Hamilton Pozo
Faculdade de Tecnologia de Santos - Rubens Lara - CEETEPS, Brazil
E-mail: hprbrazil@hotmail.com
Takeshy Tachizawa
Unifaccamp, Brazil
E-mail: usptakes@uol.com.br
Getulio Kazue Akabane
CEETEPS, Brazil
E-mail: getulio@akabane.adm.br
Submission: 11/28/2018
Revision: 2/8/2019
Accept: 2/27/2019
ABSTRACT
The objective is to delineate a
hierarchical model of decisions and respective management indicators. In an
everyday universe of events that occur, if considers a purpose of the
organization can face a hierarchy of decisions, from major strategic to minor
ones. Such a finding, if delineated as a model, it can be useful in the study
of the decision-making process. For this analysis was adopted a multiple case
study method applied in commercial, industrial and service organization.
Afterward was maximized with a differentiated sample of managers selection to
be interviewed according to the organizational pyramid hierarchical rank as
structured bases; meetings with key opinion groups; available preliminary data
collection directly from the websites. As a result, a hierarchical decision
model was obtained, differentiated according to the acting economic segment.
Keywords: hierarchical decisions;
management indicators; performance
1. INTRODUCTION
Considering
the greater purpose of the organization in the universe of everyday business
events, a hierarchy of decisions can be identified on a relative scale of
importance, from strategic to operational. This finding, combined with the
different segments of the national economy, is the presupposition of the model
proposed for the business decision-making process, based on the following
reasoning.
The
concepts of Kuhn (1962) have been used and are contributing to a greater degree
with studies related to scientific revolution; paradigm as a consensus in the
scientific community; the pre-paradigmatic phase of knowledge; normal science
and consolidated scientific paradigms; conceptualization of science. Therefore,
it is deduced that Kuhn's work (op.cit.) has
contributed to the area of administration, especially in what concerns the
concepts of paradigm, models and the scientific revolution.
The
predominance in the use of the concept of scientific revolution over normal
science in the reviewed studies and the emergence of the concept
pre-paradigmatic phase among the most cited may be related to the
administration itself, while large area would be in embryonic or developing
state, since it is a young science and therefore, not yet being observed the
occurrence of a normal science. It is deduced that the concepts of Kuhn's work
(op.cit.), initially focused on the exact sciences,
may contribute to the understanding of characteristics of the administration
area.
Over
time, one theory overlaps the other, through the concept of paradigm, because a
scientific achievement becomes the model for other researches in that area,
through the concept of normal science, because much research is done in
agreement with an already existing perspective since the administration does
not have a consolidated general theory.
2. THEORETICAL FOUNDATION
2.1.
Hierarchization of
decisions and indicators
The
hierarchization of decisions, according to Tachizawa (2018) can be implemented observing assumptions
that:
a) there are different types of organizations (economic sectors);
b) the decision-making process, as a direct function of the productive
chain, can be hierarchized at decision levels within the contours delineated by
the strategic focus defined for the organization's business;
c) the decision-making process consists of decisions (strategic and
operational) necessary for the operationalization of business activities;
d) an organization, whatever its economic sector, can be hierarchized in
layers (strategic level and operational level), where operational level
decisions group actions inherent to its productive chain;
e) strategic decisions establish management rules for the operational
decisions layer;
f) the productive chain (operational cycle or value adding chain) is
composed of productive systemic processes (end-activities of the organization)
that are in turn aided by the support processes.
According
to the model, once the productive chain is defined, the decisions that make up
the decision-making process are identified, for its subsequent hierarchization. Using commercial and industrial equipment
and motor company as an example, one can hierarchize its decisions as explained
below. This hierarchization stratifies
strategic-level decisions (inherent to business mission) and operational-level
decisions. By strategic is meant the decisions that directly affect the
strategic objectives outlined by the top management.
Tachizawa (2018) defines management indicators as a
relationship between two variables, in the form of numerator and denominator,
where their attributes and values are possible to measure. Measurements
according to these authors need to be as a result of the organization's corporate
strategies, including processes, systemic. To analyze what has been measured
means to obtain important information and conclusions to support the decision
making necessary to reveal cause and effect relationships that may not be
evident in a process.
These
management indicators, as an integral part of the model, can be structured as a
relation between two variables, in the form of numerator and denominator, where
their values are possible of measurement. Conceptually, this set of indicators
related to the performance processes of the organization as a whole represents
a consistent basis to align the activities of the productive chain with the
financial decisions of the organization.
In
addition, a benchmark of excellence, the process was considered relative to the
comparative analysis of the data of the organization in focus with those of the
market competitors.
2.2.
Types
of organizations
Organizations
in this context can be classified by a number of employees (SEBRAE, 2018) or by
billing (BRASIL, 2006). Classification according to its economic sector of
activity (FAPESP, 2018), equivalent to the addition of the Melhores
e Maiores (EXAME, 2018), may be another criterion to
be adopted. This last publication shows that the profit margin of the supermarkets
is small, varying between 0.5% and 7% however, compensating in the total
turnover that is around 4 times a year. Likewise, the situation of other
companies that win in the total turnover of their assets, such as oil
distributors, collective transportation, retail trade organizations, vehicle
distributors, and the like.
