Power And Its Impact On The Organization - 1407 Words

Concept/Issue The focus of the article is power. Power determines where the strategy of the CEO will be implemented or not or whose initiative will carry the day. Also, power determines how managers allocate tasks, which company will win the most rewarding contracts, the entrepreneur who is funded, whether the board will accept suggests of the CEO. These issues are addressed when the concept of power is put into consideration. Power to the organization is like oxygen is to breathing, meaning it is important because it motivates people, shapes social interaction, and drives outcomes. Empirical evidence suggests that, to a large part, the outcomes within an organization are determined by power. The balance of power encourages or diminishes the ability of teams to perform. Given the role of power in determining organizational outcomes, it has attracted the attention of scholars. At the very basic, power is the organizing force at societal, industrial, intergroup level, individual, and organizational level. Power involves numerous area and, therefore, there is a tendency for power researchers to ignore some aspects of power. Power is not always well understood. One primary approach to the study of power views power as an asymmetric control over valued resources, which means that those in power can control the outcomes of others, their experiences, or behaviors. The second approach sees power as a mental construct that determines their relationship with others. The sense ofShow MoreRelatedThe Role Of Power And Its Impact On The Organization1887 Words   |  8 PagesThe phenomenon of power is omni-present, and can be seen in any organisational structure where people need to be managed. Power is essential for any organisation to function as it ensures smooth execution of tasks and movement of information along with the ability to monitor or influence actions of the employees. It provides employers the capability to direct and co-ordinate the workers to attain the objectives of the organisation. Power is defined as â€Å"the intentional influence over the beliefs,Read MoreThe Concepts Of Organizations As B rains, Organizations, And Develop Strategic Direction760 Words   |  4 PagesInsights In Images of Organization, Morgan’s use of metaphors to describe different characteristics of organizations was insightful as the analogies describe the emergence of different management theories as well as challenge leaders to look at organizational life through different lens to be more effective. The metaphors that resonated with me most are organizations as brains, organizations as cultures, and organizations as political systems. In his discussion of organizations as brains, Morgan proposesRead MoreThe Threat Of The Industrial Control System1315 Words   |  6 Pagesrisks to ICS s due to the threats. This means the impacts, consequences, and likelihood associated with each threat type. If possible, include an example of the threats. There are many threats which have the potential to impact industrial control systems. These threats can vary in type and in the potential risks and impacts to the industrial control system. Understanding the threats to industrial control systems along with the threats risks, impact, consequences, and likelihood is essential for properRead MoreAnalysis : Managing Across Borders1132 Words   |  5 Pagesliving in the same society. It has been assessed that culture is among the prime factors that can have major impact on the effectiveness of the communicational process. Many studies have highlighted the fact that culture influences the way of thinking of an individual that can have major impact on the communication pattern of the strategies (Mazanec et al. 2015). For that reason, organizations often try to develop effective strategies to utilize cultural diversity for capturing different perspectivesRead MoreThe Concept Of Management And Management1147 Words   |  5 Pagesreason tha t some organizations have great success while others suffering many types of failures? I came to release how far is the difference in a concept of Management in organizations that are operating nowadays around the world. It is controversy issue and a subject for discussion. The concept of Management is wider subject but we are going to focus on two notable aspects, which have the most obvious part of the diversities in management. These two are aspects are 1- The power of ManagementRead MorePower Change Over Time And How Does It Impact The Followers?1133 Words   |  5 PagesHow Might their Source of Power Change over Time and How Does it Impact the Followers? Power refers to the ownership of power and impact over others. Contingent upon how power is utilized, it can prompt positive or negative conclusions in an association. Control in individuals is similar to power in batteries; the higher the voltage of battery, the more electromotive energy it can convey; subsequently, it can have more noteworthy effect. Likewise, individuals with more prominent wellsprings of forceRead MoreBureaucracy Is An Efficient System Bureaucracy1715 Words   |  7 PagesDemocracy is changing as a whole due to the impacts of globalization which ultimately clashes with bureaucracy resulting in: the loss of power of bureaucratic organizations, reduction of public administration and compromisation of a country s sovereignty due to the growing interdependence of different states. In public administration, bureaucracy and democracy are two contradictory forces that conflict due to their differences in ideologies and the impact of globalization on the two different structuresRead MoreCommunication Within Multinational Organizations1213 Words   |  5 Pagesdynamics prevalent within the organization. Aspects such as collectivism, individualism, power distance, and authority orientation, all affect communication within an organization. Furthermore, the manner in which the overall communication occurs is also important. Whether its marketing material, a personal conversation, or a group meeting, the manner in which the communication occurs is an fundamental part of its effectiveness. Therefore, multinational organizations must juxtapose the immediate businessRead MoreA Review On The Kraljic Portfolio1126 Words   |  5 Pagesportfolio helps the buyers in having a wide range of suppliers it becomes easier for them to manage and chose the most profitable ones. The Kraljic portfolio is based on two different matrices. The first one categorizes firm’s purchased products (profit impact) and the other dimension being the supply risk involved i n it. The values of both the dimensions can be high as well as low. To show the comparative position of the firm in the parallel supply market is the second dimension of kraljic’s matrix. DependingRead MoreManaging Across Culture1434 Words   |  6 Pagesacross culture. Hofstede (1980) identified four main cultural dimensions; they are Power Distance, IndividualismCollectivism, Uncentainty Avoidance and masculinity. Hofstede’s national cultural framework can effectively evaluate the cultural difference across countries. According to John (1980), in the Hofstede’s four main cultural dimension, Collectivism-individualism (COL-IND) cultural variability has the great impact on the intergroup behaviors. In this report, (CO-IND) is emphasized throughout the

