IM Unit V Modern Concepts Unit V

UNIT V MODERN CONCEPTS
Management by Objectives (MBO), Management by

Exception (MBE), Strategic Management - Planning for
Future direction SWOT Analysis Evolving development
strategies, Information Technology in Management
Decisions
support
system
Management
Games
Business Process Re-engineering (BPR) Enterprises

Resource Planning (ERP) Supply Chain Management
(SCM) Activity Based Management (ABM) Global
Perspective - Principles and Steps Advantages and
disadvantages.
CONTENTS:
Definition of MBO
Objectives
Types of objectives
Steps in setting up of MBO
Advantages
Disadvantages
Definition
MBO is peter ducker's concept.
MBO is defined as a comprehensive managerial system
that integrated many key managerial activities in

a
systematic
manner
and
consciously
directed
towards all levels of hierarchy for effective and efficient

achievement
objectives.
of
organizational
&
individual
Overview:
Management by Objectives (MBO) is a strategy wherein the
management
sets
specific
goals
for
the
employees
to
accomplish within a fixed time period. Regular feedback is taken

on the work progress in the aforesaid time period.
MBO operationalizes the process of consolidating objective
centric work atmosphere in the organization. It also facilitates
performance management of individual employees.
Management by objectives is a dynamic system which seeks
to integrate the companys need to clarify and achieve its profit
and growth goals with the managers need to contribute and
MBO PROCESS CYCLE:

First,
companies
need
to
set
corporate
objectives.
Some goals are then set for the employees to
meet those objectives.
The employee performance is then measured
through the performance cycle and evaluated at
the end.
Finally, the employee is rewarded for his or her
DEFINITION & CONCEPT:
Many approaches have been utilized to

integrate individual and group goals with
overall goals of an enterprise.
MBO is a process whereby the superior and
subordinates of an enterprise jointly,
a.Identify its common goals,
b.Define each individuals major areas of
responsibility in terms of results expected
of him and
c.Use these measures as guides for
operating the unit (or enterprise) and
assessing the contribution of each of its
The goals are jointly established by the manager

and his subordinates and agreed upon in advance.
At the end of the pre-decided time period, the
subordinates performance is reviewed in relation
into present goals. Both superior and the
subordinates participate in this review/evaluation.
If, after evaluation, it is found that there is some
discrepancy between the work planned (to be done)
and the work accomplished, steps are suggested to
overcome the problems or to make necessary
adjustments in the original plan.
To conclude, MBO implies managing by properly
identifying the objectives of an organization.
Objectives may be
a.Short term
Example : Expediting the works lagging behind the
schedule
a.Long term
Example : Planning for diversification
b.Specific
Example : Decision of pricing policies
c.General
Example : Objective of increment of productivity
Types:
1.Broad objectives:
It is also known as corporate objectives
It is a wordy statement of the standing the company wishes to achieve.
2.Major objectives:
It set the tactical areas into which company wishes to move
It may include Market shares, product plans and plans to expand the
customer population.
3.Lesser objectives:
These are targets, budgets and departmental objectives, including those
governing the performance standards of managers and other members of
the staff.
STEPS IN SETTING UP
MBO:
Performance appraisal system (PAS): PAS helps the management to fix

targets in identified key responsibly area (KRA) or key performance areas.
Steps in PAS:
Fixing of KRA based on role and need (by appraiser to appraisee)
1.Goal setting by appraiser based on organizational goals
2.Agreements on KRAs and goal setting (between appraiser to appraise)
3.Recording of performance by appraise.
4.Mid team review
5.Employee performance appraisal by task accomplishment .
6.Rating of performance and communicating the same to employee.
7. Appeal, if any,
8.Final rating of employee for the current year
9.Rating is given in varies scale such as very poor, poor, good, very bad,
superior, excellent.
USES OF MBO
For identification of training needs of employees based on their rating
For identifying people for promotions, incentives, foreign training or
any special / additional responsibility.
Benefits of MBO to Organization
Improvement of managing process by effective control.
Classification of organizational roles and structures
Encouragement of personel commitment
Development of effective controls at all levels
ADVANTAGES OF MBO:
It keeps company objectives/targets constantly in view
It coordinates the efforts of various departments of an organization
It provides motivation for people because they work on objectives decided with
their consent
It forces management to think ahead in respect of its short term and long term
goals
It helps an enterprise to focus on the areas where it is vital that management
should be effective and isolate the problems preventing the progress towards
company objectives
It leads to better understanding between superiors and the subordinates.
LIMITATIONS:
Management working by objectives may