The
factors that would allow the grouping of different companies into blocks,
equivalent to each other, would be the degree of concentration and
differentiation of products. It is possible to consider as essential factors to
the application of the suggested methodology, the products and productive
processes adopted by the companies. It is based on the observation that in the
market there are companies different from one another, which can be grouped
into differentiated categories, characterized by a gain in the turnover of the
asset arise, unlike those that gain profit margin, just to mention two elements
of analysis.
Companies
belonging to the nonmetallic minerals (cement) sector, according to Exame (2018), are characterized by profit margin gains,
according to the balance sheet data, whose analysis reveals high profitability
levels, around 20-30%, in addition to turnaround indicators of around 0.5 to
1.0 (companies that require large investments will find it difficult to sell
the asset at one time during the year or, equivalent to the asset only once).
Other
margin-winning companies are textile, public service, and other equivalent
organizations that belong to oligopolies industries (or business), or even
monopoly (public services, as in the case of telecommunications) of the
national economy. Examples of such differentiation of results by type of
company are given.
This
approach, which takes into account the differentiated characteristics of the
companies, can be applied in the interpretation of the law of reverse logistics
and labor outsourcing. In order to illustrate the differences arising from the
characteristics of its business, some of the best and worst performances were:
a) state
monopoly organization was the largest company in the country by sales volume;
b) organization
of state control in the area of monopolized public services, was the largest
employer of labor in the country;
c) organization
from differentiated industry, producer in the area of beverages and tobacco,
had the highest profitability;
d) municipal
company in the area of transportation service was the most indebted;
e) company
in the construction sector was the one with the highest working capital;
f) state
explorer of electric power, was the one that experienced the greatest loss in
absolute terms. The organizations reflect the logic and dynamics of the
economic sector of which they are part (TACHIZAWA, 2018).
This
theoretical basis was part of the basis for the design and implementation of
the model explained below.
2.3.
Characterization
of typical restaurants
Personality
traits (POZO; POZO; TACHIZAWA, 2011) are determined from observation and
behavior, as well as physical characteristics (PARK, 1986). Thus, as people
develop their own personalities, reflecting a relatively simple process of
personality development (MCCRAE et al., 2000). In the same way, the personality
of the brand is defined as the immediate emotional way that is obtained as a response
of people to a brand (LARSON; COUCOUVANIS; PROUTY 2003).
According
to Burke & Jan (1997), an effective strategy uses the personality of the
brand, correctly and consistently communicated and, therefore, provides an
impressive variety of benefits, including the following:
a) the
construction of its own brand generating a positioning in the general approval;
b) the
creation of a recognized environment for effective communication with
customers;
c) the
development of a strong image of the brand for the products and services
provided;
d) the
differentiation of the brand in the market;
e) allow
the company a highly perceived added value for its products and services.
Aaker
(1998) developed a Brand Personality Scale (BPS) to explore the meaning of 37
commercial brands, examining how those attributes of personality are structured
in the minds of people in the United States. The development of the process
ensured the validity, reliability, and generalization of the scale in the field
of brands. Forty-two BPS personality traits were identified in five dimensions:
sincerity, enthusiasm, competence, robustness, and sophistication. These five
dimensions have successfully described the personalities of many strong brands
in the United States (AAKER, 1998).
For
example, a brand can have a complex personality, which varies in dimensions, as
is the case of McDonald's that was evaluated with a high attribute in sincerity
and competence. In an Aaker BPS application in different restaurant segments,
such as fast food, occasional dinners, and executive lunch were distinguished
based on the five dimensions of the BPS, but, in relation to the distinction
among luxury restaurants BPS scale, I did not succeed (SIGUAW; MATTILA; AUSTIN,
2003).
3. METHOD ADOPTED
This
work was based on the method of the case study, which is limited to the
investigation of a phenomenon in a certain period of time (YIN, 2001). This
multiple case study approach (involving more than one entity) was applied with:
a) use
of a structured interview script;
b) survey
meetings with opinion-forming groups;
c) selection
of a differentiated sample of managers to be interviewed according to the
hierarchical rank of the organizational pyramid;
d) preliminary
data collection directly from the websites made available by the forty
companies of the sample, via the Internet.
Aiming
at the development of the multiple case study of the forty companies, three
organizations from the industrial, commercial and service sectors were
selected. Another effective approach was to stratify organizations, based on
their organization chart, at strategic (top management) and operational levels
(factory floor employees). Based on this stratification, we interviewed
managers, production coordinators, and managers of the strategic and operational
units of the companies.
In
addition, survey meetings were held in the class entity to which the entities
participating in the survey belonged. Finally, data were collected from the
websites of organizations, to complement the collection of data using an
individual interview script with the managers of those organizations. Three companies of services, commercial and
industrial segments were considered for analyzing the applicability of the
model.
