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Firstly, I must recognize my ignorance about this subject, which is increasingly present in the media, forums or social networks. I had to investigate a little to clarify myself, and to separate the wheat from the chaff. I have no doubt that there can be a bubble, but I also believe that in an incipient way there are changes in everything related to certain areas of banking management and economic and contractual transactions between companies.
It is called as Fintech those companies with a technological base applied and developed to provide services and solutions in the financial field. I know that this sounds very generic, but the truth is that the spectrum of initiatives included in this concept is very broad. Many start-ups are applying the full potential of today’s technology to compete in markets traditionally restricted to banks. We can find non-bank companies offering payment services between companies or individuals, loans, foreign exchange operations, optimization of treasury positions … and so on to a myriad of services, usually on digital platforms, offered in a more immediate, efficient and economical way.
Lately we are talking a lot about how in a near future the intensive introduction of technology in the workplace will result in the elimination of jobs that will be replaced by robots or various types of automation. There are many studies that differ in the degree of this impact, but according to the OECD (just to mention one), the percentage of jobs with a high risk of automation, and therefore of being eliminated, goes from 6 to 12% among the main developed countries. It is not very clear the time horizon in which this change (disruptive, they call it) will occur, although some speak of the next 10 or 20 years.
The technique of bridges is a study tool which is a step beyond the traditional horizontal analysis. It can be said that the latter is static, as it generates a data (sometimes appears as a percentage) but provides no further information. For its part, the analysis with bridges aims not only to display a value, but also explain it. Hence, precisely its name is a bridge between two data.
This is, therefore, an examination with great potential and that requires knowledge or the investigation of the origin of variations or deviations. Not enough to generate a value, but must give the reason or cause.
Let’s take a simple example. Suppose the budget of the Sales Department of a company for the year X and the actual expenditure for that year.
First, we perform the classic analysis.
The analysis with bridges explains the variations.
As seen in the example, bridges technique gives more information and reconciles data in a simple manner. It pretends to be very visual and schematic, so that we do not need narrative explanations.
The potential of analysis with bridges is high and has the following applications, among others:
– It compares different types of settings: allows you to compare the actual data with a budget for the same period; or the actual data with several consecutive periods; or the difference between various budgets …
– It analyzes one or more data at once: we can focus on the reasons for a single value such as sales, or make it wider and jointly analyze variations on sales, gross margin and profit. This second option is very rich (and appreciated by managers) and provides at a glance the impact of the mix, volume, price, overhead …
– It is applicable to different areas: although its origin is linked to the study of financial indicators can be used to address differences in all kinds of magnitudes: departmental expenses, personnel expenses, number of employees, customer complaints …