Change: The only constant

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Peter Drucker, the famous management guru, once said, “Every three years, an organisation should challenge every product, every service, every policy, every distribution channel with the question: If we were not in it already, would we be going into it now?”

 

Why do you think this question is important? How can managers help pose and answer this question? How Cost Accounting contributes to other functions of management in order to implement Druker’s suggestion? Explain giving atleast 1 company example.

Word limit: 500 words

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  • Sameer Sharma – sameer.sharma@spjain.org, SPJD – EWD 4045

    >This question is very relevant and important in the diverse business environments we are in today. The Globalization throws up different challenges every hour since our clients are accessible to a new set of vendors in hours and we can access new markets like never before. Because of this volatility in market, customer requirements are evolving and successful organizations have to move proactively in catering to their customer requirements at the same pace. Legacy mindset will definitely ensure a bleak future (look what happened to Encyclopedia Britannica till they came up with CD versions). All corporate policies should be directed in ensuring a better experience for customer (SAS Airlines – moment of truth).
    Cost Accounting contributes to all other business functions because eventually all business are created to generate profit and hence it is very important and imperative to understand the economically feasible accuracy of the cost objects. In a diverse environment, costing of cost objects is very important since management requires analyzing the costs from different perspectives depending on the offerings and deliverables.
    Pricing the products is a huge challenge due to increase in logistics, commodity items and overall inflation plaguing world economies. With an adequate cost accounting function, corporate are well equipped in taking right decisions on different aspects of trade including managing requisite margins, introduction of new line of products or services, closing or discontinuing from certain markets, etc.
    I am working in IT industry as VP Finance. The changes, volatility and at times turmoil are best witnessed in this industry where a product life cycle for one year is as low as 34 days. The customers are bombarded with the new technologies every morning and this is one industry at times where the products and services precede customer preferences. We as IT industry executives have to walk a very tight path in terms of understanding the future roadmap of customer requirements and we have to carefully place the products and services on the roadmap. It sure is a challenge because at times, we crack a goldmine and at times, we evaluate the lessons learnt. We have efficient cost accounting for various products and services and hence we are able to create value for our stake holders due to our decision makings. With the right cost accounting in place, the battle is half won since then pricing and market penetration decisions are strategically based on the solid foundation of cost accounting.
    With my humble experience, I can safely comment that an organization with inadequate cost accounting is like a blind person crossing Emirates Road alone! The organization would not know which turn in globalization would hit him and puts him out of business.

    Sameer Sharma
    VP Finance
    Avansys
    sameer.sharma@spjain.org
    SPJD – EWD4045

  • PRISCILLA KHAMBATTA – priscilla.khambatta@alfuttaim.ae SPJD (EWD10030)

    >NAME: PRISCILLA KHAMBATTA
    SPJD : EWD10030

    CHANGE: THE ONLY CONSTANT

    Change is constant and it is inevitable. Many businesses are started—but only a few succeed. To ensure that they develop a business model that both meets the market’s needs and delivers an economic return, entrepreneurs have to adapt as they learn.
    One has to be innovative to sustain today’s challenge of being a successful company and creating value in the market. And if it has to be successful then we have to be able to change according to market trends and competitor’s challenge. Peter Druckers statement says that we all are already in to this vicous circle of change and we cannot avoid it if we have to survive. Cost accounting has long been used to help managers understand the costs of running a business. Modern cost accounting originated during the industrial revolution, when the complexities of running a large scale business led to the development of systems for recording and tracking costs to help business owners and managers make decisions.
    The main function of cost accounting is cost minimisation by tracking the cost to various cost objects / cost centres – fixed costs / variable costs etc. This allocation helps the manager to take decisions on direct and indirect costs. So when one knows what the planned hourly cost rate is based on the no. of hours worked by the employees one can budget or plan for the cost of that project. The plan is very important for a manager to have controls. Thus the study of cost accounting yields insights into how managers contribute to operations and thus prepares them for leadership roles. Mangers keep a track of changes in their various cost objects through costing and it is very important for them to cope with these changes through the cost accounting which translates into management accounting for implementing strategies.

    Example: Pricing

    Pricing in our company is the responsibility of Sales & Marketing department which is well aware of the current pricing in the market place. However to set the selling price the cost of each product sold is found out so that it does not set prices that are below the production cost – thereby creating loss on every unit sold. This is where the Cost accountant functions are required. He compiles the costs and presents them to sales and marketing department. It also important when large volumes of products are sold to premium customers what level of discount can be offered. So in this case the cost accountant must determine the direct cost of the product as well as the overhead costs. It is also useful for the management to see the overall impact of cost on profit margins. Another important price related task is determining the profitability of individual customers, products, product lines and services.

    Thus cost accounting is a subset of Management Accounting and Financial Accounting to project the company’s profits and develop and implement strategies.

    From: Priscilla Khambatta-EMBA10
    EWD10030

  • Abhijit V Deshmukh (SPJPD E10012)

    >Subject: Change The Only Constant

    The important part for Managers to realize that they have to operate on two zones. Online and Offline.

    • Online refers to ensuring that the daily operation runs in an uninterrupted manner.

    • Offline: Manager also need to play an important role to step back time and again and look at their entire operation and integration with other processes with a bird’s eye view. Question the current processes and see if they are effective to meet the departmental objective & company objective. This is the offline approach. Its objective is to keep pace with the change in business environment and identify inefficiencies

    The process of Offline approach briefly is as follows

    • Defining all the current processes.

    • Questioning the entire process step by step.

    • The priority of which step to address first should be based on two factors Cost and Criticality. A high value cost needs to be addressed first as a small percentage of saving here will yield larger or more worthwhile absolute savings in cost. Processes which may involve lower costs but are critical to the operation are to be reviewed from a strategic perspective.

    • Post-Analysis: Implement the change.( The most challenging part of the process)

    Example
    A Shipping Company carried out procurement of goods and services in a traditional fashion for nearly 50 years. The process was having a few vendors who would service the vessels. The need of the hour was to deliver goods. As long as delivery was executed within the budget no questions were raised on costs.

    The company started to grow in size and revenue. Then the firm decided to apply the offline methods to question their profitability.

    Are we making enough? Can we make more?
    Are we operating in the most effective manner?

    The firm decided to bring in consultants to and establish a dedicated Purchasing function to evaluate and manage these costs. The first step was to identify the costs and

    • A cost analysis was done.
    • High cost areas identified and a review of the Purchasing process and vendors were carried out.
    • ERP package was implemented. Where inefficient and incorrect processes were eliminated.