4. ANALYSIS AND RESULTS
4.1.
Gastronomic
Services Company
Gastronomic Services Company (Empresa de Serviços Gastronômicos - ESG), originated from a business
opportunity, with the purchase of a commercial point in a food court of a
hypermarket in Rio de Janeiro (Brazil). A restaurant already existed in this
commercial point, but the new owners renamed it. The company was constituted as
Individual Entrepreneur, with taxation by “Simples Nacional”.
ESG
has three registered and reliable suppliers (delivery/term/value) for each line
of product used, such as disposables, cleaning products, meats, frozen foods,
groceries, vegetables, drinks etc. Supply prices fluctuate, and new vendors and
products are regularly consulted, testing new brands, innovating revenues and
menus, and updating and balancing costs. ESG is placed in an area where there
is only one direct competitor. The other stores sell snacks, desserts, and
coffee.
Snacks
were part of the menu at the beginning of ESG operation, but this is not its
focus. There were no snack stores nearby and this was kept on the menu to serve
customers who were already accustomed to the product and convenience of
ordering in one place (on weekends the restaurant manages to serve the whole
family, while parents choose executive dishes, children opt for snacks).
Strong
competition lies outside the enterprise. Along the whole avenue, there are
bars, snack bars, restaurants and the like, that manage to make a lower price
(and those clients that focus too much on price are attracted by these
establishments). For this, quality is a constant challenge.
ESG
managers participated in a SEBRAE project for the food industry and, with the
network between the project’s merchandising team and, in addition to the
institutional orientation, it became possible to collaborate with an online
order and delivery Startup, beginning a new sales channel. This new modality of
sale is increasing, with good acceptance by the customers because of its
celebrity. The dissemination for customers to know this new service is worked
extensively, since the more people come to know of this new service, the higher
the possibilities of capturing new clients are.
The
analysis made by the owners regarding this increase in sales on the counter is
that the advertising made for the delivery reminded customers of the ESG brand.
“Exchange is the act of getting the desired product from someone by offering
something in return. Marketing comes when people decide to meet needs and
desires through the exchange.” From this experience, the owners clearly
understood how important it is to work the marketing of the restaurant and to
insert innovations of trend and impact, to narrow the distance between the
needs and desires of the customers.
Its
strategy for attracting new customers is based on a) economic: offer quality
products with competitive price (dish of the day, promotions, partnerships
etc.); b) market: regularly explore new products and suppliers, as well as seek
to understand the competition, new distribution channels, technological
innovation for better customer service (electronic order) and also for
compliance with tax legislation.
In
addition, identifying customer needs (time, price, quality, portion quantity,
light, and integral products, children's products and products to serve the
whole family.) By understanding all these factors, it is proposed to work with
marketing, with permanent training to the employees.
With
regard to the commercial policy item, pricing takes place through the
calculation of costs and expenses with an estimate of contribution margin and
comparison with the market price. The prices practiced are in a high-median
range due to the high quality of the inputs, so the restaurant tries to excel
in flavor and quality. This is one of the characteristics of ESG, offering
tasty products and unmistakable quality.
4.2.
Business
enterprise
The Commercial e Distribuidora
de Veículos (Commerce and Distribution of Vehicles -
CDV) is a family-owned company, which is looking for a path to its recovery,
both in the aspect of global results and in the sense of internal
reconfiguration. It survived through time with: strong organizational culture;
close contact with their external environment; attention to customers;
delegation to lower levels of the organization; and conservative financial
policy.
The company lives a moment of family
succession. The presence of a family at the head of this organization is a
factor of differentiation in front of its competitors, for transmitting a
greater commitment of the managers with the company, high ethical values and
special attention with the quality of the products offered to its customers.
Its market and demand are located in
Rio de Janeiro (Brazil). Recently, with the opening of imports, the threat of
new competitors appeared. CDV’s potential market is comprised of consumers with
relatively stable purchasing power, a fruit of the essential tourism and
industrial nature of the region's businesses.
As a business philosophy, the
company concentrates efforts on profitable businesses. They usually register
and analyze their business carefully in terms of profitability. This is how it
determines which businesses are profitable and deserve greater efforts, and
which businesses do not deserve investment and attention from the top
management. CDV is divided into three areas of results, or strategic business
units: new vehicles (VN’s); used vehicles (VU’s); parts and services. Each unit
is analyzed separately in terms of costs and profits. These strategic elements
were extracted from the mission “sales of the new vehicle, buying and selling
used ones, and workshop services".
In the current context, there is an
expected total gross profit, projected because of the projections prepared by
the managers of the three results areas. Such managers discuss their estimates
with their subordinates in order to check their feasibility and verify that
nothing is out of reality, using for that, criterion that the business unit
should absorb the administrative expenses on the basis of 50% based on the
gross profit and 50% as a result of the investment, as well as revenues from
sales, which should follow the average of the last three months.
