ACCOUNTING AND DECISION MAKING – IDENTIFYING THE PROBLEM SITUATION Learn accounting and finance basics so you can effectively analyze business data to make key management decisions. Business owners are faced with countless decisions every business day. Managerial accounting information provides data-driven input to these decisions, which can improve decision-making over the long term. Fig 1.1- ACCOUNTING INFORMATION FOR A SINGLE PRODUCT   The above illustration clearly depicts that there has been a loss of Rs.100 in one year’s time for this particular product. The reason can be attributed to the increase in the “cost of goods” whereas other expenses have remained the same in both the years. For a single product manufactured, the problem is identifiable and solvable. But when the organization is producing a range of products, you need to apply some accounting technique by which the product losing money is identified and suitable measures are taken to cut down the escalating cost. Fig 1.2- Accouning Information for a Product Range The above illustration compares and contrasts the relationship of three products a company manufactures. It is seen that products P1 and P2 are doing well. Though the cost of sales has gone up for P1 and P2, the sales volume has also increased thus increasing the gross profit over the period of time. Here the product that has to be dealt with is P3 whose sales volume has drastically gone down, yet with the same cost of sales. When there is an increase in cost of sales, two things have to be considered. Identifying the problem-product Either cut down the production cost or increase the selling-price if the product has a real demand in the market. Uses of Accounting Data: Accounting information helps the management to arrive at make or buy decisions, to outsource production of certain components to cut down or control costs, to expand the production, to increase the sales volume or to downsize their project capacity. Techniques like Break-Even Analysis, Costing and Budgeting aid in going for the right production-mix, marketing-mix and sales target plans for the respective financial years. Aggregate Planning: As we all know planning is the key to the future and financial planning has to be given utmost importance for a production process. Aggregate planning involves translating long-term forecasted demand into specific production rates and the corresponding labor requirements for the intermediate term. It takes into consideration a period of 6 to 18 months, breaking it into work modules weekly or monthly and planning for the specific period in terms of men, material and...

India often looks at Japanese or American models to comprehend the concepts of management. In reality, Indian scriptures can be considered as treasuries of management. The Bhagavat Gita, the Vedas and the Epics highlight the true spirit of working together and the need for de-stressing the self for enhanced performance levels. The idea of NISHKAMYAM (to perform one’s own work without expecting a result) is truly said to be the highest ideology preached by Lord Krishna. What Induces Stress? A dynamic condition in which an individual is presented with an opportunity or confronted with a demand, related to what she or he desires and for which the outcome is uncertain but important, can be called a stressful situation. The consequences of stress in an organizational set up express themselves in the form of physiological, psychological or behavioral symptoms, which are harmful to the individuals who experience high levels of stress. Symptoms of stress: AnxietyDepressionIncreased job dissatisfactionAbsenteeismDecline in productivityRapid turn overHigh blood pressureHeart diseasesHead aches Stress Can be Motivating: While long term stress is harmful to the individual and organization as well, it is said that short term stress serves the purpose of task accomplishment by individuals or groups, within the stipulated time. It serves as a motivation factor rather than a causative agent of frustration. It has been proved by scientists and medical researchers that stress has a direct effect on the metabolism of a person, that causes increase in heart and breathing rates, increase in blood pressure, thus inducing heart attacks. Equally important are the behavioral and attitudinal changes that are created by stress, which cannot be overlooked. Job Satisfaction: Psychological symptoms arise due to job-related dissatisfaction, boredom, work pressure, irritability and procrastination. Sometimes forceful involvement may also lead to decreased job satisfaction. The job to be carried out can be finished at the particular time if the individual is able to give one’s best shot. But when it is performed under stress, they complete the job with dissatisfaction. When the incumbent is asked to perform a task that lacks clarity, naturally ambiguity arises in his mind followed by anxiety. Behavioral Symptoms of Stress Changes in productivity levels, absence, and rapid staff turnover are stress symptoms of behavioral nature. It might be expressed even in the form of increased smoking, consumption of alcohol etc., Say for instance, in production department, when there is a need to supply a product in a very limited time, the workers may be active initially, but the performance slows down when they get totally tired or dissatisfied with the work. Again the demand by the superior adds additional stress that reaches unmanageable levels. Similarly, people taking care of administration, banking, marketing and other office related works fall a prey to stress. How to manage stress? From an organization view point, it is believed that a limited amount of stress may work wonders in terms of performance, with stress acting as a “positive stimulus”. But even low levels of stress are likely to be perceived as undesirable from an individual’s stand point. How could be the notion of management and individuals be different on the acceptable levels of stress? It does not solve the purpose. Individuals have to understand that, they have to live up to the expectations of the management in order to enhance their credit ratings, in terms of promotion and pay. They have to understand that challenges are to be perceived as opportunities to prove their mettle. Self and situational analysis, work analysis, time management and physical well- being are some techniques that practically solve problems of stress. “De-stressing the Self” Techniques for Employees Organisations can reduce stress of the employees...