follow too rigid a pattern in thinking and
action
There is always need for flexibility in
management thinking and the provisions of
written objectives should not be allowed to
affect it adversely.
Contents:
Definition
Characteristics
Disadvantages
Remedies
Definition:
It is a concept which states that routine decisions and decision
making process should be handled by lower level managers only.
They have to report exceptionally important cases only to their
higher managers.
The principal aim of this concept is to free managers from

ordinary and insignificant matters that adds as a hurdle.
An
organizational
managers
system
intervene
in
only
which
when
employees fail to meet performance

standards or when plans or budgets go
awry. Managers compare results with
plans and take action when serious
Characteristics of MBE:
It is a major time saver
It is a career development process
It motivates / encourages the subordinates
It helps managers to evaluate their
subordinates on the job
It avoids delay
Disadvantages of MBE:
Sometimes, poor decision making by subordinates
leads to heavy loss
Subordinates may fail miserably problem solving
due to their inexperience
Potential problems sometimes may not come to
the managers attention
Management relations may some time suffer
Remedy :
Clarify the level of authority
Make sure the lower level managers are
comfortable in decision making and
problem solving by proper training
Have constant review
Summary:
MBO
concept
-Characteristics
-Objectives
-Advantages and disadvantages
MBE
-Definition
-Characteristics
-Disadvantages
-Remedies
Thank
you

Future
direction
development
SWOT
Analysis
Evolving
strategies, information technology in
management
Decisions
Management
Games
support
Business
system
Process
Re-
engineering(BPR) Enterprises Resource Planning

(ERP) Supply Chain Management (SCM) Activity
Based Management (ABM) Global Perspective Principles and Steps Advantages and disadvantages

Strategies in product and service

area
What is our company business?
Who are our customers?
What do our customers want?
How much they buy? At what price?
What is our competitive advantage?
What is our present technology? Weather it will last?
Whether we have to go for buy a make?
What is our profit expected in coming years?
Strategic management
It can be seen as a set of managerial decisions and
actions that determine the long term performances
of a firm
It includes analysis of both Internal environment
(within
the
firm)
and
(competitions and others)

Formulation of strategies
Implementation
Evolution &control
external
environment
Strategic planning
Just like organizational planning is a process of
deciding on the objectives of the organization,
changes in these objectives, resources used or to
be used, to manage resources based on the
analysis (Input analysis , Organizational analysis ,
Industry analysis , Environmental analysis (based
on vision), etc.
Components of strategic
planning
Product market scope

Growth
Competitive advantage
Team output scope
Types of strategies
1. Corporate strategy: A corporate
strategy provides overall direction to
the firm as it is based on analysis of
industry as a whole business strategy.
2. Business strategy: Business strategy
followed at business unit or production
unit level.
3.
Functional
strategy:
Functional
strategy
refers to an approach in
functional area to growth and basic
survival.
Few development strategies

in Marketing area
Where are our customers?

Why do they buy our product?
How to sell best?
What is our best pricing strategy?