The company's management projects
the number of units it expects to sell per month. This projection is based on
the acceptance of the models, the economic conditions of the region and the
experience, whose calculation always seeks to follow the average of the last
months of sales. This experience has allowed for accurate and detailed
calculations of future expenses. The data for the periods is recorded according
to the principles of profit centers and cost centers associated with business
units, and projections are made on a quarterly basis to adjust to the new
market conditions.
Each manager of the business areas,
along with the forecast of sales and costs of the products sold makes the
projection of expenses. The estimates also take into account the growth rate,
mainly in relation to the parts and services business unit. It adopts the
direct costing system for purposes of determining the marginal contribution in
each product line.
The operations philosophy emphasizes
the quality of products sold. The Chief Executive Officer insists that all
practices related to this matter be communicated in writing, through
instructions, which include the values of the company. Vendors meet with the
Sales Manager on a daily basis to discuss problems, review stocks at VN’s and
VU’s, and receive systematic training for 45 minutes prior to the day's
operations.
Each salesperson presents a daily
report of their contacts and activities to customers at the end of the day. Its
philosophy of employee compensation states that the Parts Manager and the
Workshop Services Manager are remunerated on a personal incentive basis,
receiving a fixed salary plus percentage of sales calculated after deduction of
direct and indirect expenses.
Team awards are adopted to enhance
and motivate individual performance, which the Board believes to be more
efficient and that better contributes to increasing sales, revenue and,
therefore, the profitability of the company. Sellers receive a fixed salary and
commissions, which percentage increases progressively, according to
predetermined rates depending on their individual performance.
Their “marketing” practice considers
that managers know the costs of the vehicles and the gross profit that they
must obtain to make profitable sales, directing their respective salespeople to
the movement and clients served. Sellers seek sales and exchanges, the best
deals from customers, and submit them to the Sales Manager’s assessment, which
accepts or rejects them based on gross profit, and the possibility of creating
a positive image of the company. Radio ads are efficient in the region,
according to the Sales Manager and should be widely used.
Advertising on the integration of
brand distributors and their products is carried out nationally by the
automaker (the official manufacturer of the brand marketed). The exchanges are
evaluated by the Sales Managers of new and used vehicles, in the value of the
wholesale less the costs of reconditioning. When it is decided to refurbish a
vehicle, it is sought to carry out the necessary services within a maximum of
48 hours, in the distributor's own workshop, and in cases of excessive volumes
of activities, to perform such services in specialized workshops of third
parties.
As an administrative structure, a
permanent inventory control system enables the safe recording of parts in stock
and enables consistent replenishment of purchases. During the fiscal year, the
physical inventory is counted monthly. The provisioning policy for stock losses
is strictly enforced, to avoid surprises at the end of the year.
Each center for calculation of
results per business unit maintains its own daily operational record, and the
accumulated data for the periods considered. The monthly control and its
results are compared to the budget data. In the day-to-day business of the
company, when deviations of the monthly data are verified with the data
budgeted in the same period, the causes are identified, and the pertinent
measures are taken.
4.3.
Industrial
company
The Empresa
de Produtos Laminados
(Rolled Products Company – EPL), located in Rio de Janeiro (Brazil), is a
business of industrialization and trade of rolled products, belonging to the
sector of metallurgical activities. Its products are metal frames; iron
components; and spare sets.
As with any business, this type of
company poses varying degrees of risks that the entrepreneur must know. These
factors pose risks of varying degrees of intensity. The main risks of this type
of business are related to
a) high
costs of raw materials;
b) respect
to the norms of the Brazilian Association of Technical Norms (ABNT) regarding
the specifications of products that demand rigid inspection;
c) seasonality
in sales operations.
EPL’s mission is “industrialization
and commercialization of metal frames for building materials stores and
builders.” Advances in the construction
sector that have caused changes in the entrepreneur’s relationship with its
consumers characterize its scenario. The development of micro-enterprises is
related to constant innovation in the construction. The companies that
manufacture and market such a product may choose to sell where the customer
pays only the product or sell to building materials stores. If they decide on
these retail stores, they automate the packaging process.
EPL sought to observe the market in
its operations as to the type of customer that the product is intended for, the
customer's wishes; what characteristic my service should present; where the
competition is; what size it is; resources (financial, material, human) will be
needed to adapt to the market needs. The purchase of raw materials by EPL is
smooth, despite fluctuations in prices and payment terms. Suppliers, in general,
are large groups that maintain a monopoly of raw materials and require quotas
for their acquisition.
There are also intermediaries who
sell in bulk, who demand their inputs at a relatively higher price when
compared to other raw material acquisition alternatives. In the analysis of the
competition, EPL took into account the size, location, and power of
penetration. This research-based analysis establishes the strengths and
weaknesses of the competition.
Among these points, one should check
the quality of the product, the average delivery time, the service system and
the price practiced by the competing market. The competition in this sector is
high, for there are legalized competitors and a significant number of
“informal” companies selling products at low prices. Building material store
networks can also lower their prices thanks to their high inventory turnover.
