Role of MIS in Business Management

Despite the vast improvements in information technology, computers (on which modern IT is based) cannot as yet take over business management. However, business information systems have transformed the effectiveness, power and efficiency of management.

In an earlier article on business management software, we looked at surface aspects of how modern management information systems help businesses. We saw how computers speeded up and improved the quality of operations. We also mentioned the existence of broad categories of business software - office suites, functional software such as accounting and inventory, and industry software such as retail management software. In this article, we seek to look more analytically at the role of information management systems.

Decision Support, Problem Analysis and Overall Control

Role of MIS in Business Management

Business managers often need to make decisions that can affect the business' fortunes one way or other. For example, a company with sales outlets or distributors spread over a wide geographic area might want to optimize the logistical operations of delivering merchandise to the outlets. The best solution might be affected by numerous factors such as demand patterns, availability of merchandise, distances involved and the option of using external carriers (who can find two way loads and might prove a lesser cost option over long distances) instead of own vehicles.

While it might be possible to use complex mathematical formulas by hand to compute the best solution, computers transform the whole process into a routine task of feeding certain information as input and obtaining suggestions for best solutions as output. The task can typically be done in a few minutes (instead of hours or even days) and it becomes possible to examine several alternatives before deciding upon one that seems most realistic.

Identifying problems and analyzing the factors that cause them also has been transformed by modern computer information systems. In a typical MIS environment, standard reports are generated in a routine manner comparing actual performance against original estimates. The software that generates the report can be instructed to highlight exceptions, i.e. significant variations between original estimates and actual performance. Managers will thus become aware of problem areas in the daily course of their work simply by looking at the reports they receive, without having to do detailed data collection and computations themselves.

Identifying the factors responsible for the problem can also be routinized to some extent by using such tools as variance analysis. Variance analysis is an element of standard costing system that splits deviations from estimates (or standards) into causative factors such as increase in price of materials used, excessive usage of materials, unexpected machine downtimes, etc. With such a detailed report, managers can delve deeper into the problem factor, such as why there was excessive usage of materials.

Control is also exercised through variance analysis. Budgets are prepared for all business operations by concerned managers working in a coordinated fashion. For example, estimated sales volumes will determine the levels of production; production levels will determine raw material purchases; and so on. With good information system management, it then becomes possible to generate timely reports comparing actual sales, production, raw material deliveries, etc against estimated levels.

The reports will help managers to keep a watch on things and take corrective action quickly. For example, the production manager will become aware of falling sales (or rising sales) of particular products and can prepare to make adjustments in production schedules, and purchasing and inventory managers will become quickly aware of any mounting inventories of unused materials. MIS thus enhances the quality of communication all around and can significantly improve the effectiveness of operations control.

Effective MIS Involves Humans and Computers Working together

The major aspect to note is that MIS provides only the information; it is the responsibility of concerned managers to act on the information. It is the synergy between efficient, accurate and speedy equipment and humans with commonsense, intelligence and judgment that really gives power to MIS.

Role of MIS in Business Management
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Risk Management Within an Organisation

Introduction

This manual is written to advise on an approach to managing risk, with regards to procedures to follow in conducting risk analyses and treatment.

Background of my Organisation

Risk Management Within an Organisation

I will focus my attention on the management of risks for my company in general. My company is involved in the trading of steel products, mainly for construction purposes, as well as the sales and purchases of agricultural products such as beans, maize and rice. With regards to these products, letters of credit (LCs) have to be initiated regularly for such products to be sold overseas. As part of the accounting and finance function, my responsibilities are not only in the proper accounting treatment of such transactions, but also as part of the team involved in a new trade financing project to ensure the smooth flow of these transactions from the opening of LCs, the financing as well as the delivery of these products. Such a flow will involve the cooperation of both the operations and the accounting and finance departments.

Purpose of Risk Management

Business risk relates to exposure to certain events that will have a negative impact on the strategies and objectives of the company. Hence business risk is due to two factors: the probability of an event occurring as well as the seriousness of the consequences (Bowden, Lane and Martin, 2001). There are several risks that are more specific to my organization, and are shown as follows:

1. Strategic risk, such as poor marketing strategy and poor acquisition strategy, as a result of poor planning (Bowden et. al, 2001). Poor marketing and acquisition of different grades of steel and agricultural products can prove the downfall of the organization.

2. Financial risk, such as lack of credit assessment and poor receivables and inventory management, as a result of poor financial control (Bowden et. al, 2001). Inadequate credit assessment of potential trade and other debtors as well as low debtors' turnover can be a poor reflection of the company's strategy and objectives.

