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.

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Price-earnings Ratio


Price-earnings ratios are published daily in newspapers for stock market-listed companies, along with the gross dividend yield, dividend cover and other information about the shares of each company. The method of calculation is what the name suggests:

Price-earnings ratio = stockmarket share price divided byEarnings per share

The stockmarket share price used is the one published in the financial newspapers at the close of business in the stock exchange for the previous evening.

As a generalization, when the price earnings ratio of a company is higher than the average for other companies in the same business sector, the stockmarket expects the company to achieve higher than average earnings per share in the foreseeable future to justify the above-average valuation of the shares.

In certain circumstances, the explanation may be quite different. For example, a takeover bid for the company may be widely expected, and the share price has already increased significantly in anticipation of the price to be offered by the bidder.

It must never be forgotten than the analysis of share prices, and especially the prediction of future changes, cannot be done simply by calculating the various ratios. If this was possible, making a fortune on the stockmarket would be easy. In practice, even the most experienced investment-fund managers would make costly errors of judgment from time to time.

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, Line of Sight

Supplier Partnership


An organization spends a substantial portion of every sales on the purchase of raw materials, components, and services. Therefore, supplier quality can substantially affect the overall cost of a product or service. One of the keys to obtaining high-quality products and services is for the customer to work with suppliers in a partnering atmosphere to achieve the same quality level as attained within the organization.

Customers and suppliers have the same goal—to satisfy the end user. The better the supplier’s quality, the better the supplier’s long-term position, because the customer will have better quality. Because both the customer and the supplier have limited resources, they must work together as partners to maximize their return on investment.

There have been a number of forces that have changed supplier reltions. Prior to the 1980s, procurement divisions were typically based on price, thereby awarding contracts to the lowest bidder. As a result, quality and timely delivery were sacrificed. It is stopped because price has no basis without quality. In addition, single suppliers for each item help develop a long-term relationship of loyalty and trust. These actions will lead to improved products and services.

Another factor changing supplier relations was the introduction of the just-in-time (JIT) concept. It calls for raw materials and components to reach the production operation in small quantities when they are needed and not before. The benefit of JIT is that inventory-related costs are kept to a minimum. Procurement lots are small and delivery is frequent. As a result, the supplier will have many more process setups, thus becoming a JIT organization itself. The supplier must drastically reduce setup time or its costs will increase. Because there is little or no inventory, the quality of incoming materials must be very good or the production line will be shut down. To be successful, JIT requires exceptional quality and reduced setup times.

The practice of continuous process improvement has also caused many suppliers to develop partnerships with their customers.

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, Line of Sight