Managerial thoughts

Managerial  thoughts

The Managerial Equation

 

 

The competition is currently such as the companies are pushed to a thinner profit. They cannot set by themselves any more the price of their products or services, but the market is currently setting it for them. Obsessed by costs, the managers employ a frantic race to reduce costs, which often deprive them of the essential tools that allow them to achieve the performance targets they have originally set. 

 

The control of the company costs is a matter on which many experts have written by using an arithmetic approach which is, in my opinion, an accounting vision at short term and does not need to be further developed here. So, in this article I will outline a new approach which demonstrates that the best way for a company to make profits is to control its immediate environment whether internally or externally.

 

Banks and governments on the one hand and the market on the other are the main players of this environment that the manager should consider when facing competition.

The banks are privileged partners of the companies where the preservation of the interests of both parties premium.

The governments are organized to regulate the market, to encourage investment to stimulate the employment and to protect the population from outlaws companies. Relationships are formalized and the obligations of each other are generally respected.

 

From that environment, it remains only the market of which the managers of the company have to face. It is really the main metric to measure the efficiency of the company managers.  The market for a company is composed of investors, customers and workers. These three components of the market are really the most influential players within a company that the managers should put at the top of the list of their priorities.

 

I don't think that you disagree with me by stating that the players mentioned above are complementary, but their goals are often opposed. The customers want lower prices and higher quality of the products or service they buy. The employees want higher salaries and a perfect working environment. The shareholders want higher return on their investments .

 

How should the managers reconcile and meet the needs of each of these players without compromising at mid and long term the financial equilibrium of their company.

Each one of these players tries to take at its advantage all what the company can offer. But by pulling too much on the rope, they could cut it and finally no one receive the benefits from the company as they are expecting

 

 

More about this article, click here:Managerial-Equation--0--.pdf



01/11/2015
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