    The effect was a saving ranging from 15-50%. In absolute terms the total cost reduction was nearly Three quarters of a million dollars year to year in their cost. Process time was cut to half. Accuracy and hit rate of correct supply increased dramatically

    The ERP helped not only to keep a watch on the costs by accurate and easy reporting but provided an intangible cost benefit by making the entire supply chain more effective by
    • reducing duplication of activities ( Cycle time were reduced by half)
    • higher checks and controls ( Transparent approval systems)
    • Quick references for last prices
    • Ability to consolidate volumes
    • Budget control
    • Accurate and quick MIS functions ( What can be measured can be controlled)

    In this the management showed the vision of questioning “It has always worked this way” tradition a challenging task in a conservative culture of the Shipping Industry.

    Today is remains a market leader and a highly profitable firm having created wealth for its shareholders.

    It is ready for survival in a Market downtrend having focused both on revenue and cost in its good times.

    Abhijit V Deshmukh
    (SPJPD E10012)
    E-mail: abhijitv_deshmukh@yahoo.com
    EMBA10

  • Abhijit V Deshmukh – abhijitv_deshmukh@yahoo.com( SPJD E10012)

    >The important part for Managers to realize that they have to operate on two zones. Online and Offline.

    • Online refers to running the daily operation in an uninterrupted manner.

    • Offline refers to the role of stepping back time and again and look at their entire operation and integration with other processes with a bird’s eye view. Question the current processes and see if they are effective to meet the departmental objective & company objective. This is the offline approach. Its objective is to keep pace with the change in business environment and identify inefficiencies

    The process of Offline approach briefly is as follows
    • Defining all the current processes.
    • Questioning the entire process step by step.
    • The priority of which step to address first should be based on two factors Cost and Criticality. A high value cost needs to be addressed first as a small percentage of saving here will yield larger or more worthwhile absolute savings in cost. Processes which may involve lower costs but are critical to the operation are to be reviewed from a strategic perspective.

    • Post-Analysis: Implement the change. (The most challenging part of the process)

    Example

    A Shipping Company carried out procurement of goods and services in a traditional fashion for nearly 50 years. The process was having a few vendors who would service the vessels. The need of the hour was to deliver goods within the budget no questions were raised on costs.

    The company started to grow in size and revenue. Then the firm decided to think offline and question their profitability.

    Are we making enough? Can we make more?
    Are we operating in the most effective manner?

    The firm decided to bring in consultants to and establish a dedicated Purchasing function to evaluate and manage these costs. The first step was to identify the costs and

    • A cost analysis was done.
    • High cost areas identified and a review of the Purchasing process and vendors were carried out.
    • ERP package was implemented. Where inefficient and incorrect processes were eliminated. Accurate and quick MIS was incorporated (What can be measured can be controlled)

    The effect was a saving ranging from 15-50%. In absolute terms the total cost reduction was nearly Three quarters of a million dollars year to year in their cost. Process time was cut to half. Accuracy and hit rate of correct supply increased dramatically
    In this the management showed the vision of questioning “It has always worked this way” tradition a challenging task in a conservative culture of the Shipping Industry.

    Today is remains a market leader and a highly profitable firm having created wealth for its shareholders.

    It is ready for survival in a Market downtrend having focused both on revenue and cost in its good times.

    Abhijit V Deshmukh
    Roll Number E10012
    E-mail: abhijitv_deshmukh@yahoo.com
    EMBA10

  • Ahmed Sajeed

    >To survive in the market every company has to maintain a decent profitability. Will the changing technology, increasing inflation rate and taste of consumers the companies should also change their products and services. What was supposed to be best earlier might be the worst at present. Hence they have to change their strategies in this highly competitive market place. To enjoy the market share all companies should challenge their products, services, policies, distribution channels with the purpose of better operational and strategic decision making.

    Managers hold the position of decision making in a company. They are main people who makes the decisions seeing the past performances and datas. They are not going to make ledgers or balance sheets. They are the one who analyses those datas and strategise for future improvement. If they can’t analyse all those things then its difficult for a company to grow.

    Profit is the main entity for which all companies are working for. To calculate profit (tangible or intangible) companies should know all the costs that are accounted for the production of their product. Base on this only the other functional groups can make a better decision for the future. Finance people calculate cost of all the cost objects and estimates the future trends and decision to be made. This is basically cost accounting. Cost accounting determines all the costs, direct-indirect, fixed-variable, which are traceable, which are used for manufacturing-selling etc. it has to consider all the entities in a proper way so that the company can make out profitability perfectly. If they can’t then their strategies is not going to be a effective and in the long run they are going to die slowly.

    I would like to take the example of SPJCM. It’s a service industry and everything SPJCM is providing to the students, professors and the guest lectures (tangible and intangible) is a cost to the cost object service. The quality of education, the environment everything has a direct or indirect effect on the profitability of SPJCM. The quality of education depends on the quality and knowledge of the professor. So to provide that quality they have to pay a good amount to the professor, good transportation and accommodation to him. This all are accounting to the cost object service of SPJCM. The students should get a good motivating environment. It depends on the classroom decoration, the audio-visual aids, the library, canteen etc accounts directly to the cost of the cost object service. If the management of SPJCM can calculate all these things then it can perfectly find out the profitability. Profitability of SPJCM may be the quantity and quality of students coming in and out compared to the other colleges the jobs they are getting in the market place as it increases the network of SPJCM.

    So SPJCM should be able to calculate all these cots perfectly with the purpose of operational and strategy making. And to survive in the market they have to challenge whatever they are following till date to come up with better options and strategies.

    Ahmed Sajeed
    Telecom Engg (Ericsson)
    SPJCM Batch 10
    E10038

  • Sucheet Parekh (Batch 4- 4051)

    >I completely agree with the statement Change is the only constant in todays dynamic world.
    Every day there are changes in market scenario, resources available, new technology and other factors. Every organisation needs to take note of such changes and their success could very well depend on the speed at which they adapt to such changes. We can already see that almost daily increase in oil price, gold price, weakening dollar and so on.
    Cost management and effective cost accounting can help organisations in moving up the value chain. This will help them price their product/ service (cost object) and ensure valuation is dont appropriately.

    Sucheet Parekh – Batch 4 – 4051

  • Varghese

    >Change the only constant is an important aspect today’s business as no business can sustain and move forward without change. The consumers are becoming more and more knowledgeable and demanding and inorder to maintain the consumer companier have to bring in change in their products.

    The question is viable is also an important thing. How much of advantage will the company be in such a change is very important. How feasible is it for the company, what are the costs involved for a compnay in such a change. Is there a way that bringing the change will not make a huge impact in the current working set up etc… are importatn issues.

