Operating Leverage


It is a financial thought quite similar to break-even analysis. Both fixed and variable costs are used in the production and marketing of products. The higher the operating leverage, the faster the speed of increase of total profits after the sales crosses the break-even volume. Likewise, those firms with high operational leverage will suffer losses at a faster rate after the sales volume drops under the break-even point.

Organizations with high operating leverage gain more from sales from organizations that have low operating leverage. Organizations with high operating leverage are more responsive to drop in sales volume, losses will occur at a faster speed.

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 Marketing & Budgeting


A phase in the strategic marketing management process is budgeting. A budget is a formal, quantitative  expression of an organization’s planning and strategy initiatives expressed in financial terms. A well-prepared budget meshes and balances an organization’s financial, production, and marketing resources so that overall organizational goals or objectives are attained.

An organization’s master budget consists of two parts: 1) an operating budget, and 2) a financial budget. The operating budget focuses on an organization’s income statement. Since the operating budget projects future revenue and expenses, it is sometimes referred to as a pro forma income statement or profit plan. The financial budget focuses on the effect that the operating budget and other initiatives (such as capital expenditures) will have on the organization’s cash position.

In addition to the operating and financial budget, many organizations prepare supplemental special budgets, such as an advertising and sales budget, and related reports tied to the master budget. Budgeting is more than an accounting function. It is an essential element of strategic marketing 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.

Global Sourcing & Operating Guidelines


Levi Strauss & Company developed the following policy to guide the firm through the maze of international business and maintain its high standard of ethical integrity. Levi Strauss & Co., has a heritage of conducting business in a manner that reflects its values. Because the company sources in many countries with diverse cultures, it must take special care in selecting business partners and countries whose practices are not incompatible with its values. Otherwise, its sourcing decisions have the potential of undermining this heritage, damaging the image of its brands and threatening its commercial success.

Business Partner Terms of Engagement

Terms of Engagement address issues that are substantially controllable by our individual business partners.

We have defined business partners as contractors and subcontractors who manufacture or finish our products and suppliers who provide material (including fabric, sundries, chemicals and/or stones) utilized in the manufacturing and finishing of our products.

i.            Environmental Requirements: We will only do business with partners who share our commitment to the environment and who conduct their business in a way that is consistent with Levi Strauss & Co.’s Environmental Philosophy and Guiding Principles.

ii.            Ethical Standards: We will seek to identify and utilize business partners who aspire as individuals and in the conduct of all their businesses to a set of ethical standards not incompatible with our own.

iii.            Legal Requirements: we expect our business partners to be law abiding as individuals and to comply with legal requirements relevant to the conduct of all their businesses.

iv.            Employment Practices: We will only do business partners whose workers are in all cases present voluntarily, not put at risk of physical harm, fairly compensated, allowed the right of free association and not exploited in any way. In addition . . . . specific guidelines [are provided in the areas of]: wages and benefits, . . . . working hours, . . . . . child labor, . . . . prison labor/forced labor, . . . . health and safety, . . . . discrimination, [and] . . . . disciplinary practices.

v.            Community Involvement: We will favor business partners who share our commitment to contribute to the betterment of community conditions.

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.

Management by Objectives


To provide a framework within which to evaluate subordinates’ behavior and, in particular, to allow managers to monitor progress toward achieving goals, many organizations implement some version of management by objectives. Management by objectives is a system of evaluating subordinates for their ability to achieve specific organizational goals or performance standards and to meet operating budgets. Most organizations make some use of management by objectives because it is pointless to establish goals and then fail to evaluate whether or not they are being achieved. Management by objectives involves three specific steps:

  1. Specific goals and objectives are established at each level of the organization. Management by objectives starts when top managers establish overall organizational objectives, such as specific financial performance targets. Then objective-setting cascades down throughout the organization as managers at the divisional and functional levels set their objectives to achieve corporate objectives. Finally, first-level managers and workers jointly set objectives that will contribute to achieving functional goals.
  2. Managers and their subordinates together determine the subordinates’ goals. An important characteristic of management by objectives is its participatory nature. Managers at every level sit down with the subordinate managers who report directly to them and together they determine appropriate and feasible goals for the subordinate, and bargain over the budget that the subordinate will need so as to achieve these goals. The participation of subordinates in the objective-setting process is a way of strengthening their commitment to achieving their goals and meeting their budgets. Another reason why it is so important for subordinates (both individuals and teams) to participate in goal setting is so they can tell managers what they think they can realistically achieve.
  3. Managers and their subordinates periodically review the subordinates’ progress toward meeting goals. Once specific objectives have been agreed upon for managers at each level, managers are accountable for meeting those objectives. Periodically, they sit down with their subordinates to evaluate their progress. Normally, salary raises and promotions are linked to the goal-setting process, and managers who achieve their goals receive greater rewards than those who fall short.