Queuing system free essay sample

In today’s generation, technology has made the man’s everyday life progressive. It contributed great changes not only in human but also in the world. Technology is the application of man’s creative imagination. It serves as the bridge to let people know of the things which they haven’t thought could exist. The automation reduces human intervention of all comfort-producing devices and gadgets are the primary by-product of man’s guest where the ultimate tool is knowledge. Man’s craving for discoveries or inventions with the application of human wisdom are endless and grow even deeper. With the technology nowadays, the proponents decided to develop a Queuing System pre-programmed with the desired information. It has the capability to display queues, videos and intended message in moving motion and different patterns. Queuing System is a large LCD monitor which displays queues for the counter serving process and important messages from the school admin of Westmead International School. We will write a custom essay sample on Queuing system or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It will improve and organize the old practice of counter serving that was already used for a very long time in almost all schools and replace the traditional paper leaf announcement bulletin board. News ticker is reliable means in enhancing effective communication for campus events, office messages and general bulletin notices. Statement of the Problem The general aim of the proposed study is to design and develop a system that will provide effective and organized queuing process for the students of Westmead International School. To solve the problems encountered by the students with regards to the process of transactions, the following objectives are formulated to achieve the proposed system. Specifically, the proponents will aim: 1. To create a network based queuing system using  touchscreen technology. 2. To enable the network based queuing system to flash messages, advertisement and four counter-queuing system. 3. To create a system that can generate a report of processed transactions. 4. To create a system that the users can interact with the proposed study through the use a touchscreen technology. Current State of Technology The sudden explosion of technology had brought up a big change in the status of companies’ way of making their businesses expand. They had used the modern technology to promote their company products as well as their company’s motives to contribute to the development of the country’s industry. Success comes into the companies with effective marketing strategies. If a business is having trouble getting customers’ attention, an electronic message board could help to recapture their interest. While certainly not a new technology, businesses that use electronic bulletin boards in front of their company always look just a bit more up to date than their competitors. Because of the additional costs that go into such a board, of course, they still remain relatively rare. But their effectiveness cannot be questioned. When well maintained, they can last for many years and will often outpace their analog brethren when it comes to looking fresh and relevant after a long time out in the elements (Walker, 2008).

Philosophy Issues Paleys Argument of Eye and Telescope

I. I. â€Å"I know of no better method of introducing so large a subject, than that of comparing a single thing with a single; an eye, for example, with a telescope. As far as the examination of the instrument goes, there is precisely the same proof that the eye was made for vision, as there is that the telescope was made for assisting it.† (William Paley).Advertising We will write a custom term paper sample on Philosophy Issues: Paley’s Argument of Eye and Telescope specifically for you for only $16.05 $11/page Learn More Paley argues that an eye and a telescope are so much specialized in their function that they cannot be the product of an accident. They must have been designed. Even if we have never seen the designer, we should not claim that there is none. Paley (1) started his argument by the perception that someone has when he randomly meets stone and a watch. The person who meets a stone will conclude that the stone could have been t here all along or been there purposelessly. However, the watch must have been made by someone because there is no way different parts can come together by themselves to perform a single function. The strength of Paley’s argument is that a good product is rarely the outcome of chance or an accident. An eye and a telescope are almost similar in the parts that they assemble to provide vision, particularly in the use of lenses and the formation of the image behind the lenses. If the parts of the telescope must be assembled by a designer, it follows that the parts of an eye must have been assembled as well (Paley 2). Paley’s argument creates the impression that living things have parts that are so much specialized that they must have an author. In a human being, there are sets of organs that perform specialized functions. The organs operate more efficiently to conserve energy. According to Darwin, the parts evolved from simple forms to more complicated and specialized forms . Whewell (194), in response to Lyell’s Principles, declared that there should be evidence of the cause of the change from one form to another. Darwin (8) argued that the cause of change is the struggle for existence. It allows individuals who are highly adapted to propagate their genes at the expense of the weaker ones of the same species. There is evidence of a continuous struggle for existence among living things. The question that can be raised is that a species cannot develop an eye if it is not encrypted in their DNA. Someone would want to know how the struggle for existence has finally resulted in the encryption of new parts into the DNA of a certain species.Advertising Looking for term paper on philosophy? Let's see if we can help you! Get your first paper with 15% OFF Learn More Biology indicates that animals may change the size, color, and shape of existing parts only because they already exist in their DNA. In