3. Operational risk, such as poor practices and routine actions, as a result of poor human actions (Bowden et. al, 2001). Non-conformity to the organization's safe practices or even willful actions by employees can create potential operational and financial losses to the company.

4. Technical risk, such as equipment and infrastructure breakdown and fire destruction, as a result of failure of physical assets (Bowden et. al, 2001). Such risks can be prevalent in my organization if appropriate actions are not taken to prevent these technicalities. Unfortunately, many organizations tend to focus too much on the performance and cost dimensions of technical risk and manage them too heavily (Smith and Reinertsen, year unknown).

5. Market risk, such as inadequate market research, which is the risk of not meeting the needs of the market, assuming that the specification has been satisfied (Smith and Reinertsen, year unknown). This risk may be more important compared to others, however it is less manageable due to the risk being less objective and quantifiable compared to say technical risk

As a result of such risks mentioned above, coupled with the advancement in technology and competitive pressures, risk management has taken a more important role in the existence of businesses today (Bowden et. al, 2001). Risk management relates to the logical and systematic way of establishing context, identifying risks, analyzing risks, evaluating risks and lastly, treating risks. This approach also involves communicating and consulting the findings as well as monitoring and reviewing the treatment of risks. This approach to managing risks is known as the AS 4360 method (Bowden et. al, 2001).

Risk Management

Step 1: Definition of Context

This relates to the establishment of context in terms of strategic, organizational and risk management (Bowden et. al, 2001). The strategic context is concerned with the relationship between the organization and its parameters in terms of financial, operational, competitive and social context (Bowden et. al, 2001). In the case of my organization, we are concerned with our financial objectives (i.e. sales turnover of US million with a profit margin of at least 12% annually), products with high quality and good customer satisfaction, as well as good market position (one of the top suppliers of steel in the regional construction industry). The strategic context also requires the organization to identify the stakeholders, which includes the owners, employees, customers, suppliers as well as the local community (Bowden et. al, 2001). In addition to that, my organization will have to be accountable to our shareholders and the media as well, since we are a local listed company.

The organizational context will be concerned with wider goals, objectives and strategies of the company as a whole (Bowden et. al, 2001). In this context, we have to establish and implement sufficient key performance indicators (KPIs) and critical success factors (CSFs) that are suitable to the different aspects of the business. There are a couple of KPIs that are commonly used in my organization:

1. Revenue and profit targets: These are mentioned above.
2. Customer satisfaction: Surveys are sent quarterly to our suppliers and customers to ensure at least 90% customer overall satisfaction.
3. Stocks update and on-time deliveries of goods: Sufficient stocks are maintained and retrieved from suppliers and deliveries have to be made on time to customers at least 98% of all sales orders.
4. Timely submission of monthly accounting and sales records to head office: The deadline of submission of such reports is usually the 5th of each month, which has to be strictly adhered to.

On a wider basis, such KPIs are also linked to CSFs in my organization, which includes the following:

1. Maintaining a healthy position in our markets: This is mentioned above.
2. Supportive top management open to marketing and financing ideas: The directors and senior management have a fortnightly meeting with lower management on possible ideas and brainstorming on ideas and possible financing from banks on certain products.
3. Sufficient funds and resources in place: Funds have to be in place for LCs, which are converted to trust receipts, which have to be settled within certain tenure, coupled with adequate manpower and technologies for proper functioning of the organization.

With these KPIs and CSFs in mind, the various activities of the can be further segregated into smaller teams and activities to provide a more logical flow for better analysis (Bowden et. al, 2001). In my organization, the sales teams are broken up into smaller groups in charge of various products for steel and agricultural aspects. This is also done likewise for the finance department, which has smaller teams in charge of receivables, payables and other administrative functions.

Step 2: Identification of Risks

This process aims to identify all events, which might affect the organization as a whole. In such a scenario, there is a need to identify all causes and potential situations (Bowden et. al, 2001). After which, we will proceed to link the risks, both threats and opportunities, with key criteria that will have a direct impact on the organization (Bowden et. al, 2001). There is also a requirement to approach these risks with proactive and reactive responses (Bowden et. al, 2001). There are several tools that can help with identifying risks, namely brainstorming, checklists and judgements based on experience.