In the companies that have decentralized responsibility for the production of goods and services to teams, particularly cross-functional teams, management by objectives works somewhat differently. Managers ask each team to develop a set of goals and performance targets that the team hopes to achieve—goals that are consistent with organizational objectives. Managers then negotiate with each team to establish its final goals and the budget the team will need to achieve them. The reward system is linked to team performance, not to the performance of any one team member.

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

Consumers of Advertising


It is vital, from the outset, to guard against the normal psychological tendency to impose your advertising “pattern” on a rather complex reality. Consider, for example, that the advertisements you may encounter through television, radio, the campus newspaper, magazines, direct mail, billboards, and the like are only a fraction of all the forms that advertising takes in other places in other times, for different purposes, and among different audiences. Yet, there is a tendency to equate that fragmented reality with the whole. Advertising is bad (good) for children; advertising is good (bad) for the economy; advertising helps us make wise (unwise) purchase decisions; advertising makes goods cost more (less); and so on. Simply, some advertising may be (or do) any of these things. All advertising is however far too complex to permit such over-simplifications.

By way of further example, one of the frequently voiced complaints of advertising critics is that advertising is not informative enough. Now, if we wish to point to some specific advertisements, it would not be difficult to accept such a premise. An advertisement for an expensive car may tell us that the car offers greater “class” than its competitors but nothing of its performance or life expectancy. Or a message for a cereal may feature a talking tiger, telling us of his adventures, but little of nutrition.

But there is other grist for this mill as well. A classified ad for a refrigerator may tell us its make, age, capacity, operating efficiency, and the reasons the seller has put it on the market. A message on drill bits for all rigs inundates its readers with performance data concerning the cost efficiencies to be accrued through the use of this bit compared with those of traditional composition. Do these ads also lack information?

To understand advertising then, you must first develop some knowledge of its more prominent functions. One way of getting a realistic picture of the landscape of advertising is to ask a simple question: Who uses advertising to reach what audiences through what media for what purpose? The pursuit of the answer not, of course, reveals all the nuances of advertising. It may, however, after a reasonable of some of the major species and subspecies and—not incidentally—serve to discourage embracing, “Advertising does …” thinking.

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

Assessing Competitors’ Areas of Strength


  1. Excellence in product design and/or performance (engineering ingenuity)
  2. Low-cost, high-efficiency operating skill in manufacturing and/or in distribution
  3. Leadership in product innovation
  4. Efficiency in customer service
  5. Personal relationships with customers
  6. Efficiency in transportation and logistics
  7. Efficiencies in sales promotion
  8. Merchandising efficiency—high turnover of inventories and/or of capital
  9. Skillful trading in volatile price movement commodities
  10. Ability to influence legislation
  11. Highly efficient, low-cost facilities
  12. Ownership or control of low-cost or service raw materials
  13. Control of intermediate distribution or processing units
  14. Massive availability of capital
  15. Widespread customer acceptance of company brand name (reputation)
  16. Product availability, convenience
  17. Customer loyalty
  18. Dominant market share position
  19. Effectiveness of advertising
  20. Quality salesforce

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

Six Sigma


Six Sigma is a statistical measure used to ensure quality of products and services. The six sigma academy has developed a break through strategy consisting of measure, analyze, improve and control, that allows companies to make exceptional bottom-line improvements. In addition to the material and labor savings, which flow directly to the bottom line, a company engaged in six sigma can expect to see:

a. Improved customer satisfaction

b. Reduced cycle time

c. Increased productivity, Reduction in total defect

d. Improved process flow.

Implementing, six sigma program in manufacturing means more than delivering defect-free product after final test or inspection. It also entails concurrently maintaining in process yields around 99.9999998 percent, defective rates below 0.002 parts per million and virtually eradicating defects, rework and scrap. Other six sigma characteristics include operating processes under statistical control, controlling input process variables, rather than the usual output product variables, maximizing equipment uptime and optimizing cycle time. In a six sigma organization, employees assess their job functions with respect to how they improve the organization. They define their goals and quantify where they are currently, their status quo. Then they work to minimize the gap and achieve six sigma by a certain date.

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

Public-private partnership


In this era of modernization in many aspects of public administration, most developing countries continue to follow century-old concepts and structures. They seriously need structural adjustment thereby launching legislative and administrative reforms, which stress a reconsideration of the role of the public administration in the conditions of democratization and market-economy. A greater emphasis needs to be placed on effectiveness of the public administration. The practice and legislation of such countries should affect patterns of the role of public sector and influence fundamental features of the system of governance. A common goal should be to introduce a more contractual, participative, discretionary style of relationship: between different levels and agencies in administrative apparatus; between the decision-making authorities and operating units; and between administrative agencies and producing units, public or private.

A major reform objective in public sector management should be to increase, within the framework of democratic accountability, cost effectiveness in the public provision of goods and services. Both citizens and public administration accept the need for improved quality in the public sector.

They need to hold high the aim of structuring an effective mechanism for achieving policy objectives, determined at central, provincial and local levels for increasing efficiency, effectiveness and accountability in providing public services.

The legality and the efficiency of providing such public services are of great concern. Local authorities are empowered to do something that is intended to assist the carrying out any role.

