MBA Knowledge Base http://www.mbaknol.com MBA Study Materials - Solved Assignments - Management Articles - Business Case Studies Thu, 11 Dec 2014 09:13:13 +0000 en-US hourly 1 http://wordpress.org/?v=4.1 The Performance Prism http://www.mbaknol.com/financial-management/the-performance-prism/ http://www.mbaknol.com/financial-management/the-performance-prism/#comments Thu, 04 Dec 2014 12:33:35 +0000 http://www.mbaknol.com/?p=6910 The Performance Prism is a second generation performance measurement and management framework that has been developed by Neely, Adams and Kennerley to further aid organisations in their pursuit of measuring the overall performance of their operations. The creators of this model suggest that for organisations operating within almost any given industry, the most important aspect of management is to deliver on the expectations of the stakeholders associated with that organisation. The Performance Prism is designed to help with the complex relationships that organisations often possess with their various stakeholders within the context of its operating environment. It provides an innovative and holistic framework that directs management attention to what is important for long term success and viability and helps organisations to design, build, operate and refresh their performance measurement systems in a way that is relevant to the specific issues that they face within their given industry.

This model attempts to distinguish itself from other similar models such as the Balanced Scorecard by offering a unique perspective on a measuring system that can ultimately be adopted as a way of operating within an industry, rather than just measuring performance of the organisation. The balanced scorecard, with its four perspectives, focuses on finance, customers, internal processes and innovation and learning. In doing so it downplays the importance of other stakeholders, such as suppliers and employees. The business excellence model combines results, which are readily measurable, with enablers, some of which are not. Shareholder value frameworks incorporate the cost of capital into the equation, but ignore all aspects relating to stakeholders.… Read the rest

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Fitzgerald and Moon’s Building Block Model http://www.mbaknol.com/strategic-management/fitzgerald-and-moons-building-block-model/ http://www.mbaknol.com/strategic-management/fitzgerald-and-moons-building-block-model/#comments Thu, 04 Dec 2014 10:22:01 +0000 http://www.mbaknol.com/?p=6914 Fitzgerald and Moon’s Building Block Model suggests the solution of performance measurement problems in service industries. But it can be applied to other manufacturing and retail businesses to evaluate business performance.

Fitzgerald and Moon has provided a framework for performance management in service organization using three criteria, called as building blocks, they include, standards of performance (against these dimensions are measured to review performance), rewards for performance (rewards are necessary for achieving standards of performance) and dimensions of performance (these are measures of performance).

1. Standards: You can think of standards as rules that employees of a company must follow in order to achieve the long term objective of the organization. For the standards to be motivating enough, it must have three important ingredients. These ingredients are;

  • Equity: Performance measures should be equally challenging for all parts of business. Relaxation given to one part of the business leads to perception of unfair treatment which hinders productivity.
  • Ownership: Performance measure should be acceptable to everyone. Employees should be got involved in the identification of measures rather than being imposed on them. Ownership means here is responsibility for the results.
  • Achievable: Performance measure should be realistic. Eg. Using actual results for the competitors to set as target. Employee will not be motivated to achieve targets if consider them impossible.

2. Rewards: In line with Vroom’s valence theory, managers expect to be rewarded not just for doing their job but for doing it right. To be effective, the components of rewards must be clear, concise, motivating and controllable by the employees.… Read the rest

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Bowman’s Strategy Clock http://www.mbaknol.com/strategic-management/bowmans-strategy-clock/ http://www.mbaknol.com/strategic-management/bowmans-strategy-clock/#comments Wed, 03 Dec 2014 12:26:07 +0000 http://www.mbaknol.com/?p=6908

In many open markets, most goods and services can be purchased from any number of companies, and customers have a tremendous amount of choice. It’s the job of companies in the market to find their competitive edge and meet customers needs better than the next company. So, how, given the high degree of competitiveness among companies in a marketplace, does one company gain competitive advantage over the others? When there are only a finite number of unique products and services out there, how do different organizations sell basically the same things at different prices and with different degrees of success?

This is a classic question that has been asked for generations of business professionals. In 1980, Michael Porter published his seminal book, “Competitive Strategy: Techniques for Analyzing Industries and Competitors”, where he reduced competition down to three classic strategies: Cost leadership, Product differentiation and Market segmentation. These three generic strategies represented the three ways in which an organization could provide its customers with what they wanted at a better price, or more effectively than others. Essentially Porter maintained that companies compete either on price (cost), on perceived value (differentiation), or by focusing on a very specific customer (market segmentation).

