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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Human Resource Management Strategy and Analysis

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THE STRATEGIC MANAGEMENT PROCESS

Goal-Setting and the Planning Process
Whether the manager is planning to boost a hotel s profitability or something more mundane, the basic planning process is the same. It involves setting objectives, making basic planning forecasts, reviewing alternative courses of action, evaluating which options are best, and then choosing and implementing your plan. A  plan shows the course of action for getting from where you are to where you want to go in other words, to the goal. Planning is always  goal-directed (in this case, to improve the hotel s level of service significantly).

THE HIERARCHY OF GOALS

In companies, it is traditional to view the goals from the top of the firm down to front-line employees as a chain or hierarchy of goals. At the top, the president sets long term or strategic goals (such as  Double sales revenue to $16 million in fiscal year 2011). His or her vice presidents then set goals, such as  add one production line at plant, which flow from and make sense in terms of accomplishing the president s goal. (In other words, What must I as production head do to help make sure that the company accomplishes its double sales goal) Then the vice presidents subordinates set their own goals, and so on down the chain of command. The planning process thus traditionally starts with formulating top-level, long-term strategic plans and goals.

Strategic Planning

A strategic plan is the company s plan for how it will match its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage. The essence of strategic planning is to ask, Where are we now as a business, where do we want to be, and how should we get there? The manager then formulates specific (human resources and other) plans to take the company from where it is now to where he or she wants it to be. When Yahoo! tries to figure out whether to sell its search business to Microsoft, it s engaged in strategic planning. A  strategy is a course of action. If Yahoo! decides it must raise money and focus more on applications like Yahoo! Finance, one strategy might be to sell Yahoo! Search. Strategic management is the process of identifying and executing the organization s strategic plan, by matching the company s capabilities with the demands of its environment.

Figure sums up the strategic management process. This process includes (1) defining the business and developing a mission, (2) evaluating the firm's internal and external strengths, weaknesses, opportunities, and threats, (3) formulating a new business direction, (4) translating the mission into strategic goals, and (5) formulating strategies or courses of action. Step (6) and step (7) entail implementing and then evaluating the strategic plan. Let s look at each step.

STEP 1: DEFINE THE CURRENT BUSINESS 

The logical place to start is by defining one s current business. Specifically, what products do we sell, where do wesell them, and how do our products or services differ from our competitor s. For example, Rolex and Casio both sell watches. However, Rolex sells a limited line ofexpensive watches. Casio sells a variety of relatively inexpensive but innovativespecialty watches with features like compasses and altimeters.

STEP 2: PERFORM EXTERNAL AND INTERNAL AUDITS

The next step is to ask, Are we heading in the right direction? No one is immune to competitive pressures. Yahoo! s search tool predominated until Google. Amazon s Kindle Reader forced even more bookstores to close. Prudent managers periodically assess what's happening in their environments.
Managers need to audit both the firm s environment, and the firm s strengths and weaknesses. The SWOT chart in Figure is the 800-pound gorilla of strategic planning; everyone uses it. Managers use it to compile and organize the company strengths, weaknesses, opportunities, and threats. The aim, of course, is to create a strategy that makes sense in terms of the company s strengths, weaknesses, oppor-tunities, and threats.

STEP 3: FORMULATE A NEW DIRECTION 

The question now is, based on the environmental scan and SWOT analysis, what should our new business be, in terms of what products we will sell, where we will sell them, and how our products or services will differ from competitors products? Managers sometimes formulate a vision statement to summarize how they see the essence of their business down the road. The  vision statement is a general state-ment of the firm s intended direction; it shows, in broad terms, what we want to become.

Rupert Murdoch, chairman of News Corporation (which owns the Fox network, and many newspapers and satellite TV businesses), built his company around a vision of an integrated, global satellite-based news-gathering, entertain-ment, and multimedia firm. PepsiCo s vision is Performance with Purpose. PepsiCo CEO Indra Nooyi says the company s executives choose which businesses to be in based on Performance with Purposes three pillars of human sustainability, environ-mental sustainability, and talent sustainability. Whereas vision statements usually describe in broad terms what the business should be, the company s  mission statement summarizes what the company s main
tasks are now. Several years ago, Ford adapted what was for several years a powerful mission for them making "Quality Job One."

STEP 4: TRANSLATE THE MISSION INTO STRATEGIC GOALS 

Next, translate the mission into strategic objectives. The company and its managers need strategic goals. At Ford, for example, what exactly did making "Quality Job One" mean for each department in terms of how they would boost quality? The answer is that its managers had to meet strict goals such as  no more than 1 initial defect per 10,000 cars.

STEP 5: FORMULATE STRATEGIES TO ACHIEVE THE STRATEGIC GOALS

Next, the manager chooses strategies courses of action that will enable the company to achieve its strategic goals. For example, what strategies could Ford pursue to hit its goal of no more than 1 initial defect per 10,000 cars? Perhaps open two new high-tech plants, reduce the number of car lines to better focus on just a few, and put in place new more rigorous employee selection, training, and performance appraisal procedures.

STEP 6: IMPLEMENT THE STRATEGIES 

Strategy execution means translating the strategies into action. The company s managers do this by actually hiring (or firing) people, building (or closing) plants, and adding (or eliminating) products and product lines.

STEP 7: EVALUATE PERFORMANCE 

Things don t always turn out as planned. For example, Ford bought Jaguar and Land Rover as a way to reduce reliance on lower-profit cars. With auto competition brutal, Ford announced in 2009 it was selling Jaguar and Land Rover (to Tata, a company in India). Ford wants to focus its scarce resources on modernizing and turning around its North American operations. Like all companies, Ford continually needs to assess its strategic decisions.

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