Analysis of the Book “The Goal: A Process of Ongoing Improvement” 
MAN 4720 – GLOBAL STRATEGY AND POLICY EXTRA CREDIT ASSIGNMENT
Analysis of the Book “The Goal: A Process of Ongoing Improvement”
By Eliyahu Goldratt.
The Goal Key Points:
The book has several key definitions:
Actual goal of any business is to make money. If the business is not making money, it won’t be able to stay in business. How businesses make money? By increasing throughput (the rate at which the system generates money through sales), by reducing inventory and by controlling operational expenses (all the money the system spends in order to turn inventory into throughput).
You can be selling a profitable product and still not be making any money. Why? Because of the system’s constraint: the Bottleneck. You can operate the business at full capacity, but if you are not aware of the system’s constraint, and keep producing above the bottleneck’s capacity, you would not increase throughput (the rate at which the system generates money through sales or service).
The capacity of throughput the plant can produce is equal to the capacity of the bottleneck. Increasing capacity at departments that are not the bottleneck does not increase productivity. Instead you are creating excess inventory which in turn requires extra storage space and wastes workers billable hours (the actual cost of maintaining high inventory).
Companies need to be looked at as a “whole unit”, not as piece by piece departments. The departments directly associated with the throughput are the key to discover the “bottleneck” and increase efficiency.
The book “The Goal” closely relates to concepts we learned in class during this semester. We learned that the purpose of the internal audit is to be able to locate the system’s constraint. Only then you can formulate an appropriate strategy to successfully increase the company’s throughput. Once the strategy is formulated, you need to decide how to implement the new strategy and how to evaluate this new strategy.
The key to successful strategic
Analysis of the Book “The Goal: A Process of Ongoing Improvement”
By Eliyahu Goldratt.
The Goal Key Points:
The book has several key definitions:
Actual goal of any business is to make money. If the business is not making money, it won’t be able to stay in business. How businesses make money? By increasing throughput (the rate at which the system generates money through sales), by reducing inventory and by controlling operational expenses (all the money the system spends in order to turn inventory into throughput).
You can be selling a profitable product and still not be making any money. Why? Because of the system’s constraint: the Bottleneck. You can operate the business at full capacity, but if you are not aware of the system’s constraint, and keep producing above the bottleneck’s capacity, you would not increase throughput (the rate at which the system generates money through sales or service).
The capacity of throughput the plant can produce is equal to the capacity of the bottleneck. Increasing capacity at departments that are not the bottleneck does not increase productivity. Instead you are creating excess inventory which in turn requires extra storage space and wastes workers billable hours (the actual cost of maintaining high inventory).
Companies need to be looked at as a “whole unit”, not as piece by piece departments. The departments directly associated with the throughput are the key to discover the “bottleneck” and increase efficiency.
The book “The Goal” closely relates to concepts we learned in class during this semester. We learned that the purpose of the internal audit is to be able to locate the system’s constraint. Only then you can formulate an appropriate strategy to successfully increase the company’s throughput. Once the strategy is formulated, you need to decide how to implement the new strategy and how to evaluate this new strategy.
The key to successful strategic