MSE401 Final Presentation: Synergy & Resource/Budget Allocation

1. Presented by Group 5: Matthew Shpolyanski Hovig Keushkerian Abdullah Alkhiliwi AbdulazizAlassaf MSE401 Final Presentation:Synergy & Resource/Budget Allocation

2. 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

3. Synergy in Everyday Business • We’ve found that most business synergies take one of six forms : • Shared Known-How • Coordinated Strategies • Shared Tangible Resources • Vertical Integration • Pooled Negotiating Power • Combined Business Creation Abdullah Alkhiliwi

4. 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 HovigKeushkerian

5. Case Study:The Synergy Tower: Merging Advanced Workplace Strategy with High Rise Design • 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 plans • Effective, flexible, and agile communication is key to having synergy among workers. HovigKeushkerian

6. 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

7. Synergy in the Workplace (Cont’d) • 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 distributed • Better results are experienced in both short and long time period Abdullah Alkhiliwi

8. Synergy in the Workplace (Cont’d) • 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

9. 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. AbdulazizAlassaf

10. 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. AbdulazizAlassaf

11. 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. AbdulazizAlassaf

12. 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. AbdulazizAlassaf

13. Allocating: Planning • Planning • provides 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

14. 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

15. Allocating: Forecasting (Cont’d) • Normative Forecasting • 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 • 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

16. 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

17. 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

18. 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: • Establishing a MARR • Measuring Performance • Evaluating the Process • Maintaining the Effective Process HovigKeushkerian

19. 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. HovigKeushkerian

20. II. Measuring Performance • Success cannot be determined unless it is measured. • Achieved by excessive documentation control • Showing the rates of return on investments in processes • Financial Ratios • Financial Statements HovigKeushkerian

21. 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 Evaluation • Audits • Checks and Balances • Validation of Books • Ledger Control HovigKeushkerian

22. 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 HovigKeushkerian

23. 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 Forecasting • Organized by Planning • Evaluated by Risk Management • Measured and Maintained by Controlling • Minimizes Input while maximizing output of production processes AbdulazizAlassaf

24. Q&A Questions? Comments? Concerns?