Employee retention using lessons from motivation theories Essay

Employee retention using lessons from motivation theories - Essay Example The paper tells that as businesses face the challenge of operating in a tough global economy they have been forced to perform painful layoffs while at the same time seek to retain their high-impact performers. One would expect it to be easier to retain staff amidst this period of economic recovery however the paradox is that there is a shortage of people with the requisite talent that companies need to remain competitive in this tough business environment. This means that the few critical employees that each company seeks to retain are also the ones who are attractive to competitors. The challenge therefore remains in retaining these critical staff. The importance of retaining critical staff cannot be gainsaid. When an employee leaves an organisation the organization loses primarily on the knowledge, skill and experience that the individual had developed over time at his/her present occupation. To fully comprehend the importance of maintaining critical employees Ramlall raises three postulations of the human capital theory. To begin with human capital theory posits that people possess skills, experience and knowledge which represent capital to an organization because they enhance productivity. This means that employees are of economic value to organizations. Secondly, the theory posits that not all labour is equal. Some labour is more valuable than others by the mere fact that more resources have been invested in their training. It is therefore important for the organization to ensure that it retains those on whom it has invested more in developing. Thirdly, investment in building skills among employees would be more profitable and more likely to be undertaken the longer the period over which the returns from the investment can accrue (Ramlall, 2004). This implies that an organisation would derive more value out of its staff if it can train them and then retain them for a significant amount of time within which the staff can use their skills, experience and k nowledge to improve the organization’s processes. Employees possess skills, experience and knowledge, and therefore have economic value to organizations. Where employee turnover is high the company fails to realize a full return on its investment in hiring and training staff. This report reviews the classic motivation theories and uses them to explain how organizations could devise techniques that will enable them retain their high-impact employees. 2.0. Work motivation The heart of motivation is to give people what they really want most from work (Mullins, 2010). Motivation can be of

WEEK 6 LEADERSHIP Essay Example | Topics and Well Written Essays - 500 words

WEEK 6 LEADERSHIP - Essay Example The goal is not to eliminate feelings from the decision-making process. The more the decision maker knows about the decision-making process, the more the intuition (Parker, & Begnaud, 2004). In most cases, great decision makers are great leaders. Leadership entails dealing with people and making decisions that affect the organization. If a leader is not a good decision maker, organizational progress may be hampered. i. Directive style: this involves decision makers with low ambiguity tolerance. The decision-making style is rational, efficient, and employs a logical way of thinking. The style focuses on the short-term and rushes in making decisions. ii. Analytic style: the style has higher ambiguity tolerance. It involves careful decision-making that is well informed. It includes a thorough assessment of the options. The style involves coping with challenging situations (Parker, & Begnaud, 2004). I mainly use the analytic decision-making style. Before making a decision, I try to understand all the issues in depth and conduct a thorough assessment of the available alternatives. I think that some decision-making styles are better suited for public safety leaders that for CEOs of large companies. The behavioral style is best suited for public safety leadership because it entails consideration of all the parties involved in the decision-making process. A Chief Executive Officer of a popular company needs to employ the analytic style to ensure that the process impacts on the organization even in the

MEMO Assignment Example | Topics and Well Written Essays - 1000 words

MEMO - Assignment Example FICO scores are reviewed by almost all lender agencies in America, before they arrive at credit decisions to offer their customers credit. For that reason, through the proper usage and incorporation of the scores, as a banker, you will be able to avoid customers with poor credit history, which will improve the financial performance of Fidelity bank. Overview of the main Fico Scores The FICO scores of customers will take into account, five main information categories that relate to the customer’s credit profile. When using FICO scores to determine the customers that can be offered loans, the chart given below displays the comparative weight offered to the different score areas. The 5 main areas featured in FICO scoring and their relative weight The review of the different ingredients of the FICO scores 1. Payment history The payment history of the customer contributes about 35 percent of their FICO score. The information reflects their information on different financial account s and areas. The different accounts reflected through the information include Credit card worth and standing, for cards like MasterCard, Visa, Discover and American Express. The second accounts featured are retail accounts, where the customer’s financial operations reflect the credit collected from outlets where they do business – showing the credit cards used at departmental stores, and the credit history maintained. The