Bowman’s Strategy Clock is a model used in marketing to analyse the competitive position of a company in comparison to the offerings of competitors. It was developed by Cliff Bowman and David Faulkner as an elaboration of the three Porter generic strategies. As with Porter’s Generic Strategies, Bowman considers competitive advantage in relation to cost advantage or differentiation advantage.

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Ashridge Portfolio Matrix http://www.mbaknol.com/strategic-management/ashridge-portfolio-matrix/ http://www.mbaknol.com/strategic-management/ashridge-portfolio-matrix/#comments Wed, 03 Dec 2014 11:23:51 +0000 http://www.mbaknol.com/?p=6918 Corporate Parenting is a strategy employed by highly centralized and diversified firms with large resource pools. It views the corporation in terms of resources and capabilities that can be used to build business units value as well as generate synergies across business units. Corporate parenting generates corporate strategy by focusing on the core competencies of the parent corporation and on the value create from the relationship between the parent and its businesses.

There are basically three styles of corporate parenting as follows; financial control, strategic planning and strategic control.

  1. Financial Control: Under this style the role of the corporate parent is to monitor and evaluate the financial performance of investment portfolio of the respective business units. The corporate managers act as agents on behalf of share holders and financial markets to identify and acquire viable assets and businesses. The business unimanagers are given the autonomy to carry out business activities and make decisions at their level. However the corporate parent sets performance standards for control purposes.
  2. Strategic Planning: Under this style the role of the corporate parent is to enhance synergies across the business units. This may be achieved through envisioning to build a common purpose, facilitating cooperation across businesses and providing central services and resources.
  3. Strategic Control: Under this style the corporate parent leverages its resources and competences to build value for its businesses.

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Brand Irritation – A Case of Negative Brand Image Building http://www.mbaknol.com/marketing-management/brand-irritation/ http://www.mbaknol.com/marketing-management/brand-irritation/#comments Sat, 20 Sep 2014 01:17:53 +0000 http://www.mbaknol.com/?p=6701 There are some gaps in between a company and its customers. These gaps are due to customer expectation with the brand and that expectation is not met with the actual brand offerings including other factors, which made customer experience not only negative but at the level of irritation. This customer irritation ultimately turns into brand irritation if necessary actions are not take.

Brand irritation word coined by the Mr Alison Eastwood in the year 2003 in his article named “Brand irritation”. But in this article he had discussed on the term brand integration (the use of commercial products in the story line of a television show, film, etc. and involving the development of specific objectives, strategies, plans, and tactics to drive the business) and connecting it with the use of brand integration in American idol and same kind of initiatives adopted by other brands. He relates it with out of box thinking, failure of advertising and brand integration.

Brand irritation is a particular case where consumer recognizes brand on a negative note due to bad experience with the brand. It does not only deal with the negative or bad experience with the brand but the irritation caused to customer due to various factors involved. These factors made irritated to the customer at the level that any product where brand name is associated with, customer responded negatively. For an example if customer purchase a product of brand “ABC” but after some time customer felt that sales personnel mis-sell him by hiding important information about the product.… Read the rest

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Outsourcing of Training and Development http://www.mbaknol.com/human-resource-management/outsourcing-of-training-and-development/ http://www.mbaknol.com/human-resource-management/outsourcing-of-training-and-development/#comments Tue, 19 Aug 2014 11:20:08 +0000 http://www.mbaknol.com/?p=6588 Organizations now are using a unique approach to provide training internally by outsourcing their training departments. This they have found is a way that reduces costs improves productivity and relives them from the need of constant upgradation. Handing over the organizations training function over to “experts” in many ways also improves the quality of training. These experts have a lot of advantages; they are constantly upgrading themselves to differentiate themselves from the competition and add value to their clients, by virtue of the multiple clients they serve – they have an upfront feel of the best industry practices; training costs can be tracked more objectively and can help align your training’s with your strategic objectives in a far better manner.

Outsourcing of training and development activities means comprehensive, end-to-end outsourcing—from the management of the training function to the design, delivery and reporting. Training BPO refers to the transfer of management and execution of one or more complete ongoing training and development processes or the entire training function to an external services provider. For many companies, outsourcing employee training and development makes financial as well as business sense.

