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Value and Drawbacks of Activity Based Management
Finance & Accounting
Pages 5 (1255 words)
VALUE AND DRAWBACKS OF ACTIVITY-BASED MANAGEMENT Name: Institution: Introduction Activity based management refers to a management approach that applies activity based costing designed for decision-making and development of organizational strategies. Its main aim is to analyze cost of processes for informed decision making into reduced operational cost at maximized customer utility levels.
This paper seeks to present a concept proposal for value and drawbacks of activity based management. The paper will develop a problem statement, discuss the significance of the problem, the advantages and drawbacks and explore existing literature on the topic. Statement of the problem The scope of activity based management and its relation to activity based costing identifies the management approach as a key line towards improved profitability of an organization. With its objectives of identifying and controlling activities that do not add value to processes, activity based management is essential in controlling production costs towards managing profitability. It forms the basis on which strategies are developed for effective elimination of ‘non-additive’ processes through activity costing (Maher, Stickney & Weil, 2007). Based on the significance of the management approach, the concept will seek to investigate the significance of value and drawbacks of activity based management. Significance of the research The concept into value and drawback of ‘activity-based’ management is based on the importance of the management approach to an organization. ...
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