Premium for Speed

A factor that is driving the trend towards automating the sales department is the extent to which speed has become a strategic advantage in the selling process. Once, it was acceptable for salespeople to promise to get back to customers with answers to questions. Increasingly, those salespeople are finding that by the time they get back to their customers with the necessary information, the sales opportunity has evaporated. The ability to respond to customers quickly is crucial to success, and the tolerances are narrower than ever before.

Similarly, the ability to compress the sales order cycle is becoming an extremely significant factor in a competitive situation. Your customers, who are under the same competitive pressures as you, are placing more and more emphasis on increased cash flow and reduced inventories. Reducing your sales order cycle from four days to two can make an important and measurable difference, certainly enough of a difference to determine whether or not you get the order.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Formal Authority

Formal authority can be thought of as the right to command or compel another person to perform a certain act. Power is the ability to influence or cause a person to perform an act. It is possible for a manager to have formal authority without power, just as it is possible for a subordinate to have power without formal authority. The distinction between these terms may be significant for the manager, who may assume that his formal authority automatically gives him power but overlook the fact that his subordinates also have power, at times greater than his own. The manager in such a situation can encounter difficult and frustrating experiences without knowing why.

If formal authority were dependent upon physical power only, life would be even more difficult than it is. Ultimately, formal authority is dependent upon the law, but most frequently it results from a  shared perception that those with formal authority have rights that ought to be acknowledged. This “ought” is so widely believed that those with formal authority may very frequently have real power as a result.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Distinctive Capabilities

A close examination of a market-driven firm will reveal two particularly important capabilities: market sensing and customer linking. First, the market-sensing capability concerns how well the organization is equipped to continuously sense changes in its markets and to anticipate customer responses to marketing programs. Market-driven firms spot market changes and react well in advance of their compititors. Second, the customer-linking capability comprises the particular skills, abilities, and processes that an organization has developed to create and manage close customer relationships.

Customer-goods firms demonstrate these capabilities in working with powerful retailers, multifunctional teams in both organizations work together by sharing delivery and product movement information and by jointly planning promotional activity and product changing. While evident in manufacturer-reseller relations in the consumer-goods market, strong customer-linking capabilities are crucial in the business market where close buyer-seller relationships prevail.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Competitive Success

An industry’s key success factors (KSFs) are those things that most affect the ability of industry members to prosper in the marketplace—the particular strategy elements, product attributes, resources, competencies, competitive capabilities, and business outcomes that spell the difference between profit and loss. Key success factors concern what every industry member must be competent at doing or concentrate on achieving in order to be competitively and financially successful. KSFs are so important that all firms in the industry must pay them close attention—they are the prerequisite for industry success. The aswers to three questions help indentify an industry’s key success factors:

• On what basis do customers choose between the competing brands of sellers?
• What must a seller do to be competitively successful—what resources and competitive capabilities does it need?
• What does it take for sellers to achieve a sustainable competitive advantage?

Determining the industry’s key success factors is a top priority. At the very least, managers need to understand the industry situation well enough to know what is more important to competitive success and what is less important. They need to know what kinds of resources are valuable. Misdiagnosing the industry factors critical to long-term competitive success greatly raises the risk of a misdirected strategy—one that over-emphasizes less important competitive targets and under-emphasizes more important competitive capabilities. On the other hand, a company with perceptive understanding industry KSFs can gain substantial competitive advantage by training its strategy on industry KSFs and devoting its energies to being better than rivals on one or more of these factors. Indeed, KSFs represent golden opportunities for competitive advantage—companies that stand out on a particular KSF enjoy a stronger market position for their efforts. Hence using one or more of the industry’s KSFs as cornerstones for the company’s strategy and trying to gain sustainable competitive advantage by excelling at one particular KSF is a fruitful approach.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Customer Value Checklist

