Products Liability


Over the years, individuals have demanded stricter laws to protect them from faulty products. Consumer protection statutes have been enacted in most countries. Manufacturers, wholesalers, and retailers are generally responsible to the user of a product if he or she is harmed by it. Three theories of liability have been established:

  1. Absolute or strict liability
  2. Negligence
  3. Breach of warranty (express or implied) and misrepresentation.

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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Franchises


A franchise is a contract arrangement by which the owner of a trade name, trademark, copyright, or process grants permission to others to use this property in selling goods or services under specified conditions.

The purchaser of a franchise (franchisee) obtains the advantage of offering a well-known or unusual product that may already have wide appeal. The franchisee  also receives the benefit of mass buying and advertising. Typically, the buyer of a franchise may pay a flat fee for the franchise as well as an additional percentage based on sales. The franchisee may also be required to pay a fractional share of the franchisor’s promotional costs and to purchase certain supplies from the franchisor.

Contract and sales laws pertaining to franchises are comparatively new. If the franchise involves the resale of goods or food, both the franchisor and franchisee will usually be liable under a breach of warranty if the food or other merchandize is not wholesome or proper from the consumer’s standpoint. However, tort liability to a third person is usually the responsibility of the franchisee alone. In a case where the franchisee’s truck struck  and negligently injured a pedestrian , the franchisor would normally have no responsibility.

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.

Warranty


In general, a warranty is the assumption of responsibility by the seller for the quality, character, or suitability of the goods he or she has sold. The seller may assume this responsibility by agreement with the buyer. In this case the warranty is created by contract, and the rights of the buyer and the liabilities of the seller are contractual in nature. Such a warranty is called an express warranty. In addition, certain responsibilities for the quality of goods sold are imposed on the seller by Uniform Commercial Code. These warranties arise whether or not the seller has made express promises as to the quality of the goods. The warranties imposed by law are known as implied warranties.

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.

Identifying Company Weaknesses and Resource Deficiencies


A weakness is something a company lacks or does poorly or a condition that puts it at a disadvantage. A company’s internal weaknesses can relate to a) deficiencies in competitively important skills or expertise, b) a lack of competitively important physical, human, organizational, or intangible assets, or c) missing or weak competitive capabilities in key areas. Internal weaknesses are thus shortcomings in a company’s compliment of resources. A weakness may or may not make a company competitively vulnerable, depending on how much the weakness matters in the market place and whether it can be overcome by the resources and strengths in the company’s possession.

Sizing up a company’s resource capabilities and deficiencies is akin to constructing a strategic balance sheet where resource strengths represent competitive assets and resource weaknesses represent competitive liabilities. Obviously, the ideal condition is for the company’s strengths/competitive assets to outweigh its weaknesses/competitive liabilities by an ample margin—50-50 balance is definitely not the desired condition.

Once managers identify a company’s resource strengths and weaknesses, the two compilations need to be carefully evaluated for their competitive and strategy-making implications. Some strengths are more competitively important than others because they matter more in forming a powerful strategy, in contributing to a strong market position, and in determining profitability. Likewise, some weaknesses can prove fatal if not remedied, while others are inconsequential, easily corrected, or offset by company strengths. A company’s resource weaknesses suggest a need to review its resource base: What existing resource deficiencies need to be remedied? Does the company have important resource gaps that need to be filled? What needs to be done to augment the company’s future resource base?

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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