Outsourcing of training and development functions makes a lot of sense for most organizations. The training function is often a decentralized operation. Most companies are unsure of how much they spend on training across the enterprise, and don’t really know what or how much they need. Of course the process of identification, analysis, design, development, deployment and evaluation varies from group to group, department to department and division to division, even within an organization.… Read the rest

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Foreign Currency Swap or Foreign Exchange Swap http://www.mbaknol.com/international-finance/foreign-currency-swap/ http://www.mbaknol.com/international-finance/foreign-currency-swap/#comments Mon, 18 Aug 2014 04:54:55 +0000 http://www.mbaknol.com/?p=6539 Each entity has a different access and different needs in the international financial markets. Companies receive more favorable credit ratings in their country of domicile than in the country in which they need to raise capital. Investors are likely to demand a lower return from a domestic company, which they are more familiar with than from a foreign company. In some cases a company may be unable to raise capital in a certain currency. Currency swaps are also used to lower the risk of currency exposure or to change returns on investment into another, more favorable currency. Therefore, currency swaps are used to exchange assets or capital in one currency for another for the purpose of financial management.

A currency swap transaction involves an exchange of a major currency against the U.S. dollar. In order to swap two other non- U.S. currencies, a dealer may need to arrange two separate swaps. Although, any currency can be used in swaps, many counter-parties are unable to exchange their currencies due to a lack of demand. Since currency swaps involve die exchange of two or more types of currencies, the actual exchange of principals takes place at the commencement and the termination of the swaps. On certain occasions, the exchange occurs only at the inception of the swap depending on the nature of the swap. The exchange of principals is necessary because of the fluctuation of currencies. Also, counter parties may need to utilize the respective exchanged currencies. Principals and interest payments are exchanged based on the spot rate agreed at the inception of the swaps.… Read the rest

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Top Ten Advertising Mantras For Small Business http://www.mbaknol.com/marketing-management/top-ten-advertising-mantras-for-small-business/ http://www.mbaknol.com/marketing-management/top-ten-advertising-mantras-for-small-business/#comments Thu, 14 Aug 2014 08:59:37 +0000 http://www.mbaknol.com/?p=6498 What will be the best resort for advertising and marketing especially for small scale companies needs to be identified. Here there are the top ten low-cost advertising methods which managers will find very useful.

  1. Creating your own Website: Today, when more and more people are turning internet savvy; for any company to come into the public eye having a company’s website is a must. A research has put forth that seventy percent of potential buyers’ first research about the product or service on the internet before walking to a mall or showroom to buy the product or service. If companies cannot invest money, then there are also free blogs and websites which offer domain names as preferred. Also, remember to market your website or blog by employing means of social media. Social media culture is on a rise, and publicizing about your presence on such platforms can result in potential success.
  2. Brand Tie-ups and Cross Promotions: Hunt for companies that pitch to similar customer base and their product or service could compliment with that of yours. This will result in sharing the customer base thus widening the number of potential customers. Also, creating a marketing campaign on a share basis could be mutually beneficial to both the companies.
  3. Conduct Seminars over different Mediums: Yes, seminars no longer connote that meetings have to take place in person. There are different mediums over which such seminars can be held. Those which take place over the internet are referred to as Webinars. This is a much cost effective way as all the participants are attending the seminar from the convenience of their homes or offices.

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Design and Placement of the Corporate Communication Function http://www.mbaknol.com/business-communication/design-and-placement-of-the-corporate-communication-function/ http://www.mbaknol.com/business-communication/design-and-placement-of-the-corporate-communication-function/#comments Thu, 14 Aug 2014 08:00:07 +0000 http://www.mbaknol.com/?p=6495 The need to centralize or decentralize usually comes down to weighing the considerations of company size, product, or service diversity, and geographic spread. For a company as diverse and large as General Electric, for example, the question was moot. Such a huge, diverse organization involved in activities as different as aerospace and network television cannot possibly remain completely centralized in all of its communication activities. Perhaps then, the best structure for large companies is some combination of a strong, centralized, functional area plus a network of decentralized operatives helping to keep communications consistent throughout the organization while adapting the function to the special needs of the independent business unit.

Despite its advantages, the mix of centralized and decentralized activities presents problems for organizations in terms of reporting relationships. If the communications operatives report to their local managers, as they inevitably would, they will run into problems when the manager from headquarters disagrees with an action taken at the local level. On the other hand, if they report to headquarters, the operatives may not fit in with the rest of the organization at the local level.

