presented by group 5: matthew shpolyanski hovig keushkerian abdullah alkhiliwi abdulaziz alassaf
TRANSCRIPT
MSE401 FINAL PRESENTATION:
SYNERGY & RESOURCE/BUDGET
ALLOCATION
Presented by Group 5:
Matthew Shpolyanski
Hovig Keushkerian
Abdullah Alkhiliwi
Abdulaziz Alassaf
What is Synergy?
The word synergy is derived from the Greek word “synergos”, which means “working together”
Synergy refers to the ability of two or more units or companies to generate greater value together than they could working apart.
Abdullah Alkhiliwi
Synergy in Everyday Business We’ve found that most business
synergies take one of six forms :1. Shared Known-How2. Coordinated Strategies 3. Shared Tangible Resources 4. Vertical Integration5. Pooled Negotiating Power 6. Combined Business Creation
Abdullah Alkhiliwi
Case Study:The Synergy Tower:
Merging Advanced Workplace Strategy with High Rise Design
Synergy is being integrated in architectural design
Designers see direct correlation between floor plan and facilitation of synergy
Floor plan actually encourages workers to mingle with one another Open spaces allow quickly shifting between work
modes
Hovig Keushkerian
Concept of synergy in the workplace is beginning to be incorporated into the planning stage of a business model.
Enhanced by advent of cloud computing
All possible avenues of communication are being incorporated into future floor plansEffective, flexible, and agile
communication is key to having synergy among workers.
Case Study:The Synergy Tower:
Merging Advanced Workplace Strategy with High Rise Design
Hovig Keushkerian
Synergy in the Workplace One of the difficulties that firms are
facing is internal conflict between departments and business units.
The sales and the credit departments rank high in these internal conflicts
Abdullah Alkhiliwi
A business organization can be compared to the human body. If one function of the body fails due to
some injury, the entire body might suffer.
When people work in teams their work is distributedBetter results are experienced in both
short and long time period
Synergy in the Workplace (Cont’d)
Abdullah Alkhiliwi
Synergy in the Workplace (Cont’d)
CEO Upper-MGMT
Lower-MGMT
Team leaders Workers
In sales oriented organizations where goals are allocated and teams are formed, a level of synergy should be maintained between all employees. • All of them have to work together
in order to achieve the desired target.
Abdullah Alkhiliwi
Budget/Resource Allocation: Managing Risk
Risk management is an essential attribute of the work in all financial markets.
It is impossible to stay on the market without good money management. because it is important to reduce risks on each deal for successful trading. This will help not only to save the own
money, but also to increase their quantity in several times.
Abdulaziz Alassaf
Managing Risk (Cont’d)
The art of getting and increasing income (gain, profit) in the uncertain economic situation are focused at the core of risk management.
Risk management is a system of management which covers economic and financial relations arising in the process of the governance.
Risk management includes the strategy and tactics of control, while it also greatly influences on budgeting and resource allocation.
Abdulaziz Alassaf
Managing Risk (Cont’d)
In risk management, receipt of sufficient and reliable data in terms of existing situation plays a major role, as it allows managers to take a concrete decision on the actions at risk.Risk is an integral part of activity in any
company. That is why one of the key conditions of
an effective budgeting system is its global use in conjunction with the elements and procedures of risk management.
Abdulaziz Alassaf
Managing Risk (Cont’d)
As an application tool, budgeting is intended to provide more effective financial and economic activities through the adaptation and optimization of management processes.
Risk management starts with the identification and evaluation of all possible threats that the company faces in its activities.The key point is the definition of limiting
external factors which include market size, scope of supply, consumer behavior and demand in budgeting.
Abdulaziz Alassaf
Allocating: Planning
Planningprovides a way of identifying specific
objectives and analyzing all the alternatives ways and methods of facing projects.
Most important part of resource and budget allocation
Without a sufficient plan, the risk of wasting money and materials increases highly○ Not only are money and materials wasted
but also time (time value of money is the most important part of engineering economics).
Matthew Shpolyanski
Allocating: Forecasting Forecasting
a scientific approach where a company would take its systematic data and choose whether or not to make a decision based on that data.
6 Elements of a good forecast : Timely, Reliable, Accurate, Meaningful, Written, and Easy to use
Used to: estimate costs/profits, pricing, cash flows, funding, new products, services
Matthew Shpolyanski
Allocating: Forecasting (Cont’d)
Exploratory Forecasting
Taking data that occurred and manipulating it to make it a formula/equation to make a logical decision.
Less risker technique to use than normative forecasting
Normative Forecasting
The technique of “shooting” ahead of time, envisioning a product that will most likely be successful and go back to present time
Only invest if pay-off will be high
Quantitative forecasting helps create mathematical formulas to help companies see how much they will most likely spend and keep track of any trends, cycles, or seasonal variations if there are any.
Matthew Shpolyanski
Strategies of Allocation Another technique of efficiently
allocating money and materials is by applying the company’s MARR into alternative methods/scenarios.
There are many mathematical techniques like present worth analysis, annual worth analysis, and rate of return analysis to help a company estimate how much they would need to spend or invest.
Matthew Shpolyanski
Budget and Resource Allocation Case Study: The Failure of Zune
• An example of the consequences of poorly allocating money and resources is Microsoft’s Zune.
• Instead of being innovative or inventive, Microsoft decided to “reinvent the wheel” by creating a media player very similar to the IPod
• With poor planning and forecasting, Microsoft didn’t realize the consequences of running against Apple’s IPod
2007 Survey done by the Wall Street Journal
Matthew Shpolyanski
Controlling Strategies of Allocation Controlling is a managerial tool which, if
applied correctly, tells all levels of management the efficiency, quality, and value of a particular aspect of the business organization.
In regards to resource and budget allocation, controlling can be broken down into four distinct phases:I. Establishing a MARRII. Measuring PerformanceIII. Evaluating the ProcessIV. Maintaining the Effective Process
Hovig Keushkerian
I. Establishing a MARR When allocating resources to processes
in an organization, a Minimum Attractive Rate of Return (MARR) must first be established. The MARR is a figure which is calculated by
planning, forecasting, and risk management components of decision making according to each process in an organization.
MARR gives management a benchmark to which it can compare the real return on its investments.
Hovig Keushkerian
II. Measuring Performance Success cannot be determined
unless it is measured.Achieved by excessive documentation
controlShowing the rates of return on
investments in processes○ Financial Ratios○ Financial Statements
Hovig Keushkerian
III. Evaluating the Process Data must be evaluated in order to
tell management how effective they were in the allocation of resources and budgets
Methods of EvaluationAuditsChecks and BalancesValidation of BooksLedger Control
Hovig Keushkerian
IV. Maintaining the Effective Process Most difficult step of Controlling
find a better strategy to allocate resources vs. trying to use a particular strategy constantly
Uncertainty and Dynamic Nature of Work means strategies must change as well
Managers must be vigilant in the pursuit of newer and better solutions to ensure some sense of continuity
Hovig Keushkerian
Conclusion Synergy and Strategies of Resource Allocation
can be intertwined.Allocation Strategies cannot be employed effectively
if there is no Synergy Resource Allocation Strategies cannot be effective
if they are not derived from data that is Proposed by Methods of ForecastingOrganized by PlanningEvaluated by Risk ManagementMeasured and Maintained by ControllingMinimizes Input while maximizing output of
production processes
Abdulaziz Alassaf