1. Does your company do a good job of listening to its customers? Give a specific example of how listening resulted in improved service quality to your customers?
2. Reliability is the ability of the company to perform the promised services dependably and accurately. On a 10-point scale, where 1 is unreliable and 10 perfectly reliable, where would you place your company and why?
3. How well does your company perform the “service basics”—that is, knowing and responding to the fundamental service expectations in your industry?
4. How effectively does your company manage the service design elements or systems, people, and the physical environment? Provide an example of how a lack of planning in one of these areas resulted in a “fail point” during a customer encounter.
5. Service recovery refers to how effectively companies respond to service failures. Cite an example of when a service failure occurred in your company and how it was handled.
6. Teamwork is an important dynamic in sustaining service workers’ motivation to serve and in minimizing service-performance shortfalls. Rate your company on its ability to foster teamwork on a scale of 1 to 10, where 1 indicates the absence of teamwork and 10 indicates maximum teamwork. How would you improve teamwork if you rated your company low on this attribute?
7. Internal service is crucial to service improvement, as customer satisfaction often mirrors employee satisfaction. To what extent does your company assess internal service quality (i.e., asking employees about the adequacy of systems to support the service, how the systems interact and serve one another, and where service failures are occurring)? Give examples of how internal service might be measured in your company.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Disadvantages of the Single Proprietorship

The literature describes the various disadvantages of the proprietorship as follows:

o Owner’s possible lack of ability and experience

o Limited opportunity for employees

o Difficulty in raising capital

o Limited life of the firm

o Unlimited liability of proprietor

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Implementing the Sales Program

As with any kind of management, implementing a sales program involves motivating and directing the behavior of other people—the members of the sales force. To be effective, the sales manager must understand why the people in his or her sales force behave the way they do. Then policies and procedures can be designed to direct their behavior toward the desired objectives.

The model of the activities involved in implementing a sales program suggests that five factors influence a sales rep’s job behavior and performance:

1. Environmental variables: Regardless of how highly motivated or competent salespeople are, their ability to achieve a particular level of job performance is influenced—and sometimes constrained—by environmental factors. The ability to reach a given sales volume, for instance, can be affected by such things as the market demand for the product being sold, the number and aggressiveness of competitors, and the health of the economy. Similarly other elements of a firm’s marketing mix, such as the quality of its products and the effectiveness of its advertising, can affect a salesperson’s ability to reach a high level of sales performance.
2. Role perceptions: To perform adequately, a salesperson must understand what the job entails and how it is supposed to be performed. The activities and behaviors associated with a particular job are defined largely by the expectations and demands of other people, both inside and outside the organization. Thus, a salesperson’s job (or role) is defined by the expectations and desires of the customers, sales manager, other company executives, and family members. The salesperson’s ability to do the job well is partly determined by how clearly the sales rep understands those role expectations. Also, the salesperson may sometimes face conflicting demands, as when customer wants a lower price but company management refuses to negotiate. The salesperson’s ability to resolve such conflicts helps determine success or failure on the job.
3. Aptitude: A salesperson’s ability to perform the activities of the job is also influenced by the individual’s personal characteristics, such as personality traits, intelligence, and analytical ability. No matter how hard they try, some people are never successful at selling because they do not have the aptitude for the job. Of course, different kinds of sales jobs involve different tasks and activities, so a person with certain characteristics may be unsuited for one selling job but tremendously successful at another one.
4. Skill levels: Evan when salespeople have the aptitude to do their jobs and an understanding of what they are expected to do, they must have the skills necessary to carry out the required tasks.
5. Motivation level: A salesperson cannot achieve a high level of job performance unless motivated to expend the necessary effort. A person’s motivation is determined by the kind of rewards expected for achieving a given level of performance and by the perceived attractiveness of those anticipated rewards.

A sales manager can use several policies and procedures to influence the aptitude, skill levels, role perceptions, and motivation of the sales force. Implementing a sales program involves designing those policies and procedures so that the job behavior and performance of each salesperson are shaped and directed toward the specified objectives and performance levels.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Intuitive Leadership and Sound Business

Intuitive Leadership is a term that has come into vogue only recently. In fact, tough-minded male executives have confessed to using intuition in their decision-making. Intuitive leadership is more than simply old-style leadership with some intuition added in to guide the corporate decision. It is leadership that takes into account both (a) the executives’ appreciation of their inner resources that are available but often not used and (b) the changes in institutions and society that are accompanying the “awakening” of employees and the public at large. The term “awakening” is used to describe the general phenomenon whereby people are becoming aware that they no longer have to accept their adopted beliefs, beliefs that they developed or accepted throughout most of their lives. These beliefs can include belief in the inderiority of certain ethnic or gender groups, beliefs in the sacrosanctity of economic customs and business practices (even if they are demonstrably not good for people or the planet), belief in powerlessness before the “big system,” or belief in the limited extent of one’s own ability to create what one wants.

