Foreign Licensing


The method of going global through the use of contractual agreements is foreign licensing. Such an agreement grants foreign marketers the right to distribute a firm’s merchandise or use its trademark, patent, or process in a specified geographic area. These arrangements usually set certain time limits, after which agreements are revised or renewed.

Licensing offers several advantages over exporting, including access to local partners’ marketing information and distribution channels and protection from various legal barriers. Because licensing does not require capital outlays, many firms, both small and large, regard it as attractive entry strategy. Like franchising, licensing allows a firm to quickly enter a foreign market with a known product or concept. The arrangement also may provide entry into a market, which government restrictions close to imports or international direct investment.

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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Everything is Tentative


It’s easy to imagine that building a new product is like building a house—first the foundation, then the frame, then the first floor, and so on. Unfortunately, product aspects are rarely locked in that way. Occasionally they are, as when a technical process dominates development, or when a semifinished product is acquired from someone else, or when legal or industry requirements exist.

We usually assume everything is tentative, even up through marketing. Form can usually be changed, and so can costs, packaging, positioning, and service contracts. So can the marketing date and the reactions of government regulators. So can customer attitudes, as companies with long development times have discovered.

This means two long-held beliefs in new product work are actually untrue. One is that everything should be keyed to a single Go/No Go decision. Granted, one decision can be

Decisive—at times, for example, when a firm must invest millions of dollars in one large facility or when a firm acquires a license that commits it to major financial outlays. But many firms are finding ways to avoid such commitments, for example, by having another supplier produce the product for a while before making a facilities commitment, or by negotiating a tentative license, or by asking probable customers to join a consortium to ensure the volume needed to build the facility.

The other untrue truism is that financial analysis should be done as early as possible to avoid wasting money on poor projects. This philosophy leads firms to make complex financial analyses shortly after early concept testing, although the numbers are inadequate.

Still another tentative matter is the marketing date. Marketing actually begins very early in the development process—for example, when purchasing agents are asked in a concept test whether they think their firm would be interested in a new item. Rollouts are now so common it is hard to tell when all-out marketing begins.

Often no one pulls a switch and marketing instantly begins. We more often sneak up on it, which clearly affects the evaluation system.

What results in some cases is a sort of a rolling evaluation. The project is being assessed continuously, figures are penciled in, premature closure is avoided, and participants avoid mind-sets of good and bad.

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

Political Aspects of Organizational Change


There is a large number of individuals who are undecided about change—they need to be influenced or persuaded to support the change. How can a manager motivate employees to change? Most of the change management literature overlooks the fact that people are largely motivated by self interest. In the 90s, popular writing in Change Management exhorted managers to develop ‘vision’ statements to appeal to people’s hearts. While there is some merit in this proposal, change managers who ignore people’s minds (and by that I mean self-interests) will find it quite difficult to garner support for their change efforts. Individuals are not solely drive by self-interests but these interests are important. In some instances, change may involve relinquishing one’s self-interest. The first thing people are likely to ask when informed about change is: what is in it for me?

There had to be a number of decisions to be made at every stage of the project involving large financial outlays—quickly and without political or bureaucratic interference. The decision-making process ensure this. Public support is critical for land acquisition and later for smooth execution. A number of contractors would be involved, and their effectiveness had to be ensured for the corporation to be effective. The community would be concerned about possible environmental degradation. Though the project would ultimately benefit the community, no cost could be unilaterally imposed on any stakeholder. The project owes its success to effectively managing such political aspects too.

If the organization’s change agenda matches self-interests of employees and other stakeholders, it has little problem in gathering support. On the other hand, if the change agenda requires employees to give up at least some of their interests, then mobilizing support is a more difficult task. More importantly, even if the change agenda is aligned with employees’ self-interests, they have to be convinced that participating in change will advance their self interests. Therefore, mobilising support is largely about influencing people to change despite—or because of—their self-interests. This aspect of influencing people’s self-interest is what makes change management ‘political’; it requires close attention to the science and art of persuasion. In other words, we need to understand the psychology of persuasion before we can devise effective ways of influencing people.

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

Cost Productivity Allocation


Most organizations pay close attention only to costs. They track them, control them, and keep them at rock-bottom levels. This could be a mistake for two reasons: First, cost should not be detached from performance. Driving costs down for its own sake inevitably drives performance down. This causes productivity to drop in the long run. Second, there are many times when costs must be allowed to go up in order to achieve an important performance target.

 

The key question is where the money will come from if budgets are tight. Cost-productivity allocation is a technique for the reallocation of money to improve productivity. It works against the traditional, across-the-board percentage cuts, which remove the good with the bad. The proposed technique permits the identification of cost items that are critical and finds the small outlay of money needed to improve productivity.

 

The theoretical background of this technique is the analysis and reallocation of the following four cost categories:

1)      Cost avoidance – removing or eliminating a cost item that is anticipated and budgeted for but not expended.

2)      Cost reduction – reducing or decreasing the amount of a cost item that has been budgeted for and is a process of expenditure.

3)      Cost control – spending, but keeping the amount of a cost item within the budget standard.

4)      Cost effectiveness – increasing the spending allocated in a budget because it will improve performance or reduce costs in the long run.

 

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