    A cost accountant can give the management the complete breakup of the costs involved, the Fixed costs, the variable costs, the direct costs, indirect costs etc…With this the management willbe able to analyse the complete cost structure. The cost accountant will also be able to inform the management the breakeven point, the point at which we must to avoid losses, by whch the management can decide how soon the revenues can start coming in

    For eg. The mobile industry, we will see that there is a change every few months in the type of mobile, features etc… it is because of these changes that consumers are so much attracted in changing their mobile every often. If there wasn’t any change in the type of mobile etc.. the industry would have remained with the olden type mobiles and the industry would die. But becuase of the change that companies like Nokia, Sony Erricson bring the mobile industry is flourishing.

    JP I am not sure about my roll number

    Mr. Varghese Abraham
    varghese09@gmail.com (SPJD)

  • Karuna M. Gurbaxani (spjain emba-10) EWD10022

    >Yes I will 101% imply this challenge and thumb rule towards company growth.
    It is important for the application of the cost object, may it be product, service or distribution channel. It helps us to follow the value chain, optimized usage of resources and use the finance in a right manner. We need to possess managerial qualities and take into effect concepts like a good supply chain, just-in-time to acquire efficiency and effectiveness. Capital should be used in core competent areas prioritizing each sector of the company.
    This in turn will help us to maximize profit and minimize costs. A good management accounting system can help us to predict future which is thus used for budgeting.

    Cost accounting measures cost of acquiring or using resources, it is a subset of management accounting which helps for planning, control and performance measurement. The main value is profit capitalization. Cost can be sub-divided into periodic or product cost. Cost accounting helps us to accumulate total of all costs, and allocate this accumulated cost to a cost object. Cost can be included in every business function that triggers it such as R & D, production, marketing, distribution, cm service, etc…. it can be directly or indirectly related to each area, at the same time it can be fixed or can vary depending on unit production. The three main features of cost accounting and cost management are – calculating the cost of cost object, obtaining information for performance evaluation, analyzing relevant information for decision making.
    Success of any organization depends on decisions made in regard to proper cost accounting; it depends on different costs for different purposes.

    By challenging this concept we can overtake the performance level and obtain conformance with good ROI’s which keep the owners (shareholders) , employees, competition satisfied as well as the company as a whole

    E.g. In HSBC Bank, after sales quality calls were handled by professional with sound sales technique telemarketers- now these telemarketers are concentrating into hardcore sales business of products achieving more than 200 % targets than usual. The after sales quality dept has been outsourced in India which is taken over like a specialized dept and at a cheaper labor cost. HSBC is not only trying to expand business but trying to cost-cut every area of it. They have also started with services like Relationship Managers for high net worth Cm to meet up to the Cm standards which automatically is a challenge for a service industry.

  • Antonio Fernandes EMBA10

    >No costs are the same every year as they keep on changing due to various factors which can be broken down into:
    Production factors:
    -Increase in Raw material price
    -Increase in Wages/Salaries

    PESTAL Forces:
    This would include inflation, demand and supply, technological advances, Government Fees and Taxes etc.

    Therefore, a product which was profitable in the year 2005 need not be a profitable product in 2007. This can be further elaborated with the following example in the man power supply industry which I am involved:

    2005 2007
    Rate/ManHr 20.00 20.00
    Tot M. Hrs75,000 95,000
    Sales: 1,500,000 1,900,000
    Wages 500,000 650,000
    Salaries 100,000 150,000
    Stores Iss 100,000 120,000
    Accom/OthOH 350,000 450,000
    Govt Fees 200,000 350,000
    Profit: 250,000 180,000

    Just as no costs are the same always, no price can remain the same always and no increase in sales would guarantee increased profits. Every cost involved must be measured and compared over a period of time. Quick decision would help management on reduction of costs or increase in price.

  • Rohit

    >From: Rohit Damodar(EMBA10, S.P.Jain)

    The cost object here is Advertising activities for the Commercial vehicle Showroom.

    Cost Accounting showed us that the advertisements in the local newspapers was the biggest expense factor.Research done by keeping a track on the number of enquiries generated from each newspaper advt. proved that the advertising activity was practicaly unworthy interms of business generation for the showroom.
    Instead an agressive Fax & E-mail campaign was carried out which was much more fruitful and result oriented.This advertising was more direct and focused on the required segment.The price spent on Fax & E-mail camaign was just about 10% of that which was spent for newspaper advertisements.
    Hence Cost Accounting contributed to the advertising function by changing the traditional mode of expensive newspaper advertising to more economical and direct advertising.

  • Russell Khambatta

    >One of the most powerful forces at play in the market today is Customer Awareness.
    Due to the enhanced awareness, generated mainly due to advertising and other marketing activities, customers are becoming more selective and demanding. In order to satisfy this demand for range, quality and incremental value, and performance standard organisations are constantly raising the bar on value delivered to customers and making customers aware of this extra value added to their offering. This again fuels the expectations of customers, leading to another organisation seeing a business opportunity in catering to these expectations.
    This cycle of ever changing expectations and fulfilment, of course means that the customer is really King. However the fallout of this is that organisations have to constantly keep a keen eye on the pulse of their market and make changes and adaptations to their portfolios and offerings very quickly indeed. A few decades ago, most large organisations always had the comfort pillow of their “brand” to fall back on. However, today, market dynamics are so complicated that brand enhancement is a constant challenge.
    Working in the IT Department of Gargash Enterprises, the exclusive dealer of Mercedes Benz cars in Dubai and the Northern Emirates, we are constantly faced with the challenge of making choices based on Total Cost of Ownership and Return of Investment when it comes to implementation of infrastructure, applications and communications systems.
    Since our department is not considered a Revenue Generating Department, we are expected to justify our cost to the company on the basis of savings of manpower, time and money attained by implementation of Information Delivery System. In order to do so, we have to maintain a strict watch on Costs of systems and constantly make changes to facilitate these savings.

    1. Generally, we assume the lifetime of any IT System to be that of 48 months. With this in view, we can constantly track the Total Cost of Ownership (TCO) of that system taking into consideration issues such as Annual Maintenance, Upgrade Protection, and loss to business in case of downtime.
    2. When Business Processes outgrow the functionality of the System, we have to naturally add that functionality. Sometimes that addition is a simple upgrade or delta module plug-in. however, when the change is major, we are faced with a choice of either rip-and-replace or fork-lift upgrade. Once again, the TCO of either option is examined in detail and weighed against the savings in manpower and transaction time. We do not take into consideration the amount of extra business generated due to this implementation.
    3. When a cost saving technology is implemented, the cost of implementation is divided by the per month savings to arrive at a Return-on-Investment in terms of months.

    -Russell Khambatta
    SPJCM EMBA10
    Roll no. EWD10037

  • M.Subramanian

    >Every year the customer’s awareness on the product is increasing. Need of customers is changing due to the technology development. In order to retain the customers, the product always needs to be challenged. This challenge may be in the form of Increasing the product feature, redesign of product, Reducing or Increasing the size ( Depends on cost). This change may be initiated due to the facts, change in demand, Analyzing the competitive Product / Service Performance, cost etc…

    As a Manager, for Changing the product he will be decided by considering some of the following facts.

