Featured Entry

MANAGING PROJECTS

-
Projects represent nonroutine business activities that often have long-term strategic ramifications for a firm. In this chapter, we examined how projects differ from routine business activities and discussed the major phases of projects. We noted how environmental changes have resulted in increased attention being paid to projects and project management over the past decade. In the second half of the chapter, we introduced some basic tools that businesses can use when planning for and controlling projects. Both Gantt charts and network diagrams give managers a visual picture of how a project is going. Network diagrams have the added advantage of showing the precedence between activities, as well as the critical path(s). We wrapped up the chapter by showing how these concepts are embedded in inexpensive yet powerful software packages such as Microsoft Project. If you want to learn more about project management, we encourage you to take a look at the Web site for the Proj...
2 comments

The Macroeconomic Environment

-
Economic prosperity, as measured by GDP per person, varies substantially around the world.
Because every transaction has a buyer and a seller, the total expenditure in the economy must equal the total income in the economy.
Gross domestic product (GDP) measures an economy’s total expenditure on newly produced goods and services and the total income earned from the production of these goods and services. More precisely, GDP is the market value of all final goods and services produced within a country in a given period of time.
The standard of living in an economy depends on the economy’s ability to produce goods and services.
Government policies can try to influence the economy’s growth rate by encouraging saving and investment, encouraging investment from abroad, fostering education, maintaining property rights and political stability, allowing free trade, promoting the research and development of new technologies, and controlling population growth.
Nominal GDP uses current prices to value the economy’s production of goods and services. Real GDP uses constant base-year prices to value the economy’s production of goods and services. The GDP deflator – calculated from the ratio of nominal to real GDP – measures the level of prices in the economy.
The consumer prices index shows the changes in the prices of a basket of goods and services relative to the prices of the same basket in the base year. The index is used to measure the overall level of prices in the economy. The percentage change in the consumer prices index measures the inflation rate.
The consumer prices index is an imperfect measure of the cost of living for three reasons. First, it does not take into account consumers’ ability to substitute towards goods that become relatively cheaper over time. Secondly, it does not take into account increases in the purchasing power of money due to the introduction of new goods. Thirdly, it is distorted by unmeasured changes in the quality of goods and services. Because of these measurement problems, the CPI overstates true inflation.
The nominal interest rate is the interest rate usually reported; it is the rate at which the amount of money in a savings account increases over time. In contrast, the real interest rate takes into account changes in the value of money over time. The real interest rate equals the nominal interest rate minus the rate of inflation.
An economy’s saving can be used either to finance investment at home or to buy assets abroad. Thus, national saving equals domestic investment plus net capital outflow.
The unemployment rate is the percentage of those who would like to work who do not have jobs. The government calculates this statistic monthly based on a survey of thousands of households.
The unemployment rate is an imperfect measure of joblessness. Some people who call themselves unemployed may actually not want to work, and some people who would like to work have left the labour force after an unsuccessful search.
Net exports are the value of domestic goods and services sold abroad minus the value of foreign goods and services sold domestically. Net capital outflow is the acquisition of foreign assets by domestic residents minus the acquisition of domestic assets by foreigners. Because every international transaction involves an exchange of an asset for a good or service, an economy’s net capital outflow always equals its net exports.
The nominal exchange rate is the relative price of the currency of two countries, and the real exchange rate is the relative price of the goods and services of two countries. When the nominal exchange rate changes so that each unit of domestic currency buys more foreign currency, the domestic currency is said to appreciate or strengthen. When the nominal exchange rate changes so that each unit of domestic currency buys less foreign currency, the domestic currency is said to depreciate or weaken.
According to the theory of purchasing power parity, a unit of currency should be able to buy the same quantity of goods in all countries. This theory implies that the nominal exchange rate between the currencies of two countries should reflect the price levels in those countries. As a result, countries with relatively high inflation should have depreciating currencies, and countries with relatively low inflation should have appreciating currencies.

Comments

Post a Comment

Populer

OPERATIONS AND SUPPLY CHAIN STRATEGIES

-
The operations and supply chain areas are important providers of value in any organization. To ensure that managers make sound operations and supply chain decisions, firms must develop strategies for these functions that are tied to the overall business strategy. This chapter has presented a top-down model of the strategic planning process, with particular attention to the concepts of value, competitive advantage, and core competency. In the second half of the chapter, we defined the major operations and supply chain decision variables, outlined the four generic performance dimensions (quality, time, flexibility, and cost), and discussed the need to make trade-offs between these key dimensions. We showed how order winner and order qualifier information can help managers understand exactly what their customers demand, so they can make trade-offs in a logical fashion. We ended the chapter with a discussion of the four stages of alignment in operations and supply chain strategy, sho...
Read more

MANAGING QUALITY

-
As an area of intense business interest, quality is here to stay. Operations and supply chain personnel in particular need to be familiar with the major quality topic areas, including the different philosophical perspectives on quality and the tools used to manage quality levels on a day-to-day basis. In this chapter, we gave you a solid introduction to quality topics, ranging from high-level discussions of quality issues to detailed descriptions of tools and techniques. We started by defining quality and describing a total cost of quality model. We then presented an overview of total quality management (TQM), as well as a section on statistical quality control (SQC). We ended the chapter with a discussion of how organizations manage quality across the supply chain and some of the issues they face. We encourage you not to let your quality education end here. The American Society for Quality ( www.asq.org ), the Juran Institute ( www.juran.com ), the W. Edwards Deming Institute ( www....
Read more

INTRODUCTION to OPERATIONS and SUPPLY CHAIN MANAGEMENT

-
Operations and supply chains are pervasive in business. Every organization must provide a product or service that someone values. This is the primary responsibility of the operations function. Furthermore, most organizations do not function independently but find that their activities are linked with those of other organizations through supply chains. Careful management of operations and supply chains is, therefore, vital to the long-term health of nearly every organization. Because operations and supply chain activities cover everything from planning and control activities to sourcing and logistics, there are numerous career opportunities for students interested in the area. Trends in e-commerce and global competition, as well as the growing importance of maintaining good relationships with other supply chain partners, will only increase these opportunities. Fortunately, there are many professional organizations, including APICS, CSCMP, and ISM, that cater to the career development ...
Read more

Internal Analysis: Resources, Capabilities, and Core Competencies

-
This chapter demonstrated various approaches to analyzing the firm’s internal environment . Differentiate among a firm’s resources, capabilities, core competencies, and activities. Core competencies are unique, deeply embedded, firm-specific strengths that allow companies to differentiate their products and services and thus create more value for customers than their rivals, or offer products and services of acceptable value at lower cost. Resources are any assets that a company can draw on when crafting and executing strategy. Capabilities are the organizational and managerial skills necessary to orchestrate a diverse set of resources to deploy them strategically. Activities are distinct and fine-grained business processes that enable firms to add incremental value by transforming input into goods and services. The compare and contrast tangible and intangible resources . Tangible resources have physical attributes and are visible. Intangible resources have...
Read more

BUSINESS PROCESS

-
Although the term business processes has been in the management lexicon for years, not all organizations clearly understand the importance of business processes and their effects on operations and supply chain performance. In this chapter, we defined the concept of business processes and showed how the business process perspective is different from the traditional, functionally oriented view of business. Business processes change the focus from “How is the business organized?” to “What does the business do?” Fortunately, practitioners and theorists continue to develop various tools and approaches for managing business processes. In this chapter, we described two process mapping approaches and demonstrated how they can be used. We also spent considerable time talking about various approaches to managing and improving business processes, including performance measurement and benchmarking, the Six Sigma methodology, and continuous improvement tools. We concluded the chapter with a discu...
Read more