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Showing posts from February, 2014

Single Entry and Double Entry Accounting

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Single entry accounting/Cash accounting. This system records only cash movement of transactions and that too up to the extent of recording one aspect of the transactions. This means that only receipt or payment of cash is recorded and no separate record is maintained (about the source of receipt and payment) as to from whom the cash was received or to whom it was paid. Double entry book keeping/Commercial accounting. Double entry or commercial accounting system records both aspects of transaction i.e. receipt or payment and source of receipt or payment. It also records credit transactions i.e. recording of Electricity Bill or accruals of Salary payment etc. This concept will be explained in detail in the next lectures but for the time being it should be noted that in cash accounting date of receipt / payment of actual cash is important while in commercial accounting the date on which the expense is caused (whether paid or not) as well as the spreading of the cost of c
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SPAN OF COMMAND, CENTRALIZATION VS. DE-CENTRALIZATION AND LINE VS. STAFF AUTHORITY

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Methods of Vertical Coordination Vertical coordination is the linking of activities at the top of the organization with those at the middle and lower levels in order to achieve organizational goals.   Formalization is the degree to which written policies, rules, procedures, job descriptions, and other documents specify what actions are (or are not) to be taken under a given set of circumstances.   1.   Most organizations need some degree of formalization so that fundamental decisions do not have to be made more than once and so that inequities will be less likely to occur. 2.  Being too highly formalized can lead to cumbersome operations, slowness in reacting to change, and low levels of creativity and innovation. Span of management or span of control is the number of subordinates who report directly to a specific manager.   1.  Managers should have neither too many nor too few subordinates. 2.   Research indicates that there is no universally correct span of management
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JOB DESIGN/SPECIALIZATION AND DEPARTMENTALIZATION II

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C. Hybrid structure is a form of departmentalization that adopts parts of both functional and divisional structures at the same level of management.   1.  Hybrid structures are adopted by large organizations to gain the advantages of functional and divisional structures. a.  Functional departments are created to take advantage of resource utilization efficiencies, economies of scale, or in-depth expertise. b.  Divisional departments are usually created to benefit from a stronger focus on products, services, or markets.   2.  The hybrid structure has several advantages. a.  Corporate and divisional goals can be aligned. b.  Specialized expertise and economies of scale can be achieved in major functional areas. c.  Adaptability and flexibility may be achieved in handling diverse product or service lines, geographic areas, or customers.   3.  The hybrid structure has several disadvantages. a.  Conflict may arise between departments and divisions. b.  Hybrid organizations tend to d
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JOB DESIGN/SPECIALIZATION AND DEPARTMENTALIZATION

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Building Blocks of Organizing 1. Job design A.  Job design is an essential part of organizational structure.       1.  Job design is the specification of task activities, usually repeated on a regular basis, associated       with each particular job.             a.  Task activities need to be grouped in reasonably logical ways for each job.             b.  The way the jobs are configured influences employee motivation.       2.  Work specialization is the degree to which the work necessary to achieve organizational goals             is broken down into various jobs. In Work specialization the tasks in an organization are divided into separate jobs. Another term for this is division of labor.      1.  Work specialization can be traced back to the writings of Adam Smith.      2.  Work specialization was seen as a way to make the most efficient use of workers’ skills because           workers would be placed in jobs according to their skills and paid accordingly.      3.  Other advant
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ORGANIZING

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Organizations are experimenting with different approaches to organizational structure and design. Organizational structure can play an important role in an organization’s success. The process of ORGANIZING —the second management functions—is how an organization’s structure is created. The Nature of Organization Structure Managers are seeking structural designs that will best support and allow employees to effectively and efficiently do their work. Organizing is the process of creating an organization’s structure. Organization structure is the formal pattern of interactions and coordination designed by management to link the tasks of individuals and groups in achieving organizational goals. An organizational structure is the formal framework by which job tasks are divided, grouped, and coordinated. 1.  This formal pattern designed by management is to be distinguished from the informal pattern of interactions that simply emerges within an organization. 2.  Organization structure
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ANSWERING THE QUESTIONS

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1.  Differentiate between entrepreneurial ventures and small businesses. Entrepreneurial Ventures—organizations that are pursuing opportunities, characterized by innovative practices, and have growth and profitability as their main goals. Small Businesses—organization that is independently owned, operated, and financed; has fewer than 100 employees; doesn’t necessarily engage in any new or innovative practices, and has relatively little impact on its industry, usually remaining small by choice or by default.    2.  Why is entrepreneurship important in Pakistan? The important of entrepreneurship in Pakistan can be shown in three areas: innovation, number of new start-up business and SMEs, and job creation.    3.  Is the pursuit of entrepreneurship important only in Pakistan? Explain. The Global Entrepreneurship Monitor (GEM) studied the pace of entrepreneurial activity on economic growth in various countries. Among the major industrialized G-7 countries inparticular, there was
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ENTREPRENEURSHIP MANAGEMENT