third account reflected is installment loans, where regular reimbursements for loans like mortgages or car loans are reflected. The fourth account reflected through the payment history is finance company records. Additionally, collection items and public records are reflected, giving information on events like foreclosures, bankruptcies, wage attachments, lawsuits, judgment and liens. Lastly, this score area gives information on the accounts that don’t show late payments, and whose financial obligations are met as agreed upon. From the informat ion captured about the different accounts and fields named before, you will use your judgment to verify whether the given customer has shown a history of repaying loans and whether their financial standing warrants the loan they are asking for. Therefore; based on the information captured, you will only offer credit to a customer with a favorable credit history and avoid those with poor payment history, because a poor history shows that they are more likely to give problems when repaying the credit. 2. The second area where you need to pay much attention is the field of the amounts owed. This information reflects about 30 percent of a customer’s FICO scores, which indicates their level of indebtedness. The areas reflected by this variable include the amounts owed for the different accounts held by the customer, the amounts apportioned to different account types, the balances from different account types, the proportion of the credit consumed through credit cards among other c redit accounts and how much the customer is yet to pay, on different loan amounts. Through the review of this score area, as bankers you will determine the level of debt that the customer has collected, which can influence their ability and their pattern of loan repayment. For example, from the case of a customer who has used larger proportions of their

SMITHFIELD STREET BRIDGE (PA) Research Paper Example | Topics and Well Written Essays - 3000 words

SMITHFIELD STREET BRIDGE (PA) - Research Paper Example Pittsburgh’s huge need for bridges presented a good opportunity for the engineers to showcase their knowledge and talent .The only form of transport within the town and some sections of the river banks in the early 19th century was the use of skiffs or canoes. As the community developed people realized that it was mandatory to build a ferry service and in 1818 the Jone’s Ferry service was established, in order to improve their business oriented culture. The ferry operated between southern bank of Monongahela and the base of Liberty Street. Stock and goods were carried by boats while passengers were carried by skiffs. In 1840, a more advanced horse ferry was developed which used blind horses as motive power. The blind horses were fitted in horizontal wheels when then propelled the boats (Von 77). A few years later a steam ferry was established by Captain Erwin on the southern bank of Ohio near the section where the rivers formed a confluence. Sadly, the ferry project col lapsed a few years later together with the Jones ferry project.Leaving just one operational steam ferry which operated from Penn Street to Saw Mill Run.The essay will deal with the three bridges elected at the Smithfield Street and how their construction revolutionized the bridge construction technology in the 19th century when civilization was developing at a remarkable speed The first bridge among the Pittsburghs highway bridges was known as the Monongahela Bridge. A bill was passed In Pennsylvania by the state legislative council allowing two bridges to be built at Pittsburg. One would be built over the Allegheny and the other one over Monongahela. Judge Findley, a member of the legislative council was given the task of calculating the overall cost of the structures. His calculations indicated that approximately 1200 feet of the river required chains that were 1590 feet long and four other iron chains weighing 64

Certificate of Need (CON) Case Study Example | Topics and Well Written Essays - 1250 words

Certificate of Need (CON) - Case Study Example The CON is crucial in the clinical setting in that it evaluates the competing interests and boost economic value. Without the CON, it is evident that the health care environment would be a free market with open competition. Challenges would emerge when making decisions and expanding medical services. As an outside consultant, I seek to evaluate the diversity issues in this case study and their impact in the clinical setting. The advantage of this position is that it lays a strong ground to be open-minded when giving out the solutions on what should be done to enhance quality care. However, the main challenge is that one does not have the power to make decisions that affects the organization. With this, the chief administrator would be in a better position to oversee what is going on in the organization and implement decisions that enhance the organization’s success. Diversity Issues and their impact The case in consideration is the open heart surgery, which is a highly profita ble service that profits Pennsylvania. From 1996-1997 to 2007-2009, Pennsylvania increased the number of hospitals offering open heart surgery. Despite the progress made, the number of procedures made in the state decreased by 37%. The change attributed to less usage of clinical facilities, skilled surgical teams, and cardiothoracic surgeons. The issue was so severe that it contributed to the termination of three hospitals, which are Medical College of Pennsylvania, Episcopal Hospital, and Graduate Hospital. The main question that emerges from this case is why so many open heart programs would be launched despite the face of declining market. Major Problems and Issue In my opinion, open heart programs would be launched because they bring profit to the organization. As