In my organization, there are several tools used to identify risks. For the finance department, there is a quarterly checklist used on different risks involved, which can include the amount of tax incurred and tax credits agreed with the tax authorities, the amount of receivables and stock updates and how efficient their respective turnovers are. Provisions for such items are also raised based on prior experience. For the marketing and operations department, weekly meetings are conducted whereby brainstorming and systems analysis are used to identify possible risks with regards to competition, changes in prices and tastes of customers as well as the safe-guarding of stocks at our premises. It is further recommended that a product plan with a product manager be put in place, with rankings are given to the priority of such risks and the inputs, processes and outputs should be investigated in greater depth (Bowden et. al, 2001).

It is mentioned that a test market will be useful if there is a high degree of uncertainty about the eventual sales of the new product as the launch date approaches (Cooper, year unknown). My organization is currently looking at possible new sales of liquor and diesel for its overseas markets. However, these possible sales are not considered new products in the existing markets. With speed and the competitive environment being important facts, a test market may not be applicable in our scenario (Cooper, year unknown).

In addition to the launch of possible new products, there are several pitfalls in considerations for my organization:

1. Lack of market orientation. These are possible risks considering insufficient market analysis and not understanding customer needs and wants.
2. Poor quality of execution. With regards to my organization, the grades or quality of the flammable new products might be filled with deficiencies, hence not meeting customers' needs.
3. Moving too quickly. A too hasty approach to launch these products might render too many mistakes in the process and compromise the quality and timing of the promotional activities (Cooper, year unknown).

Step 3: Risk Analysis

This step involves the estimation of the likelihood and consequence of possible risk events. These are often evaluated using the current controls in place (Bowden et. al, 2001). Such controls are needed to ensure effective operations, reliable reporting systems and proper compliance with rules and regulations (Bowden et. al, 2001). In my organization, controls in place will include past records, market analysis given by traders from different countries, published literature in the form of accounting and marketing magazines and internal and external auditors' reports.

There are several techniques that are used to establish likelihood and consequence, namely structured interviews, multi-disciplinary groups of experts, assessments using questionnaires and computer modelling (Bowden et. al, 2001).

The decision tree technique can also be used whereby the expected net present value (NPV) of cash flows associated with each individual outcome is shown (Vlahos, 2001). This technique is useful for the following reasons:

1. It improves our understanding of each outcome and makes assumptions more forthcoming.
2. It is useful for documenting and communicating thoughts on uncertainty and also helps generate alternatives for better value enhancement.
3. Managers can monitor each stage of the project and make appropriate analysis with regards to decisions made at each point
4. The outputs in terms of expected NPVs generated can be used as potential inputs for projects selection (Vlahos, 2001).

This technique is highly recommended for my organization in two ways:

1. This can be used in decisions made by the marketing department in terms of which products to obtain for potential markets.
2. The finance department will also find it useful in terms of the different ways of financing (i.e. direct cash financing, using LCs or trust receipts) in consideration for the building of the trade finance project.

There are two types of risk analysis, mainly qualitative and quantitative (Bowden et. al, 2001).

Qualitative Technique

A qualitative method makes use of words or descriptive scale and comes in the form of a ranking structure, alternating between Rare and Almost Certain. Such a method is concerned with raking likelihoods and consequences (Bowden et. al, 2001). With regards to construction projects, which can be applicable to my organization, the consequences can range from insignificant (whereby there is no injuries and minimum financial loss), moderate (injuries with medical help required and moderate financial loss) to catastrophic (death with significant financial loss). Such a qualitative table with various likelihood and risk levels matrix can be useful in the following scenarios:

1. Initial screening guide to identify possible risks for further analysis.
2. Where the level of risk does not justify the time and effort required for more analysis.
3. Insufficient numerical data, which renders a quantitative analysis useless.

For the qualitative analysis, the management and staff with regards to the risk events at different levels must work through the risk-ranking matrix. Each likelihood and consequence criteria should be considered in order to put events in the appropriate category (Bowden et. al, 2001).

However, there are several disadvantages associated with this technique:

1. It may not be too accurate as events within the same category may have substantially different levels of risk.
2. There may not be a common basis for comparison of risk i.e. on dollar basis or number of deaths.
3. There is no clear justification with regards to the process of 'weighing' risks
4. There could be different interpretations with regards to the meaning of different consequences i.e. the word catastrophic can mean a great deal to some people, while others might take it more lightly.
5. It can be difficult to translate the findings from this technique to match that of a quantitative method (Bowden et. al, 2001).

With these pitfalls mentioned above in mind, I would think that it will be better to consider the qualitative technique as more of an initial screening exercise which should be used concurrently with the quantitative technique.

