Situation Appraisal


We may experience confusion and uncertainty over where to begin, how to recognize situations that require action, how to break apart overlapping and confusing issues into manageable components, how to set priorities, and how to manage a number of simultaneous activities efficiently.

Nearly every manager has entered the fantasy of starting fresh. Even on the first day in a new job, the manager is beset by issues that were chronic frustrations for the previous incumbent. Every manager must operate from a middle ground, surrounded by the accumulated problems of the past, a profusion of demands of the moment, and the certainty that future threats and opportunities await him not be ignored.

Situational analysis in this situation thus has a role. It consists of evaluative techniques that lead to proper selection and use of analytical techniques. This process builds the framework for daily use of rational process ideas. It enables managers to make best possible use of the technique of problem analysis, decision analysis, and potential problem analysis.

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.

Truth Map


Truth map is an audit process designed to get to the bottom of an organization’s challenges, opportunities and concerns. It requires the involvement of a cross-section of individuals from right across the whole organization, as well as other relevant parties such as customers and suppliers. At the most simple level, it involves asking a lot of people a lot of questions—but that is only the beginning.

It is not what truth map is that makes it special but the reasons why it is being undertaken and the spirit in which it is carried out that are important.

You may use truth map in two different situations, firstly as part of truth and reconciliation in business, and secondly as the first stage of a standard message mapping exercise.

A truth map covers the same ground in either situation but covers it in different ways and for slightly different reasons.

  • Use as part of a standard message mapping exercise (e.g., to assist a group of committed, enthusiastic individuals), the emphasis is on getting to the truth about future opportunities and challenges.
  • Use as part of truth and reconciliation in business, the emphasis is on getting to the truth of past conflicts, reconciling differences and healing resentments before an organization is even able to move on and address the future. In this type of situation, significant effort must be applied to bring the different parties to the table before dialogue and debate can even start to take place.

In both these situations the actual mechanics are much the same. Both situations require methodical, systematic but sympathetic questioning.

In the interests of objectivity, the presence of an independent adjudicator can be highly beneficial or even essential.

Truth map allows everyone to be heard, it airs people’s grievances and, when done well, even the most hardened objectors can move from being on the outside peeing in, to being on the inside peeing out.

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.

 

Cardinal versus Ordinal


What do we mean when we say that a variable is “quantitatively measurable”?We do not necessarily mean that there is only a single way of measuring or scaling it. Temperature is certainly quantitatively measurable, but there are alternative ways of doing so. For example, 320 Fahrenheit is 00 Celsius, and each degree up or down of Celsius corresponds to 1.8 degrees up or down of Fahrenheit. The two scales differ, but only in zero point and unit interval. Similarly, altitude could be measured from sea level or from the center of the earth (shift of zero point) and in feet or meters (shift of unit interval). Both temperature and altitude are more technically called cardinal magnitudes, variables which have the following property: that, regardless of shift of zero-point and unit interval, the relative magnitudes of differences remain the same. In case of altitude, for example, there’s a bigger difference between the heights of the base and crest of Mount Everest than between the ground floor and roof of even the tallest building. This remains true whether we scale altitude in feet or meters or whether we measure it from sea level or from the center of the earth. If people can state that they prefer two million to one million—but not by how much—their utility is said to be an “ordinal” magnitude. Put another way, if Total Utility is an ordinal magnitude we cannot say anything about the  size of Marginal Utility but we can still say whether Marginal Utility is positive or negative.

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.

 

Managerial Accounting


Managerial accounting refers to the internal use of accounting statements by managers in planning and directing the organization’s activities. Perhaps management’s greatest single concern is cash flow, the movement of money through an organization over a daily, weekly, monthly, or yearly basis. Obviously, for any business to succeed, it needs to generate enough cash to pay its bills as they fall due. However, it is not at all unusual for highly successful and rapidly growing companies to struggle to make payments to employees, suppliers, and lenders because of an adequate cash flow. One common reason for a so-called “cash crunch” or short fall is poor managerial planning.

Managerial accounting is the backbone of an organization’s budget, an internal financial plan that forecasts expenses and income over a set period of time. It is not unusual for an organization to prepare separate daily, weekly, monthly, and yearly budgets. Think of a budget as a financial map, showing how the company expects to move from Point A to Point B over a specific period of time. While most companies prepare master budgets for the entire firm, many also prepare budgets for smaller segments of the organization such as divisions, departments, product lines, or projects. “Top-down” master budgets begin at the top and filter down to the individual department level, while “bottom-up” budgets start at the departments or project level and are combined at the chief executive’s office. Generally, the larger and more rapidly growing an organization, the greater will be the likelihood that it will build its master budget from the ground up.

Regardless of focus, the major value of a budget lies in its breakdown of cash inflows and outflows. Expected operating expenses (cash outflows such as wages, materials costs, and taxes) and operating revenues (cash inflows in the form of payments from customers and stock sales) over a set period of time are carefully forecast and subsequently compared with actual results. Deviations between the two serve as a “trip wire” or “feedback loop” to launch more detailed financial analysis in an effort to pinpoint trouble spots and opportunities.

