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.

Threat of Entry


New entrants to an industry bring new capacity, the desire to gain market share, and often substantial resources. Companies diversifying through acquisition into the industry from other markets often leverage their resources to cause a shake-up.

The seriousness of the threat of entry depends on the barriers present and on the reaction from existing competitors that the entrant can expect. If barriers to entry are high and a newcomer can expect sharp retaliation from the entrenched competitors, he or she obviously will not pose a serious threat of entering.

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

Planning for Uncertainty


Uncertainty has become so great as to render futile, if not counterproductive, the kind of planning most companies still practice: forecasting based on probabilities.

Unique events have no probability. Yet executives have to make decisions that commit to the future current resources of time and money. Worse, they have to make decisions not to commit resources—to forgo the future. The lengths of such commitments are steadily growing: in strategy and technology, marketing, manufacturing, employee development, in the time it takes to bring a new plant on steam or in the years until a commitment to a store location pays for itself. Every such commitment is based on assumptions about the future. To arrive at them, traditional planning asks, “what is most likely to happen?” Planning for uncertainty asks instead, “What has already happened that will create the future?”

The first place to look is in demographics. There have been two revolutionary changes in the workforce of developed countries: the explosion of advanced education and the rush of women into careers outside the home. Both are accomplished facts. The shift from blue-collar labor to knowledge and service workers as the centers of population gravity is irrevocable. But so is the aging of both the workforce and population.

Business people need to ask: “What do these accomplished facts mean for our business? What opportunities do they create? What threats? What changes do they demand in the ways the business is organized and run, in our goals, in our products, in our services, in our policies? And what changes do they make possible and likely to be advantageous?”

The next question is: “What changes in industry and market structure, in basic values (e.g., the emphasis on the environment), and in science and technology have already occurred but have yet to have full impact?” It is commonly believed that innovations create changes—but very few do. Successful innovations exploit changes that have already happened. They exploit the time lag—in science, often twenty-five or thirty years—between the change itself and its perception and acceptance. During that time the exploiter of the change rarely faces much, if any, competition. The other people in the industry still operate on the basis of yesterday’s reality. And once such a change has happened, it usually survives even extreme turbulence.

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

Change and Leadership


Change is nothing new to leaders or to their organizations. Around 500BC, the Greek philosopher Heraclitus noted that: “You cannot step twice into the same river, for other waters are continually flowing on.” He was one of the first Western philosophers to address the idea that the universe is in a constant state of flux.

As we move further from the “stable state,” effective change leadership has become a challenging calling. Today in the language of business, organizations, academia, and consultancy, the word “change” has come to mean different things to different people. We need to define “change leadership” in a way that establishes a congruence between leadership and the benefits of the change being implemented; and articulate it properly. Change can refer to any of the following and more:

  • External changes in the market/industry, technology, customers, competitors, social, political and natural environment;
  • Internal changes that determine how the organization reacts and adapts to the external changes at great speed;
  • Top-down programs such as business process reengineering, restructuring, cultural change, for example, and
  • Business transformation programs which can be described as comprehensive organizational initiatives.

It can also be a combination of all the above.

Major change is those situations in which corporate performance requires most people throughout the organization to learn new behaviors and skills. These new skills must add up to a competitive advantage for the enterprise, allowing it to produce better and better performance in shorter and shorter time frames.

Change leadership can be defined as altering groups to the need for changes in the way things are done; mobilizing and energizing groups; and tapping fully into the potential and the capacity of the organization. It involves taking the responsibility to champion the change initiative and effort through building and maintaining commitment and support. The situation determines who emerges as the leader and what style of  leadership he or she has to adopt. The situation will also determine the core skills needed to lead in that particular situation. Therefore, one can no longer discuss leadership in general terms.

The leader and the style of leadership required in a stable organization will differ from that which is required in an organization under threat. This is because leadership styles and behaviors are likely to be critical in times of threats.

The qualities, characteristics, and skills required in a leader are determined to a large extent by the demands of the situation in which he or she is to function as a leader.

In any major change program, there are many leaders because there are many people at many levels in the hierarchy who play different critical roles during the change process, including the CEO. In modern complex organizations, the notion of an ill-seeing, all knowing leader is unrealistic. Instead, different individuals assume leadership in situations where they have a unique competence or accountability. All the non-CEO change leaders are every bit as essential to creating high-performing organizations as are the more visible and dynamic executive leaders. In essence, the change leader could be the CEO, a line leader, internal network, or a change community.

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

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