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A REDEFINED
PRODUCTIVITY MODEL &
SOCIO-ECONOMIC DEVELOPMENT ORIENTED MANAGEMENT DECISIONS
PART-2 : MANAGEMENT DECISION MODEL
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Socio-Economic Development Acceleration
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SUMMARY OF THE RESEARCH PAPER
|
SUMMARY OF CONCEPTS DERIVED
|
MANAGEMENT
DECISION & REDEFINED PRODUCTIVITY
CONCEPT SUMMARY SCHEMATIC
CONTENTS
EXECUTIVE SUMMARY
Like a capital investment to
initiate a productive activity, technology is an intangible investment to
convert the inputs to the outputs. Hence, both these should be evaluated
with reference to their return towards the social and national cultural
environments. This concept initiated by Harry.G.Johnson
(1923 - 1979. Canada) during the 1977 Nobel symposium, is
endorsed by the persons in the international scene, who are committed to
the Socio-Economic development of their nation or region, This warrants a
redefinition of Productivity to suit the expanded scope. Accordingly, the
Productivity is redefined as the ratio of Socio-Economic development goals
to Inputs, subject to a favourable ratio of Outputs to Inputs. In order to
apply this enlarged Productivity concept under practical operating
environments, a mathematical model is framed in Part-1.
In this Part-2, the dominant
constraints to implement the enlarged Productivity are identified as
Psychological, Social, Local, International, and Universal in nature.
Their relative influences with reference to Input, Output, and
Socio-Economic development acceleration, along with the utilisation of
techno-commercial throughputs, are identified, and fitted into a
Mathematical model. An algebraic approach to solve this
Management-decision model infers that Decisions of
Psycho-Techno-Commercial (PTC) intensive contents should be cautiously
made. The relative influences of Social, Universal, International and
Local constraints on Socio-Economic goals G and outputs O, should be
pre-assessed and reduced to a possible minimum, as well as their influence
should be assessed more critically on the former ( G ) than the latter ( O
). Bilateral Input Decisions relative to Socio-Economic development goals
and Outputs should be pre-evaluated and well synchronised with unilateral
Output Decisions.
The Optimum Management
Decision is a favourable Ratio between pre-determined Socio-Economic
Development goals to the Input Management Decisions, as well as the Ratio
between pre-determined Socio-Economic Development goals to the Output
Management Decisions, subject to a favourable ratio of Output
Management Decisions to Input Management Decisions.
Hence, the final redefinition of Productivity is a
favourable Ratio between pre-determined Socio-Economic Development goals
to the Inputs, as well as the Ratio between pre-determined Socio-Economic
Development goals to the Outputs, subject to a favourable ratio of
Physical outputs to Inputs.
These algebraic inferences
are supported by the practical occurrences among various nations in
different development brackets in the world.
The development of this
model and the solutions are expected to indoctrinate an environment for
better quality and standard of life among world population, through
optimum integration of the research and development in the area of
Economics, Science, Technology and Management, in line with the
expectations of the human society from the dawn of the civilisation till
the current millennium.
| f
= Function of |
= Sigma ( Summation ) |
07. EXTENDED
PRODUCTIVITY LEAD.
Part-1 expanded the
definition of Productivity to relate the inputs to Socio-Economic
development goals, and to use the ratio of output to input as a peripheral
guideline. This is developed based on the techno-investment concept of
Harry.G.Johnson (1923 - 1979. Canada),
presented in the 1977 Nobel symposium in Stockholm, Sweden, and discussion
with accredited personal from various nations in the world, who are
committed to accelerate the pace of Socio-Economic development. This
enlarged Productivity concept is used as a guideline to develop a
Management Decision methodology model, assuming a flexibly large number of
Socio-Economic development goals, inputs and outputs. This enlarged the
scope of Management-Decision area, and provided a lead to integrate the
Management Decision process with the identification of constraints. This
Part-2 is devoted to develop a Management-Decision model, solution and its
interpretation, using a mathematical approach.
08. ASSESSMENT
OF CONSTRAINTS.