    1. Present Market Share

    If the product / service is having a considerable large market share, in order to retain the market share the product needs to be changed or suppose if the product is not doing well, again in order to increase the market share the product needs to be redesigned or changed. So In both cases the product needs to be changed.

    2. Cost:

    Cost is the prime factor before deciding on the change. It will include the calculation of all direct costs and in direct costs in associated with the change of product. Difference in costs to be evaluated by the Manager. Based on difference in costs and the expected rate of profit the Manager will react on the changing.

    Also, by analyzing the existing cost the product may required to change in order to reduce the cost.

    Cost Accounts Contribution to Other Functions of Management.

    1. Cost accounting will analyzes all the direct costs & in direct cost associated with each department.
    2. It will determine the cost of product, then the Management will decide on the Percentage of return
    3. After this , price of the product can be fixed.
    4. Marketing department will make a survey on the feasibility of survival / market position of the product with this new price.
    5. Financial department can make their budgets based on the estimated sales volume of this product / service.
    6. Cost Accounts will also determine the factors of how the costs can be reduced . Based on this the department can be decide which activity has to do and how it should do.
    7. On this way the policy of the company can be redesigned such as outsourcing of a Service , Change the supplier of the product in order to get the maximum return
    8. By changing the distribution channel, by implementing new Sales Policy will help the business to promote better.

    The examples of Change the Product which yields good results are as follows:

    1. Lifebuoy soap changed the appearance which in turn increases the sales volume.
    2. Horlicks are changed their appearance to attracted even youths. “ Junior Horlicks” were introduced. Even the shape of the bottle were changed.
    3. Most of the Banks in Dubai are re-branding every three to four years Like NBD ( Previously National Bank Of Dubai), Mashriq ( Formarly Mashreq Bank) in order to attract more customers.

    Mookkaiah Subramanian [m.subramanian@spjain.org]

  • Ann Babu Rajan – annbabu@spajin.org

    >As we know that cost accounting is a practise of measuring, analyzing and reporting financial and non financial information relating to the cost of various resources in an organization. It helps the management in making the right decisisons and on their day to day operations.With this form of accounting it helps the management to have a cost benefit approach, take in to consideration behavioral and technicl aspects and different ways of costing for different products. Cost accounting helps in getting the competitive advantage and it also helps in determing whether it is benefial if the product is manaufactured or outsourced.It helps to identify the profitable and non profitable activities and acts as a guide in future production policies.Practising Cost Accounting also benefits the consumers as the ultimate aim is to reduce cost.Cost Accounting has now become an essential part of accounting in various companies such as Hsbc, Del Computers etc, where they outsource most of there activites since it is more feasible to outsource there activities than do it on there own.
    ANN BABU RAJAN (annbabu@spjain.org)

  • Zaheer

    >it is very necessary to keep asking ourself this question as the market keep changing every instance . if a organization cannot keep up with the pace of the market growth or could not adapt to the change the market is going through, it is certain that the organization would go out of business.competitor who is eying your market would make full use of this opportunity to put you out of business.

    if you take for instance the example of Kodak. when the market of changing to the digital , they stuck to the notion that it is going to be short lived and the conventional camera and film processing would stay.more than 40000 employee lost their job and remaining 90000 were keeping their resume updated.

    zaheer hashim
    roll # 10052

  • Limnaz musthafa-limnaz_musthafa@yahoo.com

    >To begin with cost is basically defined as a resource forgone or sacrificed to achieve a specific objective. Cost accounting deals with the allocation , apportionment and accounting aspects of costs. The management guru Peter Drucker mentions that we should make changes or innovations in our cost object to move our business successfully.

    We live in a world of competition and globalization, where in to keep up with our competitors we have introduce change in our organization as and when required.We should produce according to the needs and wants of the people, making better quality products, through efficient distribution channels. The most important functions of cost accounting consists of the following.

    1. Planning- it is basically looking ahead and deciding in advance what to do, how to do, when to do it and who do it. Planning is concerned with future activity and formulates budgets to meet the objectives of the organization.
    2. Decision making- it is basically connected with making the right decisions of the available oppurtunities .It may relate to
    Price fixation, reduction of prices, changes in production should be followed or not, make or buy a spare part and so on.
    3. Controlling- it is basically dealing with comparing the actual performance with standard performance and if any deviations
    Arise , taking remedial actions to remove it. Thus controlling helps correction.

    The Managers of the companies should focus on these functions to conduct the business of organization successfully. Cost accounting method supplies the basis of factual information on which management can build up its presentation of planning and control. The Management Guru Peter Drucker is asking the management to cope up with the changes in the environment, inorder to be compete successfully. In today’s world customer’s are aware of what is happening around through advertisement, magazines, televisions etc. Basically for a company to be successful it should conduct business by three ways.
    1. Understanding the needs and wants of the customer.
    2. Providing better quality goods at reasonable rates.
    3. Innovation.

    A good example to highlight on this point would be ‘TOYOTA’ a brand that everybody admires. They have different varieties of cars of different classes of customers. To start with they have the TOYOTA COROLLA a car focusing the middle class people and LEXUS a car focusing the high class group. Toyota is moving according to the market situations , they are competing well against the American cars. For instance there is a high demand for TOYOTA cars in the middle east region even among the locals. Moreover their distribution channel is excellent, if you order 100 cars to America, they may have only 50 cars readily available, the remaining 50 cars they will make available in the time taken to reach America, that is through the fleet service, where in they have got machines, and engineers available with them do the job as and when demanded. So we can say that they use the ‘JUST IN TIME ‘ to make cars available as and when demanded, moreover this reduces the carrying cost. This Japanese car company has even overtaken American giants.

    The main reason for their success is the brand image of their cars in the minds of customers through better quality cars of all classes of the society. Second notable point is the after sale services provided by the Japanese car company. Thirdly it is planning , controlling, decision-making steps taken by the management.

    We can conclude by saying that a company or brand can be successful only producing according to the following
    1. meeting the needs and wants of the people
    2. innovation
    3. better quality products

    Limnaz Musthafa
    emba 10
    limnaz_musthafa@yahoo.com

    xxxxxxxxxxxxxxxxxxxxxxxxxxxx

  • Ashly Mathew Varghese

    >The title “Change: The only constant” – summarizes what Drucker wants to point out.
    The challenges faced by today’s managers are enormous. If you are not continuously evaluating your portfolio, you can become obsolete just at the blink of an eye. Therefore it is absolutely essential to see the value add that your organization creates; redefine processes if needed and foresee, anticipate and prepare the team for challenges that lay ahead.