These problems can often be handled creatively using some combination of both a strong centralized control for all affairs related to communications through out the company and the participation of the local operatives who, as in the case of General Electric, act as “reporters” back at headquarters. The problem of centralization versus decentralization across business units will be more or less important depending on company size, geographic dispersion, and the diversity of the company’s products and services.… Read the rest

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Role of Case Studies in Employee Training and Development http://www.mbaknol.com/human-resource-management/role-of-case-studies-in-employee-training-and-development/ http://www.mbaknol.com/human-resource-management/role-of-case-studies-in-employee-training-and-development/#comments Thu, 14 Aug 2014 07:36:56 +0000 http://www.mbaknol.com/?p=6492 One way to help trainees learn analytical and problem solving skills is by presenting a story (called a case) about people in an organization who are facing a problem or decision. Cases may be faced on actual events involving real people in an organization, or they can be fictional. Business case studies are included in college text books and courses in management, public administration, law, sociology, and similar subjects. They are increasingly available using video and other media. While cases vary in complexity and detail, trainees should be given enough information to analyze the situation and recommend their own solutions. In solving the problem, the trainees are generally required to use a rational problem-solving process that includes the following steps:

  1. Restating important facts.
  2. Drawing inferences from the facts.
  3. Stating the problem or problems.
  4. Developing alternative solutions and then stating consequences of each.
  5. Determining and supporting a course of action.

Proponents of the case study method argue that this form of problem solving within a management setting offers illustrations of the concepts employees are respected to learn and use, improves communications skills, and facilities the linking between theory and practice. Proponents also claim that cases allow participants discuss, share, and debate the merits of different inferences, problems, and alternative courses of action. Such insight can help employees to develop better analytical skills and improve their ability to integrate new information.

A business case study can present a real-life situation, which lets trainees to consider what they would do. It can present a wide variety of skills in which applying knowledge is important.… Read the rest

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Welfare Economics http://www.mbaknol.com/managerial-economics/welfare-economics/ http://www.mbaknol.com/managerial-economics/welfare-economics/#comments Thu, 14 Aug 2014 01:22:12 +0000 http://www.mbaknol.com/?p=6477

“The greatest meliorator of the world is selfish, huckstering trade.” (R.W. Emerson, Work and Days)

Welfare Economics is a normative branch of economics that is concerned with the way economic activity ought to be arranged so as to maximize economic welfare. The hallmark of welfare economics is that policies are assessed exclusively in terms of their effects on the well-being of individuals. Accordingly, whatever is relevant to individuals well-being is relevant under welfare economics, and whatever is unrelated to individuals well-being is excluded from consideration under welfare economics. Economists often use the term utility to refer to the well-being of an individual, and, when there is uncertainty about outcomes, economists use an ex ante measurement of well-being, so-called expected  utility. Welfare economics employs value judgement s about what ought to be produced, how production should be organized, the way income and wealth ought to be distributed, both now and in the future. Unfortunately, each individual in a community has a unique set of value judgements, which are dependent upon his or her attitudes, religion, philosophy and politics, and the economist has difficulty in aggregating these value judgement s in advising policy makers about decisions that affect the allocation of resources (which involves making interpersonal comparisons of utility).

The branch of economics called welfare economics is an outgrowth of the fundamental debate that can be traced back to Adam Smith, if not before. It is the economic theory of measuring and promoting social welfare. In The Wealth of Nations, Book IV, Smith wrote: “Every individual necessarily labors to render the annual revenue of the society as great as he can.… Read the rest

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The Role of Government in Environmental Protection http://www.mbaknol.com/managerial-economics/the-role-of-government-in-environmental-protection/ http://www.mbaknol.com/managerial-economics/the-role-of-government-in-environmental-protection/#comments Wed, 13 Aug 2014 12:06:00 +0000 http://www.mbaknol.com/?p=6484 The final controlling authority in most of the issues related to environment is the government itself. For example, most of the thermal power plants are owned by the government and also only the government can build dams, roads, railways, etc. Industrial or any other related activity cannot start without the approval of the government. Therefore, the government has to apply various checks and controls so that the environment is managed properly.

How can the government establish incentives that would lead industries to choose the efficient amount of pollution control in their own best interest, even if they do not face all the social costs of residual emissions?