In this way, EPL and other companies
in this segment must distribute its product in the most varied regions, with
good quality, and at competitive prices. This market, although competitive, has
the capacity to absorb all the production, because they are the first necessity
products with extremely high consumption. EPL installed its factory in an
industrial shed containing all basic infrastructure in terms of water,
electricity, telephone and related facilities.
When the project was initially
implemented, the facilities and equipment were physically arranged in a single
area, in an open space, to house the three production lines of metal window
frames; dismantled frame assemblies; and spare parts. They also implemented
spaces for storage of raw materials, storage of finished products, movement of
people and other aspects of a functional physical arrangement.
The initial investment required by the
enterprise implemented by EPL was composed of fixed investment (new or used
machinery, other equipment used in its activities) and working capital. Working
capital included the resources needed to purchase the initial merchandise
inventory for the payment of administrative expenses (fixed costs) for the
first months and to cover other expenses (registration, advertisement,
promotion, and similar items).
The total production costs of EPL.
were composed of variable costs (direct labor and direct materials); and fixed
costs (which depend, among other factors, on the amount that each partner
intends to withdraw from the company as pro-labor, from the property to be
owned or rented, from public service tariffs and from hiring or not
administrative support staff).
4.4.
Hierarchization
model
Based on the analysis of the data of
the organizations surveyed, their basic characteristics, common to the other
organizations of the economic sectors to which they belong, were specified, as
explained in Table 1. These characteristics were the basis for the proposed
model, with different results in the three organizations analyzed.
In fact, industrial organizations
involve companies that transform productive inputs into products, as is the
case of automotive vehicles, which is a product manufactured from raw materials
such as tires, steel sheets, upholstery, engines, and inputs manufactured by
their suppliers.
While it is necessary to recognize
that each economic sector has its particular characteristics, it has become
useful to group companies that, generally, have similar characteristics, to
verify the operation of blocks of companies and the behavior of the competitive
forces within each business grouping. The factors that allow the merging of
different companies into blocks, companies more or less equivalent to each
other, are the degree of concentration (which is basically determined by the
barriers to entry of new companies in the industry), the degree of
differentiation of products and production processes adopted by organizations.
It was based on the observation that
there are different companies in the market that can be grouped into
differentiated categories, showing organizations that are characterized by a
gain in the asset turnover, unlike others. Its formulation focuses initially on
the understanding of the organization as a whole and its interrelationship with
the economic sector or area of business in which it is inserted.
This form of simplified
classification in the economic sector (industrial, commercial or service) can
unfold in several segments (subsectors) increasing the complexity of such
typology. That is, a sector such as the industrial sector is subdivided into
segments of manufacturing such as vehicle assemblers; steel industry; paper and
cellulose; cement; chemical; and others.
Commercial organizations, wholesale
and retail mode, have their basic characteristics. These organizations
intermediate transactions between the industrial organizations selling the
products they manufactured to the customer (final consumer). This is the case
of vehicle distributors who sell the automotive vehicles manufactured by the
automakers selling them to their customers (individual or legal buyers).
In addition, the organizations of
the services sector are those providers of work to the organizations of other
economic sectors (industrial and/or commercial) or even those belonging to the
same branch of services (see Table 1). Examples of organizations in this sector
are those that provide surveillance services, property security, advertising,
and other related services.
Industrial organization Application
of certain principles of Taylor/Fordism with evolution to Toyotism.
Standardized production flow (assembly line or continuous production flow).
Manufacture of normally homogeneous products. They transform raw materials
(productive inputs) into final products (industrial goods).
Commercial organization Emphasis on
the concepts of the Contingency Theory with activities of buying and selling
products purchased from industries or other commercial organizations. They are
retail and wholesalers.
Organization of services provision
Custom production of services. Heterogeneous products (services). They are
organizations such as sewing studios; software studios; business consulting;
advertising agencies; accounting offices; schools and colleges; among others.
Table
1. Basic characteristics
Industrial
organization |
Application of certain principles
of Taylor/Fordism with evolution to Toyotism.
Standardized production flow (assembly line or continuous production flow).
Manufacture of normally homogeneous products. They transform raw materials
(productive inputs) into final products (industrial goods). |
Commercial
organization |
Emphasis on the concepts of the
Contingency Theory with activities of buying and selling products purchased
from industries or other commercial organizations. They
are retail and wholesalers. |
Organization
of services provision |
Custom production of services.
Heterogeneous products (services). They are organizations such as sewing
studios; software studios; business consulting; advertising agencies;
accounting offices; schools and colleges; among others. |
This form of analysis allowed the
identification of its basic characteristics, generic strategies and operational
strategies to be observed in the proposed model.
4.5.
Decision
making and management indicators
The model is based on the principles
of characterization of the organization distinguishes different types of
organizations; the existence of generic and specific strategies for each type
of organization. The specific strategies, which depend on the management style
of the manager and their beliefs, values, therefore, not considered in the
suggested model. It was also adopted the assumption that the decision-making
process is a direct function of the organization's productive chain and that it
can be hierarchized in levels within the contours delineated below (see figure 1).
The model considered an outside-to-inside approach to the organization and the
general-to-the-private according to the systemic approach adopted.