    However my point of view is that – what Drucker points out is much too generic to applied everywhere. A CEO has to evaluate the organization in itself; its competitor’s and must focus in aligning and preparing the organization for the change. The time line is just a function of the particular business environment you are in.
    Some competitive industries require you to redefine every moment. Google for example has redefined them several times during their 8 year reign in the industry. They started out as a search engine company and now they identify themselves as a media company.

    When Google started out in the valley, they had no “core business model” [a terms which the ‘suits’ are intrinsically attracted to. ] . Google just delivered superior search. The point is that – as Google provided the value add to the end user in terms of superior results in search – this in itself was their prime focus during the initial phases. Even Sergey and Larry [founders] didn’t bother to redefine themselves as a company. As the B-model didn’t have a client hook in, Google was a company with millions of hit but generating next to nil revenue. Google was forced to generate revenue partly
    because they wanted more funding from the VC’s and partly because they didn’t want to become just another fantastic dot com burst. Google redefined themselves with one difference – they embraced Advertisements and this marked the beginning of the Google Media campaign. Today Google -[ pressured by cut throat competition ] has successfully branded as a media giant with Deals with AOL and presence in virtually every internet medium. But they continue to be agile; because the B-models continue to evolve – if they don’t adapt they become obsolete – a situation which they came face to face once.

    In case of Google, better utilizing the existing platform [the fixed costs incurred in building the mammoth Google hardware stack] proved to be pivotal in converting and better utilizing their assets. It is of prime importance to redefine without radical changes in your cost structure [unless you are running on high reserves and you are very bold!! ]. Evaluating , understanding and better utilizing the resources that you have and delivering superior value is what an organization is all about in the 21st century [oops! this is also subject to change!! :)].

    Ashly Mathew Varghese EMBA 10 [ E10007 ]
    +/ashly

  • Anonymous

    >I agree with Peter drucker’s comment coz with the everyday changing world, products, services tend to get outdated & with the increasing no of competitors coming up with innovative ideas, every organisation must review its produts, services, distribution channels , marketing strategy etc. Managers must be aware of changing world & the change in demads of consumers to help organisation modify its products & services accordingly.
    Cost accounting poses a major role in taking decisions regarding changes in products & services by forecasting a correct picture of effects driven by change. It helps managers to foresee the feasibility of changes & the level of changes needed.
    e.g:Royal & sunalliance Insurance’s marine business was sufferring coz of the faster quotes given by other Insurance companies. RSA realised that delay in qoute is the only factor effecting business,. RSA came up with an innovative idea of online quotation & an online system was launched where broikers can go online & get quotes. Within 3 months there is a 25% inc in business.

    Manish Gidwani
    E10024

  • Anonymous

    >Change is to amend or modify. Industry wide, all businesses encounter change regularly. Some of the changes are – employee requirements, product development analysis, consumer spending habits and emerging technology. We continuously witness change, which is an unavoidable aspect of the modern day business environment. At times, it can be complex to handle and tricky to direct employees through.
    Managing change, or Change management is a structured approach to transitioning employees through a necessary improvement, addition, or alteration to what currently is.
    Change management is necessary when it is time to distinguish the goals of the progression of the company from individual goals of employees. The main purpose of a company is to generate maximum profits for the shareholders. This can be obscured if a proactive review is not undertaken on a regular basis.
    Consider a company such as Fujitsu Siemens, who manufacture laptops. If they were to upgrade the existing model with additional features & functions, Cost Accounting would be necessary to evaluate the viability of the proposition. They are involved with R&D, Production, Marketing, Distribution & Customer Service. A company must match the opportunities & threats it sees in the marketplace, with it’s resources & capabilities.
    Working in tandem with other functions of management, Cost Accounting would answer questions like – How do we deliver value to our most important customers?
    How different are our competitor’s products in terms of price & quality?
    What is our most critical resource – technology, production or marketing? What will be the additional demands on our resources while implementing change?
    Will adequate money be available to fund our strategy or will the cash have to be raised?

    Nikeel Idnani
    nikeel.idnani@spjain.org (SPJD E10021)

  • Sunil Gagwani

    >Peter Drucker is also considered the father of Business Management. Change is the most vital activity that takes place in an organisation.Change is something that all firms have to know how to handle and go thru the initial stages because it is very crucial. It is the inital phase of a change that deciedes the fate of everything else.It shouldnt be ignored, infact on the contrary it should be dealt with utmost care.

    An efficient manager will handle the process of change with extreme care because he knows how it would back fire if not accepted nicely. A change could be further classified as internal and external. Broadly the internal factors would include the enviornent within the organization, for example, a new set of the board of directors, a new management team taking care of a crucial activity like Finance, or even a new product being designed and the acceptance of it by the staff of the organization. The external factors would include the enviornment outside the organisation like the governtment policies, competitors, political factors, technological factors, economic factors, Social factors and Legal factors.

    An efficient manager is the one who is extremely flexible and dynamic in his approach widely, i.e with the staff that works for him as well as the management. Managers should be more receptive and acceptive when it comes to implementation of a change. Most importantly he should be in a position to anticipate change even before the actual time. It would be easy for him to handle situations inside as well as outside the organization. The most important thing for him would be to handle his colleagues.

    A manager would also take precautions to handle any situation that could be a little difficult. I would like to give an example of the company I work for i.e. HSBC, We were running a very strong sales team under the excellent leadership of Mr Hammadi, He is an IDEAL manager. I suppose he is the best manager. There was a change in our direction completely , from selling 1 product we had to sell 5 products, and all core products. This was a major set back for many of the highly efficient performers in our sales force including me. It was very difficult to motivate this bunch of top performing sales staff. He then had a couple of meetings with the whole team and was actually able to clear up and brain storm us and get us back to normal. He did this with extreme ease. He had highlightened this issue to us a month earlier and had created a smoke screen. He related to it very easily and convinced us that its our growth and career that is going to improve with this change, he proved to us this change will develop us and improve our knowledge in all products rather than just sticking on to one product.

    Sunil Gagwani
    SPJCM

  • Amit Shahani

    >What is cost??? Cost is implicit & explicit. EMBA batch 10. Cost of acquiring the MBA degree is just not the fees paid, but it also includes other cost. Cost of transportation, cost of leaving family behind, sacrificing on sleep. The main costs involved are: – the amount of interest lost if the fee amount was kept in bank for a period of 2yrs (course duration), cost of what extra income that a student could earn if he would be doing a part time job between the time he uses to attend lectures. Cost can be any expense involved in reaching the desired objective.

