Introduction
Evaluation of a systems dynamics is very important in understanding the various challenges and complex issues that needs to be corrected and maintained. Consequently, managers, especially, corporate managers get the chance to understand a number industrialized processes and different analysis in private sectors. Moreover, the system dynamics deals with relationships between factors of production and various components that determines the behavior of specific constituents. The stocks, flows, and positive feedback loop are the constituents that are going to be discussed in this document in relation to Campbell Soup Company which deals with food processing.
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Stocks and Flows
Campbell Soup Company has a cash on hand of $0.99B for the period ending 31st July 2018-which shows a great decline of 36.42% in reference to last year quarter. This may be a factor caused by the changes in exchange rates, investments and other expenditures that are related to the operation of the business. The outflows seemed to have increased as more outflows reduces the cash at hand (Meadows, 2008). Definitely, with little to know deposit, cash on hand stagnates or shows a negligible increase for big companies like Campbell Soup Company. Some years show grater amount of cash on hand which is sometimes influenced by the profits made and the deposits to the saving accounts. Furthermore, the amount sometimes vary due to the projects being funded by the money.
Apart from that, Campbell Soup Company is coming up with the plans to help ‘employees withdraw their amounts at specific times as they still work (Woodlock, 2009). The internal revenue code, however, restricts the situations under which somebody is allowed to withdraw. Early, withdrawals are penalized while still employed. The proper understanding for the withdrawals is rather required before the choice of withdrawing money from the system. Withdrawals usually affects the cash at hand and is considered a cash outflow from Campbell Soup Company. This plan will rather influence the operation since the cash at hand that may be used to fund different projects may not be available at the right time. Consequently, the amount in circulation is also affected by earlier withdrawals. The effect of withdrawals from the business to fund different projects Campbell Soup Company tends to finance with the hope of getting more income and savings.
As at July 2018, Campbell Soup Company’s inventory turnover was $1,570 Mil. The inventory turnover is usually calculated by dividing the cost of the goods sold by the total inventories (Woodlock, 2009). Total inventories for the quarter year that ended 2018 was approximated at $538 Mil. Additionally, the days’ inventories for Campbell Soup Company show a higher number for the three months in operation. It was approximated at 31.17%. The company tries to maintain its operation through ensuring a proportionate amount. At all times the inventory turnover is not maintained due to internal factors that affect operations. The goods sold sometimes vary with the demand of customers for such products which may also be influenced by seasonal changes and other related factors. The maintenance of production processes also affects the goods sold as sometimes the production goes down. As a result, the amount of goods sold is affected is affected.
Feedback Loops
Positive feedback loop involves making success out of success. Campbell Soup Company has planned on new projects that was triggered by the success of the previous and core objective of the business. This would help to boost the savings that will arise from the profits realized by the project. The loop can be achieved by incremental innovation rather than coming up with totally different products. Campbell snacks is the project that is still undergoing formation and with time. It will be out to realize an increase in savings through sales.
Recommendations
Understanding of stocks, flows, and feedback is an essential component in business. The information acquired from this processes is critical for managers as they heavily rely on such data to make future business decisions. Specifically, managers use the information to make predictions about future trends based on the current market trends. Moreover, critical understanding of stocks plays a role in decision making as businesses have intuitive inadequacy making it possible to determine the effects of various decisions to other sectors (Arnold & Wade, 2015). Without such knowledge, it would be impossible to determine the effect of managerial decisions on other sectors. If the decisions have a negative effect, it would adversely affect other departments for a long duration after the decisions have been implemented.
On the other hand, feedback loops play a crucial role in business as managers can utilize the output of a situation as the new input. Usually, managers take into consideration the customer feedback from a product and use it to further enhance a product before releasing it to the market. Such a strategy will help Campbell Soup Company to offer consumers with high quality products with a higher level of satisfaction. Therefore, managers should ensure they have adequate understanding of stocks, flows, and feedback loops as they are crucial components when making organizational decisions.
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References
Arnold, R. D., & Wade, J. P. (2015). A definition of systems thinking: A systems approach. Procedia Computer Science, 44, 669-678.
Meadows, D. H. (2008). Thinking in systems: A primer. White River Junction, VT: Chelsea Green.
Woodlock, D. (2009). Introduction to system dynamics [Video file]. Retrieved from http://www.youtube.com/watch?v=iwrni8BvrbY
Woodlock, D. (2010). Introduction to stock and flow diagrams [Video file]. Retrieved from https://www.youtube.com/watch?v=c27Rbmix6sE