Bargaining Power of Suppliers


Increasing prices and reducing the quality of products sold are potential means through which suppliers can exert power over firms competing within an industry. If a firm is unable to recover cost increases through its pricing structure, its profitability is reduced by its suppliers’ actions. A supplier group is powerful when:

  • It is dominated by a few large companies and is more concentrated than the industry to which it sells;
  • Satisfactory substitute products are not available to industry firms;
  • Industry firms are not a significant customer for the supplier group;
  • Suppliers’ goods are critical to buyers’ marketplace success;
  • The effectiveness of suppliers’ products has created high switching costs for industry firms, and
  • Suppliers are a credible threat to integrate forward into the buyers’ industry. Credibility is enhanced when suppliers have substantial resources and provide the industry’s firms with a highly differentiated product.

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.

Group Cohesiveness


Group cohesiveness results from all forces acting on the members to remain in the group. The forces that create cohesiveness are attraction to the group, resistance to leaving the group, and the motivations to remain a member of the group. Group cohesiveness is related to many aspects of group dynamics—maturity, homogeneity, and manageable size.

Group cohesiveness can be increased by competition or by the presence of an external threat. Ether factor can serve as a clearly defined goal that focuses members’ attention on their task and increases their willingness to work together.

Successfully reaching goals often increases the cohesiveness of a group because people are proud to be identified with a winner and to be thought of as competent and successful. They may be one reason for the popular phrase, “Success breeds success.” A group that is successful may become more cohesive and possibly even more successful.

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.

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.

Protectionism


When a government sees that local industry is threatened by imports, it may erect import barriers to stop or reduce them. Even threats to do this can be sufficient to induce the exporter to invest in production facilities in the importing country.

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 Efficiency


Managerial efficiency is essential. A business may produce a good or service that satisfies customers and earns some profit. But unless it is as efficient as its major competitors, these aggressive rivals will serve customers better, make more profit, and eventually drive it out of business.

A good location, large size, quality people, and other factors like luck help a business remain efficient. But the most important component of efficiency is good management. So an effective management must:

o     Set realistic goals for the firm.

o     Identify the key markets and types of customers for its main production and marketing efforts.

o     Use the resources of a business (its men, and women, materials, machinery, and money) efficiently.

o     Adapt to outside factors, such as government regulations, ethical standards, and economic and technological trends.

In short, management must direct the resources of the business toward realizable objectives. In the process, management must consider both (1) the firm’s own strengths and weaknesses and (2) the opportunities and threats posed by outside factors in determining what the business actually can achieve.

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.

 

Micro-Macro Dilemma


Producers and consumers making free choices can cause conflicts and difficulties. This is called the micro-macro dilemma: what is good for some producers and consumers may not be good for society as a whole.

Each year thousands of people are killed with handguns. Yet there are producers who make and sell handguns at a profit. And there are many consumers who feel strongly about their right to own guns. But others argue that handguns are a threat to society. They want handgun sales banned sale of all weapons limited. Should gun producers be allowed to sell guns to consumers who want them?

Such decisions don’t have to involve a matter of life and death to be important. People want the convenience of disposable products and products in easy-to-use, small-serving packages. But these same “convenient” products and packages often lead to pollution of the environment and inefficient use of natural resources. Should future generations be left to pay the consequences of pollution that is the result of “free choice” by today’s consumers?

Questions like these are not easy to answer. The basic reason is  that many different people may “have a stake” in the outcomes—and social consequences—of the choices made by individual managers and consumers in a market-directed system.

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.

 

Analyzing Current Situation: Checklist


Phase 1: The Environment

  1. What is the state of the economy and are there any trends that could affect the industry, firm, or marketing strategy?
  2. What are current trends in cultural and social values and how do these affect the industry, firm, or marketing strategy?
  3. What are current political values and trends and how do they affect the industry, firm, or marketing strategy?
  4. Is there any current or pending federal, state, or local legislation that could change the industry, firm, or marketing strategy?
  5. Overall, are there any threats or opportunities in the environment that could influence the industry, firm, or marketing strategy?

Phase 2: The Industry

  1. What industry is the firm in?
  2. Which firms are the major competitors in the industry and what is their annual sales, market share, and growth profile?
  3. What strategies have competitors in the industry been using, and what has been their success with them?
  4. What are the relative strengths and weaknesses of competitors in the industry?
  5. Is there a threat of new competitors coming into the industry, and what are the major entry barriers?
  6. Are there any substitute products for the industry, and what are their advantages and disadvantages compared to this industry’s products?
  7. How much bargaining power do suppliers have in this industry, and what is its impact on the firm and industry profits?
  8. How much bargaining power do buyers have in this industry, and what is its impact on the firm and industry profits?

Phase 3: The Firm

  1. What are the objectives of the firm? Are they clearly stated? Attainable?
  2. What are the strengths of the firm? Managed expertise? Financial? Copyrights or patents?
  3. What are the constraints and weaknesses of the firm?
  4. Are there any real or potential sources of dysfunctional conflict in the structure of the firm?
  5. How is the marketing department structured in the firm?

Phase 4: The marketing Strategy

  1. What are the objectives of the marketing strategy? Are they clearly stated? Are they consistent with the objectives of the firm? Is the entire marketing mix structured to meet these objectives?
  2. What marketing concepts are at issue in the current strategy? Is the marketing strategy well planned and laid out? Is the strategy consistent with sound marketing principles? If the strategy takes exception to marketing principles, is there a good reason for it?
  3. To what target market is the strategy directed? Is it well defined? Is the market large enough to be profitably served? Does the market have long-run potential?
  4. What competitive advantage does the marketing strategy offer? If none, what can be done to gain a competitive advantage in the marketplace?
  5. What products are being sold? What is the width, depth, and consistency of the firm’s product lines? Does the firm need new products to fill out its product line? Should any product be deleted? What is the profitability of the various products?
  6. What promotion mix is being used? Is promotion consistent with the products and product images? What could be done to improve the promotion mix?
  7. What channels of distribution are being used? Do they deliver the product at the right time and right place to meet customer needs? Are the channels typical of those used in the industry? Could channels be made more efficient?
  8. What pricing strategies are being used? Hw do prices compare with similar products of other firms? How are prices determined?
  9. Are marketing research and information systematically integrated into the marketing strategy? Is the overall marketing strategy internally consistent?

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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