Biology, only certain chemicals may resul t in the change of the DNA. The struggle for existence cannot change the DNA that can result in the formation of new parts. However, it can result in stronger and better-adapted parts and forms of life (Darwin 8). Hume (4) dismissed the adaptation of parts because the animals that become adapted finally die and new ones are produced. However, Darwin’s approach is that animals that have certain better abilities propagate their genes because of their specialized abilities. In the example of the eye, a human being with the best vision survives in the jungle and is able to produce offspring. The one with a poor vision dies with no offspring. In the end, only those with a perfect sight remain. In this case, only eagles with the best vision and the swiftest grasp remain. However, what would have forced human beings or eagles to form eyes cannot be described with certainty in the first place. Stumbling upon some chemical that alters the DNA cannot produce eyes. The struggle for exis tence may not change the DNA. Paley argued that something that happens by chance could produce â€Å"a wart, a mole, a simple, but never an eye† (5). A pimple is possible because it is not an assembly of different parts performing one function. In all cases, the argument is the same. A stone is not an assembly of parts. It can be formed through chance. Human beings would like to develop wings to fly. When the struggle for existence can be used as a cause for the prevalence of the more specialized forms, there is no evidence of struggle among celestial bodies arranged in sustainable patterns. Isaac Newton’s thought is that â€Å"the stars are so evenly spaced throughout the heavens and cannot be understood without reference to God’s intentions† (â€Å"Darwin, evolution and modern history: Dar Rev 2014 Slides Living 1† 7). One would wonder what made the stars evenly distributed that they do not collide or merge to become one huge body. They do not st ruggle to exist. It is similar to Paley’s argument where an assembly of different parts results in a system that functions together harmoniously. They cannot assemble by chance without the outcome of an accident. The outcome of an accident is likely to involve a waste. Waste may include parts that do not add value to the functioning of the system. According to Darwin (8), unused parts are eliminated through time.Advertising We will write a custom term paper sample on Philosophy Issues: Paley’s Argument of Eye and Telescope specifically for you for only $16.05 $11/page Learn More Organic fossils need to be studied similarly to the rocks. Whewell discussed that â€Å"the fossils and medals found under city ruins are to be used in the same spirit and purpose† (500). Scientists face the problem of creating a link between stages. For example, the small gradual changes from Homo Habilis to Homo Erectus. Lyell explained that it would have been possible if â€Å"it was part of the plan of nature to preserve an unbroken series of monuments to commemorate the vicissitudes of the organic creation† (34). Scientists have tried to develop a link between different stages in the evolution of mankind. However, there are millions of species that would need a similar linkage. Both Darwin and Paley base their argument on the vertebrates, which have similar body structures in terms of bone formation and body functions. However, the two authors differ on the issue of the origin of species. Paley holds that a similar body structure is a sign of contrivance, which assures the existence of a designer. Darwin uses a similar body structure to infer a common origin. Paley gives a valid argument that an assembly of different parts cannot occur by chance. Darwin’s theory is left with the difficult task of proving how new parts are encrypted into the DNA of young ones because they may not be of generic value (Darwin 12). The s olar system is an assembly of celestial bodies that do not struggle to exist. One would wonder what made the planets develop different masses and atmospheric characteristics if they have the same origin. II. â€Å"It is remarkable how Darwin recognized among beasts and plants his English society with its division of labor, competition, opening up of markets, ‘inventions’, and Malthusian ‘struggle for existence’ —with Darwin the animal kingdom figures as a bourgeois society.† (Karl Marx in correspondence with Friedrich Engels.) Darwin recognized that among beasts and plants there is a division of labor. Plants provide animals with food and oxygen. In return, animals provide carbon dioxide and manure for plants (Marx and Engels par. 2). There is competition whenever beasts have an interest in the same resources. Lions will kill hyenas to reduce competition for meat. Wolves and cheetahs will target the same animals for food. The same competition occurs among human beings when there is a conflict of interest. Division of labor may also occur in animals of the same species. For example, male lions may guard the boundaries and lionesses may specialize in hunting. There is a great division of labor among human beings. Division of labor increases productivity among human beings.Advertising Looking for term paper on philosophy? Let's see if we can help you! Get your first paper with 15% OFF Learn More The farmer has ample time to carry out his duties as a result of taking his children to school. Some animals feed while others watch out. It allows those that feed ample time to find the best food and adequate quantities. It also eliminates distraction from those that are on the lookout for predators. According to the statement, the struggle is an occurrence of chance emerging from overpopulation and the struggle for existence. It leads to the invention in animals as in mankind. As a result of the struggle and invention, a baboon finds out that it can be more satisfied by feeding on a single flamingo rather than plant shoots. However, there is difficulty in catching flamingoes. Opening up of markets is where animals will go further than usual in such food and water. During periods of scarcity, animals may widen the boundaries in which they search for food. Plenty of food in an area may also invite animals from far regions. In English society, merchants were known to bring supplies o f goods that were scarce in England. In return, they would export those that are in plenty. In the animal kingdom, animals have several options among different animals that they can hunt for food. The ones found in plenty are easily killed. They will be frequently hunted until their numbers are reduced. Paley (7) argued that it is a system to prevent overpopulation. In business, inventions come as a result of trying to gain a competitive advantage over other businesses. In the animal