Results of Poor Asset Management
Answer the following four questions. Take each one of them as a title for
a small essay:
Q1: What could result from a poor 'Asset Management' practice?
Q2: Discuss how can the 'Delegation of Financial Authority' practice
influence your job as an asset manager?
Q3: What is Capability Gap Analysis, and how it works?
Q4: Give a debate on how can the Organizational Culture interact with the
Asset Management Function?
During preparing your answers, please consider the following important
points:
1. Please keep in mind that this is an MSc level assignment that carries 15
marks.
2. The answer document should be prepared in a neat format that
comprises:
• Consider each question separately. Each answer should be 600 words
(total document should be 2400 words).
• Provide real life examples from industry in each question answer.
• Evidence of further free reading from library and online resources
(suitable number of references from books and scientific articles). journal
papers should be consulted for each question, in addition to other
references.
• Tables, figures, and illustrations to further support your answer, and
make it more clear, strong, and appealing. Try as far as possible to
produce your own-created illustrations to express your ideas rather than
copying from the internet.
• No need at all to any introductions or conclusions for the whole
assignment. Just go straight to answer each question directly.
paragraph(s)
• look to the attachment course material to understand
the questions meaning.
• List of references at end of document.
Solution
Results of Poor Asset Management
According to, Hukka and Katko (2015), asset management is a domain of interest for the
survival of an organization in terms of the risk and solvency, which in simple terms, refers to the
process of operating, developing, maintaining, and selling an asset. First, when an organization
has poor asset management, there emerges a financial crisis or risk in it due to an overstatement
of the organization's value of the asset. As a result, the company ends up depreciating and paying
much on property taxes than the reasonable amount required. The company also ends up losing
its finances to the IT suppliers' contracts as the demand for their services increases together with
the software licenses or the vendor support services since the three departments rely on the data
provided by asset inventory. An excellent example of the financial crisis presents in
organizations includes the contract and tax calculations of the IT vendors. The IT and
procurement departments record new assets the company requires but doesn't put into
consideration the removal of assets when the company disposes them.
The security risk forms another negative impact in business and is brought by poor asset
management practices due to lack of IT management, and exposes the company to vulnerability
conditions. An asset data that is incomplete, outdated, or poorly managed, has a likelihood of
elevating unsecured business environment. The major IT processes required in modern
companies include the incidence and patching response together with the IT risk management. A
poorly managed assets promote incompleteness of security services concerning poor decision
making in critical matters facing the company. Altogether, the company becomes vulnerable in
securing information regarding their system, the employee’s confidential records or the financial
ASSET MANAGEMENT
records of the company together with, the employer’s private papers in the organization.
(Hastings, 2015).
Poor business plan is another risk factor that develops due to poor asset management in
an organization since the data forms a core set of technical components that highlights other
business operations. These assets involve the integrations, business processes, users, software,
and dependencies, which depend on how well the company can manage its assets primarily in the
field of IT. Valuable planning is developed with excellent management practices that regulate the
correctness and completeness of data to escape the risks. When an organization lacks clear
information on the kind or number of assets it has, the location of assets and the users, planning
becomes difficult, thus creating a gap in the recommendation of businesses operations
optimization or the productivity of employees in the long run. Therefore, it is evident that asset
management works hand in hand with good governance in the company. Whereby, a good
governance makes the business to flourish where else a poor management decreases the
production of the company in all aspects. The case of asset management lies in the collaborative
nature of the employees, the employer and the asset manager. An asset manager ought to have
great leadership skills in communication and group involvement.
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poor asset
manageent
decrease
workforce
productivity
increased
conflicts and non-
compliance
decreased
business network
decreased
customer
satisfaction
Figure 1 :An example of a poorly managed company
Another significant risk present in an organization with poor asset management is
reduced return in the business investments. First, maintaining or re-building an infrastructure on
hardware is expensive and consumes a lot of time, which could have been used in other business
operations. A failure to keep accurate data will as well lead to reduced investment returns due to
the absence of specific aspects in the inventory data, which causes ill-informed decisions in
purchasing and maintaining the assets present in the company. The investments will
automatically generate a negative revenue due to poor management or tracking of the available
resources in the routine activities of the business (Hastings, 2015).
Influences of the Delegation of Financial Authority Practices
According to Selvaraj and Anand (2011), the delegated financial authorities or the
granting of powers in capital expenditure or approval of asset disposals influences the activities
of an asset manager either positively or negatively depending on their operations. To begin with,
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the representatives of financial authority practices in a company promotes or eases the work of
the asset managers. For instance, good governance in the modern company ensures there are
clarifications and documentation of the activities taking place, thus repetition or leaving events
unattended will be minimal. Responsible delegates also ensure that all the workers present are
informed of their actions in the company, and they respect the hierarchy, thus promoting an
environment of competent workers making the asset manager well focused on the assigned
duties (Selvaraj and Anand, 2011). The delegates also assist employees in understanding their
authority, commitments in business, and authoritative on behalf of the company to ensure more
exceptional results since everyone understands their responsibilities. Therefore, as an asset
manager, good governance of the delegates in financial authority benefits one as it promotes the
timely performance and puts all the activities in order thus, increases the probability of
significant asset management practices.