Conflict is a Part of Organizational Life Managers need to be alert to the presence of conflicts. Their focus should be oriented towards the goals to be accomplished. If there is a conflict, they should aim to resolve it smoothly by not over-reacting to the situation. They should take the help of persons who can best settle the issue, be ready to bargain and not issue orders. Their concentration should be on the problem and not on persons. True to the saying – Am I not destroying my enemies when I make friends of them?- President Abraham Lincoln Conflicts are Functional and Healthy: Conflicts in organisations are generally considered to be dysfunctional. On the contrary, many top executives of big companies view conflicts, as a means, to sufficiently analyse a problem and postpone decision making until all critical aspects of an issue are evaluated properly. Conflicts may occur within the individual, between individuals, between the individual and the group or between groups. There are many potential sources of conflict in today’s corporate organisations. The complex inter personal relationships and high degree of interdependence causes friction. Difference of Opinion: When many people must work together, conflict is inevitable, as it is human nature to clash and complain. Conflict is the personal divergence of interests between groups or individuals. The need to share scarce resources, difference in goals between organisational units, difference in values, attitudes and perception, ambiguously defined work responsibilities are some of the major sources of conflict. Functional Conflicts: Functional conflicts support the goals of a group, improve its performance and are constructive in nature. Dysfunctional conflicts hinder the performance of a group and are destructive in nature. It has not been precisely defined, as to what criterion demarcates functional from the dysfunctional. It is only the group’s performance and the delivered result or outcome that determines the nature of the conflict. Conflicts, irrespective of their type can bring these benefits to the firm: Bring hidden issues to the surface. Encourage creativity and innovation. Improves communication and make changes more acceptable. Increases group cohesion. Strategies to Resolve Conflicts: So, what kind of strategy do you think best suits in resolving conflicts? Avoiding or smoothing conflicts may be a temporary measure, only to bounce back in full force. Forcing might create undesirable consequences. The only option left is to confront the situation, face-to-face meeting of the conflicting parties for the purpose of identifying the problem and resolving it through an open discussion. Make Structural Changes to Lessen Conflicts:  By making structural changes, conflicts can be managed. The objectives of a group are modified and then integrated to suit the purpose. Also changes in the structure of the organization, that is, clarification of authority-responsibility relationship, improving the working atmosphere, ambience and work locations help in resolving conflicts. Proper Communication: Lack of proper communication, ego clashes between the people in line and staff positions, a superior’s autocratic leadership style, differing educational backgrounds, lack of co-ordination between inter-departments are all rich sources of conflict. These can be resolved with the right kind of attitudinal approach and an open mind from the management’s...

