Losers’ Description of Capabilities


Corporate losers describe their capabilities in terms of the physical and financial resources they own and control and the individuals whom they employ and can manage. Their markets are places. Their people are more comfortable with tangible assets that can be seen, smelt and touched, and easily counted, measured and valued.

Because their activities depend on the availability of physical resources some losers can operate only in certain geographical areas. It may be difficult for people living elsewhere to access them and work with them. Buildings become prisons and those excluded from participation become outsiders.

In general, losers prefer more rather than less. Some consider the accumulation of resources as an end in itself. Recruiting more staff and moving to a larger property is viewed as evidence of progress. Losers focus upon the individual items of capital rather than their relevance use, and the flow of benefits that they provide. The more losers succeed in accumulating fixed overheads, the more vulnerable they become to economic forces, commercial constraints and financial pressures.

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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Managing Cash and Near Cash


Cash and near cash (interest-bearing assets easily converted to cash) are needed to conduct day-to-day business operations like paying employees and meeting emergencies. How much of these assets managers need depends on how well they have done their financial planning, how many other current assets the firm holds, and the range of normal business fluctuations.

Cash itself pays no interest. So the financial manager must be careful to (1) speed up collection of monies due; (2) conserve funds; and (3) place idle cash in interest-bearing assets (near cash) until it is 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.

 

Corporate Disclosures


Giving stockholders more and better company information is one of the best ways to safeguard their interests. The theory behind the move for greater disclosure of company information is that a stockholder, as an investor, should be as fully informed as possible to make sound investments. By law, stockholders have a right to know about the affairs of the corporation in which they hold ownership shares. Those who attend annual meetings learn about past performance and future goals through speeches made by corporate officers and documents such as the company’s annual report. Those who do not attend meetings must depend primarily on annual reports issued by the company and the opinions of independent financial analysts.

Historically, management has tended to provide stockholders with minimum information. But companies now disclose more about their affairs, in spite of the complicated nature of some information. Stockholders therefore can learn about sales and earnings, assets, capital expenditures and depreciation by line of business, and details of foreign operations.

Corporations also are required to disclose detailed information about directors, how they are chosen, their compensation, conflicts of interest, and their reasons for resigning in policy disputes with management.

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.

 

Designing Strategies


Corporate strategy shows how a complex organization achieves its mission, while the business strategy shows how each business within the corporation contributes to the corporate strategy. These strategies typically include decisions about shared values and beliefs; industries to work in; amount of diversification; businesses to start, acquire, close or sell; type of products to make; organizational structure; relations with customers, suppliers, shareholders and other stakeholders; geographical locations, and targets for long-term profitability, productivity, market share, etc.

Consider three factors while designing strategies:

  1. The mission, which gives the overall aims and context for other decisions.
  2. The business environment, which includes all factors that affect an organization but which it cannot control, such as:
    1. Customers—their expectations and attitudes;
    2. Market—size, location, and stability;
    3. Competitors—the number, ease of entry to the market, their strengths;
    4. Technology—currently available and likely developments;
    5. Shareholders—their objectives, returns on investment, profit levels;
    6. Other stakeholders—their objectives and amount of support;
    7. Legal restraints—trade restrictions, liability and employment laws;
    8. Political, economic and social conditions—including stability, rate of growth, inflation, etc.

The business environment is similar for all competing organizations, so to be successful you need a distinctive competence.

  1. The distinctive competence, which includes the factors that set your organization apart from the competitors. If you can design new products very quickly, innovation is a part of your distinctive competence. A distinctive competence comes from your organization’s assets, which include:
    1. Customers—their demands, loyalty;
    2. Employees—skills, expertise, loyalty;
    3. Finances—capital, debt, cash flow;
    4. Products—quality, reputation, innovations;
    5. Facilities—capacity, age, value;
    6. Technology—currently used, planned;
    7. Suppliers—reliability, service;
    8. Marketing—experience, reputation;
    9. Resources—patents, ownership.

The strategic plans show how the organization can achieve the mission.