Future
direction
development
SWOT
Analysis
Evolving
management
Decisions
Management
Games
support
Business
system
Process
Re-


SWOT Analysis
A scan of the internal and external environment is an important
part of the strategic planning process.
Environmental factors which are internal to the firm usually can be classified
as strengths (S) or weaknesses (W),
and those are external to the firm can be classified as opportunities (O) or
threats (T).
Such an analysis of the strategic environment is referred to as a SWOT
analysis.
The SWOT analysis provides information that is helpful in matching the firm's
resources and capabilities to the competitive
environment in which it
operates.
As such, it is instrumental in strategy formulation and selection.
The following diagram shows how a SWOT analysis

fits into an environmental scan:
Strengths
A firm's strengths are its resources and capabilities
that can be used as a basis for developing a
competitive advantage.
Examples of such strengths include:
Patents, strong brand names, good reputation among
customers, cost advantages from proprietary, knowhow, exclusive access to high grade natural resources,
favorable access to distribution networks
Weaknesses
The absence of certain strengths may be viewed as a weakness.
For example, each of the following may be considered weaknesses:
Lack of patent protection
A weak brand name
Poor reputation among customers
High cost structure
Lack of access to the best natural resources
Lack of access to key distribution channels
In some cases, a weakness may be the flip side of a strength.
Take the case in which a firm has a large amount of manufacturing

capacity.
While this
capacity may be considered a strength that
competitors do not share, it also may be a considered a weakness if the

large investment in manufacturing capacity prevents the firm from
reacting quickly to changes in the strategic environment.
Opportunities
The external environmental analysis may reveal
certain new opportunities for profit and growth.
Some examples of such opportunities include:
An unfulfilled customer need arrival of new
technologies,
Removal
international trade barriers.
of
regulations
in
Threats
Changes in the external environmental
also may present threats to the firm.
Some examples of such threats include:
Shifts in consumer tastes away from the
firm's products, emergence of substitute
products, new regulations increased
trade barriers, etc.
The SWOT Matrix

A firm should not necessarily pursue the more lucrative
opportunities. Rather, it may have a better chance at
developing a competitive advantage by identifying a fit
between the firm's strengths and upcoming opportunities. In
some cases, the firm can overcome a weakness in order to
prepare itself to pursue a compelling opportunity.
To develop strategies that take into account the SWOT profile,
a matrix of these factors can be constructed. The SWOT matrix
(also known as a TOWS Matrix) is shown below:
SWOT matrix (also known as a TOWS Matrix
SWOT matrix (also known as a TOWS

Matrix)
S-O strategies pursue opportunities that are

a good fit to the company's strengths.
W-O strategies overcome weaknesses to
pursue opportunities.
S-T strategies identify ways that the firm
can use its strengths to reduce its
vulnerability to external threats.
W-T strategies establish a defensive plan to
prevent the firm's weaknesses from making it
highly susceptible to external threats.
Star
Cash
cows
?
Weak
Thank
you

Exception (MBE), Strategic Management - Planning for Future
direction SWOT Analysis Evolving development strategies,
Information Technology in Management Decisions support
system
Management
Games
Business
Process
Re-
engineering(BPR) Enterprises Resource Planning (ERP)

Supply
Chain
Management
(SCM)
Activity
Based
Management (ABM) Global Perspective - Principles and

Steps Advantages and disadvantages.

IT in Management
Data
once
processed
becomes
information and processed information
becomes knowledge.
Process means to make it more
usable.
Characteristics of IT in management
Use of IT is most prevalent in

management today
It helps managers to communicate, to
control, to create a knowledge society,
to make easy access to information at
low cost, for wide spread ease of using
global e-commerce and online trading,
digital auction, etc.
Management and Use of IT

Management Domain
Planning
Use of IT and PC
Scenario Planning
DSS and MIS
Consumer Access to Product & Service
Information on JV (Joint venture)
Merger and Amalgamation
Organizing
Outsourcing
Online organizing
Lesser supervision
Manufacturing process improvement
Internet and Intranet
Staffing
Helps in knowledge workers upward mobility

