Showing papers by "Samuel Eilon published in 1993"

Measuring quality of information systems

Abstract: As stressed in earlier chapters, measurement is a key ingredient in the managerial process. Without measurement, no coherent evaluation of corporate performance, or indeed the performance of any part of the organization, can take place and no rational decisions can be undertaken. We have seen quite a few examples of how measurement of the wrong things, or measuring them in the wrong way, can lead to serious misconceptions about performance. It is essential, therefore, to establish at the outset answers to the following questions: What is the purpose of the measurement methodology? What is to be measured? How is the measuring to be carried out and over what period of time? How will the results be interpreted in terms of validity, accuracy and appropriateness? When completed, how is the whole measurement process to be evaluated and what lessons may be learnt for the future?

The effect of a price war in a duopoly

Abstract: When two competitors dominate a given market, there is always a temptation for one competitor to cut the price in order to improve his/her performance, for example to capture a higher market share and increase revenue. The result of such action affects the volume sold by the other competitor, who then takes retaliatory action. After a succession of actions and reactions of this kind, a new equilibrium between the two competitors is arrived at. The paper explores the results obtained when the competitors seek three alternative performance criteria: to maximize revenue, profit or profit margin. Circumstances are highlighted under which competing strategies can lead to a deterioration in performance for both competitors.

A methodology for analysis of corporate performance

Abstract: Analysis of corporate performance is an essential exercise for strategic management of an industrial enterprise. The analysis consists of two areas: the first is that of diagnosis , which aims at providing an understanding of how the enterprise works and an explanation of changes that have taken place in its past performance; the second is that of planning , with the purpose of determining future courses of action and ascertaining their implications in terms of improved performance. The methodology described in this paper uses incremental calculus and, instead of being solely concerned with absolute measures, it largely focuses on relative changes in performance . This approach stems from two reasons: first, it is relative changes (usually expressed in percentage terms) that managers are mainly preoccupied with, and secondly the methodology involves the use of non-dimensionless variables and relationships, which allow general results to be derived. A further feature of corporate performance is that it is rarely measured by a single criterion but is evaluated by a series of ratios, and it is therefore important to determine how changing operating conditions, or changes in the external environment, affect the criteria chosen for scrutiny, and how these criteria affect each other.

A managerial response to falling demand

Abstract: A sharp fall in demand for goods can have a devastating effect on corporate performance. Possible managerial responses may include: redesign of the product, opening new markets, product diversification, financial restructuring to reduce debt, take-overs or mergers to reduce overall production capacity, alliances to share expediture (for example, in R & D and distribution), and so on. All these measures are largely of a long-term nature. As for the short term, three main strategies need to be considered (singly or in combination): 1. (1) reduce price to stimulate demand 2. (2) increase advertising and promotion expenditure, again to stimulate demand 3. (3) reduce unit cost to improve the competitiveness of the product and thereby ward off a fall in profitability. This paper is concerned with the third option, assuming that price and promotion expenditures remain unchanged. The paper explores how actions taken to reduce fixed and variable costs can affect profit, profit margins and unit cost, and proceeds to explore the degree of cost reductions that are necessary to maintain the original profit level that pertained prior to the fall in demand. The use of incremental calculus allows the derivation of general results that should be of great interest to managers in times of economic recession.