Outsourcing is a way of contracting out one or more functions to specialist companies. This allows the public entity to concentrate on its core activities. There are three primary reasons for the public administration to outsource. The first is to achieve cost-effective provision of services. The second is to provide a choice for the citizens of producing and supplying public services of different qualities and kinds. The third is simply because there is no alternative due to a lack of staff with the requisite skills; need of relaxing the administrative burden, which somebody other could deal with even better and concentrating the attention on the core administrative matters; short deadlines for implementation. This last reason for outsourcing is to meet the needs, which exceed the capability of the public administration staff, because of a shortage of either staff or skills, or which give added flexibility to the administrative organization.

Thus, the outsourcing can be seen as a process through which relationships are managed and adjusted according to arrangements specified and conditions planned by the administrative authority in the contract documentation. The focus here is not on the legal issues of the contract rather than on the quality of contracting as a mechanism for achieving policy objectives determined at all levels of government for increasing efficiency, effectiveness and accountability. From this perspective the outsourcing by public administration can be considered as a joint commitment to partnership between public and private sector operating as a co-operative device for providing public goods and services.

The trend towards greater satisfaction of public needs and consumer empowerment underlies the role of outsourcing by public administration. The outsourcing is encouraged to secure higher quality of public works and services, whereby contracting managers are located closer to the consumer and so are better able to respond to their needs in actual delivery. The role of consumers and end-clients with respect to outsourcing can thus be increased. The strategies of improving responsiveness through outsourcing on the one hand, and hierarchical distribution of the administrative functions on the other, can be combined in a successful model of public service delivery. The administrative authorities – at federal, provincial and local levels – might participate in the specification of services and in the determination of contractual standards and terms of agreement.

As part of administrative reform outsourcing by public administration should be a high priority. The corresponding legislation should be based on three main principles—transparency, non-discrimination involving open selection criteria and open standards, specifications and standards regulated by law; and open competition.

The framework agreements are significant for ensuring the execution of the administrative power intent of the outsourced functions. The federal, provincial or local governments can use outsourcing as a tool for providing public services when carrying out their functions. They use outsourcing to get public results, which should be achieved when the governments exercise their administrative powers.

The outsourcing in some way can replace the direct administrative action. Such outsourcing has the compulsory nature same as this of the executive action which it replaces. The administration can use administrative or seek lawmaking authority to bring about the result it desires, if it is nonetheless outsourcing. A realistic view is that the process of deciding to outsource as well as the very process of outsourcing is a valid exercise of administrative power. The offered and agreed terms of the contract are also exercising of the administrative power. Once the contract signed, however, the particular relationships issued by outsourcing are moved under the regulations of the private law.

The government functioning can be improved by redefining its role: Policy-making instead of operative decision-making. It should stimulate tools for establishment of working, efficient, rational and fair practice, design of efficient allocation of financial and administrative wherewithal; transparency and control. The government must also realize that developing a training strategy for skills and incentives is badly needed.

The overall proportion of outsourcing in the field of public administration is generally expected to growing. Demand will increase for a variety of reasons.

Successful outsourcing, however, presupposes the existence of an efficient market. In

Pakistan the market for some categories of public goods and services is deficient of professionalism, integrity, and fair play. Such situation is creating conditions for corruption.

From another side, outsourcing itself contributes to developing the market.

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

Characteristics of Managerial Creativity


The creative manager must be a creative human and an effective manager. He/she tends to be characterized by following group of traits:

1) Hunger for knowing curiosity, constant questioning; strong interest in stimulating ideas, theories, and philosophies, always wanting to know the ‘how’ and ‘why of things; strong interest in trying to understand people’s motives and behavior.

2) Sensitivity responsiveness to literature, arts and other fine and delicate things; interest in meeting interesting and sensitive persons; empathy for the suffering; responsiveness to beauty and elegance.

3) Complexity intuitively finding correct solutions; being a visionary; having odd, even conflicting ideas; moodiness.

4) Venturing calculated risk-taking; preference for starting own ventures; aiming big; striking out in one’s own.

5) Independence and courage questions the status quo or established order; sticking to core convictions; listens to experts but makes up own mind; clear and forceful assertion of feelings and viewpoints.

6) Reality contact initiative taking in finding out operating constraints; confidence in managing crisis; quick adjustment to new challenges and information; grip on reality despite fantasying.

7) Self-sufficiency absorbed in challenging tasks; confident in operating in alien situations; tendency to take on tough tasks; persistence in getting ventures accomplished.

The creative manager operates in a fairly tightly regulated system in which creativity failures may be penalized; creativity needs to be directed towards organizational requirements; almost all creative initiatives require approval from superiors and acceptance by colleagues and subordinates to succeed; the cynical need to be won over; opposition of vested interests to these initiatives needs to be neutralized; dedicated teams need to be developed to execute creative initiatives; creative initiatives need to confirm to evaluate and control mechanisms of the organization; changes and creative initiatives need to be synergized for maximum impact—so on and on.

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