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.

Designing Strategies


Corporate strategy shows how a complex organization achieves its mission, while the business strategy shows how each business within the corporation contributes to the corporate strategy. These strategies typically include decisions about shared values and beliefs; industries to work in; amount of diversification; businesses to start, acquire, close or sell; type of products to make; organizational structure; relations with customers, suppliers, shareholders and other stakeholders; geographical locations, and targets for long-term profitability, productivity, market share, etc.

Consider three factors while designing strategies:

  1. The mission, which gives the overall aims and context for other decisions.
  2. The business environment, which includes all factors that affect an organization but which it cannot control, such as:
    1. Customers—their expectations and attitudes;
    2. Market—size, location, and stability;
    3. Competitors—the number, ease of entry to the market, their strengths;
    4. Technology—currently available and likely developments;
    5. Shareholders—their objectives, returns on investment, profit levels;
    6. Other stakeholders—their objectives and amount of support;
    7. Legal restraints—trade restrictions, liability and employment laws;
    8. Political, economic and social conditions—including stability, rate of growth, inflation, etc.

The business environment is similar for all competing organizations, so to be successful you need a distinctive competence.

  1. The distinctive competence, which includes the factors that set your organization apart from the competitors. If you can design new products very quickly, innovation is a part of your distinctive competence. A distinctive competence comes from your organization’s assets, which include:
    1. Customers—their demands, loyalty;
    2. Employees—skills, expertise, loyalty;
    3. Finances—capital, debt, cash flow;
    4. Products—quality, reputation, innovations;
    5. Facilities—capacity, age, value;
    6. Technology—currently used, planned;
    7. Suppliers—reliability, service;
    8. Marketing—experience, reputation;
    9. Resources—patents, ownership.

The strategic plans show how the organization can achieve the mission.

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.

Disadvantages of Sole Proprietorship


What may be seen as an advantage by one person may turn out to be a disadvantage to another. The goals and talents of the individual owner are the deciding factors. For profitable businesses managed by capable owners, many of the following factors do not cause problems. On the other hand, proprietors starting out with little management experience and little money are likely to encounter many of the disadvantages.

  1. Unlimited Liability: The sole proprietor has unlimited liability in meeting the debts of the business. In other words, if the business cannot pay its creditors, the owner may be forced to use personal, non-business holdings such as a car or a home to pay off the debts. The more wealth an individual has, the greater is the advantage of unlimited liability.
  2. Limited Sources of Funds: Among the relatively few sources of money available to the sole proprietorship are a bank, friends, family, or his or her own funds. The owner’s personal financial condition, then, determines his or her credit standing. Often the only way a sole proprietor can borrow for business purposes is to pledge a car, a house, or other real estate, or other personal assets to guarantee the loan. And if the business fails, the owner may lose the personal assets as well as the business. Publically owned corporations, in contrast, can not only obtain funds from commercial banks but can sell stocks and bonds to the public to raise money. If a public company goes out of business, the owners do not lose personal assets.
  3. Limited Skills: The role proprietor must be able to perform many functions and possess skills in diverse fields such as management, marketing, finance, accounting, bookkeeping, and personnel. Although the owner can rely on specialized professionals to provide advice, he or she must make the final decision in each of these areas.
  4. Lack of Continuity: The life expectancy of a sole proprietorship is directly related to that of the owner and his or her ability to work. The serious illness of the owner could result in failure if competent help cannot be found.
  5. Lack of qualified Employees: It is usually difficult for a small sole proprietorship to match the wages and benefits offered by a large competing corporation because the proprietorship’s level of profits may not be as high. In addition, there is little room for advancement within a sole proprietorship, so the owner may have difficulty attracting and retaining qualified employees.
  6. Taxation: Although it is considered that taxation is an advantage for sole proprietorships, it can also be a disadvantage, depending on the proprietor’s income. Under current tax rates, sole proprietors pay a higher marginal tax rate than do small corporations. The tax often determines whether a sole proprietor chooses to incorporate his or her 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.

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