Quantitative Technique

This approach takes the product of likelihood and consequence, with the consequence expressed as an actual variable (Bowden et. al, 2001). Such a technique is more reliable as it relies on numerical values, with estimates of frequency being made in terms of event frequency (Bowden et. al, 2001).

There are several drivers of risks, namely, technology, people, systems, organizational factors and external factors (Bowden et. al, 2001). In my organization, some drivers of risk might include how updated my computer versions of accounting and sales systems, the competency and educational levels of the employees, the number of new ideas by lower management accepted by higher management and possibly the amount of pollution our products might cause to the environment.

The quantitative analysis is further broken down into likelihood and consequence criteria. For the likelihood criteria, it is expressed as a probability instead of frequency, thus ensuring that risks are compared on a similar basis (Bowden et. al, 2001). With similar small events likely to occur, the likelihood of them occurring can be considered as one event. With regards to my organization, examples of such similar events might include:

1. 20 deliveries which are not made on time (more than 30 minutes) to customers resulting in losses of ,000 each for transportation costs
2. 5 deliveries of wrong grades of products to customers resulting in losses of ,500 for transportation and bank charges.

For the consequence criteria, it can be considered in terms of an event leading to possible death or severe losses i.e. financial or reputation losses. In the case of the two examples for likelihood criteria given above, the related consequence criteria are as follows respectively:

1. Free deliveries made for the next trip.
2. Appropriate discounts given for these batches of products sold.

The consequence criteria can also be expressed quantitatively in terms of non-performance or failure to achieve certain KPIs, reflecting on the organisation's priorities in accepting varying degrees of risks. In my organisation's case, the free deliveries and discounts given could jeopardize not only the revenue and profit targets, but also in terms of customer satisfaction (which are important KPIs). As such the consequence criteria can be expressed as the mean or expected value (Bowden et. al, 2001). This is consistent with the Monte Carlo method, which can be used to obtain the distribution of the project or product value associated with trading operations (Vlahos, 2001).

Step 4: Risk Evaluation

Risk evaluation is concerned with identifying which risks must be treated and can be calculated using the product of likelihood and consequence (Bowden et. al, 2001). The risks can be compared with previously established criteria. Different softwares such as the Monte Carlo approach, the sensitivity analysis and the probability distribution can be used to show the effects of major risks for evaluation (Bowden et. al, 2001).

Step 5: Treating Risks

There are several methods of treating risks, namely avoidance, accepting, reduction and transfer of risks (Bowden et. al, 2001).

1. Avoiding risks. In my organization, avoiding such risks would involve possibly not importing highly flammable products such as liquor or diesel (which are part of the consideration for new products) as part of sales and speculating in foreign exchange fluctuations.
2. Accepting risks. Certain risks may be unavoidable. In my organisation's case, we have huge sales transactions in Myanmar, which has just experience a major military and governmental coup. Hence sales in Myanmar may be volatile. These are potential risks, which are already factored in our business considerations.
3. Reducing risks. Currency fluctuations are imminent when trading with overseas counterparts for my organization. Hence LCs and hedging are done frequently in order to mitigate such risks for products purchased and sold to other countries.
4. Transfer risks. For my organization, this is done in terms of insurance coverage for stocks, which are housed in our premises.

Some other popular treatment of risks will include audit compliance programs, contractual obligations and conditions, preventive maintenance, quality assurance and contingency planning (Bowden et. al, 2001). Such treatments of risk are also maintained within my organization.

The different options for treatment of risks should be evaluated and risk treatment plans should be planned and prepared (Bowden et. al, 2001). Such a plan should consider detailed base implementations, risk assessment in terms of threats and opportunities in terms of priorities and recommended proactive and reactive contingency plans. (Bowden et. al, 2001).

The risk treatment schedule and action plan should include the following:

1. The different duties and responsibilities for implementation of plan. Preferably, the plan should involve a project leader and different members in charge of one aspect of the project reporting to the leader.
2. The resources to be utilized.
3. Work breakdown structure for the activities
4. Budget allocation
5. Schedule for implementation
6. Details of the mechanism and frequency for proper compliance to the treatment schedule (Bowden et. al, 2001).

Step 6: Communicating and Consulting

For this stage, stakeholders need to have a common understanding of the project or product situation. Consultation from stakeholders as well as experts is required for better opinions, with communication needed for better coordination (Bowden et. al, 2001).

Such an approach is required for several reasons:

1. To prove that the process is conducted in a systematic manner.
2. To provide records of risks and proper organizational records.
3. To provide relevant decision makers with a proper risk management and action plan for approval and implementation.
4. To provide accountability.
5. To facilitate further monitoring and review.
6. To provide audit trail.
7. To share information (Bowden et. al, 2001).