Another positive effect in the activities of delegates of finance management to the asset
manager is it improves the work performance or the output of an organization. Businesses
involved in decision making becomes effective where the delegates of financial authority
implement it in the right manner. The representatives empower the workers by providing clarity
on the issues related to decision making in the organization thus, there will be low incidences of
collision from the managers and employees at work. Therefore, these activities save the
manager's time and boost the productivity of workers in the company with the creation of a safe
and friendly environment in the company (Hooghe et al., 2017).
Besides, the delegation of financial authority ensures that the asset manager is firm and
accountable in the component of risk management framework. Primarily, the delegates clarify
the accountability structure in the organization from the top management to the casual workers,
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thus keeping the asset manager updated. They also generate an environment of liability and sets
the limits of the powers given to the asset manager. Therefore, one develops the skills necessary
to deal with situations at hand before they get worse, enabling the asset manager to have a plan
for the risk uncertainties and establish measures to minimize their effects in the business.
Delegates also create comprehensive data on accountability records for auditoria and
management, thus tracking all the activities taking place in the organization and promoting
responsible behavior of the asset manager.
The delegates of financial authority engage in customization of the needs of the asset
manager in the organization to help fit the complexity and size of the company. Consequently,
the delegates assess the risk that is associated with the decisions made concerning the strategic
objectives of the organization. An example is when they ensure the asset manager is
knowledgeable on the fields of practice the company has obliged one in, saving them time and
effort in the delivery of services. It is also their responsibility to effectively monitor the
operational changes that occur in the organization and educate the asset manager on the new
roles assigned in the company. More so, it reminds them of the tasks assigned or acknowledges
one when there is a switch of roles thus, improving the work output and reducing wastage in the
assets present in the company together with ensuring the asset manager accomplishes the
assigned tasks without incidences of confusion.
Event handler
Public councilor
Delegate
Event Raiser
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Figure 2: Roles of delegates in a company
Capability Gap Analysis and How It Works
A performed documentation that is competent and essential in the business needs,
documentation of the current business affairs, and future state with the determination of gaps that
exists between the future and current state are what is referred to as the capability gap analysis.
How it works
First, the capability gap analysis works by identifying the present state of the company’s
department in strategizing the current plans and balancing the scorecards. To begin with, it
identifies the priorities named in the scorecard, a good example is when the banking company
needs to elevate its growth by 30% annual returns but has had an 8% growth annually. Therefore,
the bank needs to collaborate with a manufacturing firm that has a revenue of 180,000 dollars per
worker to put their current employee's state at an average of 180,000 dollars (Shirouyehzad et al.,
2012). The current state of a company does not necessarily have to be investment as it can be in
the provision of services like providing meals to homeless individuals, which is a non-profit state
in the organization. Therefore, a gap analysis begins with identifying the present project at hand,
calculating the risks, and providing the alternatives that generate profit or ones that help the
community as well as foster the growth of the company.
Identifying where the department needs to be in the field of business is the second step in
gap analysis, whereby the company revises its future target, desired state, or the stretch goal it
has. In order to accomplish the planned destination, the company needs to access the activities it
is has in the present and how they influence the position the company wishes to be in the future.
The targets of the plan are routinely monitored to ensure they lie in the strategic plans of the
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future state. Assessing the productivity of each employee towards the next goal should be a
subject of interest to the employer to develop strategies and plan a timely outline that relates to
job performance. The future goal should provide morale to the workers and the employer to see
that it is achievable within the time frame provided (Tavakoli et al., 2013).
The third step involves identifying the active gaps in the business and providing
alternatives to bridge the gap. In determining the differences existing in an organization, there
need to be considerations in the states between the current business performance and the future
goal. The two aspects need to be monitored at the same time to see the appropriate measures to
cover
the gap. If the company's next goal is in two years, the current state also needs to be a two-year
phase to calculate the difference. As much as the company estimates the gap, it needs to specify
it in terms of its causes. It is also advisable for the company to dig deeper and determine the root
causes that caused the slit and the activities it needs to change or improve to promote its overall
growth and service provision.
The gap
Time
The gap
The gap
Sales
mmeme
tr
The gap
The gap
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Figure 3: an example of a company’s capability gap analysis
Lastly, the company requires to formulate improvements to close the apparent gap with a
proper course of action. To ensure the company's growth on the identified gaps, it is necessary to
base all the perfections on the data collected while surveying the current gaps state. In an
instance where the company lacks the resources required to implement the available solutions, it
should consider partnering with other organizations but ensure it satisfies the needs of its
customers. The company should as well propose the exact dates that it will resolve the gaps
according to their capabilities and readiness regardless of the pressure from its opponents and
customers. Therefore, it should as well set the milestones that fit the difference it analyzed to
ensure the mistake does not repeat itself. There should be a continuous success in the growth of
the organization towards the future goal (Hine and Hall, 2010).