In order to assess the
constraints relative to the Socio-Economic development oriented Management
Decisions, it is necessary to divide the world into two groups, namely
those which are economically developed, and those in developing / under
developed status.
In developed nations, the
Management Decision-process are more flexible because of the following
infrastructures:
-
As the achieved development provides
adequate Biological
( food, clothing and shelter ), Psychological ( ego, id ), and
Sociological ( status, luxury ) needs for the domestic population, the
distracting variables to any productive operation are limited.
-
Because of exportable
surplus commodities providing a base to barter for the local needs,
strong local currency to exchange, and facility to exploit foreign
labour, they could use the leverage of cheap-imports to bridge the
domestic gap in the input resources.
Historically, the
economically developed nations used the impact of industrial revolution
during 1700s to replace manual labour with machines, and opened the
channels of techno-commercial research, mass production and cost
reduction. Subsequently, during 1900s, the world wars, dominated by the
developed nations, utilised the techniques to analyse the occurrence
relationship between targets and achievements, to develop a
predictive-type of commercial models, in the from of Operations research .
These two Management dimensions aided these nations to precisely quantify
the inputs, outputs, through-put processes, time, and solve them towards
optimum solutions, utilising the advancement in electronic technology. The
sizeable budgets available to the planning and implementation process
among developed nations, combined with these advanced techniques, not only
sustained their developed status, but also bound the growth rate of the
developing nations to that of theirs, during the last 100 years (Sir.
Arthur.W.Lewis, Nobel prize paper "The slowing down of the engine of
economic growth", December 1979).
These environments are not
obviously true for the developing and under developed world. These
regions, even-though economically weaker, are historically, culturally and
spiritually stronger. These introduced a vicious dimension to the
intangible (non-quantifiable) components and constraints to the area of
Management Decision. Hence, any Management-Decision model applicable to
the lesser developed world should well-fit within the dimensions of
developed world, and the reverse may not be true in most of the cases.
Based on the enlarged
Socio-Economic Productivity concept and its impact on Management-Decision
process, discussed in Part-1, the goals G1 to Gx are achieved through the
outputs O1 to Om . These outputs in turn are generated from the inputs I1
to In , acquired through input Management Decisions, related to manpower,
materials, finance, technological conversion processes, and management
facilities. Acquisition of these inputs should not violate the frame of
reference of the Socio-Economic development goals.
To the extent of the quantifiable limits, the technical systems could
optimise the utilisation of inputs, and the commercial systems could
optimise the planning, control and appraisal processes.
But the quantifiable
dimensions of both technical and commercial systems do not provide any
successful application guarantee to the following environments, peculiar
to the developing and under-developed third world nations.
-
The psychological
behaviours P of domestic manpower, due to the limited education, poor
economic background and deeply rooted philosophical outlook towards
material wealth.
- The social influence S of the
domestic groups controlled by their biological, geographic, linguistic,
religious, and political diversities. These constraints impose
limitations on the quantum outputs and Socio-Economic development
achievements.
- All other inputs ( non-manpower
) are influenced by the following.
-
Local constraints L
comprising village, district, state, and national level laws,
restricting financial outlays, monopoly restrictions, price controls,
import bans, export restrictions etc.... They also guide and control the
output consumption, public distribution methods, taxes, and exercise a
strong social-audit on corporate goals.
-
Impact of International
politico-economic situations W, such as fluctuations in currency
exchange rate, changing export demands, limitations in the availability
of foreign know-how, machineries and materials, as well as cargo
movement and travel limitations. These influence the output Decisions
related to production priorities, pricing, product or service mix,
warehousing, and transportation plans.
-
Universal disturbances U
in all parts of the world, such as cyclones, draughts, earthquakes,
floods etc..., which drain the budgets intended for essential needs,
affect the demand patterns, disturb the production and service
priorities, and limit the supplies, movement of materials, personnel
etc...
All these could exercise an
intensive influence on the input / output Decisions, as well as the
priorities on Socio-Economic development goals.
09.
