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My concentration capacity

My friends usually say that I don’t listen them when they talk to me… I have been fighting my lack of concentration all my life because my concentration level is at the mercy of the wind. As I have learned to deal with it on my daily routine, so did my closest friends. As managers in industries have to manage capacity levels and make decisions about the use of available capacity, my friends also have to decide the seriousness of the conversation depending on my concentration level. I have a maximum concentration level, the theoretical capacity, which is when I am concentrated to the fullest and l listen carefully. Then, my practical capacity is when I can be concentrated, but I might be distracted by other relevant events. The normal capacity is my average concentration level, when I might be distracted by random events. The master budget capacity is when my concentration level is very low and I can be distracted with anything. I usually listen two things, the beginning of the ...
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Could we, as clients, develop our own KPIs in order to make decisions?

To have a classic car we must love them! They are old, we don’t use them often and we never know if the car will disappoint us or not when we want to have fun. I own a classic car and because of that, unluckily, I have had a close relationship with a few mechanics. When my car has a problem, I usually choose the mechanic intuitively. The differences between them, generally are apparently reflected in the final cost. While we were discussing KPI to be used in companies during the class, I started thinking if I could develop my own KPIs in order to make decisions when choosing the mechanic in the next time. The price is an unquestionable KPI, but is it the cheapest mechanic the best option? What about the number of times that we have to leave the car at the mechanic? Was it because the car is old or because the mechanic didn’t solve the problem or even didn’t check the car completely and didn’t predict a future problem? How many days couldn’t I enjoy my car because of it? Of course...
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Levers of Control and unforeseen events

In the last class of MAC[1] we’ve learnt about the Levers of Control, developed by Robert Simons for the business environment of the 90’s. It consists in four different levers as shown in the figure 1. The Levers of Control are an important tool not only for business management but also to be applied in other fields.   Figure 1 - Levers of Control developed by Robert Simons While working as a researcher, I can now recognize great part of the Levers of Control being applied to a research environment. I worked mostly with microorganisms and molluscs in their early life stages and the research projects used to have a well-defined work strategy. However, animals or microorganisms didn’t want to cooperate and sometimes the core strategy had to change. In a business such as agriculture, where animals or plants are involved, occasionally unexpected diseases, plagues, or adverse environmental conditions can have a massive impact. The environmental change that we are facing will, probab...
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Santander and Customer Lifetime Value

Santander Bank has a different product for customers who have a better contribution to the profit of the bank and are considered the best customers. The product is called Select and there are some minimum requirements to be a Santander Select customer. This product is normally attributed to customers who are professionally well and have attained wealth after having worked for a considerably number of years. Thus, it is not common to see recent graduates who have just started their professional life as a Santander Select customer. However, Santander has been attributing the product Select to medical doctors that have just begun their activity, even though they do not meet the requirements to be a Santander Select customer. Santander predicts that young medical doctors will be profitable to the bank in the short term, since it is expected that medical doctors will earn more money as they improve their professional skills. This is called customer lifetime value, which is a prediction of t...
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To cook or to outsource?

Nowadays people live faster than past generations. In the middle of the turmoil between work and personal life, people are always running and their personal life time gets smaller. Thus, people have to manage time and money to attain their own satisfaction. At the same time, companies are each day even more competitive amongst them, working faster and for longer periods. Regarding the necessity that companies have to grow, sometimes through outsourcing to reduce costs, giving them advantage to grow allowing to have more time to invest in the future. People could manage their life as managers manage companies, but people manage their lives intuitively. A daily activity such as having dinner can be managed similarly as companies run businesses. Commonly, people have dinner at home after buying food and cooking it in their kitchen. To cook there are associated costs, fixed or variable, direct or indirect, that are added to the price of the food resulting in the total cost of the dinner. ...
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Francesinhas and Breakeven

Barcarola is famous for its Francesinha, a typical dish in Porto. Some years ago, the company opened new restaurants, but opposed to the first restaurant which is located in a residential zone, the new restaurants are located in malls. How does the location affect the number of Francesinhas needed to be sold to cover the costs of cooking the dish? In other words, is it the Breakeven Point equal in the different restaurants? The Breakeven Point (quantity) is calculated dividing the fixed costs by the contribution margin of each Francesinha: BEQ = FC ÷ CMu. Assuming that Barcarola only produces Francesinha and for the different restaurants the cost of direct materials, direct labour and the number of Francesinhas sold are the same, it would be expected to assume that the breakeven point would be the same. However, there are other costs that affect both the fixed and variable costs. The rent of restaurants is for sure different and this would affect the fixed costs. On the other hand, we ...
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