previously mentioned, open heart surgery is a highly profitable service that supports many hospitals. Nevertheless, opening many heart programs in the face of declining market would lead to economic depression. Most ho spitals may not be in a position to meet their financial goals and objectives. The machines used on these programs are costly. Thus, it is important to understand the market before launching or adding them. This would prevent economic problems that eventually may hinder the successful running of the organization (Jonas, & Kovner, 2011). Organizational Strengths and Weaknesses Although the new programs were justified to bring income, the truth of the matter is that there was no market analysis conducted prior to launching the programs. The organization fails to recognize the negative effects that would emerge from launching open heart programs in the face of the declining market. As documented in the case study, the change of these programs resulted into less efficient utilization of clinical facilities and highly skilled surgical teams. In other words, it affected the entire work performance and productivity of the organization. Because of economic depression caused by programs laun ched, the Philadelphia experienced a number of changed such as the closure of three known hospitals. Alternatives and Resolution To rationalize the number of programs in an open and free market I would embrace the CON in effort to increase the access of many hospitals to use the programs. The CON would help to improve quality in major health care services, and in turn this would boost the planning and resource development of the hospital. The services I would recommend this organization to embrace in the CON is preparing, revising, and reviewing rules and regulation for the analysis of medical services application. It is also important to conduct special studies and projects on the major k health issues with special improvement in the

Capital from profit Essay Example for Free

Capital from profit Essay Describe the sources of internal and external finance, available to Barneys business.  There are two main ways that business can access financial resources:  1. Internal sources ( within the business)  This is the money you can get within the business:  Owners savings- I believe Barney has some money for himself if he is thinking to start a new business, because its the owners who are often invest in their company to cover the setting up costs. It might be the only source they available immediately for them as for sole traders like Barney, banks or other financial institution unlikely to offer a loan as there is too much risk involved, and if you have that kind of money it is really good for the business as you will not have to pay it back by monthly or pay an interest. Capital from profit- this will become available after the business set up and operating. Once they have run for certain time, they may make some profit to invest into the business to run or buy more stock or buy new machinery to grow the business  2. External sources (outside the business)  There are number of different external sources that business can get money from to help them to set up or invest in. Banks- they can offer loans, overdrafts and business account to businesses but you will have to have a good business plan to get it. Loans are not easy to get and might not be a good option for small business as you must pay it back with interest in certain amount of time and if the company goes down the owner will end up with huge debt. The choice I would suggest is the overdraft for him as it is flexible and you wont have to pay a penny unless it is used, there are some banks who offer interest free overdraft, if you can get it will be a win! Friends/Family- you can always seek for help from your friends and families and you can even offer them a share for return of their investment or just borrow some money from them to put towards the business if they are nice enough. I would say it is the best option of borrowing money as you dont pay interest and it is your family they will not give you to court unless you run with their money. Government grants- these are available from the EU, national/local government. A grant is money you can receive as a business man; a good thing about it is that you dont have to pay it back. If Barney falls under the age group of 18-30 he can get a low interest loan from Princes Trust.  (a) The purpose of budgets, and how they can be used to monitor and control the performance of Barneys business, including, the monitoring of actual performance against budget and the use of variance analysis. Budget is a written plan with spending which will occur and a revenue that is need in the future to cover these costs. The purpose of it is it gives you clear understanding of what to expect to spend/receive in the future (coming year) to prevent or act any crisis before it happens. It also can be used as a communication between the employees to understand the objectives of the business and work towards it. For owners they can see how well their managers managing the budget plan and performance of them.

Fauji Fertilizer Company Ffc Background Management Essay