kingdom, the invention provides better knowledge that allows an animal to use less effort in the struggle for existence. The need for invention comes as a result of competition. The propagation of species is such that animals of the same species have certain advantages over other species different from their own. Darwin (59) argued that there is intense competition among animals of the same species because of the similarity of abilities. The differences among species create a form of divided labor. Anim als of different species tend to target different parts of the same resources. Their abilities are increasingly being adapted for the different resources they target. The division of labor among species reduces the struggle for existence and increases the chances of survival. A giraffe feeds on trees and a gazelle on the grass. The height of the giraffe and its kicks prevent a lion from reaching its throat easily. The gazelle’s speed is its best rescue. Each species survives, according to their different abilities. Within the species, those which display stronger qualities of their competitive abilities can propagate their genes. Competition emerges from seeking the same resources and from overpopulation. Paley (7) argued that â€Å"pain teaches vigilance and caution, gives notice to danger, and excites those endeavors which may be necessary to preserve the species† (7). As a result of scarcity of resources brought about by overpopulation, the proletariat would turn ag ainst the bourgeoisie. Hume (5) described a situation where insects can molest lions despite their strength. The Malthusian theory predicts the intensification of the struggle for existence as a result of overpopulation. In the animal kingdom, the search for green plants intensifies as the population of herbivores increase. However, their population is kept at a sustainable number by the carnivores. Mankind has been able to reproduce at a high rate after reducing the struggle for existence from the struggle of necessities to the struggle for additional pleasures. The bourgeoisie society has been described with a continuous class struggle for necessities and enjoyment (Marx and Engels par. 4). Engels draws a difference between the bourgeoisie struggles in mankind from that of animals because animals only gather finished products and are more concerned about necessities (Marx and Engels par. 4). Some animals may show an indication of enjoyment too. Birds satisfied with the necessity o f food and water may bathe in the soil as a form of relaxation. The bourgeoisie is known as a society where everyone seeks his own benefit (Marx and Engel par. 13). The animal kingdom is similar. Animals may also be friendly to their own kind once they have satisfied their individual needs. The struggle where everyone seeks to satisfy their individual needs leads to those who are more adapted to the changing conditions to survive when the weaker of their species are wiped out by scarcity. Division of labor may have resulted in better-performing parts. The different body parts form systems that are better adapted for their function. Different species also specialize in areas that provide a better chance of survival. Adam Smith claimed that a â€Å"workman not educated to this business, has by the division of labor rendered a distinct trade† (8). It is the situation when a workman gains skills through practice rather than education. It is similar to Darwin’s view that di fferent species have gained competitive advantages by repeatedly using certain abilities (Darwin 8). The abilities that provide a species with its distinction become a common feature among the offspring that will be able to survive in the struggle for existence. Marx and Engel (par. 2), in the statement, were not surprised that the same theory used in history could be used in natural sciences. At a glance, human beings may appear free from the struggle for existence. Invention and innovation have allowed mankind to live in numbers that would be considered overpopulation if human beings lived in their natural state. A closer look at animals, one realizes similar struggles as those of mankind. The search for new markets and division of labor are inventions that tend to create an advantage over individuals and nations. The individual that innovates becomes dominant. Historically, the most successful men were able to sire more children than the less successful men. Currently, the trend has changed because men are afraid to have more children alarmed by economic difficulties. It goes back to Paley’s argument that the struggle creates an awareness of danger, which reduces overpopulation in human beings. Today, in a more developed country like England, there is hardly direct combat in the struggle for resources. However, the struggle for existence has not stopped. It will be evident in firms that restructure to remain in the market place. There are individuals who develop rare technical skills, which allow them to tap into resources that are hardly available to the majority. Animals as well may develop rare skills that allow a species to tap into resources unreachable to others. Works Cited Darwin, Charles. The Origin of Species by Means of Natural Selection, or, The Preservation of Favored Races in the Struggle for Life. 6th ed. 2009. New York: Cambridge University Press. Print. â€Å"Darwin, evolution and modern history: Dar Rev 2014 Slides Living 1†. Web. Hume, David. Dialogues Concerning Natural Religion (1779). Passages distributed in class. Lyell, Charles. Principles of Geology [1830-1833, vol. 3], London: John Murray. Passages distributed in class. Marx, Karl and Friedrich Engels. Marx-Engels Correspondence 1875: Engels to Lavrov 12 November 1875. n.d. Web. Paley, William. Natural Theology or, Evidences of the Existence and Attributes of the Deity, Collected from the Appearances of Nature. 12th ed. 1809. London: Fauldner. Darwin-online Organization. Web. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations [1776], 5th ed. 1904. London: Methuen. Passages distributed in class. Whewell, William. History of the Inductive Sciences (1837). Passages distributed in class. This term paper on Philosophy Issues: Paley’s Argument of Eye and Telescope was written and submitted by user Paris Wilcox to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Free Essays on Valley Of Dreams

