E-business and its implications for performance management

E-commerce is ‘all electronically mediated information exchanges between an organisation and its external stakeholders.

E-commerce is sell-side if it is between an organisation and its customers and is buy-side if it is between an organisation and its suppliers’.

E-business includes all aspects of e-commerce, but also includes work flows and movements of information within an entity, for example between departments or functions.
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Former President Goodluck Jonathan: The Worst Nightmare Of Nigeria

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Nigeria, the most populous black nation, is richly endowed with immense natural resources but certainly not with good leaders. The absence of good leadership partly explains why this nation has an incurable endemic corruption which in plain terms has become a cultural defect. None of its past leaders, has been able to address the problem of corruption which has brought the nation to its kneels with numerous problems: acute power shortage, dilapidated and inadequate infrastructures, poor roads, unsafe aviation, unavailability of clean pipe-borne water, alarming graduate unemployment, high crime rate, violence, religious conflicts, ethnic tension, galloping inflation, untold hardship, ever widening gap between the rich and the poor, massive institutional failure, and bitter disenchantment on the part of citizenry.
Continue reading Former President Goodluck Jonathan: The Worst Nightmare Of Nigeria

President Mohammed Buhari and the future of Nigeria

Muhammadu Buhari is in trouble, according to Jamin Ohwovoriole, a professor of Communication Studies in the US. However, I am not cringing in sympathy for him: he asked for it, and he must bear his cross alone like a messiah. Nonetheless, I must confess that I am not treating his plight lightly because I know he is a human being who is devoid of any tripartite personality.

In spite of this knowledge, I vow to urge him on with joyous ululation that is indicative of my unbridled trepidation for a man whose countrymen have bequeathed with a magic wand. Not just that, Buhari has been placed on a supernatural pedestal by mere mortals seeking salvation in a wasteland.
Continue reading President Mohammed Buhari and the future of Nigeria

Dealing with risk and uncertainties in your business decisions

A lot of decision-making in business involves some risk or uncertainty. Decisions might be based on what the decision-maker thinks will happen, but there is some possibility that the actual outcome will be different; possibly better or possibly worse than expected.

a. Uncertainty occurs when there is insufficient information about what will happen, or what will probably happen, in the future. It is therefore likely that estimates of future values (estimates of future sales, future costs, and so on) will be inaccurate.

b. Risk occurs when the future outcome from a decision could be any of several different possibilities.

However, it might be possible to assess with reasonable accuracy the probability of each possible outcome. When there are reliable estimates of the probability for each possible outcome, risk can be assessed or analysed statistically.

When there is uncertainty or risk in a business decision, management should consider both:

a.  The expected incremental costs, revenues and profits, and also,

b.  The risk or uncertainty.
There are several different ways of allowing for risk and uncertainty in decision making.

The approach you take or taken by management will depend to a large extent on your, or their attitude to risk. In other words, to what extent will you or management decision be affected by the risk or uncertainty in the situation?

Risk cannot be removed entirely from a decision, because risk exists in the situation itself. A decision-maker can try to analyse the risk, and must make a decision on the basis of whether the risk is justified or acceptable.

Risk preference
Risk preference describes the attitude of a decision-maker towards risk.

A company or decision-makers might be described as risk averse, risk-seeking or possibly risk neutral.

i.  Risk aversive organisation or decision maker considers risk in making a decision, and will not select a course of action that is more risky unless the expected return is higher and so justifies the extra risk. A risk-averse organisation or decision maker does not try to avoid risk as much as possible; however he might want a substantially higher expected return to make any extra risk worth taking.

ii.  A risk neutral organisation or decision maker ignores risk entirely in making a decision. The decision of a risk neutral decision maker is to select the course of action with the highest expected return, regardless of risk.

iii.  A risk-seeking organisation or decision maker also considers risk in making a decision. A risk seeker, unlike a risk-averse decision-maker, will take extra risks in the hope of earning a higher return.

It is often assumed that managers are risk averse, and so will not select a course of action that has higher risk unless it offers a higher expected return sufficient to justify the risk that is taken.

Reducing risk and uncertainty.
Risk and Uncertainty occurs when there is a lack of reliable information. It can therefore be reduced by obtaining more information on which some reliance can be placed. However, it is doubtful whether risk and uncertainty can be eliminated altogether.

There is often uncertainty about the likely volume of sales demand for a product.
For established products, it might be possible to estimate future sales by taking historical sales figures, and making adjustments for sales growth or decline, and planned changes is the sales price.

For new products, however, estimating sales demand can be very difficult because there is no benchmark on which to base the estimate.

Risk and Uncertainty about future sales demand for a product can be reduced through the use of market research or focus groups.

Market research is research into a particular market, such as the market for a product, for the purpose of obtaining information about the market – such as attitudes and buying intentions of customers in the market.

Market research might be carried out, for example, to test the attitudes of target customers to a prototype of a new product.

In some cases, market research might attempt to obtain an estimate of the likely sales demand for a product.
A focus group is a group of participants who are invited to give their views, opinions and ideas about a product or market to a market research team. The members of a focus group will be selected so as to represent a target audience or target market, and the information provided by the group will therefore be representative of the views of the target market as a whole.

By analysing data obtained from market research surveys or focus groups, an entity might expect to obtain more reliable estimates of the likely sales demand for a product thereby reducing risk and uncertainty in its operation.

THE EFFECT OF IT ON PERFORMANCE MANAGEMENT

Information Technology (IT) systems for providers of services

The service industry is made up of organisations that deliver services to consumers. The individuals who make up this industry are hired to perform tasks.

Most performance management techniques were developed for manufacturing organisations but might often be useful for service companies.