Fauji Fertilizer Company Ffc Background Management Essay In 2002, FFC acquired ex Pak Saudi Fertilizers Limited Urea Plant, situated at Mirpur Mathelo. This acquisition, worth PKR 8,151 million, is one of the largest industrial sector transactions in Pakistan to date. Today, FFC has three plants with a combined capacity of 5,770 MTPD of prilled urea. It is one of the thirty biggest companies of Pakistan, represented via the KSE-30.2 Along with being one of the largest urea producers in the country, FFC is involved in training manpower and providing turnaround services within Pakistan and in the Middle East. A timeline of the evolution of FFC ensues.3 1978: Incorporation of the Company. 1982: Commissioning of Plant I, Goth Machhi with annual capacity of 570 thousand tonnes. 1991: Listed with Karachi and Lahore Stock Exchanges. 1992: Through the De-Bottle Necking (DBN) programme, the production capacity of Plant I was increased to 695 thousand tonnes per year. 1992: Listed with Islamabad Stock Exchange. 1993: Commissioning of Plant II, Goth Machhi with annual capacity of 635 thousand tonnes of Urea. 1993: Initial investment in Fauji Fertilizer Bin Qasim Limited, a DAP and Urea manufacturing concern; currently stands at Rs 4.75 billion representing 50.88% equity share. 1997: With achievement of Quality Management System certification in Goth Machhi, FFC became the first fertilizer plant in Pakistan to achieve this distinction. 2002: FFC acquired ex Pak Saudi Fertilizers Limited (PSFL) Urea Plant situated in Mirpur Mathelo (Plant III) with annual capacity of 574 thousand tonnes of urea, which was the largest industrial sector transaction in Pakistan at that time. 2003: FFC obtained certification of Occupational Health Safety Assessment Series, OHSAS-18001:1999. 2004: With investment in Pakistan Maroc Phosphore, Morocco S.A. of Rs 706 million, FFC has equity participation of 12.5% in PMP. 2008: Investment of Rs 1.5 billion in Fauji Cement Company Limited, currently representing 6.79% equity participation. 2008: DBN of Plant III was executed and commissioned successfully for enhancement of capacity to 718 thousand tonnes annually. 2010: Investment in FFC Energy Limited, Pakistans first wind power electricity generation project. 2011: SAP ERP implemented in the Company, improving business processes by reducing time lags and duplication of work. Vision Pakistan is a burgeoning market, not just in terms of head count, but also in advancement in the way agri-business is now carried out. Gone are the days of antiquated fertilizers, instead, only the best is now sought. FFC foresees this market to be extremely lucrative. It wants customers to benefit from its palette of product offerings, both domestic and outside the home country. It seeks to be thought of as not just the best there is, but also as a conscientious and caring company. FFC aims to be positioned as a very well-rounded organization in the minds of all its stakeholders, whether external or internal. Its value chain has quality at its core. It strives to be successful via total integration of streamlined processes, incomparable products, driven and motivated workforce, and extraordinary service, all the while staying ahead of the competition and continuously scanning the market. Corporate Strategy Our flexible and dynamic corporate strategy strives for enhancing customer satisfaction by adding value over the long run. We aim at creating value for the stakeholders by maintaining and improving our competitive position in the market. This is achieved by focusing on our sustainable competitive advantage that is derived by continuously assembling and exploiting an appropriate combination of resources and capabilities in response to the changing market conditions. Our organizational culture is one of our most fundamental competitive advantages. We have built and preserved an innovation-adept culture, a culture that promotes transparency and accountability through honesty, integrity and diligence in our dealing with employees, customers, financial market, government, regulatory authorities, and all the other stakeholders. Diversification in business line is also being considered. Our unique corporate strategy gets aligned with the resource allocation system and flows down to the oper ational levels, thus ensuring its implementation at all levels along with the achievement of the intended results.6 FFC focuses on value addition. This means that everyone at the company tries to make each subsequent year better than the previous one. This enhances the value creation process. For this, the corporate strategy is characterised by flexibility and innovation, which are also the core components of the culture of the organization. FFC prides itself on having been able to develop a culture which is innovative, transparent, and honest. Innovation allows FFC to be able to anticipate and prepare for change, by aligning its internal strengths with the external opportunities. Transparency enables FFC to satisfy every stakeholders requisites, since nothing is swept under the rug. This promotes diligent behaviour and accountability at all levels. Honesty is a trait which is valued from the very top to the very bottom of the hierarchy at FFC. It is this particular combination of all the above that the culture is both employee centric and customer centric. The human element, be it in the form of a worker/manager or a customer, is highly valued at FFC. Therefore, while the former is kept abreast of everything that goes on in the organization, the latter is assured of premium quality product and premium quality service every single time. Organization is all about teamwork. FFC is aware of this, which is why it demands uncompromising integrity and hard work from all individuals, so that the sum is greater than the parts. There is mutual understanding, trust, and interdependence. In return, FFC has a very worker friendly environment. Commitments within the company as well as with business partners, suppliers and customers are valued and kept. FFC is founded upon the principles7 of à ¢Ã¢â€š ¬Ã‚ ¢ Honesty in communication; à ¢Ã¢â€š ¬Ã‚ ¢ Excellence in products and services; à ¢Ã¢â€š ¬Ã‚ ¢ Consistency and synchronisation in words and actions; à ¢Ã¢â€š ¬Ã‚ ¢ Compassion in relationships within the micro and mega environments of the organization; à ¢Ã¢â€š ¬Ã‚ ¢ Fairness to all stakeholders through adherence to laws, regulations and policies. FFCs Financial Health