1. Direct Regulation

Direct regulation of polluting activity (i.e., setting a legal limit for pollution) frequently comes to mind. The government could, for example, simply limit the industry’s pollution to R units by decree. Direct regulation of this sort was popular in the United States shortly after the setting up of Environmental Protection Agency, a government organization tasked to regulate any practice that may have an adverse effect on the environment. Created in 1970, the EPA became the US government’s answer to increasing qualms about the wanton disregard of some industries and their unsafe practices that pose hazards to human health and the environment in general.  Aside from safeguarding human and environmental health, the EPA is also empowered to craft and enforce regulations under existing environmental laws. It is also responsible for researching various methods to protect the environment.  Since its creation, the EPA took the lead in implementing changes to make the United States a better place to live in.… Read the rest

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The Economists View of Environmental Pollution http://www.mbaknol.com/managerial-economics/the-economists-view-of-environmental-pollution/ http://www.mbaknol.com/managerial-economics/the-economists-view-of-environmental-pollution/#comments Wed, 13 Aug 2014 11:32:20 +0000 http://www.mbaknol.com/?p=6480 Why do people use resources like the environment? This is because, pollution is a byproduct of activities that add to their welfare. These activities bring economic gain to producers and utility gain to consumers. We do not pollute the planet just for fun; we do it as part of activities that improve our welfare. The economists view of environmental pollution is that pollution creates another trade-off of cost and benefit that must be weighed on a case by case basis.

Many of our streams and lakes have historically served as depositories of chemical waste generated by industrial plants and mines. Some are cleaner now, but many still suffer damage form earlier discharges of chemicals, like PCBs whose “half-lives” are measured in hundreds of years. Many pesticides, fertilizers, and detergents used by farms and homes find their way into our lakes and waterways, where they have damaged commercial and recreational fishing. Automobiles are primary source of many air pollutants. The residue of their emission can foul both the air that we breathe and the land located close to the road that we drive on. Factories generate particles of various kinds, often through the combustion of fossil fuels; these pollute the air and fall onto the ground-both near and far. Some of our pollution has even been shown to cause damage on a global scale. The production and emission of chlorofluorocarbons has damaged the ozone layer and exposed much of the planet to increased ultraviolet (UV-B) radiation from the sun; the emission of carbon dioxide and other greenhouse gases has begun to warm the planet at rates that many find alarming.… Read the rest

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Poverty Trap http://www.mbaknol.com/managerial-economics/poverty-trap/ http://www.mbaknol.com/managerial-economics/poverty-trap/#comments Fri, 08 Aug 2014 11:40:50 +0000 http://www.mbaknol.com/?p=6294 Poverty trap is a situation where an unemployed person receiving social security benefits not encouraged to seek work because his or her after‐tax earnings potential in work is less than the benefits currently obtained by not working. The poverty trap occurs due to benefits such as income support, housing benefit, single parent allowance and family tax credit. Given that social security benefits represent the ‘bottom line’ (that is, the provision of some socially and politically ‘acceptable’ minimum standard of living), the problem is how to reconcile this with the ‘work ethic’.

For example, consider the case of a low-skilled person in the UK. He is unable to get a high-paid job because he doesn’t have the right skills, training or experience. He has two options. First one is to get a low-paid job or second option is to claim unemployment benefits. If he gets a low paid job he will have to pay taxes and national insurance so he decides he is actually financially better-off just claiming benefits for being unemployed. As time goes by he carries on claiming benefits and continues to lose his ability and confidence in himself. This makes it more difficult for him to get a decent-wage job and more appealing to continue living on benefits. We can say that he is in the poverty trap.

One suggested way to release people from poverty trap is for government to provide employers with employment subsidies that allow them to pay wages higher than the minimum level of social security, even though the marginal revenue product of the work undertaken does not warrant it.… Read the rest

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The Edgeworth Box http://www.mbaknol.com/managerial-economics/the-edgeworth-box/ http://www.mbaknol.com/managerial-economics/the-edgeworth-box/#comments Tue, 29 Jul 2014 06:17:13 +0000 http://www.mbaknol.com/?p=6292 In 1881, Francis Y. Edgeworth came up with a way of representing, using the same axis, indifference curves and the corresponding contract curve in his book “Mathematical Psychics: an Essay on the Application of Mathematics to the Moral Sciences”. It was Vilfredo Pareto, in his book “Manual of Political Economy”, 1906, who developed Edgeworth’s ideas into a more understandable and simpler diagram, which today we call the Edgeworth box.

