This paper draws concepts from the book The Mind Share Market: The Power of an Alternative Currency, by the same author. It expands the foundational definition of its predecessor "Freemium: Attributes of an Emerging Business Model" and focuses on the challenges of the model while introducing mitigation strategies.
{"title":"Challenges Specific to Freemium and Two-Sided Markets","authors":"Nicolas Pujol","doi":"10.2139/ssrn.1968307","DOIUrl":"https://doi.org/10.2139/ssrn.1968307","url":null,"abstract":"This paper draws concepts from the book The Mind Share Market: The Power of an Alternative Currency, by the same author. It expands the foundational definition of its predecessor \"Freemium: Attributes of an Emerging Business Model\" and focuses on the challenges of the model while introducing mitigation strategies.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"128 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-12-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128151279","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Zhibin (Ben) Yang, Goker Aydin, V. Babich, D. Beil
We study a buyer's strategic use of a dual-sourcing option when facing suppliers possessing private information about their disruption likelihood. We solve for the buyer's optimal procurement contract. We show that the optimal contract can be interpreted as the buyer choosing between diversification and competition benefits. Better information increases diversification benefits and decreases competition benefits. Therefore, with better information the buyer is more inclined to diversify. Moreover, better information may increase or decrease the value of the dual-sourcing option, depending on the buyer's unit revenue: for large revenue, the buyer uses the dual sourcing option for diversification, the benefits of which increase with information; for small revenue, the buyer uses the dual sourcing option for competition, the benefits of which decrease with information. Surprisingly, as the reliability of the entire supply base decreases, the buyer may stop diversifying under asymmetric information (to leverage competition), whereas it would never do so under symmetric information. Finally, we analyze the effect of codependence between supply disruptions. We find that lower codependence leads the buyer to rely less on competition. Because competition keeps the information costs in check, a reduction in supplier codependence increases the buyer's value of information. Therefore, strategic actions to reduce codependence between supplier disruptions should not be seen as a substitute for learning about suppliers' reliabilities.
{"title":"Using a Dual-Sourcing Option in the Presence of Asymmetric Information about Supplier Reliability: Competition vs. Diversification","authors":"Zhibin (Ben) Yang, Goker Aydin, V. Babich, D. Beil","doi":"10.2139/ssrn.1275110","DOIUrl":"https://doi.org/10.2139/ssrn.1275110","url":null,"abstract":"We study a buyer's strategic use of a dual-sourcing option when facing suppliers possessing private information about their disruption likelihood. We solve for the buyer's optimal procurement contract. We show that the optimal contract can be interpreted as the buyer choosing between diversification and competition benefits. Better information increases diversification benefits and decreases competition benefits. Therefore, with better information the buyer is more inclined to diversify. Moreover, better information may increase or decrease the value of the dual-sourcing option, depending on the buyer's unit revenue: for large revenue, the buyer uses the dual sourcing option for diversification, the benefits of which increase with information; for small revenue, the buyer uses the dual sourcing option for competition, the benefits of which decrease with information. Surprisingly, as the reliability of the entire supply base decreases, the buyer may stop diversifying under asymmetric information (to leverage competition), whereas it would never do so under symmetric information. Finally, we analyze the effect of codependence between supply disruptions. We find that lower codependence leads the buyer to rely less on competition. Because competition keeps the information costs in check, a reduction in supplier codependence increases the buyer's value of information. Therefore, strategic actions to reduce codependence between supplier disruptions should not be seen as a substitute for learning about suppliers' reliabilities.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122769987","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Over the last decade, mass customization has emerged as an effective approach to customer centricity, i.e. to regard customers as individuals, to proactively develop products and services according to the individual customer’s preferences, and to efficiently produce and distribute these offerings. In other words, the goal of mass customization is to efficiently provide customers what they want, when they want it. This paper discusses the background of mass customization and its underlying fundamental capabilities: solution space definition, the design of robust processes, and choice navigation.