Valley of Dreams Silicon Valley or The Valley of Dreams represents many things to different people. It’s the place were the integrated circuit, the first commercial radio broadcast, minicomputers, miniprocessors, gene-splicing, 3-D computing, and Internet commerce were all invented or created. It’s also believed that if it stood alone as an independent country, it would hold the world’s 12th largest economy. This valley could also just represent the place where a lot of the nerds we use to make fun of ran off too. Those nerds however, have become some of the wealthiest men not only in California and the United States, but some are right up there with other world economic leaders. The driving force for the creation of the Valley of Dreams has got to be: â€Å"Get it today, because it may be gone tomorrow† (Kaplan, 27). It is the slogan that most of its residents go by. There’s a hunger that fuels the valley’s residents and pushes them to go forward. Ma ny hope to gain more wealth and others want the wealth but have aspirations of changing the future as well. It’s definitely the valley of the dollar where most people have hit it big or believe they are about to. It’s that attitude that helped the Silicon Valley get where it is today, as an â€Å"American icon† (Kaplan, 13). However, Silicon Valley doesn’t guarantee immediate or promised success. Kaplan explains the rise of venture capitalism in and around the Valley. The story tells of the traditional missed opportunities committed by William Shockley and Fairchild Semiconductor. Shockley was a technical genius with little business sense and his rise and fall marked the beginnings of Silicon Valley as we know it today. Shockley represents only a minority of those who have lived there because he certainly did fail but there aren’t many that can relate to him. John Doerr, Larry Ellison, Steve Jobs, Jim Clarke, Marc Andreesen, and Jerry Yang are some of the... Free Essays on Valley Of Dreams Free Essays on Valley Of Dreams Valley of Dreams Silicon Valley or The Valley of Dreams represents many things to different people. It’s the place were the integrated circuit, the first commercial radio broadcast, minicomputers, miniprocessors, gene-splicing, 3-D computing, and Internet commerce were all invented or created. It’s also believed that if it stood alone as an independent country, it would hold the world’s 12th largest economy. This valley could also just represent the place where a lot of the nerds we use to make fun of ran off too. Those nerds however, have become some of the wealthiest men not only in California and the United States, but some are right up there with other world economic leaders. The driving force for the creation of the Valley of Dreams has got to be: â€Å"Get it today, because it may be gone tomorrow† (Kaplan, 27). It is the slogan that most of its residents go by. There’s a hunger that fuels the valley’s residents and pushes them to go forward. Ma ny hope to gain more wealth and others want the wealth but have aspirations of changing the future as well. It’s definitely the valley of the dollar where most people have hit it big or believe they are about to. It’s that attitude that helped the Silicon Valley get where it is today, as an â€Å"American icon† (Kaplan, 13). However, Silicon Valley doesn’t guarantee immediate or promised success. Kaplan explains the rise of venture capitalism in and around the Valley. The story tells of the traditional missed opportunities committed by William Shockley and Fairchild Semiconductor. Shockley was a technical genius with little business sense and his rise and fall marked the beginnings of Silicon Valley as we know it today. Shockley represents only a minority of those who have lived there because he certainly did fail but there aren’t many that can relate to him. John Doerr, Larry Ellison, Steve Jobs, Jim Clarke, Marc Andreesen, and Jerry Yang are some of the...

Group dynamic discussion board Essay Example | Topics and Well Written Essays - 250 words

Group dynamic discussion board - Essay Example To be specific, a person will stay back and monitor what others think of the topic, thus opt to go by their decisions due to fear of criticism from others. Similarly, this approach will most likely compromise other participants into supporting ideas and solutions that they do not support deep from their hearts. It is these individual ideas that create much impact on the company, rather than speeding the process of reaching solutions. The recommendations that the author made in this article were all relevant to the situation. Particularly, the author was aware that the key decision-makers were the Japanese, hence making the entire recommendations favor the use of namawashi in discussions on matters concerning the company. For example, the author states, â€Å"seek out with the Japanese counterparts through casual basis to find out their views on various subjects† (Rochelle, 2012. P 2). In the similar capacity, the author advice the Japanese to consider including the Americans in pre-meeting discussions, even the casual discussions. The only part that I disagree with the author is the failure of promoting the American style of approaching solutions. If I were in the authors shoes, I would have promoted the American approach to the debates by addressing the key decision-makers on the importance of using approaches of open discussions, hence finding a way of reaching a mutual

Business Studies LocationBreakeven Essay Example | Topics and Well Written Essays - 1500 words

Business Studies LocationBreakeven - Essay Example Also inventory would not need to be stored thus stock holding costs would also be reduced. (Unit 88) Having the suppliers close by is important, having the customers nearby also matters. The business revenue directly depends on the location which is easily accessible to the customer. Also it should be at such a place where the flow of customers is high or the population density is high so that the business product is exposed to the customers as much as it can. The transport network plays a vital role in selecting a location. The raw materials need to come via a transport route. The customers have to visit the storefront and purchase the product. Therefore the road network in the immediate vicinity needs to be good. Furthermore the location should be at such a place where train/ship/plane network is close by so that connectivity to local and international business centres is maintained. (Business Review, 2003) The actual piece of land selected for locating the business needs to be seen from the cost point of view as well. There should be room for future expansion. For customer storefronts, spacious land with space for car parking is sometimes required. The geological stability of the land area also needs to be considered as well as the knowledge of high seismic activity zones near the area. The use of Greenfield and Brownfield sites are being increasingly used in the UK. (Unit 88) Labour For a new business finding an area where skilled labour is available is also one of the factors to be considered since the skills required for the job are not always available in the locality. For an existing