdition,
1980.
M.
Govindarajan
andS.
Natarajan,
Principle
sofManagement,
PrenticeHallofIndiaPvt.Ltd.,
NewDelhi,2
007.
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