MANAGEMENT DECISION MODEL.
LINK DIAGRAM - 2
( **
means to the power )
Link Diagram - 2
summarises the Socio-Economic goal transfer through output / input
Decisions to the Management aspects of the commercial systems CS ,
technical systems TS , and the relative influences of the four intangible
constraints.
As seen from this
Link Diagram - 2,
S, U, W, L respectively represent the Social, Universal,
International
(World ), and Local constraints.
Using this schematic, it is
mathematically possible to correlate the two systems, four intangibles,
along with the psychological aspects P, to the Decision
variables, relative to the goals Gx , outputs Om ,
and inputs In, using the relational constants A, B,
E, and coefficients of correlation a
to v, as below :-
Om = f
( DO ) = A ( S**a U**b W**c
L**d )-------- ( 11
)
corresponding to the
relationship ( 04 ) in Part - 1.
In = f
( DI ) =
B ( S**e U**g W**h L**j ) ( P**
k CS**l TS**p )
-- ( 12 )
corresponding to the relationship ( 05 ) in Part - 1.
Also, the Socio-Economic goals Gx
are influenced by the intangible constraints. This could be mathematically
represented as
Gx = E ( S**q
U**r W**t L**v
)---------------- ( 13
)
Hence, the enlarged Productivity,
as a ratio between Socio-Economic goals and the inputs could be
represented as
|
{Gx /
f
( DI ) } = |
{ E ( S**q
U**r W**t
L**v ) } Divided by
{ B ( S**e
U**g W**h
L **j ) ( P**k
CS** l TS**p
) }
= { E / B ( P**k C**l
T**p ) }{ S**( q -
e ) U**( r - g ) W**(
t - h ) L**
( v - j ) }
= Y { S**( q - e
) U**( r - g ) W**( t -
h ) L**( v - j ) }
--- ( 14
)
where Y = { E / B ( P**k CS**l
TS**p ) }------------- (
15 )
Output to Input peripheral ratio could be
represented by
f
( DO / DI ) = { A ( S**a U**b
I**c L**d )
}Divided by
{ B ( S**e U**g
I**h L**j ) ( P**k
CS**l TS**p ) }
> 1
= { A / B ( P**k
C**l T**p ) } { S**(
a - e ) U**( b - g ) I**(
c - h )
L** ( d - j
) }
= V { S**( a - e
) U**( b - g ) I**(
c - h ) L**( d - j ) }
------ ( 16 )
where V = { A / B ( P**k
CS**l TS**p )
}-------------- ( 17
)
Synchronisation of Output
decisions to the Socio-Economic development goals is represented by
|
{Gx /
f
( DO ) }
|
Gx =
f
( DO ) or { E ( S**q U**r
W**t L**v ) } =
{ A ( S**a U**b
W**c L**d ) } from
( 11 ) and (
13 ).
Hence,
{ A / E } = { ( S**q
U**r W**t L**v
) / ( S**a U**b W**c
L**d ) } or
Q = [ S**( q
- a ) U**( r - b ) W**(
t - c ) L**( v - d ) ]
----- ( 18 )
where Q = ( A / E ) ------------------------------------------ (
19 )
From ( 15
), ( 16 ) and (
18 ), the
following could be derived.
[ V / Y } = { A / B ( P**k CS**l
TS**p ) } Divided by
{ E / B( P**k CS**l TS**p
) } = { A / E } = Q
------ ( 20 )
10.
MANAGEMENT DECISION INFERENCES.
The guidelines set by the
algebraic solution could be logically and systematically interpreted into
different Management Decision directions, with reference to the expanded
Socio-Economic development oriented Productivity model.
10A.
SOCIAL RATE OF RETURN OVER QUANTUM RATE OF RETURN
Equations (15)
and (17) are the
constant of proportionality for the Socio-Economic development
Productivity and Output to input relationship respectively. In both these
equations, the coefficients of correlation k, l, p relative to
Psychological, Commercial and Technical aspects appear in the denominator.