    This question is really very important to survive in this dynamic market, which in other words we call customer market. Customer first is the motive of each and every organization to maximize their profit. As often as possible the company should challenge its product, service, policy, channels of distribution as per market demand to live and live in comfort in this market. If the product or service is not matched with the customer demands there would be a flaw in the companies’ policy or some other field which the company should seriously look into. To summarize you could say that as often as possible the company should look at it competitors its existing process and alter the needful as per the market demands and trends.

    Managers should keep a track of the products, revenue, sales etc. they should be involved in a big picture, trained on various cost benefit analysis. They should keep their eyes wide open at all times to see what product is generating maximum profit and which product is loss for the company. Keeping in mind not only products but also process and services involved directly or indirectly to the objective of the business. If would be better if PM are given training on finance and are asked to maintain financial records of each project handled by them separately.

    Cost accounting helps all departments that are inter linked to check the cost involved in receiving the desired product, the future revenue from that’s product, inventory records, which stage is the product as of now. Introduction, growth, maturity , decline etc this gives us a clear idea finance plays a key role in each department of the organization and cost accounting help each department of an organization.

    Example: – Mashreq Bank Samsung Credit Card. Benefit – Discount on Samsung products, Redeem points directly on Samsung outlet, higher point earning facility, dine in promotion discounts, AAA card, Easy payment plan…. Still a non profit generating product…. Why??? Points could be only redeemed in Samsung outlets; High rate of interest, no proper advertising, and marketing was a failure. Finally product droppers down the product line of mashreq. This is the best example to show, you need to review your products, services, policies, distribution channel every now and then to stay in this buyers market.

    Student – Emba Batch 10
    Name – Amit Shahani

  • Deepak Bhatia – deepak.bahtia@spjain.org

    >Why I think this question is important because every company should realize that if they are not challenging enough, then their competitor will command the position in the market, their products and services will decline and also competitor’s products will takeover larger share of the market. Also at a certain stage the products, services, policy and distribution channels of the company makes a downward slope and the makes losses or reduces profits and the costs also rises. Challenging our own products, policies, services and distribution channels make the company more profitable and are a leader in the market from competitor’s perspective. It also becomes a strategy in its own way in the company. This creates value for customer to buy the products of your company and also distinguishes itself from competitor’s products.

    Manager can help pose and answer to this question by making their products competitive in the market thereby making several changes or amendments in the product with the assistance of customers, by surveys etc. He can change the services he provides to the customers by asking himself that if he was the customer what I would be wanting from the product. He also can change the policies of his company which can be easy to understand and easy to follow by his fellow members and his staff. He can also change the distribution channels, the manner in which the products reach the customers. Changing the distribution channels means if the customer does not like to for shopping for your products on the streets he and she can always go to a shopping mall to do the same because we have changed the distribution channel.

    Cost accounting contributes to other functions of management in many ways Refined cost accounting produces better information Cost accounting systems provide management with information crucial to operating more efficiently in today’s competitive healthcare environment. Enhanced cost systems are simple to implement because they parallel existing hospital charge systems.
    By modifying existing cost systems, healthcare institutions can generate more accurate cost information necessary for dealing with third-party payers, physicians, and managed care organizations.
    Healthcare organizations are beginning the arduous task of establishing cost accounting systems that provide the information needed to make decisions concerning operating performance, cost control, budgeting, prices, and managed care contracting.
    Existing hospital cost systems do not meet these needs. Enhancing cost systems that are in place at most healthcare organizations will generate more accurate cost information and data to create standard cost systems.
    Approximately 70 percent of all hospitals have some type of system that captures costs by procedure or diagnosis related group (DRG), and about 70 percent of these hospitals use some type of “cost to charge ratio” to develop cost information. Most providers also recognize that charges are a very poor predictor of costs and that these systems must be modified.
    Cost information must be accurate enough to enable management to make decisions concerning a variety of changes in the hospital operating environment. Hospital product costs must be identified and priced to allow recovery of fixed costs.

    Deepak Bhatia – deepak.bhatia@spajin.org
    Roll number – (SPJD E10014)

  • Deepak Bhatia

    >Why I think this question is important because every company should realize that if they are not challenging enough, then their competitor will command the position in the market, their products and services will decline and also competitor’s products will takeover larger share of the market. Also at a certain stage the products, services, policy and distribution channels of the company makes a downward slope and the makes losses or reduces profits and the costs also rises. Challenging our own products, policies, services and distribution channels make the company more profitable and are a leader in the market from competitor’s perspective. It also becomes a strategy in its own way in the company. This creates value for customer to buy the products of your company and also distinguishes itself from competitor’s products.

    Manager can help pose and answer to this question by making their products competitive in the market thereby making several changes or amendments in the product with the assistance of customers, by surveys etc. He can change the services he provides to the customers by asking himself that if he was the customer what I would be wanting from the product. He also can change the policies of his company which can be easy to understand and easy to follow by his fellow members and his staff. He can also change the distribution channels, the manner in which the products reach the customers. Changing the distribution channels means if the customer does not like to for shopping for your products on the streets he and she can always go to a shopping mall to do the same because we have changed the distribution channel.

    Cost accounting contributes to other functions of management in many ways Refined cost accounting produces better information Cost accounting systems provide management with information crucial to operating more efficiently in today’s competitive healthcare environment. Enhanced cost systems are simple to implement because they parallel existing hospital charge systems.
    By modifying existing cost systems, healthcare institutions can generate more accurate cost information necessary for dealing with third-party payers, physicians, and managed care organizations.
    Healthcare organizations are beginning the arduous task of establishing cost accounting systems that provide the information needed to make decisions concerning operating performance, cost control, budgeting, prices, and managed care contracting.
    Existing hospital cost systems do not meet these needs. Enhancing cost systems that are in place at most healthcare organizations will generate more accurate cost information and data to create standard cost systems.
    Approximately 70 percent of all hospitals have some type of system that captures costs by procedure or diagnosis related group (DRG), and about 70 percent of these hospitals use some type of “cost to charge ratio” to develop cost information. Most providers also recognize that charges are a very poor predictor of costs and that these systems must be modified.
    Cost information must be accurate enough to enable management to make decisions concerning a variety of changes in the hospital operating environment. Hospital product costs must be identified and priced to allow recovery of fixed costs.

    Deepak Bhatia – deepak.bhatia@spjain.org (Roll nbr. EWD10014)

  • Anonymous

    >“Today the business and Economy are driven by Technology, specially, Advance system integration and communication tools like Internet, SAP etc.

    Hence Cost Accounting also has to adapt accordingly and integrate with all these communication tools to have an advantage over its competitors.

    Pooja K
    SPJCM- Dubai
    EWD 10028

  • Varghese Mathew . varghese1982@hotmail.com

    >Change; a simple six letter word meaning “to make something different from what it currently is.” Companies have to change their product, service, policy, distribution channel etc according to the customer or user needs. Companies cannot force users to buy the products they are making, but they have to make the product or services in such a way that it satisfies the customer requirements.