{"title":"Mass Customization: A Strategy for Customer-Centric Enterprises - A Review of the Strategic Capabilities to Make Mass Customization Work","authors":"F. Piller","doi":"10.2139/ssrn.1720785","DOIUrl":"https://doi.org/10.2139/ssrn.1720785","url":null,"abstract":"Over the last decade, mass customization has emerged as an effective approach to customer centricity, i.e. to regard customers as individuals, to proactively develop products and services according to the individual customer’s preferences, and to efficiently produce and distribute these offerings. In other words, the goal of mass customization is to efficiently provide customers what they want, when they want it. This paper discusses the background of mass customization and its underlying fundamental capabilities: solution space definition, the design of robust processes, and choice navigation.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-12-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126596554","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the electronics industry and beyond, original design manufacturers (ODMs) provide a full spectrum of services, ranging from design and development to manufacturing, to original equipment manufacturers (OEMs). Through resource pooling, ODMs benefit from scope economies when designing different products for multiple OEMs. Such design outsourcing practices, however, stir concerns that it may dilute product differentiation and subsequently intensify market competition. To examine the strategic impact of design outsourcing, we develop a game-theoretical model with a single ODM and two competing OEMs. The ODM has two divisions to serve the OEMs separately. The OEMs engage in a differentiated price competition over the Hotelling Line with product locations endogenously chosen by the parties who design the products. A wholesale-price contract is negotiated bilaterally between an ODM division and her OEM customer, and design outsourcing may reduce an OEM’s bargaining power. We compare two scenarios: (1)The ODM divisions establish dedicated resources and act as independent profit maximizers; (2)The ODM divisions cooperate through resource pooling and benefit from scope economies in both design and manufacturing. Our results highlight the role of bargaining in shaping the OEMs’ design sourcing decisions. In particular, whether the OEMs outsource design in equilibrium critically depends on the degree of asymmetry between their bargaining powers vis-a-vis the ODM. With similar bargaining power, the OEMs are more likely to outsource when they become stronger relative to the ODM. With significantly different bargaining power, surprisingly, the strong OEM tends to insource while the weak one tends to outsource. Scope economies may induce the ODM to decrease product differentiation between the products she designs for her OEM customers, and this tendency increases as the OEMs’ bargaining power strengthens. Ceding bargaining power, therefore, can be used by an OEM as an incentive lever to influence the ODM’s design decisions.
{"title":"Design Outsourcing in a Differentiated Product Market: The Role of Bargaining and Scope Economies","authors":"Q. Feng, Lauren Xiaoyuan Lu","doi":"10.2139/ssrn.2986185","DOIUrl":"https://doi.org/10.2139/ssrn.2986185","url":null,"abstract":"In the electronics industry and beyond, original design manufacturers (ODMs) provide a full spectrum of services, ranging from design and development to manufacturing, to original equipment manufacturers (OEMs). Through resource pooling, ODMs benefit from scope economies when designing different products for multiple OEMs. Such design outsourcing practices, however, stir concerns that it may dilute product differentiation and subsequently intensify market competition. To examine the strategic impact of design outsourcing, we develop a game-theoretical model with a single ODM and two competing OEMs. The ODM has two divisions to serve the OEMs separately. The OEMs engage in a differentiated price competition over the Hotelling Line with product locations endogenously chosen by the parties who design the products. A wholesale-price contract is negotiated bilaterally between an ODM division and her OEM customer, and design outsourcing may reduce an OEM’s bargaining power. We compare two scenarios: (1)The ODM divisions establish dedicated resources and act as independent profit maximizers; (2)The ODM divisions cooperate through resource pooling and benefit from scope economies in both design and manufacturing. Our results highlight the role of bargaining in shaping the OEMs’ design sourcing decisions. In particular, whether the OEMs outsource design in equilibrium critically depends on the degree of asymmetry between their bargaining powers vis-a-vis the ODM. With similar bargaining power, the OEMs are more likely to outsource when they become stronger relative to the ODM. With significantly different bargaining power, surprisingly, the strong OEM tends to insource while the weak one tends to outsource. Scope economies may induce the ODM to decrease product differentiation between the products she designs for her OEM customers, and this tendency increases as the OEMs’ bargaining power strengthens. Ceding bargaining power, therefore, can be used by an OEM as an incentive lever to influence the ODM’s design decisions.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-09-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121672694","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The impacts of business environmental factors on operations strategy choices in a manufacturing context have been heavily researched. However, how managers of service firms in developing countries such as China develop operations strategy has yet to receive any significant attention among researchers. Drawing on the manufacturing literature, we examine, in the Chinese context, the relationships between business environmental factors (such as business cost, competitive hostility, labour availability, and environmental dynamism) and operations strategy choices (such as low cost, quality, flexibility and delivery performance). Employing a path analytic framework, we have identified strong linkages between business environment (viz. business cost, competitive hostility and environmental dynamism) and operations strategy choices. We have found that environmental dynamism (such as changes in retail technology and innovations in new service development) had the strongest influence on the degree of emphasis placed on operations strategy choices. However, environmental concerns about labour availability do not appear to have any direct effect on the operations strategy selections among retail firms in China.