It implies that higher the
values of k, l and p , then lesser the Socio-Economic Productivity as well
as the ratio of output to input.
The developing world
population is more elastic to philosophical, political, religious and
other environmental disturbances, which attract and appeal to their
psychology. Hence, psycho-intensive Management Decisions could lead to
industrial unrest, strikes, and large-scale immigration of local skills
outside the geographic boundaries ( Village, State or National boundaries
). Hence, cautious approach should be followed while making any
psycho-intensive Decisions.
Also, over-intensive
commercial or technical Decisions could either lead to an un-employment
situation or inadequate adaptability of domestic households and local
professionals to such mechanical environments.
The experience of
multi-national Corporations among developing nations in Asia, to
synchronise their mechanised and computerised operations with their
head-quarters in America or Europe, has caused many problems. The first is
the psychological resistance to change attitude from the domestic
management and labour class. The second aspect is from lack of social
infrastructure to plan, process, utilise, update and optimise the use of
both hardwares and softwares (of automated program controlled machines or
computers). The third impact is from the lack of local support both from
the government and the labour unions. The local labour laws view the
creation of unemployment by any corporate sector so seriously, to the
extent that they even nationalise the sector, to maintain the minimum
employment guarantee.
The last impact is from the
weak domestic currency in the international exchange market, which cannot
buy even the cheapest machineries or softwares, available from
economically advanced nations. This experience demonstrates a
broad-spectrum coverage of the constraints out-lined in this model.
As per this model guideline,
the solution is to view the mechanisation or computerisation as a
techno-intensive investment decision, and apply it in phase, by
considering the Social Rate of Return as more important than the Quantum
Rate of Return. Then the Management action shall be to start with
optimisation models, cost-reduction projects and Socio-Economic
development oriented modules, and consider all other areas as low priority
items in the mechanisation / computerisation process.
10B.
SOCIO-ECONOMIC DEVELOPMENT OVER
QUANTUM OUTPUT
The resultant Coefficients
of correlation for Social, Universal, International and Local environments
in equation ( 14
) and ( 16 ) are
expressed as
( q - e ), ( r - g ), ( t - h
), ( v - j ) and ( a - e ), ( b - g),
( c - h ), ( d - j ) respectively. This implies that
both the Decisions related to Socio-Economic-Development, Productivity and
Output to Input ratio could be favourable, only if
{ e > a and q } , { g > b and r
} , { h > c and t }, and
{ j > d and v }
This provides a relational
guideline on Social, Universal, International, and Local ( SUWL )
constraints on the three Management Decision areas.
a, b, c and
d relate their influence to Output Decisions e, g, h and
j relate their influence to Input Decisions. q, r, t
and v relate their influence to Socio-Economic-Development
goals.
These algebraic derivations
infer that the relative influence of these four ( SUWL) intangible
constraints should be ensured that it is less in both Output and
Socio-Economic-Development goals formulation than the Input area.
Hence, the Management Decisions sequence
should be :
-
Stabilise the
Socio-Economic-Development infrastructure of the operation first, by
optimally utilising the available inputs to produce the basic-need
outputs.
-
Secondly, after an
acceptable level of Socio-Economic-Development stability, plan the
output upgrades, by properly synchronising the domestic and imported
input supplies.
-
Thirdly, improve the
domestic input supplies to attain a full self-sufficiency level.
By following this sequence,
the influence of intangible constraints on Socio-Economic-Development
goals and outputs are tackled at first, and reduced to a minimum.
Subsequently, when the input upgrade decisions are under implementation,
the relative influence of these intangible constraints will be either
negligible or even nil .
Japan is a good example
which adopts a bottom to top Decision-pooling technique in all productive
operations. This is a built-in methodology to avoid the psychological
resistance to change attitudes, post-implementation social problems, and
divergent group-interests among the local communes, as well as the
unforeseen set-backs at the international level and unexpected calamities
due to universal disturbances. They are met jointly with moral and
physical courage. Their techno-commercial superiority in the world,
inspite of the lack of domestic oil and steel, and inadequate land area to
house giant-size projects, is because of their management methodology in
line with this model.