Consultancy work
Outsourcing man power
Training and Educating people
Leading
IT gives power to knowledge workers,

consumers
Lower communication cost
Helps team work
Ease of control
Timely deduction and deviation
Worldwide selling
Promoting partnership
Controlled intranet
Financial control made easy by
Electronic spreadsheets
Controlling
Use of IT at different
levels :
Supervisory level (Junior management grade) :
Very wide spread use, high programmable, very often

repetitive
Middle level managers:
Very widely used for administration, co-ordination,
information system, controlling subordinates
Top level managers:
It can be used for formulating strategies, polices,
information and knowledge and apply of decision models
Challenges of IT
Resistance to computerization (use of graphics, uses friendly
software, etc.,)
Speech recognition devices (Use voice or speech instead of keyboard)
Networking (using LAN, WAN, at a which are cost effective)
Telecommuting - working with computers at home instead of office.
It helps in mobilizing more time of reason and avoids cost and delay in
transportation
Other networks (Intranet, Internet, Groupware it is teleconferencing

by three or more people of time)
IT in management is a welcome feature. However, the information
security (using firewalls, etc.,) should always be taken care of and has
to be embedded into each IT application.

Future
direction
SWOT
Analysis
Evolving
development
management
Management
Games
Decisions
Support
Business
System
Process
Re-


MANAGEMENT
INFORMATION SYSTEM (MIS)
MANAGEMENT INFORMATION SYSTEM
A system of obtaining, abstracting, storing and analysing

data to produce effective information for use in planning,
controlling and decision making process.
MIS is used for decision making in the functional areas of

business. it has brought accuracy and speed to the
management.
CHARACTERISTICS OF GOOD
MIS
Information must be clear and

conciseness
The information should be relevant to
the business organisation
It must be simple and easy to
understand
Helps in the process of decisionmaking and corrective actions
MIS should help in solving the
complicated problems effectively
NEED FOR MIS

1.INTERNAL FACTORS :
RESOURCES PLANNING AND
CONTROL INFORMATION
OPERATIONAL INFORMATION
PRODUCTION FUNCTION
MARKETING FUNCTION
EXTERNAL FACTORS
I. POLITICAL AND GOVERNMENT
II. ECONOMIC CONDITION
III. TECHNOLOGY
IV. COMPUTER HARDWARE
V. SOFTWARE
VI. DATA
VII.PEOPLE
IMPLEMENTATION OF MIS
INPUT DATA
OUTPUT
INFORMATION S STORES
AND RETRIEVALS
DECISION MAKING
ANALYSIS
ACTIONS
ROLE OF MIS
a) MIS increases knowledge of manager and he
can function effectively.
b) MIS provides decision-making process.
c) MIS provides successful achievement of the
organisation objectives.
INFORMATION
APPROPRIATE
DECISIONS
EFFECTIVE
MANAGEMENT
PERFORMANCE
ACHIEVEMENT OF
ORGANISATION
ROLE OF MIS
SL.N
O
MAJOR
SUBSYSTEM
MARKETING
APPLICATION
SALES PLANNING , SALES ANALYSIS ,

SALES FORECASTING
MANUFACTURING
PRODUCTION PLANNING , COST

CONTROL ANALYSIS
LOGISTICS
PLANNING AND CONTROL
FINANCE AND
ACCOUNTING
COST ANALYSIS , PLANNING , INCOME

MEASUREMENT
TOP MANAGEMENT
STRATEGIC PLANNING , POLICY ,

RESOURCE ALLOCATION
APPLICATION OF MIS
TO PROVIDE :
Planning and control
Sales forecasting
Effective managerial activities
Long term plans
Government policy and regulation
Allocate resources
To find out new opportunities
Help management decision about
quality, quantity and market price, etc
MANAGEMENT AND MIS
OPERTIONAL CONTROL
It provides detailed information and
accurate on a daily and weekly basis
A market manager must know of past
and present sales, record , consumers
behaviour, advertising budjet
It provide him timely and detailed
information obtained from daily
operations
MIDDLE MANAGEMENT
Middle level managers such as
department heads are concerned with
the current anf future performance
Information about marketing level
problems with customer reduction in
sales, quantity of product.
They required information from
within and outside organisation
TOP LEVEL STRATEGIC