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What Is Entrepreneurship? 1. Entrepreneurship—the process where individuals or a group of individuals risk time and money in pursuit of opportunities to create value and grow through innovation regardless of the resources they currently control. 2.  Entrepreneurial ventures vs. small businesses Entrepreneurial ventures—organizations that are pursuing opportunities, characterized by innovative practices, and have growth and profitability as their main goals. Small businesses—organization that is independently owned, operated, and financed; has fewer than 100 employees; doesn’t necessarily engage in any new or innovative practices, and has relatively little impact on its industry, usually remaining small by choice or by default. Why Is Entrepreneurship Important? 1.  Innovation—a process of changing, experimenting, transforming, revolutionizing, and a key aspect of entrepreneurial activity. 2.  Number of New Start-Ups Assuming that some of these new businesses engage in innova
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LEVELS OF STRATEGIES, PORTER’S MODEL AND STRATEGY DEVELOPMENT (BCG) AND IMPLEMENTATION

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Level of Strategies Many organizations develop strategies at three different levels. These three different and distinct levels of strategy are corporate, business, and functional:   Corporate-level strategy is developed by top-level management and the board of directors. The corporate-level strategy seeks to determine what businesses a corporation should be in or wants to be in. Two popular approaches for answering the question of what business(es) should we be in are the grand strategies framework and the corporate portfolio matrix. 1.  These strategies address a.  What business the organization will be coordinated to strengthen the organization’s competitive position. b.  How the strategies of those businesses will be coordinated to strengthen the organization’s competitive position. c.  How resources will be allocated among businesses.   2. Business-level strategy concentrates on the best means of competing within a particular business while also supporting the corporate
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STRATEGIC MANAGEMENT - II

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THE STRATEGIC MANAGEMENT PROCESS The strategic management process is an eight-step process that encompasses strategic planning, implementation, and evaluation.   A.   The first step is identifying the organization’s current mission, objectives, and strategies. 1.  Every organization needs a mission,which defines the purpose of the organization. What is the organization’s reason for being in business? 2.  It’s also important to identify the organization’s current objectives and strategies, as well.   B.   Step 2 is analyzing the external environment. It’s important to analyze the environment because, to a large degree, it defines management’s strategic options. 1.  A successful strategy is one that aligns well with the environment. 2.  This step is complete when managers have an accurate grasp of what is taking place in the external environment and are aware of important trends that might affect the organization.   C.  The third step is identifying opportunities and threats. Af
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STRATEGIC MANAGEMENT -I

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INTRODUCTION Today’s business news is filled with reports of organizations making changes in their strategies for whatever reasons. An underlying theme of discussing strategic management is that good strategies can lead to high organizational performance. THE IMPORTANCE OF STRATEGIC MANAGEMENT The environmental shocks during the decades of the 1970s and 1980s forced managers to develop a systematic means of analyzing the environment, assessing their organization’s strengths and weaknesses, identifying opportunities that would give the organization a competitive advantage, and incorporating these findings into their planning. The value of thinking strategically was recognized. The Concept of Strategic Management Strategic management is a process through which managers formulate and implement strategies geared to optimizing goal achievement, given available environmental and internal conditions.Strategic management is that set of managerial decisions and actions that determine
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MANAGEMENT BY OBJECTIVE (MBO)

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Time Span of Goals and Plans 1.  Strategic goals and plans generally involve time periods of 3-5 years. 2.  Tactical goals and plans typically involve time periods of 1 to 3 years. 3.  Operational goals and plans can be for as short a period as 1 week or as long as 1 year. Characteristics of Well-Designed Goals a.  Written in terms of outcomes b.  Measurable and quantifiable c.  Clear as to a time frame d.  Challenging but attainable e. Written down f.  Communicated to all organizational members Steps in Goals Setting—Five Steps a.  Review the organization’s mission. b.  Goals should reflect what the mission statement says. c.  Evaluate available resources. d.  Determine individually, or with input from others, the goals. e.  Write down the goals and communicate them to all who need to know. f.  Review results and whether goals are being met. Developing Plans The process of developing plans is influenced by three contingency factors and by the planning approach followed.
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PLANNING PROCESS AND GOAL LEVELS

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The overall planning process   A.   Planning is a two-part function—setting goals and determining how to try to achieve the goals. 1.  A goal (often used interchangeably with “objective”)is a future target or end result that an organization wishes to achieve. 2.  A plan is the means devised for attempting to reach a goal.   B.  An organization’s mission is the organization’s purpose or fundamental reason for existence. 1.  A mission statement is a broad declaration of the basic, unique purpose and scope of operations that distinguishes the organization from others of this type. 2.  A mission statement serves a variety of purposes. a.  For managers, a mission statement can be a benchmark against which to evaluate success. b.  For employees, mission statements define a common purpose, nurture organizational loyalty, and help foster a sense of community among members. c.  For external groups, mission statements help provide unique insights into an organization’s values and future di
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PLANNING: FUNCTIONS & BENEFITS