10C.
INTANGIBLES OVER TANGIBLES
When the Social, Universal,
International, and Local constraints are related and graded between
Socio-Economic-Development and output Management Decisions, their relative
correlation coefficients appear as
( q - a ), ( r - b), ( t - c ),and (
v - d ) respectively, in equation
( 18 ). This
infers the occurrence of optimum synchronisation between
Socio-Economic-Development and output Management Decisions, only when
q > a, r > b, t > c, and v > d. It means that
the Socio-Economic-Development oriented Decisions are relatively guided
intensively by these four intangible constraints, than output Management
Decisions.
Some developing nations in
Asia, motivated by their interest to substantially increase the domestic
quantum production capability, than their Socio-Economic-Development
goals, nationalised the large-scale multi-national petroleum, chemical and
research-intensive electronic industries. This is obviously contradictory
to this algebraic inference.
Subsequently, these
developing nations are forced to either invite back the multi-national
management teams of these nationalised sectors, or open these sectors to
private operators. This is because of these following environments :
-
Even-though the output quantum production
capability of the sectors were adequate at the time of nationalisation,
the social infrastructure to support, manage, and produce "quality"
outputs to meet the domestic and export standards, were absent.
-
Technological
security and safety standards were sacrificed by the outdated and
traditional government management, in the post-nationalisation period.
The market leadership of these sectors deteriorated, and non-adherence
to public health standards resulted in environmental pollution, causing
problems to large volume households around, as well as the in-house
labour.
-
Lack of
international research and development facility and closure of avenues
for the exchange of experiences, kept their products and services
outdated within their nation, and obsolete in the international market.
-
Techno-intensive local
skills developed within these sectors,
migrated to comparatively developed nations abroad, looking for
opportunities to optimally utilise their skills, and get adequate
incentives for their know-how.
These current situations
among developing nations support this algebraic inference of the
Management-Decision model.
10D.
BILATERAL INPUT AND OUTPUT INTEGRATION
The ratio A/E is equal to
the ratio V/Y is derived in equation ( 20
). The inference is that the bilateral Input Decisions relative to both
Output and Socio-Economic-Development Productivity (represented by V/Y),
should be equally balanced by output Decisions ( unilateral dimension )
towards Socio-Economic-Development goals
(represented by A/E).
It means that any nation
directing their efforts towards self-sufficiency and self-dependency
through proper infrastructure to deliver the output products and services,
should also pre-evaluate their implications on input resources relative to
:-
-
The feasibility to develop and maintain the supply of input
Materials, Machinery, Management and Productive skills from domestic
sources. This is represented by
[ Gx / ( DI ) ] should be optimum.
-
Impact on output products
and services to supply them at economically justifiable costs and
socially acceptable quality. This is represented by [ Gx / ( DO ) ]
Thus the input should serve
in such a way to assist the Socio-Economic Development goal optimisation
as well as Productive Output. In addition, the Output should also be
oriented towards Socio-Economic development optimisation.
The Optimum Management
Decision is a favourable Ratio between pre-determined Socio-Economic
Development goals to the Input Management Decisions, as well as the Ratio
between pre-determined Socio-Economic Development goals to the Output
Management Decisions, subject to a favourable ratio of Output
Management Decisions to Input Management Decisions.
Hence, the final redefinition of Productivity
is a favourable Ratio between pre-determined Socio-Economic Development
goals to the Inputs as well as the Ratio between pre-determined
Socio-Economic Development goals to the Outputs, subject to a favourable
ratio of Physical outputs to Inputs .
11.
CONCLUSION.
Money is the medium of
exchange for wealth, and its usefulness to the domestic society is
attained when it is pooled and productively utilised as a Capital
investment . Technology is a medium of conversion for the generation of
utilisable output goods and services, from the input resources. Management
is a methodology to match and optimise the productive utilisation of both
money and technology, to serve their optimum purposes, towards a
broad-based Socio-Economic-Development goals. Socio-Economic Development
is the cumulative upgrade in the standards of living and peaceful
co-existence between different groups and societies within a nation.