PLANNING
MIS must provide information to top
management for strategic planning
and control
External source of information
Economic condition
Technological conditions
Government policy
Actions of competitors
MIS
INTERTNAL SOURCE OF
INFORMATION
Sales volume
Financial analysis
Human resources
Product quality , customers satisfaction
The top
managers
receive overall
financial
analysis
and
summarised
comparisons of departmental performance.
Decision Support Systems

Decision support systems (DSS)
Offer potential to assist in solving both
semi-structured and unstructured
problems
Characteristics of a DSS
Handles large amounts of data from different
sources
Provides report and presentation flexibility
Offers both textual and graphical orientation.
Supports drill down analysis
Performs complex, sophisticated analysis
and comparisons using advanced software
packages
Supports optimization, satisfying, and
heuristic approaches
Characteristics of a DSS
Performs different types of analyses
What-if analysis
Makes hypothetical changes to problem and
observes impact on the results
Simulation
Duplicates features of a real system
Goal-seeking analysis
Determines problem data required for a
given result
Integration of MIS and DSS

In many organizations they are
integrated through a common
database
Separation of DSS transactions in the
database from MIS transactions may
be important for performance
reasons
Characteristics
1) Focus
MIS
DSS
MIS focuses on structured Focuses

and routine decisions
tasks
on
also
semi-structured
and
requires
managerial judgment
2) Emphasis
Data storage and general Emphasis on data manipulation

efficiency
Also
emphasis
on
general
effectiveness.
3) Access
Indirect
access
to Direct data and access by
managers & direct access strategies managers only

to technical people.
4) Reliance
MIS
defends
computer expert
5) Understanding
on
a Depends on managers own

judgment
MIS managers need not DSS
managers
understand the full nature decision

of data &decisions
better way
know
environment
the
in
THANK YOU

Future
direction
development
SWOT
Analysis
Evolving
management
Decisions
Management
Games
support
Business
system
Process
Re-


Management or Business
Games
Business Games are method of
instructions
in
which
organizational
people are made to realize, understand

their present potential and available
scope in them for further improvement.
Characteristics of BG
All BG orient the mind towards winning which is also

necessary in business atmosphere
The confidence level of people increases due to this practice
Any failure in BG increases the fighting sprit, it also increase

the cognitive knowledge of learning
It augments the theory fear of failure is more harmful than

the failure itself.
Decision making process is enhanced
Teaming and synergy is also enhanced both as a team

member and team leader.
Business Games
Objectives:
To provide managers with increased
awareness of their own behavior.

How others perceive them
Increased understanding of group process
Sensitivity training actually aims for increased
empathy improved listing skills, greater

openness, increased tolerance levels and
increased conflict resolution skills.
Disadvantages
It is termed by people as crude
method
The weakest individual of the group
faces the strongest brunt of all
others.

Future
direction
development
SWOT
Analysis
Evolving
management
Decisions
Management
Games
support
Business
system
Process
Re-
engineering (BPR) Enterprises Resource Planning


BUSINESS PROCESS
REENGINEERING (BPR)
BPR refers to analysis and redesign of

workflows
and
processes
within
and
between organisations.
BPR is defined as the fundamental rethinking
and
radical
methods,
redesign
new
(New
strategy,
platform,
new
new
philosophy,
etc)of business related process to achieve

dramatic improvements in performance in
terms of cost, time, quality, output quantity
and responsiveness to customers.
BUSINESS PROCESS
REENGINEERING (BPR)
Present
Future
Captive approach
Flexible approach
Ineffective systems
Lean
Inflexibility
competitive
Low consumer focus
effective
Lack of innovation
customer focused
High overheads
profitable
Longer lead time
innovative
Bureaucratic paralysis
creative
WHO WILL Do REENGINEER

process?
Leaders
Process incharge people
Reengineering team
Streaming committee
STEPS IN BUSINESS PROCESS

REENGINEERING
Determining a process vision
Define the process to be reengineered
Understanding and measuring the
existing process
Identify the Information technology
average level
Designing the prototype
(approximation)
Implementing BPR
Review, feedback and modify
Adv of BPR
Improvement of organization as a
whole better process improvement
Uses IT and other technologies for
drastic improvements

