BUSINESS MANAGEMENT USING CHAOS THEORY

MIT meteorologist Edward Lorenz watched his work become a catch phrase.
Lorenz, who died in April, created one of the most beguiling and evocative notions
ever to leap from the lab into popular culture: the "butterfly effect," the concept that
small events can have large, widespread consequences. The name stems from
Lorenz's suggestion that a massive storm might have its roots in the faraway flapping
of a tiny butterfly's wings.
In the 2004 movie "The Butterfly Effect" - we watched it so you don't have to
- Ashton Kutcher travels back in time, altering his troubled childhood in order to
influence the present, though with dismal results. In 1990's "Havana," Robert
Redford, a math-wise gambler, tells Lena Olin, "A butterfly can flutter its wings over
a flower in China and cause a hurricane in the Caribbean. They can even calculate
the odds."
Students often ask me if this quote is true. Many of them have heard different
variations of this quote and before really giving it much thought they take the quote
for face value and really think that if a butterfly flapped its wings in New Jersey a
storm might happen in another part of the world. The "butterfly effect" as the term
was originally called was the brainchild of MIT meteorologist Edward Lorenz. In
1961 while working as an assistant professor in MIT's department of meteorology,
Lorenz created an early computer program to simulate weather. One day he changed
one of a dozen numbers representing atmospheric conditions, from .506127 to .506.
That tiny alteration utterly transformed his long-term forecast, a point Lorenz wrote
about in his 1972 paper, "Predictability: Does the Flap of a Butterfly's Wings in
Brazil Set off a Tornado in Texas?
A tornado in Texas could be caused by a butterfly in Brazil, Bali, or Budapest.
Realistically, we can't know. "It's impossible for humans to measure everything
infinitely accurately," says Robert Devaney, a mathematics professor at Boston
University. "And if you're off at all, the behavior of the solution could be completely
off." When small imprecisions matter greatly, the world is radically unpredictable.
How can Chaos Theory be applied to Business Management
Generally the business consists of the following department
 HUMAN RESOURCE MANAGEMENT
  FINANCIAL MANAGEMENT
 MARKETING
 QUALITY CONTROL DEPARTMENT
 REASEACH AND DEVELOPMENT
Can chaos theory applied for human resource management for better
performance?
Yes, the chaos theory can be applied for the human resource management
for better performance.
The hrm plays a vital role in the organization. The hr manager will recruit the
employees for any department in the organization. If the hr manager recruit the
talented and skill full employees then the organizational goals can be achieved.
One of the best company which have been successes by good planning and
effective human resource is APPLE. Apple is the well-known company who
have successive in the market.
There are also some company who have failed due to human resource
management is not proper. The company like
NOKIA
HP(Hewlett Packard)
There are many company who have failed due to no proper human resource
How can we relate the chaos theory for human resource manager?
Chaos theory means if there is a small change then there will occur a large disaster.
If we relate this theory to APPLE COMPANY, they have a good management so the
company is in the good position
If we see in HP and NOKIA, there was a small mistake done by the human resource
manager and the company was closed or taken by other company.

Can chaos theory applied for finance management for better performance?
Yes, the chaos theory can be applied for the finance management for better
performance.
 Finance manager is the one who will handle all the financial transactions in
the organization. If the finance manager does the mistake then it affects the whole
organization, because he is the one who handles the finance in the organization.
If the owner needs the finance then he should take it from the finance manager.
How can we relate the chaos theory for finance manager?
If the finance manager does a mistake then the organization will close. There is
many company is closing due to the wrong done by financial manager.
Top 10 corporate accounting scandals
 WASTE MANAGEMENT SCANDLE(1998) = $1.7 FAKE EARNINGS
 ENRON SCANDAL(2001) = LOSS TO SHARE HOLDERS $74 BILLION
 WORLDCOM SCANDAL (2002) =INFLATED ASSETSBY AS MUCH AS
$11 BILLION
 TYCO SCANDAL (2002)= CEO& CFO STOLE $150 MILLION AND
INFLATED COMPANY INCOME BY $500 MILLION
 HEALT THSOUTH SCANDAL (2003) = EARNINGS NUMBER WERE
ALLEGEDLY INFLATED $1.4 BILLION TO MEET STOCCKHOLDER
EXPECTATIONS
 FREDDIEMAC SCANDAL (2003) = $ 5 BILLION IN EARNINGS WERE
MISSTATED
 AMERICAN INSURANCE GROUP SCANDAL(2005) = MASSIVE
ACCOUNTING FRAUDTO TUNE $3.9 BILLION
 LEHMAN BROTHERS SCANDAL (2008) = HOD OVER $50 BILLION
IN LOANS DISGUISED AS SALES
 BERNIE MADOFF SCANDAL (2008) = TRICKED INVESTOR OUT OF
$64.8 BILLION THROUGH THE LARGEST PONZI SCHEME EVER
 SATYAM SCANDAL (2009) = FALSELY BOOSTED REVEBUE BY $1.5
BILLION

How can we relate the chaos theory for MARKETING?

Market is the place where the customers will come to buy the product. If the
organization provides the quality product the customer will be for that product
forever. If the product failed in market then the customers will not be no longer for
the product. If the is quality then the customer will consume the produce even though
it is costly. one of the best example is iPhone. Even though the IPhone is costly the
people will buy the produce because the quality of the product is nice
How can we relate the chaos theory for finance manager?
If once the customer loses his belief on the product then the product will be no longer
in the market. The good will of the company will loses. One of the best example is
MAGGI.
We all came to know that there is lead in Maggi. Then the consumer refused to buy
the product. The loss was rs 320 crores for the company. This is because the
production manager did not took any step and not even the quality control
department took care about it.
If we relate this theory then if the Nestle have invested more in the advertising and less in
the quality control department. If there was good or effective quality control then the Nestle
have no need to bear the loss of 320 crores.
Even though the Maggi products have again came in to market it takes time to get the customer
belief