business moving to another location has the problem of persuading the existing employees to start coming to the new facility. They might have to relocate their homes, or change their office hours due to traffic etc. which might cause inconvenience. (Business Review, 2003) Government Influence The government of some counties may give incentives, like low priced land, to businesses to locate in some areas. The government may want to keep industries only in industrial areas and give incentives such as subsidized land and labour rates etc. (Unit 88) Image Most storefronts bank on the type of area where they are located. For a branded store, having an outlet in the posh area of the city makes sense. Thus a business wanting to create an impression and keep its status high in order to charge premium prices from the customers would need to locate in expensive localities. (Business Review, 2003) Hassle of Relocation When the business moves to a different area, a certain bit of disruption is caused to the business activities. The suppliers may not want to come to the new location. The employees would have to change their routine or even relocate themselves. The

Illustrative Transactions and Financial Statements Answers Essay Example for Free

Illustrative Transactions and Financial Statements Answers Essay Identify potential problems with regression data. 7. Evaluate the advantages and disadvantages of alternative cost estimates. 8. (Appendix A) Use Microsoft Excel to perform a regression analysis. 9. (Appendix B) Understand the mathematical relationship describing the learning phenomenon. Why Estimate Costs? Managers make decisions and need to compare costs and benefits among alternative actions. Good decision requires good information about costs, the better these estimates, the better the decision managers will make (Lanen, 2008).. Key Question What adds value to the firm? Good decisions. You saw in Chapters 3 and 4 that good decisions require good information about costs. Cost estimates are important elements in helping managers make decisions that add value to the company (Lanen, 2008). Learning Objective One: Understand the reasons for estimating fixed and variable costs The reasons for estimating fixed and variable costs The basic idea in cost estimation is to estimate the relation between costs and the variables affecting costs, the cost drivers. We focus on the relation between costs and one important variable that affect them: activity (Lanen, 2008). Basic Cost Behavior Patterns By now you understand the importance of cost behavior. Cost behavior is the key distinction for decision making. Costs behave as either fixed or variable (Lanen, 2008). Fixed costs are fixed in total, variable costs vary in total. On a per-unit basis, fixed costs vary inversely with activity and variable costs stay the same. Are you getting the idea? Cost behavior is critical for decision making. The formula that we use to estimate costs is similar cost equation: Total costs = fixed costs + {variable cost per unit} number of units T c = f + {v} x |With a change in Activity |In Total |Per Unit | |Fixed Cost |Fixed |Vary | |Variable |Vary |Fixed | What Methods are used to Estimate Cost Behavior? Three general methods used to estimate the relationship between cost behavior and activity levels that are commonly used in practice: Engineering estimates, Account analysis Statistical methods (Such as regression analysis) (Lanen, 2008). Results are likely to differ from method to method. Consequently, it’s a good idea to use more than one method so that results can be compared. These methods, therefore, should be seen as ways to help management arrive at the best estimates possible. Their weakness and strengths require attention. Learning Objective Two: Estimate costs using engineering estimates. Engineering Estimates Cost estimates are based on measuring and then pricing the work involved in a task. This method based on detailed plans and is frequently used for large projects or new products. This method often omits inefficiencies, such as downtime for unscheduled maintenance, absenteeism and other miscellaneous random events that affect the entire firm (Lanen, 2008). Identify the activities involved Labor |Rent |Insurance |Time |Cost | Advantages of engineering estimates |Details each step required to perform an operation |Permits comparison of other centers with similar operations | |Identifies strengths and weaknesses. | | Disadvantages of engineering estimates 1. Can be quite expensive to use. Learning Objective Three: Estimate costs using account analysis. Account Analysis Estimating costs using account analysis involves a review of each account making up the total costs being analyzed and identifying each cost as either fixed or variable, depending on the relation between the cost and some activity. Account analysis relies heavily on personal judgment. This method is often based on last period’s cost along and is subject to managers focusing on specific issues of the previous period even though these might be unusual and infrequent(Lanen, 2008) . Example: Account Analysis (Exhibit 5. 1) |3C Cost Estimation Using Account Analysis | |Costs for 360 Repair Hours | |Account |Total |Variable Cost |Fixed Cost | |Office Rent $3,375 |$1,375 |$2,000 | |Utilities |310 |100 |210 | |Administration |3,386 |186 |3,200 | |Supplies |2,276 |2,176 |100 | |Training |666 |316 |350 | |Other |613 |257 |356 | |Total |$10,626 |$4,410 |$6,216 | |Per Repair Hour |$12. 25 ($4,410 divided by 360 repair-hours) | 3C Cost Estimation Using Account Analysis (Costs at 360 Repair-Hours. A unit is a repair- hour) Total costs = fixed costs + {variable cost per unit} number of units T c = f + {v} x |$10,626 = $6,216 + $12. 25 (360) |$10,626 = $6,216 + $$4,410 | Costs at 520 Repair-Hours Total costs = fixed costs + {variable cost per unit} number of units |Tc = $6,216 + {$12. 25} 520 |Total costs = $6,216 + $ $6,370 |$12,586 = $6,216 + $ $6,370 | Advantage of Account Analysis 1. Managers and accountants are familiar with company operations and the way costs react to changes in activity levels. Disadvantages of Account Analysis 1. Managers and accountants may be biased. 2. Decisions often have major economic consequences for managers and accountants. Learning Objective Four: Estimate costs using statistical analysis. The statistical analysis deals with both random and unusual events is to use several periods of operation or several locations as the basis for estimating cost relations . We can do this by applying statistical theory, which allows for random events to be separated from the underlying relation between costs and activities. A statistical cost analysis analyzes costs within the relevant range using statistics. Do you remember how we defined relevant range? A relevant range is the range of activity where a cost estimate is valid. The relevant range for cost estimation is usually between the upper and lower limits of past activity levels for which data is available (Lanen, 2008). Example: Overhead Costs for 3C ( Exhibit 5. 