    In business, it is often said that change is the only constant. No matter what your business is, you are without a doubt encountering change everyday. The needs of employees, product development challenges, consumer spending trends and emerging technology are just a few of the major areas that change over time, and sometimes by the minute! Even though we are continuously bombarded with change, and change is an inevitable part of today’s dynamic and fast paced work environment, it can be difficult to handle, and challenging to lead employees through.

    Each year marketing organizations go to great effort and expense to develop marketing plans only to find that within 3 months into the planning horizon the situation has changed markedly and the plans are rendered obsolete. For this reason, one of the basic skills in marketing is to manage change, to be able to predict future market requirements and changes, and quickly respond. There are a number of major changes in the composition of the population and attitudes of the consumer, which work together to produce dramatic changes in the products that people buy and the manner in which they use them.

    All companies needs to have a tentative insight in to the natural world of its business, that is understanding the environment of the business they are doing society market and customers; the specific objective of the company and the core competencies needed to accomplish the organizations mission or objectives.

    An organization should not throw away or waste its resources in any form. If a company found any of its products are making loss it is advisable to discontinue the product rather continue and make heavy loss in the future. An organization should also look outside the organization, and analyze non- customers.

    Example

    Adidas – a name that stands for competence in all sectors of sport around the globe. The founder Dassler’s aim was to provide every athlete with the best possible equipment. It all began in 1920, when Adi Dassler made his first shoes using the few materials available after the First World War.

    Today, the adidas product range extends from shoes, apparel and accessories for basketball, soccer, fitness and training to adventure, trail and golf.

    In 1920 Adi Dassler makes his first shoe in his workshop in Germany. The shoe made of canvas was a training shoe for runners and cost two reichsmarks. Adi Dassler followed three guiding principles in his development work:

    • produce the best shoe for the requirements of the sport
    • protect the athlete from injury
    • Make the product durable.

    In 1925 for the first time shoes with studs and spikes are introduced. He also constructs different shoes for the different distances and uses state-of-the-art materials to achieve a saving in weight.

    After that they started making tennis shoes. In 1932 Los Angeles Olympic Games Arthur Jonath takes the bronze in the 100 m in Dassler shoes. Adi Dassler’s range now comprises 30 different shoes for a total of eleven sports. Adi Dassler start marking shoes using canvas and rubber from American fuel tanks.

    After that Adi Dassler focuses his efforts on new soccer shoes. He produces his first shoes with moulded rubber studs. In 1950 the first of the “Samba” all-round soccer shoes are launched on the market. The Samba continues to be regarded as the classic all-round training shoe today.
    Adidas came out with sports bags. Adidas development of the first nylon half-soles for sprint shoes.
    At the Olympic Games in Rome, 75 percent of all track & field athletes rely on adidas shoes. To mark the Olympic Games, the “Rom” training shoe is launched. Today, this classic is one of the top trend shoes and is now being produced again in small quantities.

    In 1963 the first adidas balls are developed and produced. Adidas came out with the lightest track shoe ever made. The “Tokio 64” weighs just 135 grams per shoe.

    In 1967 the first adidas sports apparel is produced – with the ever popular Three Stripes, of course.
    Adidas is the first company in the world to produce injection-moulded multi-stud soles of polyurethane, giving a one-year guarantee on the sole. The first jogging shoe, “Achill”, is launched.

    In Mexico an adidas ball, the “Telstar”, is the official ball at a Soccer World Cup for the first time. Right up until the present day, all goals at major soccer events are scored with adidas balls.

    The “Adilette” is introduced, still one of the classics in the adidas range today.

    The first adidas tennis rackets are launched.

    Adidas also sets the pace in the winter sports sector, with newly developed X-country ski bindings.
    The “Copa Mundial”, the world’s best-selling soccer shoe ever, is launched.

    The adidas Azteca, the world’s first synthetic World Cup matchball, is introduced.
    adidas launches the revolutionary “TORSION®” sole system, still used today for a wide variety of sports shoes.

    “Predator®” is the name of the revolutionary soccer shoe introduced on the occasion of the Soccer World Cup in the USA.

    In 1995 Adidas goes public. The adidas share is one of the most interesting new listings on the stock market in Germany.

    Five of the 16 teams at the European Championship wear adidas. Adidas also supplies the Official Matchball and equips the referees and linesmen. The innovative adidas soccer shoes with Traxion sole technology are an instant success and represent a new milestone in the development of soccer shoes.

    In Sydney, Adidas underlines its competence as an Olympic brand. Adidas is represented in 26 of 28 sports. More than 3,000 athletes wear adidas. Adidas develops revolutionary products based on the concept of “Energy Maintenance” for six sports: swimming, track & field, cycling, fencing, weightlifting and wrestling.

    Adidas produces the first sporting goods soap in the industry’s history.
    Adidas underlines its position as the undisputed market leader in soccer and signs a long-term agreement as Official Sponsor and Licensee of the FIFA World CupTM 2002 and 2006 and the Women’s World Cup 2003.

    In October, in New York, adidas-Salomon presents an exciting new structure for its core brand, adidas. Instead of the traditional divisional structure of Footwear and Apparel/Accessories, adidas now has three divisions: Forever Sport, Original and EQUIPMENT. (As of 2002 the divisions are called: adidas Sport Performance, adidas Sport Heritage, adidas Sport Style)

    Adidas-Salomon´s sales are at a new record level in 2000 reaching € 5.8 billion. The Growth and Efficiency Program, initiated earlier in the year, is completed, successfully paving the way for future success for the Group.

    Adidas, as the first brand in the sporting goods industry, launches the “Customization Experience” project introducing a new business model in the industry giving consumers the opportunity to create their own unique footwear to their exact personal specifications in terms of function, fit and looks.

    In 2001 adidas-Salomon achieves record-breaking sales of € 6.1 billion. The management keeps the promise of a 15% increase in earnings per share by putting together a team that is committed to maximizing the financial results for the Group’s passion for performance, innovation and heritage.

    “Impossible is nothing” is the central message of a global brand campaign that adidas launches in 2004 February. It brings to life the attitude adidas shares with athletes around the world – the desire to render the impossible possible, to push yourself further, to surpass limits, to break new ground. The campaign shows the rich stable of adidas athletes past and present, including the greatest of all time, boxing legend Muhammad Ali, long-distance runner Haile Gebrselassie, football icon David Beckham and NBA star Tracy McGrady.

    At the beginning of the year adidas launches the new PredatorPulse™, the best football boot ever made, thus underlining its position as the number one brand in football. The new Predator® football boot features the revolutionary PowerPulse™ technology. This technology is based on a simple principle already used in the construction of tennis rackets and golf clubs: optimal distribution of the mass.