Defining Organizational Culture Business is an integral part of the society; and it influences other elements of the social system, which in turn affect business. The entire sphere of business activities are influenced by the social structure and culture of a society. The social system is influenced by the way the business functions, innovations, transmission and diffusion of information and new ideas etc. Business activities have greatly influenced social attitudes, values, outlooks, customs and traits. However, it is very difficult and, in some cases, almost impossible to change many elements of the social environment in the short run. Hence, a business may have to anticipate and adapt to these uncontrollable external environments. Socio-cultural environment refers to the influence exercised by certain social factors, which are “beyond the company’s gate“. This includes attitude of people towards: Work Wealth Knowledge Family Marriage Religion Education Ethics and social responsibility of business. Belief System Influencing the Action: Culture is something that is evolved in a society over a long period and it represents the unified belief system of a large group of people. An organization can be distinguished from another by way of its culture, since organizational culture is unique in its perspective and methodology. When people from different social backgrounds are made to work under the same roof, a corporate organization acquires a distinct culture. Culture conveys a sense of identity for the organization. It facilitates the generation of commitment to do something noble than one’s own self-interest. Cultural Differences: As business go international, the need for understanding and appreciating cultural differences across countries is essential. Any move from one country to another will create a certain amount of confusion, disorientation and emotional upheaval. Especially, people form Asian countries that migrate to the west are subjected to what is called a “culture shock”, in terms of attitude, working style, language, way of life, dress codes and negotiating styles. Freshers may adapt to these changes quickly, since they are natural and easy to be trained. The problem arises with individuals who had been working under a totally different cultural setup from that of the new cultural environment; they will have to undergo the process of ‘unlearning‘, which is more like swapping old ideas for new ideas. This change process is what both the employees and the management find challenging; but ultimately what needs to be done has to be done. Culture Shock: Multi national and Trans national companies, which have business establishments in different parts of the world, must be prepared to cope with the culture shock. Since huge investments go into their projects, they have to think and analyze about the cultural and social aspects that have a definite impact on the working of organisations. For example, the work attitude of employees in the west might lay emphasis on services and results, oriented towards self-improvement; while that of the Asian counterparts may be patience and sacrifice rooted in emotions and loyalty. Business can be considered as a large social network serving to satisfy economic and social interests; culture acts as the social glue that helps hold the organization together by providing appropriate standards for the behavior of organization members. Slogans of Some Reputed Organizations in the Industry: Nokia: Connecting people Jet Airways: The joy of flying Reliance Industries: Growth is life Citibank: Your citi never sleeps The above cited examples give you a fair idea about what a particular company stands for. The orientation of these companies, expressed in the form of SLOGANS contributed to the successful conduct of their...

Human Behavior- A Psychodynamic Approach In any organization, utmost importance is given to human resource management. Handling or manipulating other resources like physical, financial or production is at your discretion. When it comes to managing your employees, there you go! You start feeling the pinch. Man is like a “live wire” and if you don’t possess the mastery to understand and utilize the power behind his psyche, then you are at a loss and you are not capable of what is called “the wizard touch”. Maintaining the Employee Morale: The main problem with your subordinates or even with yourself might be boosting up of morale. Always keeping yourself in a cheerful proposition will take you to greater heights, as it helps you to achieve your goals faster. Human strength lies in self belief which is his reserved store of strength, the one which he never utilizes or not allowed to utilize to the fullest extent possible. A bureaucratic or autocratic manager should understand the fact that when human mind is given a chance to explore with full freedom instead of following orders it comes out with the greatest ideas; which may prove fruitful to your organization in a big way. Make Your Work-force Dynamic: If a person wants to become successful in a business venture, he should possess the fire of unfailing enthusiasm and the nerve to face the adversities that come in his way. Life is a game and so is business. You can play the game fearlessly when you are backed up by like minded individuals who will carry on your fire to the next level. So it is important on your part to prepare your subordinates to adapt to the different dimensions of the business atmosphere and make them more dynamic. Human mind has the power to grasp things faster than what we assume it to be. Even average performers can be transformed into star performers when, The work itself is appealing, yielding and useful The work has scope for independent activities The Work defines goals or targets The social atmosphere created by the manager is warm Innovative ideas are welcome Empathy on part of the manager The Power of Relaxation: Another important aspect for the betterment of human psyche is relaxation. A relaxed mind can achieve things hundred times better. People who are always on the run have the feeling that they have not accomplished much. If you keenly observe, only 8 hours of productive work is done every day. In order to accomplish whatever you have in your agenda, you definitely need to relax and plan. The art of resting the mind and the power to dismiss all worries and exhaustion is probably the winning formula. The employer who secures the goodwill of his employees can accomplish more with less effort and exhaustion. Try to bring out the creativity of your subordinates to make the climate of your firm cordial and the attitude...