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Q. Explain Activity based management?
Activity based management (ABM) is about satisfying customers whilst making fewer demands on internal resources. The aim is that once cost drivers are created, organisations can aim to reduce cost, by creating models for more effective planning and control. ABM can lead towards the elimination or reduction of non-value added activities e.g. customer returns, complaints and obsolesce of stock. By eliminating activities which don't add value to customers, an organisation may still satisfy customers and at the same time make fewer demands on organisations resources.
Alfred Rappaport's definition of shareholder wealth (value) Shareholder value = corporate (business) value - Debt The corporate value represents the perpetuity of cash
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Instant competition blinds a company to latent competitors who can demolish the old ways of doing business.
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