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 Master Plan


Many people assume that a formal business plan is only for big time businesses. Wrong. A business plan is for anyone who wants to give their enterprise their best possible shot. It is where you detail out all the operational, marketing, and money matters of your business. It is, in essence, a road map. With it, you will better be able to reach your goal. Without it, you run the risk of spending precious time and money traveling in circles or unwittingly wandering into danger zones.

In response to the question, what a business plan is, follow the following”

  • A business plan is written by the home-based business owner with outside help as needed.
  • It is accurate and concise as a result of careful study.
  • It explains how the business will function in the marketplace.
  • It clearly depicts its operational characteristics.
  • It details how it will be financed.
  • It outlines how it will be managed.
  • It is the management and financial “blueprint” for startup and profitable operation.
  • It serves as a prospectus for potential investors and lenders.

A study for “why” of creating it, note:

  • The process of putting the business plan together, including the thought that you put in before writing it, forces you to take the objective, critical, unemotional look at your entire business proposal.
  • The finished written plan is an operational tool, which, when properly used, will help you manage your business and work toward its success.
  • The complete business plan is a means for communicating your ideas to others and provides the basis for financing your business.

While you are to be the author of the document, you shouldn’t hesitate to get professional help when it comes to areas outside your ken, such as accounting, insurance, capital requirements, operational forecasting, and tax and legal requirements. Finally, in response to the question, “When should Business Plan be used?” note:

  • To make crucial startup decisions
  • To reassure lenders and backers
  • To measure operational progress
  • To test planning assumptions
  • As a basis for adjusting forecasts
  • To anticipate ongoing capital and cash requirements
  • As the benchmark for good operational management

If you have been doing your research and homework all along, you probably have most of the raw material for the business plan, so it won’t be such an awesome task.

Business plans differ greatly, depending on the nature and scope of the enterprise. Some elements a person in a retail sales business would need in his or her business plan may be totally irrelevant for your service business. Similarly, business plans vary in length—from five or six pages or a virtual booklet; some are written in an engaging narrative style while others take another approach—just the facts. However, while business plans may differ in style, tone, length, and components, there is some common ground. Below is a list of items that should be in almost every business plan:

  • A summary of the nature of your business and its principal activity with a detailed description of the product(s) or service(s) you will offer.
  • A statement as to the form your business will take (sole proprietorship, partnership, incorporation) and how it will be managed and operated (with information on employees or subcontractors if applicable).
  • A discussion of any extra-ordinary (and potentially problematic) matters revolving around such things as space requirements, production processes, and operating procedures.
  • A discussion of major trends in your trade or profession.
  • A discussion of your competition and the basis on which you will compete.
  • A description of your target market that might include a profile of a typical customer or client.
  • A discussion of your plans for pricing, sales terms, and distribution.
  • A discussion of how you intend to advertise and promote your products or services.
  • A detailed statement of startup and operating costs for at least the first year.
  • A discussion of how your business will be financed.
  • Profit and loss and cash flow statements for at least the first year of business.

If this list has made a business plan seem all the more scary and arduous a task, don’t panic. There are books on the market that will guide you through the process.

A clean attractive business plan is a sine qua non if you will be applying for a loan or looking for investors. But even if the document is for your eyes only, you owe it to yourself to produce a professional-looking document. Since it is your road map, the neater it is the better it will serve you when you refer to it at various stages of your entrepreneurial journey.

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.

Value Stream Management


The value stream management method is a strategic and operational approach designed to help a company or complete supply chain achieve a lean status. It has its antecedents grounded in the Value Stream Mapping approach but seeks to overcome some of the problems and drawbacks of this earlier approach. Value Stream Management also incorporates various education and policy deployment stages to make it a far better basis for ongoing company or supply chain development. The new approach can be divided into individual and consecutive stages.

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

Change or Change Management?


Our ability to deal with mega theme dramatic change is the subject of the next trend. Perhaps the single most important indicator for corporate success in the near future is the attitude of the company culture about change. The willingness of a structure to set itself up for change, to regard itself as a testing ground with daily battles, not just those that occur every planning period, is one of the best litmus paper indicators of eventual success or failure.

Today’s information explosion is just beginning. The growing list of mergers, alliances and joint ventures and the rapid deployment of technology are producing change at a velocity that even the seasoned players in businesses can’t surmise. The challenge for businesses will not be in how we manufacture or market change but how we manage it.

The days of the large-scale, vertically integrated corporation are numbered. The trend is toward smaller enterprises with increasing specialization of products are services: the upcoming approach is 50 people are the maximum for the company; if the staff gets above 50 people the company will be cut in two. There is no place to hide in a firm of 50 people. These small companies know what’s happening in their marketplace and with their competitors—they’re not from the marketplace.

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 contact www.asifjmir.com, Line of Sight