In view of these changes, what is sound business for the future? What do these changes mean to business people? Of one thing we can be sure: business life will be replete with challenges. Some of these challenges will stem from the global dilemmas, with growing recognition of the role business has unwittingly played in accelerating modern society’s race towards self-destruction. Some of these challenges will stem from the changing attitudes of employees and the general public—the customers. The new environment for business will emphasize innovation and will be highly competitive. To prosper in such an environment, a business firm will need to attract and hold its most creative people. To do that, businesses will have to provide a work environment that fosters creativity development.

Developing intuitive leadership in the future will not be a luxury or a passing fad; it will be the heart of business. The challenges will be great. It will be necessary to deal effectively with the increasing complexity, interconnectedness, and systematic nature of the economic system. There is both good news and bad news. The bad news is that there will be persistent problems of mediocrity, debt, trade balance, global dilemmas, and worker morale. The good news is that we have inner resources we haven’t been using—untapped resources that are quite capable of dealing with these problems.

Thus “intuition” is not just a new gimmick in management decision making. Intuition is a code word for a necessary transformation of business—indeed, of global society.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Strategic Leadership’s View about Investment in Innovation

The strategic leadership view argues that the strategic incentive to invest in an innovation or the failure to exploit it as a result of destroyed competence come only after a firm’s top management has recognized the potential of the innovation. Top management makes the decisions to invest in an innovation, or if such decisions are made by lower level managers, they still reflect the beliefs and values of top management. But incentive to invest in an innovation or its ability to embrace and exploit the innovation is a function of the extent to which the firm’s top management recognizes the potential of the innovation. This ability of top management to recognize the potential of an innovation is a function of its managerial logic, or view of the world, which in turn depends on management experiences, organizational logic, and industry logic. Thus whether a firm is a new entrant or an incumbent may not matter much. What matters is the strategic leadership’s dominant logic.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Accounting Information

Accurate cost data are required for the successful implementation of the integrated physical distribution management concept using total cost analysis, for the management and control of physical distribution operations, and to aid in setting selling prices and in justifying price differentials.

As the cost of physical distribution increases, the need for accurate accounting for the costs becomes increasingly critical. Since the physical distribution function is relatively more energy intensive and labor intensive than other areas of the firm, its ratio of costs to total company costs has been steadily increasing. Efficient and effective distribution policies cannot be determined until the costs related to separate functional areas and their interaction are made available to distribution decision makers.

The quality of the accounting data will influence management’s ability to exploit new markets, take advantage of innovative transportation systems, make changes in packaging, choose between common carriers and private trucking, increase deliveries or increase inventories, and determine to what extent the order-processing system should be automated.

The accounting system must be capable of providing information to answer the following questions:

a)        What are the impacts of physical distribution costs on contribution by product, by territory, by customer, and by salesperson?

b)        What are the costs associated with providing additional levels of customer service? What trade-offs are necessary and what are the incremental benefits or losses?

c)        What is the optimal amount of inventory? How sensitive is the inventory level to changes in warehousing patterns or to changes in customer service levels? How much does it cost to hold inventory?

d)        What mix of transportation modes and carriers should be used?

e)        How many field warehouses should be used and where should they be located?

f)          How many production set-ups are required? Which plants will be used to produce each product?

g)        To what extent should the order-processing system be automated?

To answer these and other questions requires knowledge of the costs and revenues that will change if the physical distribution system changes. That is, determination of a product’s contribution should be based on how corporate revenues, expenses, and hence profitability would change if the product line were dropped. Any costs or revenues that are unaffected by the decision are irrelevant to the problem. For example, a relevant cost woul be public warehouse handling charges associated with a product’s sales; a non-relevant cost would be the overhead costs associated with the firm’s private trucking fleet.

Implementation of this approach to deceision making is severely hampered by the lack of availability of the right accounting data or the inability to use the data when they are available. The best and most sophisticated models are only as good as the accounting input, and a number of recent studies attest to the gross inadequacies of distribution cost data.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight