“An activity is an event, task or unit of work with a specified purpose, for instance, designing a product, setting up machines, operating machines, and distributing products;” by Horngren, Foster, Datar. According to Kaplan R.S
Dangers of Escalation of Commitment in Accounting
This report analyses the issue of escalation of commitment to a course of action from the perspective of the pharmaceutical industry. Escalation can be defined as a situation where a failing venture is supplied with additional resources beyond the point of feasibility. As such, escalation carries substantial dangers for organisations by generating avoidable economic losses. The report inquiries into the generic causes of escalation by examining subject literature. Accordingly psychological, social, organisational and project-specific factors are identified as common escalation activators. Exploration into the particulars of the said industry categorises profitability issues, market performance concerns, maturing products portfolio alongside development pipeline conditions as features amplifying pharma companies’ vulnerability to escalation. The point is supported by real-life case examples located in the appendix.
Appreciation of escalation causes allows for development of effective prevention policies. The report suggests preventive measures aimed at reducing the occurrence of escalation triggers, such as challenging the individual and social causes. Approaches for reducing other factors’ impact on decision-making are outlined in the form of strategy alteration as well as process management policies. The report finalises with suggestions on escalating situations management.
Statement of Reference The aim of this 2000-word report is to inquiry the causes and dangers of escalation of commitment to a course of action from the perspective of pharmaceutical companies.
This report is to assess the dangers of escalation of commitment to a chosen course of action through the perspective of pharmaceutical companies. In order to achieve the aim set, the paper first analyses the definition and threats arising from the phenomenon of escalation.
Next, following the framework proposed by Ross