Informally or formally setting objectives and then only examining options until one is found that will fulfill those objectives. Traditionally, economists often adopted the simplifying assumption that organizations and individuals follow a profit maximizing behavior. Many believe that the concept of satisficing is a more realistic description of human and organizational behavior because profit maximizing requires detailed analysis of every possible option, which would be a self-defeating behavior because of the cost and effort involved in doing so.
A form of strategic planning that considers a variety of alternative situations (scenarios) that may happen in the future. The analysis of the scenarios considers the threats and opportunities that the scenarios might carry with them along with the outcome for the company should the scenario occur. If the outcome of one scenario would be better than all other scenarios, the company should attempt to steer the organization toward that scenario if possible.
The company should also use the identification of opportunities and threats to initiate actions that will take advantage of the opportunities and minimize the threats where possible. Because external factors such as consumer tastes, competitive activity, government regulations and natural disasters will, to some extent, determine which scenario occurs, the organization cannot accurately shape the scenario that unfolds, the organization should develop action plans for those potential scenarios that pose the greatest threats.
An analysis of how large an effect a small change in a cost or revenue factor will have on profitability.
Contributed by: ManagerWise Staff
service level agreement
Abbreviated as SLA, a service level agreement is a separate contract or, frequently, a component of a more comprehensive service contract. In the SLA a service provider promises to meet specified levels of service quality, performance and/or timeliness.
An SLA is common in contracts for the provision of computer services. In that case, the SLA might guarantee that the supplied systems will be available at least a certain percentage of the time, support calls will be responded to within a certain time, etc. While common in the information technology services field, that is far from the only use of SLAs. They can be a component of or an add-on to the sale of any type of service.
An SLA typically specifies penalties to be paid by the supplier if it fails to provide the agreed upon service levels.
The date on which payment for a transaction is legally required to be made.
Contributed by: ManagerWise Staff
Compensation that is paid to an employee on his or her departure from the company, over and above any back salary, wages, vacation pay and benefits that are due at the time of his or her departure.
Severance pay is typically (but not necessarily) paid only if the employee's departure is initiated by the company, not by the employee. Of course, companies can always choose to issue severance pay even if they are not legally required to do so. Whether the employee has a legal right to severance pay and if so, how much, depends on the language of the employment contract (if any), the circumstances of the employee's dismissal and the labor laws of the governing jurisdiction.
Contributed by: Managerwise Staff
The net assets (total assets minus total liabilities), which belong to the shareholders of the company.
A rigorous methodology implemented with the objective of lowering costs and, particularly, minimizing process and/or product defects. It can be applied to just a specific area of an organization's operations, such as manufacturing, or to all processes throughout the organization including, but nor limited to, human resources, sales, administration, finance, etc. The six sigma methodology is data-driven and includes rigorous measuring of all critical aspects of the relevant processes.