Price Differentiation

A common response during slow demand is to discount the price of the service. This strategy relies on basic economics of supply and demand. To be effective, however, a price differentiation strategy depends on solid understanding of customer price sensitivity and demand curves.

Heave use of price differentiation to smooth demand can be a risky strategy. Over –reliance on price can result in price wars in any industry where eventually all competitors suffer. Price wars are well known in the airline industry, where total industry profits suffered as a result of airlines simultaneously trying to attract customers through price discounting.

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.

Rolling up your Sleeves

If there’s one way that you can get other people to become more interested and more focused on improving themselves, it is to lead by example. Take time out to go on training courses, even though you may be too busy. Take time to read useful information, not just novels, books or newspapers but actual up-to-date books and texts from the experts within your industry. Practise your skills, use them and make sure that they’re developed as far as they possibly can be. If it means learning a new language or learning a skill that you don’t have then take on that challenge. It is very difficult to manage people well if you have low self-esteem, but if you feel good about yourself and you have that feeling of progress and achievement, then it is very hard for this not to rub off on other people.

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.

Productivity—the Japanese Way

Economists are forever telling us that we need to increase productivity in order to improve our standard of living. Productivity is one of those concepts that are so loaded with meaning and implications that is very difficult to define, much less explain. Not surprisingly then, improving “it” is one of the most difficult tasks facing business. More to the point, the time for improvement is quickly running out. Industrial performance is being outstripped at a frightening pace by the Japanese. In fact, it has reached the point where their productivity performance is so superior that they can literally pick any product and any market and quickly come to dominate it.

The idea that Japanese are uniquely gifted in only a few related areas has been debunked by their proven successes in industries as diverse as automobiles and semi-conductors. As well, the facile suggestion that the Japanese are somehow culturally inclined to be productive doesn’t wash. Japanese managers have taken over factories in Europe and the US and greatly improved productivity records. Productivity has also been high in their North American plants.

If corporate managers believe that their workers can be as competitive as anyone else in the world, and technically, there’s no valid reason why they can’t be, then they must find better ways to help their employees realize their potential. In that sense, study of Japanese methods is a jumping-off point that can lead to adaptations that will produce unique ways of improving productivity.

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.

Factors of Production

Each business has its own mix of the four factors of production, vis-à-vis, natural resources, labor, capital, and entrepreneurship.

Natural resources refers to everything useful in its natural state as a productive input including agricultural land, building sites, forests, mineral deposits, and so on. Natural resources are basic resources required in any economic system.

Labor is critically important. It refers to everyone who works for a business, from the company president to the production manager, the sales representative, and the assembly line worker.

Capital is defined as the funds necessary to finance the operation of a business. These funds can be provided in the form of investments, profits, or loans. They are used to build factories, buy raw materials, hire workers, and so on.

Entrepreneurship is the taking of risks to set up and run a business. The entrepreneur is the risk taker in private enterprise system. In some situations the entrepreneur actively manages the business; in others this duty is handed over to a salaried manager.

All four factors of production must receive a financial return if they are to be used in a private enterprise system. These payments are in the form of rent, wages, interest, and profit. The specific factor payment received varies among industries, but all factors of production are required in some degree for all businesses.

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.

Contamination of Resources

Nations have paid relatively little attention to the contamination and destruction of the world’s natural resources. Entire forests have been destroyed by people wanting to get firewood or to clear land and by contaminated air and water. Pollution control of air and water was considered a luxury that governments, anxious to attract new industry and to keep the industry they had, could ill-afford to impose. Developing countries assert, “They can’t afford pollution control like Japan or the United States—that’s cultural imperialism.” They unfortunately do not realize that the price for such negligence is too high.

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.

The New Trend

Today, everything has changed. Globalization, the internationalization of markets and corporations, has changed the way modern corporations do business. To reach the economies of scale necessary to achieve the low costs, and thus the low prices, needed to be competitive, companies are now thinking of a global (worldwide) market instead of a national market. Instead of using one international division to manage everything outside the home country, large corporations are now using matrix structures in which product units are interwoven with country or regional units. International assignments are now considered key for anyone interested in reaching top management. As more industries become global, strategic management is becoming an increasingly important way to keep track of international developments and position the company for long term competitive advantage.