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WHAT IS PLANNING? Planning involves defining the organization’s goals, establishing an overall strategy for achieving these goals, and developing a comprehensive set of plans to integrate and coordinate organizational work. The term planning as used in this chapter refers to formal planning. The quality of the planning process and appropriate implementation probably contribute more to high performance than does the extent of planning. WHY DO MANAGERS PLAN? Purposes of Planning Planning is important and serves many significant purposes. 1.  Planning gives direction to the organization. 2.  Planning reduces the impact of change. 3.  Planning establishes a coordinated effort. 4.  Planning reduces uncertainty. 5.  Planning reduces overlapping and wasteful activities. 6.  Planning establishes objectives or standards that are used in controlling. How do managers plan? Planning is often called the primary management function because it establishes the basis for all other f
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CONTEMPORARY PLANNING TECHNIQUES.

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Two planning techniques that are appropriate for planning in an environment that’s both dynamic and complex are project management and scenario planning.   1)  Project Management A project is a one-time-only set of activities that has a definite beginning and ending point in time. Project management is the task of getting a project’s activities done on time, within budget, and according to specifications.   Project Management Process   There are seven steps in the project planning process.  i.  Define objectives. ii.  Identify activities and resources. iii.  Establish sequences. iv.  Estimate time for activities. v.  Determine project completion date. vi.  Compare with objectives. vii. Determine additional human resource requirements. The role of the project manager i.  The only real influence project managers have is their communication skills and their power of persuasion. ii.  Team members seldom work on just one project; they’re usually assigned to two or three at any
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PLANNING AND DECISION AIDS-II

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1.  TECHNIQUES FOR ALLOCATING RESOURCES. Resources are the assets of the organization and include financial, physical, human, intangible, and structural. 1)  Budgeting A budget is a numerical plan for allocating resources to specific activities. Budgets are popular because they’re applicable to a wide variety of organizations and units within an organization. There are four different types of budgets. a  A revenue budget is a budget that projects future sales. b  An expense budget is a budget that lists the primary activities undertaken by a unit and allocates a dollar amount to each. c  A profit budget is a budget used by separate units of an organization that combines revenue and expense budgets to determine the unit’s profit contribution. d  A cash budget is a budget that forecasts how much cash an organization will have on hand and how much it will need to meet expenses. These budgets are based on the assumption of a single specified volume—fixed budgets. Howeve
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RECORD KEEPING AND SOME BASIC CONCEPTS

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We can maintain a diary of transactions and note the daily transactions like sale, purchase etc. in it. Problems Faced in Maintaining Diary of Transactions • How will we come to know the income and expenses from various sources? • We only have a sheet / page on which daily transactions are listed. • We do not know which product is selling better and which is not. Available Alternate One can go through all the transactions at the end of the month and note different types of transactions on different pages. So that every page gives complete detail for a different type of transaction like sales of different products and expenses of different types now try to go through these transactions and separate transactions of different types.   But what if the number of transactions is large? Is it really possible to go through hundreds or thousands of transactions at the month end and analyse them to obtain required results.  Sales and purchase are not always for cash. Some ti
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How Technology Affects Managerial Communication

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Two developments in information and communication technology seem to be having the most significant impact on current managerial communication: networked computer systems and wireless capabilities. Networked Systems 1. An electronic mail system is a mail system that allows high-speed exchange of written messages through the use of computerized text-processing and communication networks. a.  Electronic mail has advantages. 1)  It is a time-saver. 2)  It leads to exchanges of information among managers who previously did not communicate. 3)  Managers tend to receive new types of information through these systems. b.  Electronic mail has a couple of disadvantages. 1)  It eliminates the nonverbal cues that serve as aids in face-to-face communication. 2)  It is easy to vent anger and frustrations over email that would never be communicated through regular written communication channels. 3)  It leads to an excess of irrelevant mail. 2.  Voice mail is the recording systems which en
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BASIC CONCEPTS OF ACCOUNTING

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Financial accounting is the maintenance of daily record of All financial transactions in such a manner that it would help in the preparation of suitable information regarding the financial affairs of a business or an individual. The need for recording financial transactions arises because the individual or business wants to know the  performance of the business and to assist the person in making decisions related to the business. Transactions In accounting or business terms, any dealing between two persons involving money or a valuable thing is called transaction .   Human beings are social animals and are bound to adopt a community living style. Living in a community, essentially means that people interact with other people and are dependent on each other to fulfill their needs. Every person cannot fulfill all his needs like food, clothing, housing etc. on his own. He, therefore, depends on other people for his needs, in return to this providing others with some of theirs. It
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