Fauji Fertilizer Company (FFC) enjoys stable gas supply from Mari gas fields because they come under Fauji Foundations ownership. This translates into a huge competitive advantage over other fertilizer manufacturers, which are linked with the Sui-based networks. Financial highlights of FFC for the current year appear in the table below. These are for the period ended September 30, 2012.8 2012 (Rs 000) 2011 (Rs 000) Turnover 29,208,413 36,321,157 Cost of sales -22,778,306 -22,565,347 Gross Profit 6,430,107 13,755,810 Administrative Expenses -677,700 -550,247 Other Income 695,185 1,092,089 Taxation -991,876 -3,721,386 Profit after Tax 2,130,481 7,169,794 Earnings per share (Rs.) 2.28 7.68 Source: FFCs Annual Report for the Third Quarter, 2012 Revenue increased by 49% during the first half of 2012, due to high urea prices and sales of imported DAP. FFC urea sales exceeded 500,000 tons in June, which made up for declining sales in the first five months of 2012. In total, urea sales were up by 6% to 1.2 million tons in the period under review.9 Urea prices remained volatile from April to June 2012, as the GoP decided on a price slash for May, along with an announcement of reversal of Rs 50 per bag in June. This was much needed so as to be able to compete with cheaper imported fertilizer, due to government subsidy on it. FFCs urea plant underwent 30% gas curtailment last year, which was ten percent more than that decided for the plants operating on the Sui gas network. This resulted in an extended shutdown of 27 days of the urea plant, and a decline of 17% in urea production, on a YoY basis. The scenario on the DAP front was opposite to the one on the urea front. In spite of the gas curtailment, FFC managed to operate the DAP plant at a level which exceeded 2010s production level of 0.66 million tons. Due to the imposition of Gas Infrastructure and Development Surcharge (GIDS), gross profit margin was 47% during April to June 2012, a decline of 12.52 percentage points on a yearly basis. This was also exacerbated by the net reduction of Rs 100 per bag of urea during the same period. Other income was unable to support the bottom line as it declined by 15%, mainly due to lack of dividend earning from subsidiary Fauji Fertilizer Bin Qasim Limited. Financial charges increased by 36% which can be explained by the increase in short-term borrowings. However, long-term borrowings have declined, and the Company was able to have a very healthy debt to equity ratio (19% in 2011 as compared to 49% in 2006). Debt increased due to the Companys decision to revamp its urea and DAP plants several years back. FFC has been able to repay its long-term obligations because of its sustainable revenue stream. 10 IT Vision The IT Strategy at FFC shall complement our Corporate Vision by business transformation through technology innovation, introducing best practices and connecting our processes for timely information and optimized performance to succeed in our endeavours.11 Information Systems SAP project: the implementation of SAP ERP is finally complete, with the transformation from Legacy to SAP system gone smoothly at all locations. BMS: a Building Management System (BMS) is a centralized computer based control system, linking equipment for ventilation, fire, security, power, etc. onto one platform, which enables timely and coordinated response to different facilities at the same time. Also, the integrated end-to-end system optimizes energy consumption. Electronic recruitment: FFC launched an online career portal in accordance with its HR department, and development of the portal by its IT division. All this has been done to make the recruiting process efficient, and to match individuals to jobs. SAP implementation support: IT at all locations provided support to SAP users in learning to use and adapt to SAP. This support comprised of trainings, onsite and offsite support, and troubleshooting. Technical support was also provided to help resolve outstanding issues, in alliance with functional teams at SAP Project Office. Information Security Penetration testing at branch sites: the information security department contributed hugely in that it secured its information network post SAP implementation. It assessed the potential threats which could pose a security risk towards the FFC network and/or the SAP system. Security awareness sessions at branch sites and the Head Office: the importance of information security was imparted to employees everywhere via awareness sessions. Some of the key points covered in these sessions were security risks, threat vectors, hacking trends, etc. More than 200 employees of FFC attended these sessions at their respective sites. Business Model Fauji Fertilizer Company has several important factors at the heart of its business. These have been summed up in a business model, with three components, at FFC. Growth Drivers FFCs growth is primarily driven by exponential expansion in sales revenue, powered by strong demand for our product and effective distribution network all over the country. Efficiency enhancement is our long term goal. We continuously seek opportunities to improve efficiency of our business processes to optimise costs, utilising less to produce more. Our sales are largely cash based, which gives us the margin to effectively utilise available cash resources to fulfil the Companys working capital requirements, and hence minimise external funding requirements resulting in reduced finance costs. 