This
approach shows that an organization, whatever it is, is a succession of
decisions that its manager needs to make throughout his or her lifetime. These
decisions can be hierarchized on a scale of relative importance where
"important" are classified as strategic and "minor" are
framed as operational.
The
model takes into account that the manager, in any decision, cannot consider
everything equally important (too many decisions and information can camouflage
crucial issues). The strategic decisions, therefore, are those related to the
adaptation of the organization to the external environment and that affect its
competitive position in the economic sector to which it belongs.
Figure
1: Hierarchization model
Source:
Authors’ conception
It
usually refers to long-term business activities where the nature of their
decision is complex, not clearly defined where one problem is different from
the other. It, therefore, uses information from the external environment and
flexibility to solve its problems (e.g. innovation in products and/or
production processes) with the application of innovative technologies.
Operational
decisions, on the other hand, refer to choosing the course of action to be
taken in the operational cycle of the organization (productive chain of its
end-activities). Their decisions usually relate to the internal environment,
their short-term time horizon, and their problems are routine and repetitive,
therefore, they can be standardized.
4.6.
Implementation
of the model
The implementation of the model was
done at the ESG, whose mission was “to provide gastronomic services to the
tourist-class public.” To achieve this, the company tries to meet the
expectations of its customers and employees and be recognized in the market for
its quality.
The management of its business
activities involved decisions to be made regarding services; price; distribution
channels; and promotion and advertising. These decisions were ranked from the
“most important” (strategic) to the “least important” (operational) from the
analysis of their mission and productive chain, as shown below (see figure 2).
Strategic-Level decisions were
identified in terms of services and strategic partnerships. The latter with
hotels; tourism agencies; providers; transport companies; promoters of social
events; specialized media; class entities; producers of gastronomic programs;
cellars; and local restaurants
Figure
2: Decisions in service organizations
Source:
authors
It was defined as a management
indicator, metric to measure the financial outlays and disbursements, to
monitor the continuity of the organization's strategic activities. It is
calculated as:
Indicator
of outlays and disbursements (IED) is number of days of disbursements (ndd)
divided per number of days (nd).
IED
= ndd : nd
This indicator, now calculated as
"3" (120 days divided by 40 days = 3), means a metric positive from 3
to 1 day, which is the disbursement cycle, with a longer payment period. That
is, for each day of receipt of cash the company has “3” days of payment deadline.
It means that the manager of the company would pay its suppliers on time
(payroll and productive inputs) and would receive cash from the customers.
As indicators of performance
(operational level) to control the activities of the production chain were
defined: financial commitment; planned and performed; participation of
partners; and own resources versus billing.
Financial commitment: The monitoring
of the financial movement is done by means of an "overdraft
commitment" indicator, which is a metric that relates the values coming
from the bank checking account of the overdraft (or even from the credit card),
relating to the personal expenses of the members (legal entity) in a given
period (monthly) by the total financially handled by the company (value of
checks issued / total of amounts disbursed in the period).
If the indicator reached is “0.05”
it means that 5% of the expenses in the period were incurred by the individual,
represented by the owners, as movement on their overdraft check (or even credit
card). When linking amounts disbursed with items of property, plant, and
equipment, one can use the possibilities of obtaining external financial
resources to finance such acquisitions (asset purchase/disbursement amounts
incurred in the period).
Financial control: "Planned
versus realized control" is a metric that relates the planned values
related to the personal expenses of the partners (legal entity), in a certain
period (monthly) by the total planned to be handled, financially, by the
company (planned values to be disbursed in the period / total of planned
amounts to be disbursed in the period).
If the indicator is “0.10”, it means
that the individual, represented by the owners, as a movement on their
overdraft check (or credit card), will incur 10% of the planned expenses for
the period. The values of the relationships established in the metrics can be
expressed in US dollars or other reference currency to allow comparisons with
past years incurred in that same business organization.
The “membership participation”
indicator is a metric that relates the amounts committed by members to pay
expenses in a given period (monthly) by the total financially occupied by the
company (resources of the owners / total resources moved (100%)). It is the
kind of indicator the smaller the better.
For example, if the members
disbursed US$ 7,500.00 in a given month, out of a total of US$ 75.00 handled by
the organization, means an indicator of 75.00 divided by 7,500.00 equal to
0.10, which means that 10% of the financial movement was banked with resources
of the owners of the company.
Therefore, it is a situation to be
avoided in the day-to-day operations of the organization. This is because the
mixture of family and business of the company result in problems and conflicts
between its owners. The indicator ‘financial resources of partners versus
billing of financial resources of partners versus billing’.
Own resources vs. billing is a
metric that relates the values committed by the partners to pay expenses in a
given period (monthly) for the total invoiced, by the company (resources of the
owners total turnover of the company (100%)). The "membership
expense" indicator is a metric that relates the personal expenses of the
partners (legal entity) in a given period (monthly) to the total financially
occupied by the company (total expenses associates / total resources moved by
the company (100%)). If the indicator calculated is "0.05", it means
that "5%" of the expenses incurred in the period were incurred by the
individual represented by the owners.