{"title":"Effects of Business Environment on Operations Strategy: An Empirical Study of Retail Firms in China","authors":"Wantao Yu, R. Ramanathan","doi":"10.2139/ssrn.1393333","DOIUrl":"https://doi.org/10.2139/ssrn.1393333","url":null,"abstract":"The impacts of business environmental factors on operations strategy choices in a manufacturing context have been heavily researched. However, how managers of service firms in developing countries such as China develop operations strategy has yet to receive any significant attention among researchers. Drawing on the manufacturing literature, we examine, in the Chinese context, the relationships between business environmental factors (such as business cost, competitive hostility, labour availability, and environmental dynamism) and operations strategy choices (such as low cost, quality, flexibility and delivery performance). Employing a path analytic framework, we have identified strong linkages between business environment (viz. business cost, competitive hostility and environmental dynamism) and operations strategy choices. We have found that environmental dynamism (such as changes in retail technology and innovations in new service development) had the strongest influence on the degree of emphasis placed on operations strategy choices. However, environmental concerns about labour availability do not appear to have any direct effect on the operations strategy selections among retail firms in China.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-04-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125453378","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2009-03-03DOI: 10.1108/17410400910950991
Gavin P. M. Dick
– Accreditation to the ISO 9001 Quality Management Systems Standard has proven to be a persistent and growing phenomenon in services and manufacturing, yet to date little attempt has been made to explore how performance results in cross‐sectional research may be attributed to different causation mechanisms and how their influences may alter over time. This paper aims to fill this gap., – The paper defines four possible causation mechanisms before searching and analysing the empirical literature on quality management system certification to ISO 9001 and business performance for evidence of their causal influence., – From the analyses, it is found that the benefit that can safely be attributed to the treatment‐effect of ISO 9001 accreditation is lower waste; while the benefits of lower costs and better quality are less likely unless motives for adoption are developmental rather than externally driven. From an analysis of longitudinal studies a strong selection‐mechanism is found where more profitable firms have a greater propensity to adopt than less profitable firms. From the finding propositions are developed to show how the influence of these mechanisms change over time., – The existence of the selection‐mechanism has profound implications for interpreting business performance achievements because the benefits that are attributed to the treatment‐effect from adopting quality management system standards are likely to be greatly inflated by the influence of the selection‐mechanism. The author suggests that richer theory is needed that can incorporate bi‐directional influences and new research is needed to explore the underlying causes of the selection effect., – The paper is believed to be the first to systematically explore attribution of performance in the ISO 9001 literature. Its findings provide new insights into the complexities of attribution of performance in studies of new practices and systems.