12 What fuels growth at FFC? The retained earnings, which are the result of ever increasing demand for fertilizer. The Company is cost effective, which allows it to reduce dependency on external funding. Our Key Assets Human capital is by far our most treasured asset, directly affecting performance of the Companys business processes, ensuring success every year. Among our most valuable assets is our brand name Sona, which is the soul behind our existence, growth and prosperity. We are continuously investing in our production facilities to enhance operational efficiency and fuel the key growth drivers. Our extensive distribution network extends to all provinces of the Country, ensuring maximum market presence.13 What makes FFC click? Its workforce. Its brand name, Sona, which helped in putting FFC on the map. Investment in production facilities to have lean operations. Strong distribution. How We Leverage Our Assets Our assets in turn are leveraged by our management excellence and our consumer centric approach. Our strategies are focused around consumer satisfaction and quality perfection. The pursuit of excellence in every sphere of operation is our aim which ensures continued success. Our farsighted management strategies are focused on development of our key assets which form the foundation for future growth.14 Success at FFC results from managerial excellence, focus on the customer, no compromise on quality, and a long term orientation. REVIEW OF TECHNOLOGY USED SAP ERP SAP AG (Systems, Applications, and Products in Data Processing) is a German multinational software corporation, which makes enterprise software to manage business operations, customer relations, operations, and record keeping. SAP ERP15 (Enterprise Resource Planning) is an integrated software solution that utilizes and consolidates information from all business functions and departments in an organization. It provides solutions for the following aspects of any business, with the modules in bullet points: SAP ERP Financials Accounts payable/Accounts receivable Financial reporting Risk management/Regulatory compliance Cash flow monitoring Travel management SAP ERP Human Capital Management HR and payroll Labour force analysis Placement/Recruitment and training/Talent management SAP ERP Operations Procurement and logistics Product development and manufacturing Sales and service Operations analytics Implementation On January 10th, 2011, one of the biggest feathers in FFCs cap was the implementation of the SAP, under its transition to an Enterprise Resource Planning (ERP) system. Abacus Consulting was its technical partner and consultant. Initially, SAP was used in tandem with FFCs old system, Legacy, but eventually, the latter was completely done away with. FFC holds the distinction of pioneering the introduction of an ERP system in Pakistan.16 FFCs management went ahead with the idea of SAP implementation believing that it would create value addition in departments of marketing, supply chain, finance, accounting, human resource, and procurement, amongst others. The SAP implementation at FFC was carried out in several phases. Despite the management being satisfied with the entire revamping program, the system is not without its drawbacks. The most crucial of these is that SAP cannot be operated optimally until the user has complete command over its functions. Therefore, consultants and/or specialists are required if SAP has to be fully utilized for its benefits at such an early stage of its installation. SAP ERP consists of several modules and sub-modules, an outline of which appears above. The software takes the information, data, statistics, etc. from all the modules, and combines them to facilitate the organizations decision making, process streamlining, human effort expended, through product design and development, production and inventory control, human resources, finance and accounting. This overall procedure is known as enterprise resource planning, and it is carried out on a companywide scale. If this procedure is carried out correctly, any organization can transcend from its old system to this fully integrated software. The magnitude of benefits to be reaped is huge, e.g. efficient business processes, inventory reduction, and lead time reduction, to name a few. Updates in SAP only need to be done once, and they automatically get implemented company-wide. It provides real time information, reducing the possibility of redundancy errors, shortages, and higher TATs. Areas like s upply chain, procurement, finance and accounting stand to benefit greatly. On the other end of the spectrum, there are the negative aspects. Firstly, the software is anything but cheap. Secondly, it is not just expensive; it is very technical, sophisticated, and intricate. Companies face problems while implementing SAP ERP software, for example, failing to be specific about operational objectives, no orientation towards change, flexibility, and futuristic perspective, and lack of a learning organization. The following sections detail some of the major advantages and disadvantages of using SAP.17, 18 Advantages of SAP Integration: SAP does not focus on or improve individual performance, so the goal of using SAP should be getting benefits from integration. This reduces erroneous data entry and overlapping entries. Flexibility: SAP allows organizations to create their own framework of operations within the SAP structure. This framework dictates issues like access levels of employees, signoffs required at which level, flagged and correct transactions, etc. For example, FFC has the authority to determine which employee can access what area in the SAP structure. Analytical software: apart from being able to keep track of various activities going on simultaneously, both short- and long-term, SAP has in-built analytical features. For example, it can monitor the value chain, and then evaluate when the next shipment or order is due, and time it accordingly. Monitoring, evaluation, decision making, and execution, are all enabled via the usage of SAP, all at once. Disadvantages of SAP Expensive: being able to utilize SAP optimally entails software, hardware, implementation, consulting, training, hiring