The PDS indicator verified in the
year showed that the owner represented 82% of the expenses incurred in the
company. This percentage is significant since 82% of the total expenses
incurred by the company did not belong to itself. The PRM indicator verified in
the year indicates that 18% of the expenses are pertinent to the organization
and that they were paid with own resources, evidence that the entity has the
capacity to generate cash to meet its needs.
Based on the analysis it is noticed
that the company has few expenses, for acting in the provision of services,
however, it has been suffering the impact on its availability due to the
personal expenses of the partners. Based on the CPR indicator analyzed for the
year, it was possible to show that they were disbursed 10 times higher than
expected and planned monthly for the withdrawal period. In none of the months
studied the planned value was executed, as evidenced in the financial
monitoring model.
The indicator “participation of
expenses and resources handled” is a metric that relates the values related to
the expenses of the company (legal entity) in a given period (monthly) by the
total financially occupied by the organization (total expenses company / total
resources moved by the company (100%)). If the indicator found is 0.05, it
means that the individual, represented by the owners, incurred 5% of the
expenses in the period. The benchmark of the restaurant, dividing billing
volume, revenues or sales in monetary terms, in Dollar) by the number of
employees, with employment relationship more outsourced. That is an individual
company indicator = billing volume number of employees.
Subsequently, of the restaurants in
the region (sum of the affiliated companies the class entity/union of bars and
restaurants), dividing sales volume, revenues or sales in monetary terms, in
Dollar) by the number of employees, with employment contract plus outsourced.
This is: region indicator RI) is equal to billing volume (bv)
divided by the number of employees (ne).
RI = bv : ne
Indicator A: “14% of sales channel
delivery”. Increase sales through the delivery channel (marketing and good
service). Increase sales through the delivery channel (marketing and good
service). Due to the volume of card receipts, it is necessary to monitor the
respective bank credits (reconciliations) and negotiations of fees and monthly
payments with the card operators, in order to minimize financial expenses and
greater control of the amounts actually received.
Another correlate indicator for
commercially measuring the business is to relate turnover by the number of
customers in a given period. That is, add up the monthly billing, dividing it
by the number of customers. For example, adopting values of the last month, for
US$ 30,000.00 divided by 1,200 customers, we have an indicator equal to “25”.
Interpreting such an indicator means that the restaurant earned US$ 25.00 per
customer.
Indicator B: “Little diversification
for delivery”. Due to the short term for payment to suppliers, and lack of
flexibility to negotiate this proposition, it is necessary to control rigidly
the stock turnover, to avoid “holes” in the cash flow and unnecessary
expenditures.
Indicator C: “delivery rate”.
Consider the gain per quantity of sales (increase delivery) and reduce or
eliminate the delivery fee. Fixed costs (rent and payroll) are the commanders
of flat-rate net income. Since there are few decisions that can reflect the
reduction of these costs, an extra effort is needed to reduce variable costs in
order to balance or maximize this margin. It is suggested that competition
analysis can collaborate with innovations (new practices) to improve this
result. It is concluded that the establishments are expanding their distribution
channels (counter, delivery and similar). The organization, therefore, should
concentrate its marketing for the delivery, as it is being done in the
competition; in addition, to better diversify its products.
As seen in the Company “C”, in which
we can highlight an interesting aspect of this branch, the establishment is
subdivided into three businesses: industry (baking), commerce (sale of
products) and services (restaurant). This would make life easier for the
consumer, who solves multiple items in one place and improves the bakery
results. Consider also, for the company, the possibility of opening new sales
channels (food trucks) to attend events.
This can generate an additional
return and since the itinerant food service is a market trend, this new service
can add value to the restaurant brand, and thus attract more customers to the
store. The mission of the Company: To offer quality food, with the best flavor
and speed. The mission of competitor “B”: use our natural gifts and talents in
the preparation of the dishes, serving, in essence, the word to all our friends
and clients. The mission of competitor “C”: to offer the best products, with
the best possible care within the ethics that governs the food laws.
4.7.
Commercial
company
The application of the proposed
model (see figure 3), with the corresponding metrics, is illustrated below. The
value chain based on the end-of-organization activities (mission) originates
from suppliers of inputs (vehicles and parts) and ends in the delivery of
products to final consumers (customers).
Figure 3. Decisions in commercial organizations
Source:
Authors
For strategic level decisions, which
encompass the definition of the product line, purchase of new vehicles (VNs), used vehicles (VUs) and sales prices, are metric
proposals such as: financial management indicator (IGF); and economic
management indicator (IGE).
When unfavorable, IGF may jeopardize
continuity of the company. It is calculated as, financial turn is igual number of days of
disbursements (ndd) divided by number days cashed (ndc).
IGF =
ndd : ndc
This indicator, now calculated at
"3", means a metric whose ratio is positive from "3" to
"1" day, which means that it is a cycle with disbursements with a
longer payment term. That is, financial
turnover = 120 days ¸ 40 days = 3.