This report should include the following:

1. Executive summary
2. Scope of project
3. Methodology of study
4. Contextual issues of the project including the restraints
5. Success factors chosen
6. KPIs for each success factor chosen
7. Target and tolerance
8. Any assumptions
9. Top ten risks across all CSFs for the project or product plan
10. Vulnerabilities in phases of the project
11. Responsibilities for managing risks in phases
12. Primary and secondary drivers triggering each risk
13. Existing controls
14. Tables and figures (Bowden et. al, 2001)

Step 7: Monitoring and Reviewing

For the final step, there is a need to develop and apply mechanisms to ensure ongoing review of risks i.e. project leaders should provide a consistent update of the current situations (Bowden et. al, 2001). The effectiveness of the risk management process should be consistently monitored and reviewed (Bowden et. al, 2001).

Conclusion

Risk should be managed on an active basis. Risk management will involve identification of areas of high risks ahead of time, interpreted to the greatest degree possible, with the best technical or marketing talent allocated to the problem, have the problems solved as quickly as possible, and be provided with a contingency plan in case something cannot be resolved (Smith and Reinertsen, year unknown).

Reference List

Bowden, A., Lane, M. and Martin, J. (2001) Triple Bottom Line Risk Management. Wiley.

Cooper. (year unknown). New Products: Problems and Pitfalls. Pg 22-49.

Cooper. (year unknown). To test or Not to Test. Pg 123-129.

Smith, P. and Reinertsen, D. (year unknown). Managing Risk. Pg 207-21.

Vlahos, K. (2001). Tooling up for Risky Decisions. Pg 47-52.

Risk Management Within an Organisation
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Key Advantages and Disadvantages of Scientific Management

The Scientific Management theory is "the development of a science to replace the rule-of-thumb knowledge of the workmen." It is reflected in a financial statement analysis as labor costs, concerning matters like the employees salaries, benefits, training and loans. Scientific knowledge is organized, systematized and approved knowledge; knowledge with a reason for it. Frederick Winslow Taylor is the father of this theory, which was given birth during the later years of nineteenth century. According to him, what the industry needs is efficiency instead of forbearing inefficiency. This was possible through the success of sciences-experiment, measurement and hope. Other names are Taylor's Principles or Taylorism.

How should it be followed by a company? The principle of Scientific Management's key advantages can be seen in Taylor's four principles on revolutionizing labor advancements, which are in financial ratio analysis covering more of costs in running a company. During the dialogue he conducted to the New England Railroad Club back in 1977, he said that: firstly, it should progress the current system used by workers; secondly, the employees scientific selection, training and development should be done carefully as horse specialists study their horses; thirdly, management must incorporate the science of tasks with the precisely selected employees, in order to direct these men to perform work in accordance with the laws of the science; and lastly, the company should have an equivalent number of managers versus workers.

Going further, the disadvantages of the Scientific Management theory being applied to a company operation are the misuse and abuse of information by management. According to Deming, W.E., in running a business, the proprietor should maximize profits without retrenchment of the human workforce. Together with Taylor, they think that if the theory is to be properly followed, there would be enhanced productivity in terms of efficiency and quality. Taylor saw the place his argument during his foreman years at Midvale Steel Company, "I realized that I had not more than one tenth of the knowledge of the men, and we set out deliberately to find out, that is, to make some kind of an accurate study which would give the foremen of that shop a knowledge somewhat commensurate with the knowledge of the men".

Key Advantages and Disadvantages of Scientific Management

He, also, said that economic competition in itself would not generate organizational efficiency and thus, leading to inefficiency if the business still fails to organized and orchestrated scientifically. Scientific methods were came about through patterns followed from sciences-experiment, measurement and generalization. During this process, his studies were goaled on unearthing the principles of the management law. More importantly, this should be unbiased and comprehensible.

On a modernist activist opinion, if the company initiated a Scientific Management, it pledges, as part of financial analysis, cost effectiveness and waste diminishments as well as elevated regulation and standardization on its process. They also said that production and human resources will be hindered on efficiencies if there are organizational conflicts, disarray, excessive surpluses and idling. The management's failures will not also escape this indictment. Their work yielding might also be encumbered by being illogical, insatiable and unwieldiness. A scheme was suggested by modernists in solution to these and they call it the "mental revolution." It was then deemed that the traditional modes of thought, such as "orthodox intellectual activity" and "academic design," set barricades on the rationalization and social liberation.

