Theory of Constraints

Theory of Constraints

Goal and Bottlenecks

The statement “most people have not been managing according to the goal” entails the forceful practices that are done by managers and leaders in pushing their employees to perform in the firm. They push the staff at any point to deliver their services according to the company mission and vision statement aimed at achieving the industry goals. However, they fail to figure out the bigger picture in the company. The managers use all means, whether punitive or not, to ensure that the staff delivers services that help in obtaining the success of the goals set (Galli, 2019). For example, in most companies, some managers quickly make decisions without figuring out the repercussion, which may result. The decisions made by managers are intended to solve instant issues since they are made immediately. They see something is not working accordingly or the desire for a particular goal. As such, one may view that management performance is based on the moment, and thus, they try to fix issues right away rather than focusing on the goal planned. They make decisions whose justification is to benefit themselves rather than focusing on its effects on the overall management of the business.

“Bottlenecks” is a terminology that entails discrepancies existing between volume and demand. That is, the capacity is not equal to demand. Companies deal with bottlenecks by providing a job description for one’s workforce to be followed daily. Bottlenecks, in most cases, are caused by the failure of employees to know what they are required to do. Therefore, if they are given job directions, such will be minimized.  Cross-training of employees is also used in dealing with bottlenecks. Staff is given the training to handle jobs intended for others, thus ensuring the flow of work regardless of whether a given worker is absent or unable to deliver their duties (Galli, 2019). Organizations can apply the theory of constraints to cope with bottlenecks. For example, the business should identify the process constraints to provide the measures which can be used in solving. This involves deciding the best ways of exploiting process constraints.

Agency Theory

Agency theory is a principle which is used in explaining and resolving relationship issues existing between commercial principals and their agents. For example, resolving challenges between shareholders and company executives. The resolution of issues is geared towards the reduction of agency loss (Kopp, 2019). The theory also applies to solve challenges in managerial accounting. One of the ways of misusing managerial accounting in an unethical manner is through the withholding of information. Such can if a division invests in a new company. The firm may not be able to disclose complete information effectively and efficiently; thus, the management may lead to the keeping of negative information to the corporation. Secondly, the sharing of misleading information also leads to the breaching of ethical managerial accounting. For example, in some instances, an accountant may share misleading information to either make things appear worse or better from what the reality holds.

Similarly, misleading information can also result from utilizing different methods in computing data for the reports required rather than the specific rules. The computation may lead to wrong variations in valuation for either FIFO or LIFO (Kopp, 2019). The manager can overcome withholding of information by disclosing it, whether it is negative or positive. The misleading information can be overcome by using the specific rules in computing the reports and ensure the provision of real financial information.

References

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Galli, B. J. ( 2019). Relating human resource management to ‘The Goal’ by Eli Goldratt. International Journal of Qualitative Research in Services, 3, 2, 93-106.

Kopp,.C.M. (2019). Agency Theory. https://www.investopedia.com/terms/a/agencytheory.asp