The Interaction Between the Organizational Culture and Asset Management Function
A business that has a culture that supports the company will automatically lead to
exceptional performance in the functions of asset management. An organization that is discipline
and adheres to the planned asset management record has a low-risk return, and excellent
compliance is significant. For instance, workers who are accountable and comply with the
operations of the company operate smoothly and promotes the culture of the organization
towards the goals. In return, where the organization values the employee’s compliance culture, it
will record a practical asset management function with the least time spent during the operations
as satisfying all the parties involved. Generally, organization discipline is a fundamental aspect
in the domain of planned asset management activities in any business that has future goals to
attain (Harwiki, 2013).
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Continuous improvement mentality is another high culture in the business that is
discussed by Brunetto and others in (2014) as it assists in improving the asset management
functions within an organization. An organization will perform an excellent asset management
purpose if their culture permits them to recognize and adapt to the new conditions and
opportunities. The secret to achieving great innovation and service improvement lies in
establishing firm boundaries that favor the innovation activities and provide guidelines that don't
jeopardize the attainment of the objectives set by the organization. Exploring the risk associated
with each innovation is another excellent move an organization can take to ensure they are dealt
with before the innovation project, thus improving the activities of the asset management. An
organization that has continuous improvements as its primary aspect generates a complete set of
useful asset management domain that favors the organization's growth.
Contrary, an organization that lacks great leadership is bound to fail in the functions of
asset management. A leader who does not lead by example cannot chair the organization or
influence the workers to perform their duties as required. Therefore, managing the assets present
in the company will be a tough task to conduct, and the company will record inadequate asset
supervision. Ideally, if workers have a culture of disrespecting their authorities or the authorities
disrespecting workers tend to create a gap between the top managers and employees. In turn, the
company will record negative asset management. Lack of communication between the leaders
and workers, lack of support, and promotions will enhance contrary asset management practices
in the organization (Sabir and Khan, 2011).
Similarly, when an organization has the culture of neglecting its employee’s successful
behaviors, it will become hard for an asset management function to be productive. A formal
performance measurement system that discourages good performances at work or doesn't reward
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them will not meet the production targets or the future goals of the company. Therefore,
individuals develop negative habits and demonstrate low performance or generate light output at
the end of the day. The behavior becomes a continuous activity; thus, they form a lazy culture in
their respective jobs. In return, the company records output that is below the average expectation
making it hard to succeed in their asset management task. The performance of employees is
directly linked to the company's appreciation in their behavior and the nature of rewarding the
desired behavior. This subject promotes competition among the workers and generates a positive
function on the management of the company's assets. Besides, a non-collaborative relationship in
the organization creates a harsh environment for the workers and does not promote asset
management activities in any organization (Brunetto et al., 2014). Lastly, unhappy employees or
the ones who are neglected have a tendency of recording negative behavior, work out put
together with being lazy while performing their allocated tasks or when participating in
meetings, seminars and educational trips.
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References
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Management Organizations. Journal Of Management In Engineering, 30(4), 04014014.
https://doi.org/10.1061/(asce)me.1943-5479.0000251
Harwiki, W. (2013). The Influence of Servant Leadership on Organization Culture,
Organizational Commitment, Organizational Citizenship Behavior and Employees’
Performance (Study of Outstanding Cooperatives in East Java Province, Indonesia). Journal
Of Economics And Behavioral Studies, 5(12), 876-885.
https://doi.org/10.22610/jebs.v5i12.460
Hastings, N. (2015). Physical asset management (2nd ed., pp.
https://link.springer.com/content/pdf/10.1007/978-3-319-14777-2.pdf). Springer.
Hine, D., & Hall, J. (2010). Information gap analysis of flood model uncertainties and regional
frequency analysis. Water Resources Research, 46(1).
https://doi.org/10.1029/2008wr007620
Hooghe, L., Marks, G., & Lenz, T. (2017). Measuring international authority (pp.
https://books.google.com/books?hl=en&lr=&id=JXAuDwAAQBAJ&oi=fnd&pg=PP1&dq=roles
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dir_esc=y#v=onepage&q=roles%20of%20delegates%20authority&f=false). Oxford
University Press, 2017.
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Hukka, J., & Katko, T. (2015). Resilient Asset Management and Governance Fordeteriorating
Water Services Infrastructure. Procedia Economics And Finance, 21, 112-119.
https://doi.org/10.1016/s2212-5671(15)00157-4
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A Mediating Role of Employee Values. Journal Of Economics And Behavioral
Studies, 3(2), 145-152. https://doi.org/10.22610/jebs.v3i2.265
Selvaraj, C., & Anand, S. (2011). A Role Based Trust Model for Peer to Peer Systems Using
Credential Trees. International Journal Of Computer Theory And Engineering, 234-239.
https://doi.org/10.7763/ijcte.2011.v3.310
Shirouyehzad, H., Lotfi, F., Shahin, A., Aryanezhad, M., & Dabestani, R. (2012). Performance
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analysis. International Journal Of Services And Operations Management, 12(4), 447.
https://doi.org/10.1504/ijsom.2012.047953
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https://doi.org/10.1504/ijsom.2013.057507
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