Key Advantages and Disadvantages of Scientific Management
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Thyra works as a writer at Alphadore, a financial consultancy firm located in Dubai, UAE. It's a one stop solution designed to help small business owners make smart financial decisions and achieve business goals. Visit the site at: http://www.alphadore.com

What is Management?

Management is different from leadership but just as important. To understand the nature of management, we need to be clear how it differs from leadership. The first step in answering the question: "What is management?" is to understand the basic tasks of all organizations. Like any other species, an organization needs to take care of its immediate business of survival but it also has to evolve to ensure its fitness to cope with changes in the environment and the actions of competing species.

Management is the function that organizes the execution of today's business. Leadership is the evolutionary mechanism that changes organizations to prosper in tomorrow's world. Whenever a species or individual animal runs into obstacles, variations occur and new forms are selected from those variations. Leadership is a risk taking type of action that explores new frontiers and promotes new ways of behaving. It follows that, in a stable environment, good management is all that is needed to prosper; leadership in this context isn't required.

This portrayal is not the popular one where leadership means being the top dog in a group regardless of what's going on in the environment. Also, management has been cast on the rubbish heap since the late 1970's following the initial wave of Japanese commercial success in the West. We wanted a scapegoat for our failure to compete with the Japanese, and management was fingered for this role. Jack Welsh, Tom Peters and other gurus called for more leadership and an end to management, which they saw as stifling innovation. The reality was that a lack of competition created a complacent attitude AND lackluster management. It was the way management was practiced that was the problem, not anything to do with management as a function. We simply needed to upgrade management for a new reality.

What is Management?

Being hierarchical by nature and inclined to worship heroes, we tend to regard the person in charge of our group as a leader. But complexity demands specialization and executives need to perform multiple roles that depend on the unique demands of their situation. If their main function is to maintain quality, low cost and good customer service while motivating employees to perform to their potential, then they are performing the management function, not showing leadership.

Management is like investment. Managers have resources to invest - their own time and talent as well as human and financial resources. The goal or function of management is to get the best return on those resources by getting things done efficiently. This doesn't entail being mechanical. The manager's style is a contextual issue. With highly skilled and self-motivated knowledge workers, the manager can be very empowering. Where the workforce is less skilled or motivated, the manager may need to monitor output more closely. By saying that management is a function, not a type of person or role, we better account for self-managed work teams where no one is in charge. Managemenet simply makes the best use of all resources even when we manage ourselves. Hence management does not necessarily entail a dictatorial, controlling overseer. Skilled managers know how to coach and motivate diverse employees. Getting things done through people is what they do.

The aim of management is to deliver results cost effectively in line with customer expectations and profitably, in the case of commercial organizations. It is not only leaders who can be inspiring. Inspiring leaders move us to change direction while inspiring managers motivate us to work harder.

Management is a vital function thanks to the complexity of modern organizational life. The need to coordinate the input of so many diverse stakeholders, experts and customers requires enormous patience and highly developed facilitative skills. Excellent managers know how to bring the right people together and, by asking the right questions, draw the best solutions out of them. To facilitate well requires managers to work very closely with all relevant stakeholders.

By contrast, the leader can be a bit of an outsider. Like Martin Luther King, Jr. promoting desegregation on buses to the U.S. government from the sidelines, the leader can induce people to change even with no direct involvement or authority over the people who are needed to take the hoped for action.

Managers don't just keep ongoing operations ticking over. They also manage complex projects like making a modern movie or putting the first man on the moon. Leadership is only required to sell the tickets for the journey or to resell it periodically if resistance develops, but management drives the bus to the destination.

What is Management?
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See http://www.lead2xl.com for more articles like this one. Mitch McCrimmon has over 30 years experience in executive assessment and coaching. His latest book, Burn! 7 Leadership Myths in Ashes, 2006, challenges conventional thinking on leadership.

Developing Your Property Management Business Plan - How to Start a Property Management Company

The recent real estate "crisis" has caused a number of beneficial effects on the property management industry. There has never been a better time to consider starting a property management business than right now.

1. Houses are not selling, therefore homeowners that need to move and/or investors are forced to rent their units out; thus increasing the rental property supply chain.
2. Houses are foreclosing by homeowners and being bought by investors that in turn rent the property out. This increases the amount of supply as well.
3. The homeowners that were foreclosed upon will now be renters. Thus increasing the rental pool and increasing demand.