2) The following information is used throughout this chapter: Here we have the overhead costs data for 3C for the last 15 months. Let’s use this data to estimate costs using a statistical analysis. |Month |Overhead Costs |Repair-Hours |Month |Overhead Costs |Repair-Hours | |1 |$9,891 |248 |8 |$10,345 |344 | |2 $9,244 |248 |9 |$11,217 |448 | |3 |$13,200 |480 |10 |$13,269 |544 | |4 |$10,555 |284 |11 |$10,830 |340 | |5 |$9,054 |200 |12 |$12,607 |412 | |6 |$10,662 |380 |13 |$10,871 |384 | |7 |$12,883 |568 |14 |$12,816 |404 | | | | |15 |$8,464 |212 | A. Scattergraph Plot of cost and activity levels Does it look like a relationship exists between repair-hours and overhead costs? We will start with a scatter graph. A scatter graph is a plot of cost and activity levels. This gives us a visual representation of costs. Does it look like a relationship exists between repair-hours and overhead cost? We use â€Å"eyeball judgment† to determine the intercept and slope of the line. Now we â€Å"eyeball† the scatter graph to determine the intercept and the slope of a line through the data points. Do you remember graphing our total cost in Chapter 3? Where the total cost line intercepts the horizontal or Y axis represents fixed cost. What we are saying is the intercept equals fixed costs. The slope of the line represents the variable cost per unit. So we use â€Å"eyeball judgment† to determine fixed cost and variable cost per unit to arrive at total cost for a given level of activity. As you can imagine, preparing an estimate on the basis of a scatter graph is subject to a high level of error. Consequently, scatter graphs are usually not used as the sole basis for cost estimates but to illustrate the relations between costs and activity and to point out any past data items that might be significantly out of line. B. High-Low Cost Estimation A method to estimate costs based on two cost observations, usually at the highest and lowest activity level. Although the high-low method allows a computation of estimates of the fixed and variable costs, it ignores most of the information available to the analyst. The high-low method uses two data points to estimate costs (Lanen, 2008). Another approach: Equations V = Cost at highest activity Cost at lowest activity Highest activity Lowest activity F = Total cost at highest activity level V (Highest activity) Or F = Total cost at lowest activity level V (Lowest activity) Let’s put the numbers in the equations | | | |V = $12,883 $9,054 |V = $10. 0/RH | |568 – 200 | | F = Total cost at highest activity level V (Highest activity) F = $12,883 $10. 40 (568), F= $6,976 Or F = Total cost at lowest activity level V (Lowest activity) F = $9,054 $10. 40 (200) Rounding Difference C. Statistical Cost Estimation Using Regression Analysis Statistical procedure to determine the relationship between variables High-Low Method: Uses two data points. Regression analysis Regression is a statistical procedure that uses all the data points to estimate costs. [pic] Regression Analysis Regression statistically measures the relationship between two variables, activities and costs. Regression techniques are designed to generate a line that best fits a set of data points. In addition, regression techniques generate information that helps a manager determine how well the estimated regression equation describes the relations between costs and activities (Lanen, 2008). We recommend that users of regression (1) fully understand the method and its limitations (2) specify the model, that is the hypothesized relation between costs and cost predictors (3) know the characteristics of the data being tested (4) examine a plot of the data . For 3C, repair-hours are the activities, the independent variable or predictor variable. In regression, the independent variable or predictor variable is identified as the X term. An overhead cost is the dependent variable or Y term. What we are saying is; overhead costs are dependent on repair-hours, or predicted by repair-hours. The Regression Equation |Y = a + bX |Y = Intercept + (Slope) X |OH = Fixed costs + (V) Repair-hours | You already know that an estimate for the costs at any given activity level can be computed using the equation TC = F + VX. The regression equation, Y= a + bX represents the cost equation. Y equals the intercept plus the slope times the number of units. When estimating overhead costs for 3C, total overhead costs equals fixed costs plus the variable cost per unit of repair-hours times the number of repair-hours. We leave the description of the computational details and theory to computer and statistics course; we will focus on the use and interpretation of regression estimates. We describe the steps required to obtain regression estimates using Microsoft Excel in Appendix A to this chapter. Learning Objective Five: Interpret the results of regression output. Interpreting Regression [pic] Interpreting regression output allows us to estimate total overhead costs. The intercept of 6,472 is total fixed costs and the coefficient, 12. 52, is the variable cost per repair-hours. Correlation coefficient â€Å"R† measures the linear relationship between variables. The closer R is to 1. 0 the closer the points are to the regression line. The closer R is to zero, the poorer the regression line (Lanen, 2008). Coefficient of determination â€Å"R2† The square of the correlation coefficient. The proportion of the variation in the dependent variable (Y) explained by the independent variable(s)(X). T-Statistic The t-statistic is the value of the estimated coefficient, b, divided by its standard error. Generally, if it is over 2, then it is considered significant. If significant, the cost is NOT totally fixed. The significant level of the t-statistics is called the p-value. Continuing to interpret the regression output, the Multiple R is called the correlation coefficient and measures the linear relationship between the independent and dependent variables. R Square, the square of the correlation cost efficient, determines and identifies the proportion of the variation in the dependent variable, in this case, overhead costs, that is explained by the independent variable, in this case, repair-hours. The Multiple R, the correlation coefficient, of . 91 tells us that a linear relationship does exist between repair-hours and overhead costs. The R Square, or coefficient of determination, tells us that 82. 