Edgeworth box a conceptual device for analyzing possible trading relationships between two individuals or countries, using indifference curves. It is constructed by taking the indifference map of one individual (B) for two goods (X and Y) and inverting it to face the indifference map of second individual (A) for the same two goods. Thus, Edgeworth box is a traditional visualization of the benefits potentially available from international trade.

Individual A’s preferences are depicted the three indifference curves A1, A2 and corresponding to higher levels of satisfaction as we move outward from origin OA. Individual B’s preferences are depicted by the three indifference curves B2 and B3, corresponding to higher levels satisfaction as we move outward from origin OB. Both consumers’ preferences between the reflected in the slopes of their indifference curves, with the slope of a curve at any point reflecting the Marginal Rate of Substitution of X for Y. Only where individual A’s indifference curves are tangential to individual B’s indifference curves (points E, F and G) will A’s marginal rate of substitution of product X for product Y be the same as B’s marginal rate of substitution of X for Y, so that their relative valuations of the two products are the same.… Read the rest

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Case Study on Business Ethics: Al Dunlap at Sunbeam http://www.mbaknol.com/business-ethics/case-study-on-business-ethics-al-dunlap-at-sunbeam/ http://www.mbaknol.com/business-ethics/case-study-on-business-ethics-al-dunlap-at-sunbeam/#comments Wed, 02 Jul 2014 15:13:25 +0000 http://www.mbaknol.com/?p=6185 Early Days of Sunbeam

Sunbeam was formed in 1897 as the Chicago Flexible Shaft Company. The company originally manufactured and sold agricultural tools. By 1910 the company introduced the iron as its first electrical home appliance. Later other appliances such as mixers, toasters and coffeemakers were introduced. Sunbeam came to be known as a recognized designer, manufacturer and marketer of innovative consumer products aimed at improving lifestyle. In 1946, the company changed its name to Sunbeam Corporation. In 1960, Sunbeam acquired Oster which allowed Sunbeam to expand into other home products such as hair dryers and health and beauty appliances. The company later added electric blankets, mattresses, humidifiers, vaporizers and thermostats, among other innovations. Sunbeam soon became the leading manufacturer of electric appliances. The company survived the 1980’s as the US economy suffered, and many companies underwent acquisitions, restructuring, and closings. In 1981, Allegheny International acquired Sunbeam, and the company retained its name. In this acquisition, John Zink, manufacturer of air pollution-control devices and Hanson scale, manufacturer of bathroom scales, were added to the business. Unfortunately the undertow of the economy consumed the company as well, and Allegheny was forced into bankruptcy in 1988.

In 1990, Michael Price, manager of Mutual Shares, corporate turnaround executive Paul Kazarian, and hedge fund manager Michael Steinhardt purchased the bankrupt Sunbeam. Under their leadership, Sunbeam went public as Sunbeam-Oster in 1992. Despite these obstacles, the board at Sunbeam felt that a profitable future was ahead, and they just had to search for someone to lead them in the right direction.… Read the rest

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Cost Control Techniques in Business http://www.mbaknol.com/modern-management-concepts/cost-control-techniques/ http://www.mbaknol.com/modern-management-concepts/cost-control-techniques/#comments Tue, 01 Jul 2014 02:06:52 +0000 http://www.mbaknol.com/?p=6178 During the 1990’s cost control initiatives received paramount attention from corporate America. Often taking the form of corporate restructuring, divestment of peripheral activities, mass layoffs, or outsourcing, cost control techniques were seen as necessary to preserve – or boost – corporate profits and to maintain – or gain – a competitive advantage. The objective was often to be the low-cost producer in a given industry, which would typically allow the company to take a greater profit per unit of sales than its competitors at a given price level.

Cost control and reduction refers to the efforts business managers make to monitor, evaluate, and trim expenditures. These efforts might be part of a formal, company-wide program or might be informal in nature and limited to a single individual or department. In either case, however, cost control is a particularly important area of focus for small businesses, which often have limited amounts of time and money. In a small business the focus is often on selling and servicing the customer. This leaves the task of purchasing slightly sidetracked. Even seemingly insignificant expenditures – for items like office supplies, telephone bills, or overnight delivery services – can add up for small businesses. On the plus side, these minor expenditures can often provide sources of cost savings.