specialists, programmers, repair and maintenance staff, etc. Employees have to be trained in those aspects of the software that they have access to. The story does not end here, because trainers might leave after training personnel, but the repair and maintenance experts need to be kept on retainer. Other ongoing costs include those incurred for software up gradation. If IT experts or consultants are outsourced, even that increases the labour costs of the organization overall. Hidden costs arise along the way of SAP systems integration projects. SAP projects are expensive enough to begin with. Add to that the burden of additional unanticipated costs, and the corporation can say goodbye to a high ROI. A common example of such a cost is those work items that were not part of the original project plan. These include custom modifications, applying more resources to areas of the implementation that were outside the project plan, etc. Detrimental to user accuracy: software does not have the ability to detect errors, and SAP is no exception. It also falls prey to the carried-forward error. The employees know that once a wrong entry has been made, it will be a part of the entire database of information. This makes employees/users more susceptible to make mistakes. Complexity: due to this feature of SAP, organizations spread out the implementation over a period of time, rather than all at once. The complete implementation might take several years, which also enhances employees skill set in pieces. The time taken for complete integration might become so exhaustive that the managements focus on post-integration planning be pushed into oblivion. The management might just settle for the system integration, and unconsciously avoid what is coming after the integration. Management: project managers, in some instances, have to deal with problems and provide solutions, instead of the users who logged in the original complaints into SAP. The software calls for scope management, which not every employee is capable of. ORACLE E-BUSINESS SUITE Oracle Corporation is an American multinational specializing in developing software for enterprises, with a focus on database management systems. It also has software for enterprise resource planning (ERP), customer relationship management (CRM) and supply chain management (SCM), to name a few.19 The company offered software for the financial aspect of businesses in late 1980s. Now however, its product palette is not just limited to ERP, CRM, or SCM, instead it reaches into areas like warehouse management, human resource, procurement, product lifecycle management, etc. Expansion and growth of Oracles application software business has come about through acquisitions and in-house developments. Oracle resorted to product bundling when it came up with its Oracle E-Business Suite Release 12 (Oracle EBS R12). This version keeps Oracles core database management system technology intact, and the E-Business Suite branches out into several product lines.20 Oracle CRM Oracle Financials Oracle HRMS Oracle Mobile Supply Chain Applications Oracle Order Management Oracle Procurement Oracle Project Portfolio Management Oracle Quotes Oracle Transportation Management Oracle Warehouse Management Systems Oracle Inventory Oracle Enterprise Asset Management FERTILIZER INDUSTRY REVIEW For many developing countries, the focus is on economic recovery after the financial crisis of 2007-08. However, issues of increasing population and rising food prices have made food security a big concern for policy makers as well. The latter two issues are equally, if not more, important for the underdeveloped countries, and Pakistan is no exception. Pakistan is an agro-based economy. The agriculture sector has provided the impetus for economic growth. This can be observed by the fact that it provides employment to almost 45% of the total labour force, in one way or the other. It is a seasonal sector, so there are jobs all-year round. On the reverse side of this picture, income generated from this sector fuels demand for products made by other sectors (industrial and tertiary). This interdependence, so to speak, is indicative of the importance of this sector for Pakistan. Almost 21% of GDP is contributed by the agricultural sector.21 Some major crops and their contribution appear below: Crops Production (kt) 2009/10 Production CAGR 2000/01 2009/10 Yield (Kt/Acre) 2009/10 Gross Value Addition of Major Crops Wheat 23,864 2.60% 1.07 39% Cotton 2,159 1.90% 0.28 22% Rice 6,883 4.20% 0.97 18% Sugarcane 49,373 1.30% 21.2 10% Source: Economic Survey of Pakistan 2009/10 The agriculture sector of Pakistan was adversely affected due to the floods approximately two and a half years ago. They had damaged around 30% of the agricultural area, and resulted in crop losses worth USD 2.5 billion. This flood damage also affected the fertilizer sector. This is due to the evident strong inter linkages between the agriculture sector and the fertilizer industry.22 Crop-wise damage and the area affected are shown in the table below. Crops Affected Area (mn acres) Area Affected Cotton 1.3 17% Rice 1.4 23% Sugarcane 0.4 16% Source: Fertilizers in Pakistan. Demand, Production and Imports. By Eqan Ali Khan, Business Head, Fert and Agri Commodities; Mar 30, 2011 The fertilizer industry in Pakistan is basically an oligopoly. This oligopoly is characterised by 4 major players in the market: Fauji Fertilizer Company, Fauji Fertilizer Bin Qasim Limited, Engro Fertilizer, and Dawood Hercules Fertilizer. A new and fast growing addition is Fatima Fertilizer, of the Fatima Group. If we look at the production of urea by the four companies respective contribution, FFC and FFBL dominate by producing 48% of the total, Engro produces 15%, and Dawood Hercules produces 6%. Almost 20% is imported and distributed through