Both types of organisation turn inputs into outputs:

a. A manufacturing company uses labour and other inputs to transform raw materials and components into finished products which it sells.

b. A service company does not produce/sell products but provides a service.

Both types of company need to determine the costs of output for planning (e.g. activity levels) decision making (e.g. pricing) and control.

There are a number of performance management techniques which have been developed to link the cost of inputs to the costs of production. These can be used in the service industries also.

For example; an accountancy firm provides a variety of services. The costs of the firm can be assigned to cost drivers (e.g. an hour of each staff types’ time) and the cost of each consultancy contract found by multiplying time spent by hourly costs. This is based on Activities Based Costing (ABC) principles which identify cost drivers and job costing which assigns costs to individual jobs.

IT systems and service providers

IT systems can improve the quality of service in a number of different ways.

The service provider has instant access to the customer’s files or to other key information. Instant access means that a customer’s requests can be dealt with immediately. This makes it possible, for example, to sell and renew insurance policies by telephone.

For companies that provide services (rather than manufacturing goods), IT systems can make substantial improvements in the quality of service provision. A key feature of many services is the contact between a representative of the company (the service provider) and the customer. This may be face-to-face contact, or contact by telephone or even e-mail or text message.

The Internet often makes it possible for customers to compare the products or services of different suppliers, and to make an informed choice about which supplier to buy from. It may therefore be important for companies to provide extensive information to customers on their web site, to help them make their purchase decisions.

Some services can be provided through IT systems. In some cases, the customer is given the opportunity to take control over his own service provision. For example, customers can book seats on air flights and at theatres using the Internet and the service provider’s web site or download media items (music and film) through the Internet. Immediate service provision, made possible by IT systems, is likely to increase customer satisfaction with the service.

IT systems and performance management

Performance management systems are information systems, and the development of information technology (IT) continues to have a significant impact on performance management and on:

a. Collecting data
b. Storing data and information: (Note: data is unprocessed, whereas information is data that has been processed into something that has meaning or purpose)

Instant access to performance management data
Another significant feature of modern IT systems is instant access to information.

Information might be held on a central database, and accessible to all authorised personnel through a network connection.

Instant access means that managers do not have to wait for information to come to them, for example in routine reports. They can search for and obtain the information they want at any time. Furthermore this can be done from any location that has an internet connection.

Remote input

In traditional performance management systems, data was input to the computer system by specialist staff. There was often a high rate of input errors, and data validation checks were included in the software to reduce the error rate. In many systems, the process of collecting data and input to a computer system was fairly slow.

Modern IT systems often provide for automatic input of data by non-finance operating staff, often with minimal risk of errors. One example is the automatic input of sales data and inventory data at check-out points in stores and supermarkets, using bar codes and automatic bar code readers. Information is available about sales and reductions in inventory at the exact moment that the items are being sold.

Instant access to external sources of data

IT systems also provide for access to external sources of data and information. External data can be obtained from the Internet, either:

I. Free of charge, for example, from the web sites of government departments and public news agencies, or

II. Through subscription (payments to an external information provider).
A wide range of complex data analysis can be performed with computer software.

Many managers can use models for planning and forecasting, including the application of sensitivity analysis to plans and forecasts.

IT systems and competitive advantage

In a highly competitive market, service providers are continually looking for ways to manage their costs and increase productivity.

IT systems may be able to give one business a strategic advantage (competitive advantage) over its rivals. The efficiency of IT systems can improve the quality of administration, production and service to customers, and so provide better value for customers, for example by reducing costs or providing a faster service.

Even if an IT system does not provide a competitive advantage, however, a business may need to have efficient systems to avoid being at a competitive disadvantage. A business needs to invest in IT to keep up with what rivals are doing.

Significantly, IT systems can create a competitive advantage by providing management with better information. In this respect, a well-designed performance management system will provide a competitive advantage.

Management should keep their IT systems under continual review, and:

a. Be aware of new developments in IT systems and new opportunities for exploiting IT

b. Review existing systems to ensure that they are of a high quality and are operating effectively and efficiently

c. Monitor the use of IT systems by competitors, and be prepared to respond to any initiatives in IT that competitors introduce.

Analysing The Technological Environment Of Your Business

The technological environment consists of the science and technology available to an organisation (and its competitors), and changes and developments in science and technology that occur regularly. Continue reading Analysing The Technological Environment Of Your Business

Growing Your Business: Identifying Opportunities and Threats; SWOT analysis.

Strength, Weakness, Opportunities and Threats (SWOT) analysis is a technique (or ‘model’) for identifying key factors that might affect business strategy. It is a simple but useful technique for analysing business strategic position. Continue reading Growing Your Business: Identifying Opportunities and Threats; SWOT analysis.

Growing Your Business: The relevance of the mission statement.

A mission is the purpose of an organisation and the reason for its existence. Many entities give a formal expression to their mission in a mission statement.

‘A mission describes the organisation’s basic function in society, in terms of the products and services it produces for its customers’ (Mintzberg). The mission defines the present state or purpose of an organisation.

A mission statement should be a clear and short statement. Drucker suggested that, a mission statement should answer the following fundamental questions:
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Challenges Of Children As Child Soldier And The Graca Machel Repot.

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Child soldiers are more obedient, do not question orders and are easier to manipulate than adult soldiers.

The exploitation of children in the ranks of the world’s armies must end, says a new United Nations report. One of the most alarming trends in armed conflict is the participation of children as soldiers, declares the report, by Graça Machel, the Secretary-General’s Expert on the Impact of Armed Conflict on Children. Continue reading Challenges Of Children As Child Soldier And The Graca Machel Repot.