Therefore, for each "1"
day of receipt of cash the company has "3" days of deadline for
payment. In other words, the company manager pays its suppliers on time (30-day
payroll and 60-day subject suppliers) and receives from customer sales in cash,
given the financial resources of financial agents’ credit operations.
The economic management indicator (IGE) represents the turnover of
products, calculated by dividing the average number of days of inventory. In
the case of CDV, an indicator equivalent to 30 days is used. That is, it is the
average time that vehicles are in stock.
For operational decisions,
performance indicators are inherent in the form of financial movement; and
control of planned and performed.
4.8.
Industrial
company
Decisions
were ranked from the "most important" (strategic) to the "least
important" (operational) from the analysis of their mission and productive
chain, as shown below (see figure 4).
As productive processes, the sustainable
value chain was considered, supported by the adoption of ISO14000
(environmental management), ISO16000 (social responsibility) and ISO18000
(health and safety at work) certification.
As operational decisions, we have:
a) sizing
the sales targets and production;
b) careful
selection of clients, good payers, in order to avoid default;
c) preservation
of stocks at minimum levels, whether raw materials or finished products;
d) minimizing
the need for working capital through the use of outsourced labor, as far as
possible, in the company’s activities.
Figure 4: Decisions in industrial organizations
Source:
authors
Its strategic decision is process
innovation, and its respective indicators are explained below. The innovation
indicator is calculated by relating the "expenditure on innovation in the
product in the period", by "turnover in the period". The billing
amount (denominator of the ratio) can be replaced by the profit amount of the
period. In this way, the percentage of profitability of the period invested in
innovation and technology would be measured. It would be a measure of
reinvested values in the business of what was noted in the period as
"added value."
Another indicator of innovation
derived could relate values invested in the creation of the improvement of
products (goods or services) and production processes. That is, Indicator of
innovation (IOI) is equal to Values in brands and patents in the period (vbpp) divided by Invoicing in the period (IP).
IOI =
vbpp : ip
Analogous analysis to the previous
indicator may be applicable and with the replacement possibility of the billing
amount of the period with the volume recorded in the deferred asset accounts.
Such an approach can be used to
measure expenditure on innovation, relating it to the cost of goods sold
(costing of goods/services production). That is, the indicator of innovation in
process (IOIP) is equal to values invested in innovation (vii) divided by the
total cost of production of the period (tcpp).
IOIP
= vii : tcpp
It is possible to establish metrics
that show capitalized values in innovation and technology applied to processes,
namely:
innovation
indicator (II) is equal to expenditure on product innovation in the period (epip) divided by turnover in the period (tp).
II = epip : tp
The billing amount (denominator of
the ratio) can be replaced by the profit amount of the period. In this way, the
percentage of profitability of the period invested in innovation and technology
would be measured. It would be a measure of reinvested values in the business
of what was noted in the period as "added value."
Similarly, one could calculate the
same values spent on innovation in processes, divided by the total number of
employees on the shop floor. This would make it possible to analyze the per
capita values of labor (own and outsourced) allocated in production. As a
period, one can consider the annual, quarterly or even monthly exercise. If it
is convenient, the amounts invested in products (goods or services) can be
exchanged for the cost of improving processes. This involves or does not
involve the introduction of new technologies applied to products and/or
production processes.
The analysis in a comparative way
can be done, with values before and after the innovation implemented. Whatever the indicator, it is feasible to
compare with equivalent metrics available for benchmarking purposes. An example
is the innovation indicator, whose benchmark of market excellence is the
investments in innovation, on the value of the billing of the period in focus.
In this case, the indicator of each
company can be determined by relating:
volume of sales (revenues or sales in monetary terms) by the number of
employees, with an employment relationship, plus outsourced personnel.
That is, individual company
indicator (ICI) is equal to billing volume (bv)
divided by number of contributors (nc).
ICI =
bv : nc
An indicator of the companies of the
sample was verified (sum of the 40 companies), dividing the volume of billing,
by the number of employees, with the employment relationship, plus outsourced.
That is, sample indicator (SI) = billing volume (bv)
divided by the number of employees (ne).
SI = bv : ne
The indicator of the companies in
the region (sum of the companies affiliated with the class/union), divided by
the sales volume (revenues or sales in monetary terms, in Dollar) by the number
of employees can be calculated as Region indicator (RI) is equal to Billing volume (bv)
divided by Number of employees (ne)
RI = bv : ne
5. CONCLUSIONS
An attempt was made to establish an
understanding of the functioning of organizations in three economic sectors
(commercial, industrial and services) with the implementation of the proposed
model. This model, of the non-prescriptive type, can be adapted to the
singularities of other companies not covered by this work. The results obtained
allowed to deduce that the decision-making process is composed of objective and
subjective elements that vary according to the management style of its leaders.
Although
it is necessary to recognize that each organization has its own characteristics,
it becomes feasible to group companies that, generally, have similar
characteristics, to enable the operation of blocks of companies and the
behavior of competitive forces within each economic block.
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