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.

21st Century Competition

The fundamental nature of competition in many of the world’s industries is changing. The pace of this change is relentless and increasing. Even determining the boundaries of an industry has become challenging. The companies compete not only among themselves, but also with companies in other sectors. The pace of change among once-stable phone companies is as relentless as it is in the “traditional” grocery industry.

Still other characteristics of the 21^st century competition are noteworthy. Conventional sources of competitive advantage such as economies of scale and huge advertising budgets, are not as effective in the 21^st century competition.

The traditional managerial mindset cannot lead a firm to strategic competitiveness in the competitive landscape. In its place, managers must adopt a new mindset—one that values flexibility, speed, innovation, integration, and the challenges that evolve from constantly changing conditions. The conditions of the competition result in a perilous business world, one where investments required to compete on a global scale are enormous and the consequences of failure are severe.

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.

Small Business

A small business is a business that must have at least two of the following characteristics: 1) independent management with the managers often owning the firm, 2) the capital contribution coming from a limited number of individuals—perhaps only one, 3) the firm operating in a local area, and 4) the firm representing a small part of the overall industry.

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.

Competitive Marketing Theories

Competitive market theories are derived from the neo-classical economic concepts of rational choice and maximization of utility. The assumption is that individuals choose jobs which offer them maximum benefits. The utility or value of these benefits – money, vacation time, pension entitlement and so on – vary for different individuals according to their personal preferences. People move from one organization to another if improved benefits are available. At the same time, employer organizations attempt to get the most from their employees for the lowest possible cost.

The outcome of this process is a dynamic and shifting equilibrium in which both employees and organizations compete to maximize benefits for themselves. Within a specific region or industry there is a balance between supply and demand for human resources. Pay and conditions for employees are determined by the relative scarcity or abundance of skills and abilities in the employment market. Competitive forces push wages up when demand for products – and hence employees – increases, and downwards when the economy is in recession. In the latter case a market clearing wage is eventually arrived at which is sufficiently low to encourage employers to increase recruitment and eliminate unemployment. This discourse reinforces the view that employees are objects to be traded like any other commodities in the market – human resources in the hardest possible sense. Supposedly, they offer themselves – their skills and human qualities – for sale to the highest bidders. Within this mindset they could just as well be vegetables on a market stall.

Competition theories assume that job-seekers have perfect knowledge of available jobs and benefits. Job-searching is an expensive and time consuming business. The unemployed do not have money and those in work do not have time. The result is that few people conduct the extensive searches required to find jobs which meet their preferences perfectly. In practice, most individuals settle for employment which is quickly obtained and which exceeds the reserve minimum wage they have in mind. There is a considerable element of luck involved. Moreover, the job-seeker does not make the choice: in most cases the decision is in the hands of employer.

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.

International Codes of Environmental Conduct

A number of business organizations have developed codes of environmental conduct. Among the most important ones are the following:

• International Chamber of Commerce (ICC): The ICC developed the Business Center for Sustainable Development, 16 principles that identify key elements of environmental leadership and call on companies to recognize environmental management as among their highest corporate priorities.
• Global Environmental Management Initiative (GEMI): A group of over 20 companies dedicated to fostering environmental excellence, GEMI developed several environmental self assessment programs, including one that helps firms assess their progress in meeting the goals of the Business Center for Sustainable Development.
• Keidanren: This major Japanese industry association has published a  Global Environmental Charter that sets out a code of environmental behavior that calls on its members to be “good corporate citizens.”
• Chemical Manufacturers Association (CMA): The U.S. based industry association developed Responsible Care: A Public Commitment, which commits its member-companies to a code of management practices, focusing on process safety, community awareness, pollution prevention, safe distribution, employee health and safety, and product stewardship. The group is working for the international adoption of these principles.
• CERES Principles: These are 10 voluntary standards developed by the Coalition of Environmentally Responsible economies that commit signatory firms to protection of the biosphere, sustainable use of natural resources, energy conservation, risk reduction, and other environmental goals.
• International Organization for Standards (ISO): ISO 14000 is a series of voluntary standards introduced in 1966 by the ISO, an international group based in Geneva, Switzerland, that permit companies to be certified as meeting global environmental performance standards.

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.