- ISO 9001质量管理体系标准认证已被证明是服务业和制造业中持续存在且日益增长的现象，但迄今为止，很少有人尝试探索横截面研究中的绩效结果如何归因于不同的因果机制，以及它们的影响如何随时间变化。本文旨在填补这一空白。——本文定义了四种可能的因果机制，然后对iso9001质量管理体系认证和企业绩效的实证文献进行了检索和分析，以证明它们的因果影响。-从分析中发现，可以安全地归因于ISO 9001认证处理效果的好处是减少了浪费;虽然低成本和高质量的好处不大可能实现，除非采用的动机是发展而不是外部驱动的。从纵向研究的分析中，我们发现了一个强大的选择机制，即利润较高的公司比利润较低的公司更倾向于采用新技术。根据这些发现，提出了表明这些机制的影响如何随时间变化的命题。选择机制的存在对解释企业绩效成就具有深远的影响，因为采用质量管理体系标准所带来的待遇效应很可能被选择机制的影响大大夸大。作者建议，需要更丰富的理论来纳入双向影响，并需要新的研究来探索选择效应的潜在原因。这篇论文被认为是第一个系统地探讨ISO 9001文献中绩效归因的论文。它的发现为研究新实践和新系统的绩效归因的复杂性提供了新的见解。
{"title":"Exploring Performance Attribution: The Case of Quality Management Standards Adoption and Business Performance","authors":"Gavin P. M. Dick","doi":"10.1108/17410400910950991","DOIUrl":"https://doi.org/10.1108/17410400910950991","url":null,"abstract":"– Accreditation to the ISO 9001 Quality Management Systems Standard has proven to be a persistent and growing phenomenon in services and manufacturing, yet to date little attempt has been made to explore how performance results in cross‐sectional research may be attributed to different causation mechanisms and how their influences may alter over time. This paper aims to fill this gap., – The paper defines four possible causation mechanisms before searching and analysing the empirical literature on quality management system certification to ISO 9001 and business performance for evidence of their causal influence., – From the analyses, it is found that the benefit that can safely be attributed to the treatment‐effect of ISO 9001 accreditation is lower waste; while the benefits of lower costs and better quality are less likely unless motives for adoption are developmental rather than externally driven. From an analysis of longitudinal studies a strong selection‐mechanism is found where more profitable firms have a greater propensity to adopt than less profitable firms. From the finding propositions are developed to show how the influence of these mechanisms change over time., – The existence of the selection‐mechanism has profound implications for interpreting business performance achievements because the benefits that are attributed to the treatment‐effect from adopting quality management system standards are likely to be greatly inflated by the influence of the selection‐mechanism. The author suggests that richer theory is needed that can incorporate bi‐directional influences and new research is needed to explore the underlying causes of the selection effect., – The paper is believed to be the first to systematically explore attribution of performance in the ISO 9001 literature. Its findings provide new insights into the complexities of attribution of performance in studies of new practices and systems.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":" 8","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-03-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131942794","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
It is widely documented that managers tend to backdate their stock option grants so that a past date on which the stock price was particularly low is picked to be the grant date. Almost all of the current literature attributes the option backdating behavior exclusively to the agency problem which states that managers manipulate the terms of their option awards at the expense of shareholders. Our paper challenges this idea and demonstrates an alternative explanation for backdating. We show that backdating could be the consequence of efficient contracting that solves executive compensation problems. We first empirically document a rather strong but surprising evidence that better corporate governance is associated with more backdating. We then establish a theoretical model to explain this finding. The model predicts that managerial backdating benefits shareholders by (1) reducing the management compensation cost and (2) increasing managerial incentive. Using a large dataset, we provide strong empirical evidence supporting the model's predictions. Overall, our evidence supports the efficient contracting view of optionbackdating, and contradicts the prevalent agency explanation.
{"title":"Backdating Executive Stock Option Grants: An Agency Problem or Just Efficient Contracting?","authors":"Hamed Mahmudi, Huasheng Gao","doi":"10.2139/ssrn.1030907","DOIUrl":"https://doi.org/10.2139/ssrn.1030907","url":null,"abstract":"It is widely documented that managers tend to backdate their stock option grants so that a past date on which the stock price was particularly low is picked to be the grant date. Almost all of the current literature attributes the option backdating behavior exclusively to the agency problem which states that managers manipulate the terms of their option awards at the expense of shareholders. Our paper challenges this idea and demonstrates an alternative explanation for backdating. We show that backdating could be the consequence of efficient contracting that solves executive compensation problems. We first empirically document a rather strong but surprising evidence that better corporate governance is associated with more backdating. We then establish a theoretical model to explain this finding. The model predicts that managerial backdating benefits shareholders by (1) reducing the management compensation cost and (2) increasing managerial incentive. Using a large dataset, we provide strong empirical evidence supporting the model's predictions. Overall, our evidence supports the efficient contracting view of optionbackdating, and contradicts the prevalent agency explanation.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124665422","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate coordination strategies in the remote delivery of business services (i.e. Business Process Offshoring). We analyze 126 surveys of offshored processes to understand both the sources of difficulty in the remote delivery of services as well as how organizations overcome these difficulties. We find that interdependence between offshored and onshore processes can lower offshore process performance. Investment in coordination mechanisms such as modularity, ongoing communication and generating common ground across locations ameliorate the performance impact of interdependence. In particular, we are able to show that building common ground - knowledge that is shared and known to be shared - across locations is a coordination mechanism that is distinct from building communication channels or modularising processes. Our results also suggest the firms may be investing less in common ground than they should.