    New partnerships are signed at the beginning of 2005: adidas announces its new role as the Official Sportswear Partner for the Beijing 2008 Olympic Games.
    Adidas acquisition of Reebok International Ltd. providing the new adidas Group with a footprint of around €9.5 billion ($11.8 billion) in the global athletic footwear, apparel and hardware markets.

    “We are delighted with the closing of the Reebok transaction, which marks a new chapter in the history of our Group,” said adidas-Salomon AG Chairman and CEO Herbert Hainer. “By combining two of the most respected and well-known brands in the worldwide sporting goods industry, the new Group will benefit from a more competitive worldwide platform, well-defined and complementary brand identities, a wider range of products, and a stronger presence across teams, athletes, events and leagues.”

  • Abdul Khan – abdul_k_khan@hotmail.com

    >The only constant is change and Change is the law of nature. How true this statement?
    Every organization goes through changes and it needs to adapt to these changes which may come in various forms.

    In today’s changing world every organization needs to review all aspects of its business periodically and try to analyze the internal and external factors which affects its business and try to take measures well in advance to tackle these changes. For e.g. Product oriented companies like Samsung always adapt to the changing needs of the customer and other factors, failing to do this would only allow it to sink deeper. In analyzing the product along with customer needs, costing also needs to be looked into deeper way and that is where cost accounting plays a major role.

    Cost Accounting helps in measuring and analyzing the costing of the product like for e.g. the changes in the cost of a product and give in depth details of financial implications about direct and indirect cost based on which the management can take decisions regarding the continuity of the product. Moreover it helps in making decisions regarding the amounts and kinds of material being used, changes to be made to the material processing and design of the product. For e.g. Samsung has built special plants that enable to use same equipment to manufacture variety of its products. Basically cost accounting helps at very stage of value chain right from Research and development, design of product, production, marketing, distribution, customer services.

  • Ribu V. Thomas (EMBA10)

    >CHANGE – THE ONLY CONSTANT

    Change is the window through which the future enters your business. In business, it is often said that change is the only constant. Change is in all areas of business and change is an inevitable part of today’s dynamic and fast paced work environment.

    Many businesses are started—but only a few succeed. To ensure that they develop a business model that both meets the market’s needs and delivers an economic return, entrepreneurs have to adapt as they learn. They have to listen, watch, and react adroitly. Along with the thrill of the startup, there is the excitement of change and of learning from experimentation and experience.
    Companies, like any living organism, must become learning organizations that change and adapt to suit their changing business environment.

    According to Bill Gates, if you don’t practice the change management that looks after the future, the future will not look after you “. If you’re too focused on your current business, it’s hard to look ahead…” The constant formation of new units within a corporation is one means of gearing up to change.

    To determine the improvements to make in response to the change, you should continuously:

    • Partner with customers, listen to their feedback, and
    • Study new technology opportunities.

    Manager’s need a better understands how the employees deal with change. Look for signs of concern when presented with change. If you can recognize an employee’s position on change, you can help them through it with a few simple measures.

    Often people feel challenged by change when they do not understand the reasons for the change, or the benefit of the change. Some employees need more communication, more information, to accept change. Many staff members want to know how the change will benefit them, their team, or the company. Connecting the change to the company’s big picture may gain the employee’s acceptance and enthusiasm to adapt.

    Change management is about understanding people, but it is also about planning and execution. The best way to handle change is to be ready for it. Make a plan for the transition. Include the steps and strategies you will use to communicate the change. When possible involve employees ahead of time, by asking for their opinions and ideas regarding the change. Be prepared to lead people through the change. Also, identify how you will measure the success of your change management when the transition is complete.

    Make change a well-discussed topic in your business environment. If your company encounters constant change, educate employees on strategies for dealing with change, and use humor to discuss changes. Introduce the topic of change in training classes with products that address change in the work environment.

    Constant Change: Toyota

    “Failure to change is a vice! I want everyone at Toyota to change and at least do not be an obstacle for someone else who wants to change.” This was a very powerful statement coming from the chairman of the most successful manufacturing company in the world, Toyota Motor Corporation, but it is not surprising. It is a phenomenon of Toyota to never stop continuously improving.

    In 1950, Toyota almost went bankrupt. Around 1960, they sent over a few hundred cars to sell in the U.S. and returned 60 of them to Japan to be reworked. At the time, Americans looked at things made in Japan as junk.
    Toyota goes from making junk, to making a Lexus and becoming the world’s largest and most successful automobile manufacturer only through the method of improving every single day.

    Toyota has never laid off a single worker in over 50 years. Toyota has nine plants in North America and is opening a new plant in Mississippi, making cars with American workers with American wages equal to or better than other automotive companies. Toyota build cars in America and be so successful — they made more than $14 billion in 2006 — and American manufacturers have to go China and India to save money.

    Mr. Okuda chairman of Toyota wants everyone to change, but all resists change. When you want to do something new, the mind finds a good excuse: no money, it is not in the budget, it won’t work, the boss won’t let me, don’t have enough time, etc. The mind can easily find a million ways not to change.

    But, if you want to grow, if you want to meet international competition, then you don’t have much choice. And Mr. Okuda recognized that Toyota’s success depends on everyone in the company doing their job to grow and change every day. The manager’s real job to lead and support that change process.

    Every day the manager should look around the company, take videos and still pictures, and challenge people to grow, to eliminate non-value adding wastes, to use their brains to identify and solve problems, and to improve their skills and capabilities. A manager’s job is to stimulate people to change for the better, every day.

    Toyota managers are asked to write annual growth plans and submit them to their supervisors. The manager decides for himself or herself what he/she needs to grow. Each quarter they sit and review their growth plans with their bosses. This process surely stimulates people to take charge of their growth. Change everything that blocks productivity improvements, cost reductions, better quality, safer workplaces or good customer service

  • Ann

    >As we know that cost accounting is a practise of measuring, analyzing and reporting financial and non financial information relating to the cost of various resources in an organization. It helps the management in making the right decisisons and on their day to day operations.With this form of accounting it helps the management to have a cost benefit approach, take in to consideration behavioral and technicl aspects and different ways of costing for different products. Cost accounting helps in getting the competitive advantage and it also helps in determing whether it is benefial if the product is manaufactured or outsourced.It helps to identify the profitable and non profitable activities and acts as a guide in future production policies.Practising Cost Accounting also benefits the consumers as the ultimate aim is to reduce cost.Cost Accounting has now become an essential part of accounting in various companies such as Hsbc, Del Computers etc, where they outsource most of there activites since it is more feasible to outsource there activities than do it on there own.
    ANN BABU RAJAN (annbabu@spjain.org)
    BATCH 10