Benefits of ERP implementation in an Organization

Each of you have been critical in the work conducted so far on Project-A and are key to ensuring a successful implementation in the next few months. Working together we can ensure our ERP initiative results in a single information technology platform that will allow for:

ü Integration of business processes

ü Improvement in operational efficiency

ü Improved real time visibility of the various aspects within Sonata and in the environment – at micro and macro levels

ü Improved connectivity with customers and suppliers

ü Compliance with regulatory requirements

ü Deployment of Best Practices that support cGMP

ü Scalability without disruption of existing business transactions

ü Enhancing collaboration and information sharing across departments allowing for timely and accurate planning and decision making

ü Helping to build cohesive and efficient, target oriented corporate culture

You are cordially invited to the Project-A Launch Lunch on Monday, April 22 at 1:30 pm

Steps in the perceptual process

1. According to Learning from Experience: Jim Sinegal’s (the cofounder, president, and CEO of Costco Wholesale) management philosophy is

a.	“We’re going to be a company that’s on a first-name basis with everyone”
b.	“We are going to lead in pay and benefits”
c.	“We are going to be very flexible with our employee’s schedules”
d.	“We will not tolerate any slacking off at work”

ANS:  A          

     2.   According to Learning from Experience: Jim Sinegal, the cofounder, president, and CEO of Costco Wholesale, believes that customers shop at Costco for/because

a.	there is plenty of parking
b.	convenience
c.	quality
d.	price

ANS:  C                  

     3.   The process by which people select, organize, ____ and ____ information from the world around them is referred to as perception.

a.	evaluate; synthesize
b.	interpret; respond to
c.	identify; evaluate
d.	process; search for

ANS:  B                  

     4.   The second to last step in the perceptual process is:

a.	observation
b.	interpretation
c.	organization
d.	selection

ANS:    B

Traditional organization design that would be most appropriate for entrepreneurs

Students who engage in an appropriate critical thinking analysis of the advantages and disadvantages of the different traditional forms of organizational design and the conditions calling for their differential use should have no problem figuring out the appropriate response.


The traditional organization design that would typically be most appropriate for use by entrepreneurs in the early stages of their small business development is the functional design. Small businesses are typically started to market a single product or service to a targeted market in a relatively uniform, stable environment where the probability of business success is high. 

 

A functional design involves the creation of positions and departments on the basis of either specialized activities, (such as marketing, human resources, and purchasing), or on the basis of the process used, (such as receiving, assembly, and inspection). Grouping tasks and employees by function can be both efficient and economical, which is very important to a new business struggling to become or remain profitable. Other relevant advantages include the fact that the functional design permits clear identification and assignment of responsibilities, and that employees easily understand it. In addition, people who are doing similar tasks and facing similar problems work together, thus increasing the opportunities for interaction and mutual support. 

 

A functional design may be effective when an organization has a narrow product line (typical in the case of new small businesses), competes in a uniform environment (again, likely in the case of a new business), pursues a low-cost or focused business strategy (appropriate for certain broad or targeted markets), and doesn't have to respond to the pressures of serving different types of customers.

The functional design is the most basic type of organization design and often represents a foundation from which other types of designs evolve. For example, integration across functional departments often becomes difficult as the organization increases the number of geographic areas served and the range of goods and services provided. In such cases, the addition of specialized staff departments (such as customer service) may enable an organization to deal effectively with some degree of environmental complexity. However, as the small business grows and begins to serve larger, more diverse markets with a broader product or service line, it will ultimately have to evolve to other, more complex forms of organization design, such as the place or product designs.

What are the Implied Warranties in Sale of goods Act

Implied Warranties

Unless otherwise agreed, the law in-corporate following Implied Warranties

1. Warranty of quite possession: Sec –14 (b), the first implied warranty on the part of the seller is that “the buyer shall have and enjoy quite possession of goods.” If the buyer is in anyway disturbed by a person having a superior right than that of the seller, the buyer can claim damages from the seller. Since disturbances of quite possession is likely to arise only where the seller’s title of goods is defective, this warranty is regarded as an extension of the implied condition of the title provided in section-14(a)

Example: A buys a typewriter and spent some money for repairs. It turns to be a stolen article. A is entitled to get back what he paid plus repair charges.

2. Warranty of freedom from encumbrances: Sec.-14 (c) Says that ‘the goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made’ if goods are afterwards found to be subject to a charge and the buyer has to discharge the same , there is a breach of warranty and the buyer is entitled to damages. If the buyer knows about the encumbrance on the goods at the time of entering into the contract, he becomes bound by the same and he is not entitled to claim compensation from the seller for discharging same.

Example

A pledges a watch with B. Later gets the watch for limited purpose and A sales it to C. B tells C about the pledge. C has to make payment for the pledge amount to B. Here is breach of warranty and C can get compensation from A.

3. Warranty of disclosing the dangerous nature of goods to the ignorant buyer: The third implied warranty on the part of seller is that in case the goods sold are of dangerous nature he will warn the ignorant buyer of the probable danger. If there is a breach of warranty the buyer is entitled to claim damages for injury. The seller is bound to give some warning of the danger in the goods to the buyer.

Example

C. Purchases a tin of disinfectant powder from A. A knows that the lid of the tin is defective and if it is opened without special care it may be dangerous, but tells nothing to C. C opens the tin in the normal ways whereupon the disinfectant powder flies into her eyes and causes injury, A is liable in damages to C as he should have warned C of the probable danger.

