ARE112_Sp11_Notes02_TransOrg - ARE 112 Spring 2011 Notes #2...

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ARE 112 – Spring 2011 Notes #2 – Looking at the Transformational Organization ARE112_Sp11_Notes02_TransOrg Page 1 of 3 I. Class Notes 1. Babe the film next Monday, April 11 th 2. Group form – turn in by end of class this Wednesday, April 6 th II. The “The Beer Bust” case III. The Goal and the Theory of Constraints A. As you continue to read The Goal keep the following in mind: 1. Theory of Constraints (TOC) is an overall management philosophy that aims to continually achieve more of the goal of a system. If that system is a for-profit business, then the goal is to make more money, both now and in future. In a broader perspective, the goal is to create value so there is application to not-for-profit organizations as well. For The Goal, this is what Jonah is talking about. 2. TOC consists of two primary collections of work: a. “The Five Focusing Steps” and their application to operations b. “The Thinking Processes” and their application to project management and human behavior. 3. According to TOC, every organization has one key constraint which limits the system's performance relative to its goal. These constraints can be broadly classified as either: a. an internal constraint or b. a market (external to the organization) constraint c. you will see this as you read The Goal 4. In order to manage the performance of the system – the firm -, the constraint must be identified and managed correctly (according to the Five Focusing Steps below). The Five Focusing Steps and the Continuous Improvement Goal Theory of Constraints is based on the premise that the rate of revenue generation – the goal for example - is limited by at least one constraining process (i.e. a bottleneck). Only by increasing
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This note was uploaded on 06/08/2011 for the course ARE 112 taught by Professor Butler during the Spring '08 term at UC Davis.

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ARE112_Sp11_Notes02_TransOrg - ARE 112 Spring 2011 Notes #2...

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