8% of the changes in overhead costs can be explained by changes in repair-hours. Can you use this regression output to estimate overhead costs for 3C at 520 repair-hours? Multiple Regressions Multiple regressions are used when more than one predictor (x) is needed to adequately predict the value (Lanen, 2008). For example, it might lead to more precise results if 3C uses both repair hours and the cost of parts in order to predict the total cost. Let’s look at this example. |Predictors: |X1: Repair-hours |X2: Parts Cost | 3C Cost Information | |Month |Overhead Costs |Repair-Hours ( X1) |Parts ( X2) | |1 |$9,891 |248 |$1,065 | |2 |$9,244 |248 |$1,452 | |3 |$13,200 |480 |$3,500 | |4 |$10,555 |284 |$1,568 | |5 |$9,054 |200 |$1,544 | |6 |$10,662 |380 |$1,222 | |7 |$12,883 |568 |$2,986 | |8 |$10,345 |344 |$1,841 | |9 |$11,217 |448 |$1,654 | |10 |$13,269 |544 |$2,100 | |11 |$10,830 |340 |$1,245 | |12 |$12,607 |412 |$2,7 00 | |13 |$10,871 |384 |$2,200 | |14 |$12,816 |404 |$3,110 | |15 |$8,464 |212 |$ 752 | In multiple regressions, the Adjusted R Square is the correlation coefficient squared and adjusted for the number of independent variables used to make the estimate. Reading this output tells us that 89% of the changes in overhead costs can be explained by changes in repair-hours and the cost of parts. Remember 82. % of the changes in overhead costs were explained when one independent variable, repair-hours, was used to estimate the costs. Can you use this regression output to estimate overhead costs for 520 repair-hours and $3,500 cost of parts? Learning Objective Six: Identify potential problems with regression data. Implementation Problems It’s easy to be over confident when interpreting regression output. It all looks so official. But beware of some potential problems with regression data. We already discussed in earlier chapters that costs are curvilinear and cost estimations are only valid within the relevant range. Data may also include outliers and the relationships may be spurious. Let’s talk a bit about each. Curvilinear costs |Outliers |Spurious relations |Assumptions | 1. Curvilinear costs Problem: Attempting to fit a linear model to nonlinear data. Likely to occur near full-capacity. Solution: Define a more limited relevant range (example: from 25 – 75% capacity) or design a nonlinear model. If the cost function is curvilinear, then a linear model contains weaknesses. This generally occurs when the firm is at or near capacity. The leaner cost estimate understates the slope of the cost line in the ranges close capacity. This situation is shown in exhibit 5. 5. 2. Outliers Problem: Outlier moves the regression line. Solution: Prepare a scatter-graph, analyze the graph and eliminate highly unusual observations before running the regression. Because regression calculates the line that best fits the data points, observations that lie a significant distance away from the line could have an overwhelming effect on the regression estimate. Here we see the effect of one significant outlier. The computed regression line is a substantial distance from most of the points. The outlier moves the regression line. Please refer exhibit 5. 6. 3. Spurious or false relations Problem: Using too many variables in the regression. For example, using direct labor to explain materials costs. Although the association is very high, actually both are driven by output. Solution: Carefully analyze each variable and determine the relationship among all elements before using in the regression. 4. Assumptions Problem: If the assumptions in the regression are not satisfied then the regression is not reliable. Solution: No clear solution. Limit time to help assure costs behavior remains constant, yet this causes the model to be weaker due to less data. Learning Objective Seven: Evaluate the advantages and disadvantages of alternative cost estimation methods. Statistical Cost Estimation Advantages 1. Reliance on historical data is relatively inexpensive. 2. Computational tools allow for more data to be used than for non-statistical methods. Disadvantages 1. Reliance on historical data may be the only readily available, cost-effective basis for estimating costs. 2. Analysts must be alert to cost-activity changes. Choosing an Estimation Method Each cost estimation method can yield a different estimate of the costs that are likely to result from a particular management decision. This underscores the advantage of using more than one method to arrive at a final estimate. Which method is the best? Management must weigh the cost-benefit related to each method (Lanen, 2008). Estimated manufacturing overhead with 520 repair-hours and $3,500 parts costs *. The more sophisticated methods yield more accurate cost estimates than the simple methods. |Account Analysis = $12,586 |High-Low = $12,384 |Regression= $12,982 |Multiple Regression= $13,588* | Data Problems Missing data Outliers Allocated and discretionary costs Inflation Mismatched time periods No matter what method is used to estimate costs, the results are only as good as the data used. Collecting appropriate data is complicated by missing data, outliers, allocated and discretionary costs, inflation and mismatched time periods. Learning Objective Eight: (Appendix A) Use Microsoft Excel to perform a regression analysis. Appendix A: Microsoft as a Tool Many software programs exist to aid in performing regression analysis. In order to use Microsoft Excel, the Analysis Tool Pak must be installed. There are software packages that allow users to easily generate a regression analysis. The analyst must be well schooled in regression in order to determine the meaning of the output! Learning Objective Nine: (Appendix B) Understand the mathematical relationship describing the learning phenomenon. Learning Phenomenon Leaning phenomenon refers to the systematic relationship between the amount of experience in performing a task and the time required to perform it. The learning phenomenon means that the variable costs tend to decrease per unit as the volume increase. Example: | |Unit |Time to Produce |Calculation of Time | |First Unit |100 hours |(assumed) | |Second Unit |80 hours |(80 percent x 100 hours | |Fourth Unit |64 hours |(80 percent x 80 hours | |Eighth Unit |51. hours |(80 percent x 64 hours | |Impact: Causes the unit price to decrea se as production increases. This implies a nonlinear model. | Another element that can change the shape of the total cost curve is the notion of a learning phenomenon. As workers become more skilled they are able to produce more output per hour. This will impact the total cost curve since it leads to a lower per unit cost, the higher the output. Chapter 5: END!! COURSE WORK EXERCISE 5-25 – A B PROBLEM 5-47 -A B REFERENCES Lanen , N. W. , Anderson ,W. Sh. Maher ,W. M. ( 2008). Fundamentals of cost accounting. New York : McGraw-Hill Irwin. [pic]