How Companies Deemed to be Public limited Company

Companies Deemed to be Public limited Company

A private company will be treated as a deemed public limited company in any of the following circumstances :-1. Where at least 25% of the paid up share capital of a private company is held by one or more bodies corporate, the private company shall automatically become the public company on and from the date on which the aforesaid percentage is so held.

2. Where the annual average turnover of the private company during the period of three consecutive financial years is not less than Rs 25 crores, the private company shall be, irrespective of its paid up share capital, become a deemed public company.

3. Where not less than 25% of the paid up capital of a public company limited is held by the private company, then the private company shall become a public company on and from the date on which the aforesaid percentage is so held.

4. Where a private company accepts deposits after the invitation is made by advertisement or renews deposits from the public (other than from its members or directors or their relatives), such companies shall become public company on and from date such acceptance or renewal is first made.

Alternative measures of capacity

One primary cause of underapplied or overapplied overhead is a difference in budgeted and actual costs. Another cause is a difference in the level of activity or capacity chosen to compute the predetermined overhead and the actual activity incurred. Capacity refers to a measure of production volume or some other activity base. Alternative measures of activity include theoretical, practical, normal, and expected capacity. 

The estimated maximum potential activity for a specified time is the theoretical capacity. This measure assumes that all factors are operating in a technically and humanly perfect manner. Theoretical capacity disregards realities such as machinery breakdowns and reduced or stopped plant operations on holidays. Choice of this level of activity provides a probable outcome of a material amount of underapplied overhead cost.

Reducing theoretical capacity by ongoing, regular operating interruptions (such as holidays, downtime, and start-up time) provides the practical capacity that could be achieved during regular working hours. Consideration of historical and estimated future production levels and the cyclical fluctuations provides a normal capacity measure that encompasses the long run (5 to 10 years) average activity of the firm. This measure represents a reasonably attainable level of activity, but will not provide costs that are most similar to actual historical costs. Thus, many firms use expected annual capacity as the selected measure of activity. Expected capacity is a short-run concept that represents the anticipated activity level of the firm for the upcoming period, based on projected product demand. It is determined during the budgeting process conducted in preparation of the master budget for that period.

If actual results are close to budgeted results (in both dollars and volume), this measure should result in product costs that most closely reflect actual costs and, thus, an immaterial amount of underapplied or overapplied overhead.

What is Position of Directors ?

It is very difficult to pinpoint the exact legal position of the directors of a company. They have been described by various names, sometimes as agents, sometimes as trustees, and sometimes as managing partners of the company. But “such expressions are not used as exhaustive of the powers and responsibilities of such persons but only as indicating useful points of view from which they may, for the moment and for the particular purpose, be considered.”

We may now consider the position of the director’s form all these points of view.

Directors as Agents. A company as an artificial person acts through directors who are elected representatives of the shareholders. They are, in the eyes of the law, agents of the company for which they act, and the general principle of the law of principal and agent regulate in most respects the relationship between the company and its directors.

Directors as Employees. Although the directors of a company are its agents they are not employees or servants of the company for being entitled to privileges and benefits, which are granted under the Companies Act to the employees. But there is nothing to prevent a director form being a servant of the company under a special contract of service, which he may enter into with the company.

The Companies Act itself indicates many situations where a director may be in the employment of a company.

Directors as officers For certain matters under the Companies Act, the directors are treated as officers of the company [Sec 2 (30)]. As such they are liable to certain penalties if the provisions of the Companies Act are not strictly complied with.

Directors as trustees Directors are treated as trustees

· Of the company’s money and property; and

· Of the powers entrusted to them.

Limitations of learning curve theory

Following limitations of learning curve must be kept in view :
1. All activities of a firm are not subject to learning effect. Following types of activities are subject to learning effect :

(a) Those, that have not been performed in this present operational mode.

(b) Those which are being performed by new workmen, new employees or others not familiar with the particular activity. In contrast, activities being performed by experienced workmen, who are thoroughly familiar with those activities will not be subject to learning effect.

(c) Those involving utilization of material not used by firm so far.
2. It is correct that learning effect does take place and average time taken is likely to reduce. But in practice it is highly unlikely that there will be a regular consistent rate of decrease, as exemplified earlier. Therefore any cost predictions based on covernational learning curves should be viewed with caution.

3. Considerable difficulty arises in obtaining valid data, that will form basis for computation of learning effect.

4. Even slight change in circumstances quickly renders the learning curve obsolete. While the regularity of conventional learning curves can be questioned, it would be wrong to ignore learning effect altogether in predicting future costs for decision purposes.

Limitation of Exponential Smoothing

When forecast errors are squared and accumulated, give a measure of the discrepancy between the forecasts and the actual sales. Similarly, other values of 0.2, 0.3, α= etc. may be tried. The value that gives the least squared diviation of error would be optimum α. In practice, it is not infrequent to assign the value of a from experience. Where the computer activities are available, the above method of least squared deviations may be carried out for groups of items depicting similar sales behaviour.
 

Limitation of Exponential Smoothing
(i) The method is useful for short-term forecasting only.

(ii) It relies solely on the past history of sales. There are cases where subjective estimates may provide better forecasts. There have been attempt to complement the two; forecasts from Exponential smoothing and subjective estimates, successful to a great extent, but not fully satisfactory.