Future
direction
development
SWOT
Analysis
Evolving
management
Decisions
Management
Games
support
Business
system
Process
Re-


Enterprises Resource
Planning (ERP)
ERP is defined as the process of
system integration through network
that is capable of planning all the
resource of the enterprise to achieve
specified goals.
ERP integrates all the departments

and functions of organizations from
supplies to end users, depts. like HR,
finance, Marketing, QC, etc.
ENTERPRISE RESOURCE
PLANNING
WHAT IS ERP ?
Enterprise Resource Planning systems (ERPs) integrate
all data and processes of an organization into a unified
system.
A typical ERP system will use multiple components of

computer
hardware
and
software
to
achieve
the
integration.
A key ingredient of most ERP systems is the use of a

unified
database
modules.
to
store
data
for
various
system
ERP
systems
are
large
computer
systems
that
integrate application programs in accounting (i.e.,

accounts
receivable),
sales
(i.e.,
order
booking),
manufacturing (i.e., product shipping) and the other

functions
in
the
firm.
This integration is accomplished through a database

shared by all the application programs.
ERP HISTORY IN
DEPTH
The first software that was designed to assist
the manufacturing process happens to be the
MRP (Material Resource Planning) in the year
1975.
This was followed by another advanced
version namely MRP2 which is the acronym for
Manufacturing Resource Planning.
None of them yielded benefit of ERP.
DRAWBACKS OF MRP
SYSTEMS
These Software's were helpful in manufacturing
processes only.
Their benefits do not extend to other sectors.
The MRP solutions did not render the expected
results due to exorbitant costs and practical
work problems.
MRP systems required huge pool of technical
expertise in terms of manpower and machines.
WHY ERP?
Complete integration of systems across the departments
in a company as well as across the enterprise as a whole.
Only solution for better project management.
Better customer service.
Automatic introduction of latest technologies.
Expertise database.
PROBLEMS TACKLED
BY
ERP
SYSTEMS
Material Shortages
Productivity Enhancements
Customer Service
Cash Management
Inventory problems
Quality Problems
ERP SELECTION
Check whether all functional aspects of business are duly
covered.
Check whether all the business functions and processes
are fully integrated.
Check whether all the latest IT trends have been covered.
Check
whether
the
vendor
implementing capabilities.
has
customizing
and
ADVANTAGES OF ERP
PACKAGES
Ease of use.
Readymade solutions for most of the problems.
Integration of all functions already established.
Dependency on human resources eliminated.
Easy enterprise wide information sharing.
Suppliers and customers can be online communication.
Automatic adaptation to new technologies.
Knowledge transfer between industries guarantees
innovation.
Why ERP Is Required

It is very essential is this competitive
world to perform better, to increase
market
share,
thereby
increase
efficiency.
ERP helps organizations to be cost
effective by re-engineering the present
business process.
It utilities information technology and
communication and uses them for
organizational effectiveness.
Business modeling for ERP:

It consists of process mapping of
business process and subprocess.
Diagrammatic
representation
of
business
process
indicating
the
sequence, flow, interconnection, path
of all subsystem to the main sysytem.
Making a cost effective ERP model by
planning in line business objectives.
ERP features
Role of consultants is very important
here.
ERP is managed by the strategy of
bringing people together by making
available information to everybody for
effective DM.
It is time bound.
ERP success depends on functionality,
technology, cost to ERP package
(whether customized or not).
Steps in ERP
Identification of ERP needs (quick info flow,
effective, eliminating paper work and networking)
Evaluate
the
present
business
situation
understanding the present info system, present
procedures and methods , present process &
technology.
Decisions regarding desired situations (by
benchmarking resource utilization).
Re-engineer
the
present
business
process(reduction of cycle time downtime,
reducing no. of decision points and stream lining
information to flow at all levels)
Evolution of various ER package (cost vise, local
or global presence, R& D investments, cost of
implementing, ease of implementation, etc).
Steps in ERP
Finalisation of ERP Package
Finalize the consultant
Implement ERP in a phased manner
followed by post implementation
support.
ERP Domains
Materials Management
Banking Financial services
SCM
HR
ERP operating software
AGILE (HR), People Soft (HR), Oracle
(finance)