The above items create a perfect storm for the Property Management Business Industry. The purpose of my article is to present and discuss the 6 categories that are paramount in developing your property management business plan:

Developing Your Property Management Business Plan - How to Start a Property Management Company

1. Executive Summary
2. General Company Description
3. Description of Services
4. Marketing Plan
5. Operational Plan
6. Budget

1. Executive Summary - Include everything that you would cover in a five-minute interview. Who are the owners, what is their experience in this industry? Explain the fundamentals of your business. What do you think the future holds for your business and your industry? Make it enthusiastic, professional, complete, and concise.

2. General Company Description - This includes your mission, vision and company commitments, Who is your target market (higher/lower end residential, multi-family, commercial), what price range of properties will you target, what area(s) will you target, who are the prospective tenants and what's the future of your industry? Form of ownership, what factors will make the company succeed? What strengths do you personally bring to the business? Long term: What are your plans for the future of your business? Growth? If so, at what rate and how will you achieve it?

3. Description of Services - Describe in depth your property management service structure. What will you perform on a monthly basis for your property owners? What will be your monthly fee structure? What additional services will you offer such as evictions, project management, maintenance and what will your fee structure and profit center look like?

Much of your service offering will be developed by performing a complete competitive analysis. Your offering needs to be correctly place in the marketplace to make yourself unique. You should know your competitions monthly fee structure, how many properties they manage, number of managers, etc.

4. Marketing Plan - Bottom line: Your plan for how to attract clients. How will you get your company and offer in front of your prospective property owners. How will you utilize the following: (website, SEO (search engine optimization) plan, online marketing, signs, advertisements, associations, relationships, networking, direct mail campaigns, signs, yellow pages, calling for rent by owners, etc.)

By the way, there are methods that are much more effective than others for a start up real estate management company. Be sure to do your proper research before you unnecessarily spend money.

5. Operational Plan - Explain the daily operation of your business; (its location, equipment, people, processes, and surrounding environment.) If you are starting out opening your own prop mgt business, you will want to spend the majority of your free time in marketing techniques.

6. Budget and Financials - Includes your start up expenses, capital expenses and expected monthly recurring expenses. If you are starting out a your business with 0 properties as I did, you will want to start with a minimal budget in mind. Keep your costs as low as possible. What is your expected income based on your predicted growth rate?

Conclusion: Properly developing your property management business plan is the key to your success. Starting a property management business can be very rewarding, however not having the right direction and foresight from the beginning can blind you and your business. Remember; "Failing to properly plan is properly planning to fail."

Developing Your Property Management Business Plan - How to Start a Property Management Company
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Patrick Rogers is the owner of Rents2Riches, a Property Management Business Coaching Company that is dedicated to the phenomenal development and growth of the Property Management Industry. Patrick also develops marketing products that help existing and startup Property Managers get more clients and learn the tips and tricks in operating a Property Management Business.

Patrick offers his own personal property management business plan free for download at PropertyManagementBusinessPlan.com.

Importance of Supply Chain Management in Modern Businesses

Supply Chain Management (SCM) as defined by Tom McGuffog is "Maximising added value and reducing total cost across the entire trading process through focusing on speed and certainty of response to the market." Due to globalization and ICT, SCM has become a tool for companies to compete effectively either at a local level or at a global scale. SCM has become a necessity especially for manufacturing industry when it comes to deliver products at a competitive cost and at a higher quality than their competitors. Here are some of the reason SCM has become important to today's manufacturing industry:-

Competitive Edge through Core Competencies

Today's business climate has rapidly changed and has become more competitive as ever in nature. Businesses now not only need to operate at a lower cost to compete, it must also develop its own core competencies to distinguish itself from competitors and stand out in the market. In creating the competitive edge, companies need to divert its resources to focus on what they do best and outsource the process and task that is not important to the overall objective of the company. SCM has allowed company to rethink their entire operation and restructure it so that they can focus on its core competencies and outsource processes that are not within the core competencies of the company. Due to the current competitive market, it is the only way for a company to survive. The strategy on applying SCM will not only impact their market positioning but also strategic decision on choosing the right partners, resources and manpower. By focusing on core competencies also will allow the company to create niches and specialization of core areas. As stated in the Blue Ocean Strategy outlined by Chan Kim, in order to create a niche for competitive advantage, companies must look at the big picture of the whole process, and figuring out which process can be reduce, eliminate, raise and create.

Importance of Supply Chain Management in Modern Businesses

As an example stated by Chan Kim, the Japanese automotive industries capitalise on its resources to build small and efficient cars. The Japanese automotive industries gain competitive edge by utilising their supply chain to maximise their core competencies and position itself in a niche market. The strategy works and now Toyota Motor Corporation, a Japanese company, is considered to be the number one auto car maker in the world beating Ford and General Motors of the United States.