Cost control refers to management’s effort to influence the actions of individuals who are responsible for performing tasks, incurring costs, and generating revenues. First managers plan the way they want people to perform, then they implement procedures to determine whether actual performance complies with these plans.… Read the rest

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Fundamentals of Internal Auditing http://www.mbaknol.com/modern-management-concepts/internal-auditing/ http://www.mbaknol.com/modern-management-concepts/internal-auditing/#comments Sun, 29 Jun 2014 07:08:27 +0000 http://www.mbaknol.com/?p=6163 What is Internal Auditing?

Internal Auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal auditing is a catalyst for improving an organization’s governance, risk management and management controls by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice.

The Institute of Internal Auditors has defined internal auditing as follows: “Internal auditing is the independent appraisal activity within an organization for the review of the accounting, financial and other operation as a basis for protective and constructive service to the management. It is a type of control, which functions by measuring and evaluating the effectiveness of other types of control. It deals primarily with accounting and financial matters but it may also properly deal with matters of an operating nature.”

Here are various definitions of Internal Auditing prevailing, which can be stated as follows:

  1. Internal Audit is a management tool, performed by employees of the organization to ensure correctness in accounting data and to detect fraud by way of periodical review of organizational system and procedures.
  2. Internal Auditing is a continuous and systematic process of examining and reporting the operations and records of a concern by its employees or external agencies specially assigned for this purpose.

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Customer Segmentation Analysis http://www.mbaknol.com/marketing-management/customer-segmentation-analysis/ http://www.mbaknol.com/marketing-management/customer-segmentation-analysis/#comments Sat, 14 Jun 2014 03:47:13 +0000 http://www.mbaknol.com/?p=6075 The buying behavior of customers will vary by segment, such as the elderly, the affluent, where people live, and so forth. If you want to understand how to compete, then you should understand the purchasing processes – who is buying what from whom? You can start your analysis with various customer segments and then test each hypothesis to see if this segment is buying the product or service. This type of analysis, referred to as customer segmentation analysis, helps the organization focus on those segments that provide the greatest growth.  Customer segmentation analysis identifies and profiles promising target customers so that you can reach them with optimal marketing mixes.

All consumer markets contain many subgroups of customers and prospects who behave differently, have different hopes, fears and aspirations, and have different purchasing behaviors. Segmentation enables a company to craft individual marketing plans that hit the “hot buttons” of each consumer group. Segmentation is the practice of dividing consumers into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests and spending habits. The goal of segmenting customers is to decide how to relate to customers in each segment in order to maximize the value of each customer to the businessArmed with a better understanding of their customer base, marketing managers can design targeted marketing and service campaigns to reach specific customer segments with offers that are suited to their needs and preferences. The goal of customer segmentation analysis is to identify groups in which the customers are as much  alike as possible—and greatly differentiated from customers in other segments.… Read the rest

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Michael Porter’s Four Corners Model http://www.mbaknol.com/strategic-management/michael-porters-four-corners-model/ http://www.mbaknol.com/strategic-management/michael-porters-four-corners-model/#comments Fri, 13 Jun 2014 03:10:17 +0000 http://www.mbaknol.com/?p=6066 Profiling a specific competitor is often important to management. However, many competitive profiles will fail to give management insights into how competitors will respond to your own strategy. Understanding this inter-relationship is important for knowing how to position your company in relation to the competition. One of the most popular models for this type of competitor analysis is the so-called Four Corners Analysis.

The Four Corners Analysis developed by Harvard Business School professor and strategy guru Michael Porter is a model well designed to help company strategists assess a competitor’s intent and objectives, and the strengths it is using to achieve them. By examining a competitor’s current strategy, future goals, assumptions about the market, and core capabilities, the Four Corners Model helps analysts address four core questions: 

  1. What drives the competitor? Look for drivers at various levels and dimensions so you can gain insights into future goals.
  2. What is the competitor doing and what is the competitor capable of doing?
  3. What are the strengths and weaknesses of the competitor?
  4. What assumptions are made by the competitor’s management team?

From there, you can identify a competitive strategy that maneuvers around the rival’s objectives and strengths, and that plays to your company’s capabilities.

Michael Porter’s Four Corners Model can be used to develop a profile of the likely strategy changes a competitor might make and how successful they may be and determine each competitor’s probable response to the range of feasible strategic moves other competitors might make. It is also used to determine each competitor’s probable reaction to the range of industry shifts and environmental changes that may occur.… Read the rest

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