{"title":"Integrating Distributed Work: Comparing Task Design, Communication and Tacit Coordination Mechanisms","authors":"K. Srikanth, P. Puranam","doi":"10.2139/ssrn.1125924","DOIUrl":"https://doi.org/10.2139/ssrn.1125924","url":null,"abstract":"We investigate coordination strategies in the remote delivery of business services (i.e. Business Process Offshoring). We analyze 126 surveys of offshored processes to understand both the sources of difficulty in the remote delivery of services as well as how organizations overcome these difficulties. We find that interdependence between offshored and onshore processes can lower offshore process performance. Investment in coordination mechanisms such as modularity, ongoing communication and generating common ground across locations ameliorate the performance impact of interdependence. In particular, we are able to show that building common ground - knowledge that is shared and known to be shared - across locations is a coordination mechanism that is distinct from building communication channels or modularising processes. Our results also suggest the firms may be investing less in common ground than they should.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"412 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116229017","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper describes the procedure that allows public service organization to smoothly switch from traditional costing system to an Activity Based Costing system at low risk and with minimum investment. The aim of many contemporary national, provincial and local is to reinvent government through the application of private sector strategies and techniques (Kearney, Feldman, and Scavo 2000). The fundamental objective of reinvention is to strive for a government that works better and costs less. The purpose of this paper is to investigate if ABC can be a valuable tool to understand costs and provide more accurate costs of services in a public service organisation in South Africa; and to determine and implement the process improvements strategies in the public service organisation in South Africa. The results achieved show that the municipality would have an increase in profitability and be able to improve cost control. The overall results achieved indicate that ABCM has a significant role to play in the Public Service Organisation in South Africa.
本文描述了公共服务组织在低风险、低投资的情况下，从传统的成本核算系统顺利过渡到作业成本核算系统的过程。许多当代国家、省和地方的目标是通过应用私营部门的战略和技术来重塑政府(Kearney, Feldman, and Scavo, 2000)。改革的根本目标是争取建立一个运作更好、成本更低的政府。本文的目的是调查ABC是否可以成为一个有价值的工具，以了解成本，并在南非的公共服务组织提供更准确的服务成本;确定并实施南非公共服务机构的流程改进策略。取得的结果表明，市政当局将增加盈利能力，并能够改善成本控制。取得的总体结果表明，ABCM在南非的公共服务组织中发挥着重要作用。
{"title":"The Smooth Implementation of Activity Based Cost Management (ABCM) in the Public Service Organisation (PSO) in South Africa","authors":"Makomane Taba","doi":"10.2139/ssrn.2269740","DOIUrl":"https://doi.org/10.2139/ssrn.2269740","url":null,"abstract":"This paper describes the procedure that allows public service organization to smoothly switch from traditional costing system to an Activity Based Costing system at low risk and with minimum investment. The aim of many contemporary national, provincial and local is to reinvent government through the application of private sector strategies and techniques (Kearney, Feldman, and Scavo 2000). The fundamental objective of reinvention is to strive for a government that works better and costs less. The purpose of this paper is to investigate if ABC can be a valuable tool to understand costs and provide more accurate costs of services in a public service organisation in South Africa; and to determine and implement the process improvements strategies in the public service organisation in South Africa. The results achieved show that the municipality would have an increase in profitability and be able to improve cost control. The overall results achieved indicate that ABCM has a significant role to play in the Public Service Organisation in South Africa.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2007-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121179009","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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