Value Advantage

SCM has allowed business nowadays to not just have productivity advantage alone but also on value advantage. As Martin Christopher in his book, Logistics and Supply Chain Management: Strategies for Reducing Cost and Improving Service' states, 'Productivity advantage gives a lower cost profile and the value advantage gives the product or offering a differential 'plus' over competitive offerings.' Through maximizing added value and also reduce the cost in the same time, more innovation can be added to the product and process. Mass manufacturing offers productivity advantage but through effective supply chain management, mass customization can be achieved. With mass customization, customers are given the value advantage through flexible manufacturing and customized adaptation. Product life cycles also can be improved through effective use of SCM. Value advantage also changes the norm of traditional offerings that is 'one-size-fits-all.' Through SCM, the more accepted offerings by the industry to the consumers would be a variety of products catered to different market segments and customers preferences.

As an example, the Toyota Production System practiced in Toyota, evaluates its supply chain and determines what is value added activities and what is not value added activities. Non added value activities are considered to be 'Muda' or waste and therefore must be eliminated. Such non added value activities are overproduction, waiting, unnecessary transport, over processing, excess inventory, unnecessary movement, defects and unused employee creativity. The steps taken to eliminate waste are through Kaizen, Kanban, Just-in-time and also push-pull production to meet actual customer's demands. The Toyota Production System revolutionise the Supply Chain Management towards becoming a leaner supply chain system that is more agile and flexible towards meeting the end users demands.

Importance of Supply Chain Management in Modern Businesses
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Razamith Sovereign is undergoing his Masters in Engineering Business Management in University of Warwick, United Kingdom. A General Manager in a technology company, he provide useful advice through his articles that have been found very useful in managing his daily operation of the company. To find more information on Supply Chain Management please visit http://supplylogistic.blogspot.com

Management Accounting

What is management accounting?

According to the Chartered Institute of management accountants (CIMA), Management Accounting is "the process of recognition, measurement, gathering, study, research, analysis and communication of information used by management to plan, assess and control within a body and to assure appropriate use of and accountability for its Resources. Management accounting also comprises the preparation of financial reports for non management groups such as shareholder's, creditor's, regulatory agencies and tax authorities" (CIMA Official Terminology) The American Institute of Certified Public Accountants(AICPA) states that management accounting as practice extends to the following three areas:

- Strategic Management-advancing the role of the management accountant as a strategic partner in the organization.
- Performance Management-developing the practice of business decision-making and managing the performance of the organization.
- Risk Management-contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.

Management Accounting

The Role of Management Accounting

Management accountants have a double reporting relationship. As a strategic partner and provider of decision based financial and operational information, management accountants are responsible for managing the business team and at the same time having to report relationships and responsibilities to the corporation's finance organization.

Breaking down of cost or outflow into functions and processes to smooth the progress of cost control at each prepared level in the business environment, also to suggest alternatives to improve the productivity of the business to accumulate the maximum profit/success of the business.

The management accountants must develop a standard for all working areas and to evaluate the actual standards within the business sector, ensuring the best operation of available resources in the business sector and to Identify areas of wastages, leakages, inefficiencies and invisible losses that the business has dealt within the last view years.

The accountant must deploy informatic tools for a well-organized management information system to keep the business up to date with the latest whereabouts in the business sector, contributing to a Total Quality Management (TQM) assisting in decision-making process at all levels of management of the specific enterprise.

What management accountants Do?

Also known as corporate accountants, management accountants work within one specific company. They perform a series of tasks to ensure their company's financial security, handling essentially all financial matters and thus helping to drive the business's overall management and strategy skills to the best they can.

A management accountant's responsibilities can be a variety of things, depending on the company you work for, the management accountant's level of experience, the time of year and the type of industry the management accountant is at, you could find yourself doing anything from budgeting, handling taxes, managing assets to help determine compensation, the benefits packages and aiding in strategic planning.

The aims of management accounting

1. Formulating strategies to reach their goals as fast as possible but thorough.
2. Planning and constructing business activities to keep the business up and running for it to make a profit.
3. Helps in making the financial decisions of the firm, by using strategies to reach their aim.
4. Optimal use of Resources (making use of all resources that one can find like the internet, books and own knowledge)
5. Supporting financial reports. preparation (you can also give your meaning about the subject that is discussed by giving your view point).
6. Safeguarding asset.

Management Accounting
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