Thus, the tangible wealth
and intangible technology are inter-tangled to serve their productive
purposes by the Management-Decision methodology, terminating at the
Socio-Economic-Development offspring. The effectiveness of all these three
ingredients should hence be evaluated with reference to the ultimate
end-use, namely the Socio-Economic-Development.
With this in view, the
Productivity, which measures the effectiveness of all the inputs with the
outputs is redefined to reflect their contributions towards the
Socio-Economic-Development goals, with an advantageous output generation
potential. The Management Decision process, which designs, implements, and
monitors these productive achievements, need proper directive orientation,
with reference to this enlarged Socio-Economic-Development Productivity
model.
Development of an algebraic
Management-Decision model and its solution leads to the conclusion that
-
There is a need for
cautious approach to the psycho-techno-commercial intensive Decisions.
-
Consider Social return as
more important than quantum returns.
-
Pre-assessment and control
of the influence of social, universal, international, and local
constraints on Socio-Economic-Development and output { with more
emphasis on the Socio-Economic Development than on Output }.
-
Bilateral synchronisation
of inputs and outputs with reference to Socio-Economic-Development
goals.
The practicality of these
inferences are obvious from the experiences of various nations in the
world, in different Socio-Economic-Development brackets. As per historical
guidelines,
Nomenclature is mere
identification. Expression is greater then the name (nomenclature).
Innovation is greater than the expression. Execution is greater than the
innovation. Results are greater than execution. Knowledge updating and
perfection is greater than results. Improved utilisation is greater than
the knowledge. The highest level of utilisation is their unification into
the Life and make it Valuable.
Source : The
Chandogya Upanishad from the Hindu "Sama Vedham" Chapter 7,
Section VII, Verse 1.4 (Ancient Sanskrit astro-scientific scripture dated
back to about 1500 B.C)
Economics and other sciences
in the world developed different concepts, and designated them with
different nomenclatures. The research and development activities innovated
and propagated their advancements. Technology executed them to produce
tangible and intangible results, updated them and perfected them through
feed-back systems. Management utilised the improve systems gained from all
these processes. Ultimately, they should serve the betterment of the value
of life of people in the national and international society.
This expanded Productivity
and management-Decision model, the algebraic solution and their
interpretation is a magnificent attempt towards this vicious
Socio-Economic-Development upgrade in the new Millennium.
====================================================
LEGENDS
|
CS |
Commercial Systems
|
Coefficient of Correlation with
reference
to DI is l |
|
D I |
Decisions on Input |
B - Constant of Correlation with
reference
to L, S, W, U |
|
DO |
Decisions on Output |
A - Constant of Correlation with
reference
to L, S, W, U |
|
G |
Socio-Economic
Development goals |
1 to x |
E - Constant of
Correlation with
reference to L, S, W, U |
|
L |
Local ( Domestic )
disturbances |
Coefficient of Correlation
with reference
to DO is d, DI is j , G is v |
|
P |
Psychological
constraints |
Coefficient
of Correlation with reference to
DI is k |
| PG |
Productivity relational to
Socio-Economic Development ( 1 to z ) |
|
Q |
A / B |
V / Y |
R |
Output to Input ratios ( 1 to
y ) |
|
S |
Social disturbances |
Coefficient of Correlation
with reference to
O is a , DI is e, G is q. |
| TS |
Technical Systems |
Coefficient of Correlation
with reference to
DI is p |
| U |
Universal disturbances
|
Coefficient of Correlation
with reference to
DO is b, DI is g, G is r |
| W |
International
( World )
disturbances |
Coefficient of Correlation
with reference to
DO is c , DI is h , G is t |
|
V |
Correlation constant
between Output and Input Decisions, relative
to P, CS, TS |
|
Y |
Correlation constant
between Socio-Economic Development goals
and Input Decisions, relative to P, CS, TS.
|
|
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PUBLICATION -
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LINK DIAGRAM - 1