NFML. When we look at the production of phosphorus, a similar pattern emerges. FFC and FFBL stand at 47%, Engro at 28%, Agritech at 2%, RG at 1% and around 22% is imported. C:Documents and SettingsAdministratorDesktopUntitled.png Source: Fertilizers in Pakistan. Demand, Production and Imports. By Eqan Ali Khan, Business Head, Fert and Agri Commodities; Mar 30, 2011 Fertilizer production is concentrated in nitrogenous fertilizers, which comprises 85% of all fertilizers produced in the country. Although other types of fertilizers are also produced in Pakistan, the main reason for this concentration on nitrogenous fertilizers is that its main raw material, i.e. natural gas, is cheaply available in the country. The raw material for other fertilizers such as potassium and phosphate has to be imported.23 Fertilizer is Pakistans most important and expensive input in agricultural production. The contribution that the use of balanced fertilizer makes towards increasing yield varies from around 30 to 60 percent in different crops production. Almost all of Pakistans soil is deficient in nitrogen (N), 80 to 90 percent is deficient in phosphorus (P), and 30 percent is lacking in potassium (K).24 Land used for just one type of crop is facing declining fertility, for the obvious reason that only certain nutrients are being used. When these land holdings are not used in crop rotation, the soil does not get replenished, and productivity for future crops declines. Nutrient Actual (Kg/Acre) Recommended (Kg/Acre) Nitrogen 41 41 Phosphorous 9 20.5 Potassium 0.4 10.3 Source: Fertilizers in Pakistan. Demand, Production and Imports. By Eqan Ali Khan, Business Head, Fert and Agri Commodities; Mar 30, 2011 From July 2011 to March 2012, domestic production of fertilizer decreased by 1.4%. This was the result of the industry experiencing a curtailment in the supply of natural gas, which is the main raw material for producing urea, therefore some urea plants produced less than their production capacity. However, import of urea made up for this slack, increasing the supply of fertilizer by 16.3%. On the consumption side however, this increase in supply was met by a reduction of 4.9%. Screen Shot 2012-11-19 at 11.55.38.png Source: Fertilizers in Pakistan. Demand, Production and Imports. By Eqan Ali Khan, Business Head, Fert and Agri Commodities; Mar 30, 2011 Two major reasons for this reduced fertilizer consumption was the heavy and destructive rains in Sindh province, and the price hike faced by all fertilizers. The price of urea went up by 81.4% in July-March, 2011-12 (as compared to the same period of the last fiscal year). The prices of DAP, CAN and NP also increased by 38.8%, 75.5%, and 45.7%, respectively, over the same period last year.25 Fertilizer Pre-GST Co. to Dealer Transfer Prices (Rs/Ton) Taxation Impact Post GST Co. to Dealer Transfer Prices (Rs/Ton) Urea 20,400 13.20% 23,100 DAP 66,025 19.14% 78,660 MOP 48,200 17.05% 56,420 Source: Engro Analytics The actual price which the dealer faces is truly seen after the tax burden has been accounted for. The differential is huge, as the figures in the table above show. Pakistan is able to produce approximately 7 million tons of urea annually currently. Out of this total, capacity of 4 million tons is dependent upon gas from Mari gas fields, and the other 3 million tons on Sui Northern Gas Pipeline (SNGPL) and Sui Southern Gas Company (SSGC). During 2011, all these plants produced a little less than 5 million tons of urea.26 In the past, gas supply to fertilizer units linked to SNGPL was curtailed in winter. However, last year, units receiving gas from Mari faced 20% curtailment, and the ones getting gas from SGGPL and SSGC faced mandatory closure up to 60 days. In 2012, this mandatory closure is expected to exceed 90 days. The sorry state of affairs can be assessed by the fact that from January 1 till October 31, 2011, fertilizer plants on the SNGPL network received the equivalent of just 3.5 days of gas per week, relative to other sectors, which received 4 to 5 days of gas a week. For the fertilizer industry, gas is an input without which it cannot manufacture urea, whereas for other sectors, it is not an absolute necessity.27 If current levels of gas curtailment are adhered to, industry experts expect urea production to be around 4.8 million tons during 2012. However, this is an optimistic number. Realistically, units will probably have difficulty in achieving even this production level, mainly due to the widening gap between demand and supply of gas as projected by the government. It is pertinent to bear in mind that even if subsidy on gas were to be completely abolished by the Government, Fauji Foundation has under its ownership and control Mari gas fields. In a manner of speaking, backward vertical integration exists, so any adverse change in regulations regarding gas subsidy will not be detrimental to FFCs operations. With the demand for urea forecasted to be 6.3 million tons in 2012, the shortfall is expected to be around 1.5 million tons. This is a very bleak scenario for the economy, since internal capacity is well able to meet this demand. Externally, when imports will be resorted to, they will erode the countrys foreign exchange by USD 600 million, at the very least, based on current prices, and may be even more costly if international prices rise. It is expected that any hike in crude oil prices will automatically escalate urea prices in the international markets. Growing tension between the United States and Iran has already initiated a spiraling increase in global crude oil prices.28 Under consideration is the possibility that urea manufacturers should exercise the LNG import option to meet the shortfall in gas supply. There exist two schools of thought regarding this debate. One says that running plants on LNG is not feas