Future
direction
development
SWOT
Analysis
Evolving
management
Decisions
Management
Games
support
Business
system
Process
Re-


Supply Chain Management (SCM)

System
It is an extension of distribution logistics

and was earlier referred to as physical
distribution management.
It is primarily an integration of material
management,
manufacturing
and
physical distribution by network using
information technology.
SCM is often interpreted as network of
production, distribution and marketing.
Four major drivers of SCM

1.
Transportation 2. inventory 3. Facilities and 4. Information
SCM s also seen as a trade off between efficiency and responsiveness.
SCM facilities management of high quality inventory most

efficiently and effectively (from manufacturing point to sale point)
It is embedded with policies, procedures and organizational

structures (manufacturing organizations spend nearly
54 % of
money on raw materials, components of maintenance.)
SCM success depends on effective integration of various aspects

such
as
speed,
service,
volume,
scale,
cost,
environment, customization, common polling, etc.
operating
Key areas of SCM

Ways and means of minimizing
uncertainty
Reduction of Lead time
Improving flexibility &process Quality
Minimize variety to maximize
economic of sales
Proper demand management
Taking care of product differentiation
Improving the major drivers
Eg of SCM:
Just in time: JIT is maintaining
adequate inventory and not keeping
stocks more than the requirement.
Hindustan Petroleum Corporation

improved their profits by improving
supply chain, optimizing procurement
process, lower freight charges, etc.
Definition
A supply chain is a network of facilities
and distribution options that performs the
functions of procurement of materials,
transformation of these materials into
intermediate and finished products, and
the distribution of these finished products
to customers.
112
115
116

Future
direction
development
SWOT
Analysis
Evolving
management
Decisions
Management
Games
support
Business
system
Process
Re-


Activity base Management

(ABM):
ABC is activity based costing. It is the basic

form of ABM.
A type of functional accounting being adopted
by leading companies like HP, GE and Union
Carbide.
Traditional financial accounting identified cost
according to the category of expenses such as
salary, supply charges, raw material cost,
fixed and variable cost.
Activity base Management

(ABM):such as sales order
Cost associated activities
processing, expediting customer orders, resolving
delivery problems, re-tooling of machines, cost of
advertising, publicity, etc are separately calculated.
ABC provides decision makes a much more accurate
breakdown of the cost data and the time taken for

each item.
Such as analysis can help mangers to understand the
significance levels of activities within a process and

help them to reduce cost.
Characteristics of ABM
ABM based on ABC is adopted
where there is increase in overhead
levels
where increasing in labour cost
Eg. Of overhead charges : Salaries for
employees,
electricity
and
maintenance, taxes and other duties
to be paid to government., rent for
premises, etc.,
Steps in ABC
Costing of each activity is taken up

Identity cost driver for each of the
activity
Establish cost driver rate
Apply required rate to the products
Advantages of ABC
It supports cost control measures
It produces products with better cost
for managers to make proper decisions

Exception (MBE), Strategic Management - Planning
for Future direction SWOT Analysis Evolving
development
management
Decisions
Management
Games
support
Business
system
Process
Re-

Based Management (ABM) Global Perspective Principles
and
disadvantages
Steps
Advantages
and
Global Perspective of
Management
Global perspective consists of
1) International management or Oversees management:
International or oversees business takes place

between a parent country and host countries
2) Global or trans-national corporations: Views the world as
one market irrespective of place of functioning
3) MNC (Multi-national corporations): MNCs have their
head quarters in one country but operate in many countries
Eg: Ford of USA operates in INDIA, UK etc.
Types of International Business:

The various types are
Exports
Licensing
Management contracts
JV (joint venture)
Strategic alliances
Subsidiaries
Transformation of International Business

