Attitude-Based Costing: Sri Sathya Sai Perspective

A Sheaffer fountain pen [i] costs about INR 3,000 to 4,000 which involves Total Value Management. However, the price of the product should not give a jolt to people, for importance ought to be given to the process of manufacture, which goes behind the finished product. The different components of the pen and the material used in the product should be examined in detail in this regard. The shell has 22-karat gold plating, underneath which there is steel. It also has a filter and a gold nib. The cost of the filter, the nib, steel frame and the gold plating will have to be taken into account in addition to the marketing charges. Thus, the total cost of the pen could be worked out. This Sheaffer pen is not made in India, but made in a foreign country and therefore, is given a specialised and expensive packing, the cost of which would form more than 50% of the cost of production of the primary unit (pen). Hence, it would be wrong to arrive at the total cost of the final finished product without taking into account the cost of each component that makes up the full product. The cost of each component should be separately projected in advance. The total cost of the pen should be reduced from INR 3,000 without making any compromise in quality. So, instead of 22-karat gold, 18-karat gold should be used for gold plating and a high quality steel nib in place of the gold nib. Thus, a good quality pen can be made available at affordable prices to the consumers [ii]. 

A Sheaffer Pen
Today, the needs of man in daily life transcend mere necessities like food and clothing, which however are construed as necessities in the contemporary society. However, the manufacturers of commodities employ dubious means in the manufacturing process to increase their profits. It is not correct to let go consumer interests for the sake of profit maximisation and if done so, it loses the right to be called ‘business’. Business should be based on the principle of ‘fair exchange’. One should be prepared to pay INR 10 if one wishes to purchase a handkerchief and the transaction will not be completed in case of absence of a suitable consideration. 

Likewise, in spiritual sphere too, if the devotee offers unconditional, pure and firm faith, God will also bestow full grace. The transaction with God too can be likened to a business transaction, as the devotee has to pay a proper price (devotion) for God’s grace, which does not, however, include profit or any other material returns in any manner. As business people today account for in the books of account, donations to political parties and gifts to close relations as business expenditure, the reputation of business is getting tarnished. As such, the total cost of production should be reduced systematically by cutting down the cost of each component.  
An Indian Steel Plant
Today, India is throwing open its doors to many countries in the name of Foreign Direct Investment (FDI), which is inappropriate as the awareness and communication systems of India vis-à-vis other nations are entirely different. Initially the economic pacts between the nations may appear rosy, but with the passage of time, differences may surface. The establishment of steel plants at Bihar and Kudremukh (Mysore) in India appeared to have functioned normally in the initial stages, but later suffered setbacks eventually. These two factories suffered from raw material shortages and other associated problems and failed to continue as profitable ventures. The temperament and style of functioning of mangers in India are quite different as compared to their counterparts in other countries. Indians, in general, are guided by ethical and moral principles. In the past, business people in India might not have possessed high educational qualifications, but had the positive outlook to do valuable service to the society through business. The business carried out by Indians was having ‘self-protection’ as the cardinal value, which results in self-sacrifice, and finally self-confidence. Thus, without self-preservation, either an individual or an organisation cannot last long. The dynamic mixture of self-preservation, self-sacrifice, and self-satisfaction forms the foundation for ‘Reengineering’.

Note:


[i] Baba materialised a Sheaffer pen in the Audio Visual room (now known as the Multi-Media centre) in the Prasanthi Nilayam campus of the Institute during the course of the discourse and presented it to the then Vice-Chancellor of the Institute, Dr. Somnath Saraf (1985-1991) at the conclusion of the discourse.

[ii] Baba took the example of Sheaffer pen to illustrate how by making some changes, good quality products can be made available at affordable prices. However, the same explanation also holds good in case of all other products.

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