Defining Issues & Priorities


Ensure that the key issues facing business have been realistically defined in light of the current and rapidly changing business environment. There is nothing new about this requirement, but the fact is that very few management teams actually take the time and apply the discipline necessary to objectively define and prioritize the key issues that can make or break their business. The issues of inferior quality, higher cost products, lower productivity, and nonresponsive service plague manufacturers for the better part of the recent past. Many companies in industries such as steel, automotive, machine tool, textile, farm and construction equipment suffer badly as a result. Only few companies address these issues in effective ways. Most are unable to clearly identify the key issues, set priorities, and develop the necessary business plans to overcome the underlying problems.

While the specific issues vary for different companies and industries, the management mindset should not vary. To deal effectively with an increasingly turbulent environment, priorities must be set so the business can survive unexpected blows, adapt to sudden dropping changes, and then capitalize on smaller windows of opportunity that develop and close much more quickly than they have in the past.

Many progressive managers kick off their planning process with a session aimed specifically at getting agreement on key issues and priorities. Accepting these priorities require a shift in the way most managers think and act, such as:

  • Liquidity becomes a more important objective, often more important than reported earnings. It provides the flexibility to deal more effectively with unexpected events than is possible when everything is tied up in fixed and slow moving assets.
  • Productivity gains per dollar of capital and per employee must be achieved annually. These reductions must exceed inflation and achieve demonstrably lower costs.
  • Innovation must never stop. Demonstrable product and process improvements must be achieved year after year.
  • All cycle and response times must be continuously reduced.
  • A “frightened” sense of urgency must be the way of life in all parts of the business.

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.

Inflation and the Rule of 72


No formula is more useful for understanding inflation than the rule of 72. Basically, the idea is to compute quickly how long it takes the cost of goods and services to double at various compounded rates of growth. For example, if houses were increasing in cost at 9 percent a year, how long would it take for the price of a home to double? The answer is easy to calculate. Simply divide the annual increase (9 percent) into 72 and you get a number of years it takes to double the price (eight years). If houses go up in price by 12 percent, it only takes six years to double in price (72 divided by 12 = 6), and so on. Of course, the same calculation can be used to predict how high food prices or car prices will be 10 years from now.

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.

Strategic Management


Strategic management is the set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company’s objectives. It comprises nine critical tasks:

  1. Formulate the company’s mission, including broad statements about its purpose, philosophy, and goals.
  2. Conduct an analysis that reflects the company’s internal conditions and capabilities.
  3. Assess the company’s external environment, including both the competitive and the general contextual factors.
  4. Analyze the company’s options by matching its resources with the external environment.
  5. Identify the most desirable options by evaluating each option in light of the company’s mission.
  6. Select a set of long-term objectives and grand strategies that will achieve the most desirable options.
  7. Develop annual objectives and short-term strategies that are compatible with the selected set of long-term objectives and grand strategies.
  8. Implement the strategic choices by means of budgeted resource allocations in which the matching of tasks, people, structures, technologies, and reward systems is emphasized.
  9. Evaluate the success of the strategic process as an input for future decision-making.

As these nine tasks indicate, strategic management involves the planning, directing, organizing, and controlling of a company’s strategy-related decisions and actions.

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.

When Marketing doesn’t Work


Marketing has not measured up to expectations in many companies because management has concentrated on the trappings rather than the substance. When most executives talk about what their companies have done to become more marketing oriented, they usually point to such actions as:

  • Declarations of support from top management in the form of speeches, annual reports, or talks to the investment community.
  • Creation of a marketing organization, including appointment of a marketing head and product or market managers, transfer to marketing of the product development and service functions, establishment of a market research function, salespeople reassigned around markets, advertising function strengthened.
  • Adoption of new administrative mechanisms, such as formal marketing planning approaches, more and better sales information, and revised information systems structured around markets rather than products.
  • Increased marketing expenditures for staffing, training and development, advertising, marketing, research.

The point is not that these actions are useless, but that by themselves they are no guarantee of marketing success. Effective marketing requires a fundamental shift in attitude and values throughout the company so that everyone in every functional area places paramount importance on being responsive to market needs. The steps taken in most companies are not useful because they fail to accomplish this crucial shift in attitude. And without this shift in attitude, the most highly developed marketing operation cannot produce any real results.

Why have so few companies gone beyond the trappings to achieve the change in attitude that ensures substantive marketing? Frequently, one or more of these situations exist:

  • In a surprising number of cases, management does not fully understand the marketing concept as it applies in its situation.
  • In many other cases, management understands the implications of the marketing concept but has not committed itself to the actions and decisions needed to reinforce it.
  • In almost every case, management has failed to install the administrative mechanisms necessary for effective implementation of the concept, especially into the non-marketing function.

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.

 

Communicating Responsibilities


How do we communicate responsibilities to a person so that he has a clear understanding of what is expected of him? And how do we keep those responsibilities in the forefront of his mind so that he is always on track, working on the correct activities?

Before a person is hired he should be shown a written description of the job. At the time he is hired, he should be given a copy of the description to keep. When you review the responsibilities section with the person ask him for feedback. You want to make sure that his understanding of the responsibilities matches your own understanding.

The responsibilities section of the job description should be the basis upon which the employee’s performance is evaluated. Therefore, it makes sense to review the responsibilities with the person at the beginning of each review period and at the time of the annual written review.

Whenever, you verbally review the person’s performance, which should be on a fairly frequent basis, the responsibilities should be reviewed at that time as well.

If you have difficulty with a person, if the person consistently works on activities that do not lead to the fulfillment of his or her responsibilities, you may have to review the responsibilities more frequently.

The objective is to make sure the person clearly understands what he is to do at all times. Understanding, of course, cannot take place without communication.

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.

 

Post-sale Customer Loyalty


Maintaining the loyalty of major current customers can be crucial for improving a business’s profitability as its markets mature. Loyal customers become more profitable over time. The firm not only avoids the high costs associated with acquiring a new customer, but it typically  benefits because loyal customers a) tend to concentrate their purchases, thus leading to larger volumes and lower selling  and distribution costs, b) provide positive word-of-mouth and customer referrals, and c) may be willing to pay premium prices for the value they receive.

Periodic measurement of customer satisfaction is important, then, because a dissatisfied customer is unlikely to remain loyal to a company over time. Unfortunately, however, the corollary is not always true. Customers who describe themselves as satisfied are not necessarily loyal. Indeed, 60 to 80 percent of customer defectors in most businesses are “satisfied” or “very satisfied” before their defection. In the interim, perhaps, competitors improved their offerings, the customers requirements changed, or other environmental factors shifted. Businesses that measure customer satisfaction should be commended, but urged not to stop there. Satisfaction measures need to be supplemented with examinations of customer behavior, such as measures of the annual retention rate, frequency for purchases, and the percentage of a customer’s total purchases captured by the firm.

Defecting customers should be studied in detail to discover why the firm failed to provide sufficient value to retain their loyalty. Such failures often provide more valuable information than satisfaction measures because they stand out as a clear, understandable message  telling the organization exactly where improvements are needed..

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.

 

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