1. Ethnocentric:
It is an approach found in international firms where
nationals from the parent country dominate the
organization at home and abroad.
In terms of decision-making, the subsidiaries have
very little autonomy, and control resides in head
office.
This ethnocentric attitude stems from the belief that
the parent-country nationals are best suited to run the
business, irrespective of the local circumstances.
EG: Earth movers.
Polycentric :
These are foreign subsidiaries staffed by local people
who have great managerial freedom Eg: Hyundai motors
It is an approach found in international firms where hostcountry nationals manage the subsidiaries.
Decision-making is given to the subsidiaries, although
head office in the parent country controls the overall
business strategy.
From this perspective, host-country nationals are
considered important because they can bring local
knowledge and understanding to the day-to-day
operations of the subsidiary businesses.
3. Geocentric:
Geocentric management involves a global
view of the organization's international operations.
Here the entire organization is viewed as inter
dependent system operating in many countries.
The top level managers are either from local
countries or other nations.
However, a two way communication is a must
(between head quarters & other locations Eg:
Philips, Asea Brown Boveri (ABB)
The best managers, regardless of their nationality
or location, are selected for the assignments that
fit their skills and abilities, the various units are
connected by a coordinated plan that allows for
local needs and actions in the context of overall
organizational performance.
Adv of global management

Money can be easily raised throughout the world
by its operations at different locations Eg: Hyundai
It utilities the business opportunities available in
many countries
Cost effective products can be made (by using low
cost labor)
Large MNC & can receive managers and personals
from a world wide managers bank.
THANK YOU

IM Unit V Modern Concepts Unit V

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UNIT V MODERN CONCEPTS

Management by Objectives (MBO), Management by

Business Process Re-engineering (BPR) Enterprises

that integrated many key managerial activities in

towards all levels of hierarchy for effective and efficient

accomplish within a fixed time period. Regular feedback is taken

MBO PROCESS CYCLE:

DEFINITION & CONCEPT:

Many approaches have been utilized to

The goals are jointly established by the manager

Performance appraisal system (PAS): PAS helps the management to fix

Management working by objectives may

The principal aim of this concept is to free managers from

employees fail to meet performance

UNIT V MODERN CONCEPTS

strategies, information technology in

engineering(BPR) Enterprises Resource Planning

Strategies in product and service

(competitions and others)

Product market scope

Few development strategies

Where are our customers?

UNIT V MODERN CONCEPTS

strategies, information technology in

engineering(BPR) Enterprises Resource Planning

The following diagram shows how a SWOT analysis

The absence of certain strengths may be viewed as a weakness.

For example, each of the following may be considered weaknesses:

Lack of patent protection

A weak brand name

Poor reputation among customers

High cost structure

Lack of access to the best natural resources

Lack of access to key distribution channels

In some cases, a weakness may be the flip side of a strength.

Take the case in which a firm has a large amount of manufacturing

capacity may be considered a strength that

competitors do not share, it also may be a considered a weakness if the

international trade barriers.

The SWOT Matrix

SWOT matrix (also known as a TOWS Matrix

SWOT matrix (also known as a TOWS

S-O strategies pursue opportunities that are

UNIT V MODERN CONCEPTS

engineering(BPR) Enterprises Resource Planning (ERP)

Management (ABM) Global Perspective - Principles and

Use of IT is most prevalent in

Management and Use of IT

Helps in knowledge workers upward mobility

IT gives power to knowledge workers,

Supervisory level (Junior management grade) :

Very wide spread use, high programmable, very often

Other networks (Intranet, Internet, Groupware it is teleconferencing

UNIT V MODERN CONCEPTS

strategies, information technology in

engineering(BPR) Enterprises Resource Planning

MANAGEMENT INFORMATION SYSTEM

A system of obtaining, abstracting, storing and analysing

MIS is used for decision making in the functional areas of

Information must be clear and

NEED FOR MIS

SALES PLANNING , SALES ANALYSIS ,

PRODUCTION PLANNING , COST