A Retailer’s Value Chain

The value a retailer adds lies in providing more choices, greater convenience, better quality, availability, and lower prices. To do so, it must perform several activities. The first stage of this chain is store operations, in which the retailer must perform four kinds of activities. First, it must make the right choices about the mix of goods that its stores must carry (merchandising). Once the mix of goods has been determined, purchasing must seek suppliers who are dependable, that is, would deliver on time and at good prices. The retailer, on the one hand, must also make sure that it does not run out of items that customers want but, on the other hand, cannot afford to be stuck which inventory that customers do not want. It cannot hold the goods too long either, because doing so also costs money. Moreover, the prices of products such as semiconductors or computers drop so fast that a retailer can loose a lot of money by holding inventory. Thus, inventory management is critical.


The second stage of the chain is logistic. The retailer must get the goods from suppliers to the right stores, at the right time, at the right cost. The last stage is marketing. The firm must market itself and its products through its advertising, promotion, and pricing, which is often done with the help of or in alliance with suppliers. In some cases the retailer may also have a service network to repair or maintain products.


In performing the activities of its value chain, a firm must interact with suppliers, customers, and firms in related industries. These other firms also have value chains of their own. What we really have, then, is a system of value chains called the value chain 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, Line of Sight

Picking up on Lower Transaction Costs

Suppose a firm was pondering whether to integrate vertically into supplier activities or to keep buying supplies from the open market. One important factor is the decision would be the cost of each option. If the firm was buying the supplies from the market, it would have to search for the best price, best quality, and best on-time delivery, negotiate and sign a contract, and make sure that the terms of the contract are enforced. All these activities have costs associated with them—transaction costs. If the firm decided to integrate vertically, it would have to establish a value chain for the activities. It would hire, train, organize, motivate, and lead employees who carry out the activities of the supplier value chain internally—all of which also costs money. The firm would integrate vertically if its costs of organizing transactions internally are lower than those of doing so externally. That would depend on four things: asset specificity, uncertainty, the frequency of transactions, and whether the supplier is opportunistic. Asset specificity refers to how idiosyncratic an asset in the relationship becomes as it (the relationship) develops.


All else being equal, the higher the asset specificity, uncertainty, and frequency of transactions, the higher the transaction costs of market transactions, and the more the manufacturer should think about vertical integration.


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

Warping Higher Customer Satisfaction

You can improve your management of others to enable you to deliver higher customer satisfaction:

  1. Listen to other people around you,  no matter what their experience or lack of it and listen without judgment–every opinion is a valid one. If you hear two or three ideas together they can often spark a fourth, which you wouldn’t have arrived at if you’d heard them with a judgment.
  2. Use praise. Use praise more frequently and more sincerely than you’ve ever done in the past. Every night when you go home, if you’re a manager or even if you are not, ask yourself have I said thank you? to three people for three different things today? If you haven’t, it either means one of two things: that no body that you work with, or for, has actually done anything which is worth saying thank you for , or that they have done things of note but you haven’t noticed.
  3. If you can’t say something positive, don’t say anything. If you went into a meeting with your manager and they ran through a list of 20 things that they were pleased with and just as you were leaving they delivered one negative criticism, the chances are that this is the one thought that would stay with you, the other 20 would disappear in the length and shadow of the negative criticism. Negative criticism has virtually no practical application. If you have to say something then think it through and put it into a positive context. Remember that people will normally do the best they can with what they have. If they are not doing the best that they can, then you need to help them to see what can be done and what talents, resources, or alternatives exist for the.
  4. Always be seen to be fair and honest. If there’s one thing that can demotivate staff and people around you quicker than almost anything, it is people having favorites.
  5. Share your concerns. Managing a customer service team, an organization, or being an entrepreneur is not an easy job. Whilst you need to be decisive and have confidence and courage that inspires people, there is much to be gained from being open and sharing your own hopes, dreams and concerns.  One of the things that people often like in working in a small business, perhaps one which has an entrepreneurial flair to it, is the enthusiaism and the sheer energy that those people can put into theirday and they do, every signle day. Remind people what you’re doing, where you’re going and why you do what you do.
  6. Become a teacher. Instead of finding fault, managing by exception, and pointing out where people are going wrong, become obsessed with helping people become twice as good as they are now. If you manage people, or you aspire to manage or lead people, then your goal should be to make sure thatas quickly as possible they can do their job twice as well as they’re doing it now, even if it means them being promoting or leaving. There is nothing more satisfying than seeing other people around you do well, especially if you know you’ve contributed to that. Don’t ask yourself what can I do for myself?  Instead, ask yourself, how can I help my team become a better team?  Take a few minutes at regular intervals, at random times during the day if necessary, and teach people different ways of doing things–upgrade their skills, explain different aspects of the business, formalize it–put together different training programs so that people, over a period of time, will really move forward in both their skills, their knowledge and their habits.
  7. Kiesin is a Japanese word that has no equivalent in the English language. It roughly translates as constant and never ending improvement.  The Japanese philosophy is to do a thousand things one percent better not one thing a thousand percent better. This means that everybody that you work with–every supplier, every employee, and every manager, everybody in the customer satisfaction value chain–should be constantly required to innovate, to improve and suggest ideas. Coming up with ways to improve how things are done, should  almost become a mandatory part of any job.
  8. Develop yourself. If there’s one way that you can get other people to become more interested and more focused on improving themselves, it is to lead by example. Take time out to go on training courses, even though you masy be too busy. Take time to read useful information, not just novels, books or newspapers but actual up-to-date books and tesxts from the experts within your industry. Practise your skills, use them and make sure that they’re developed as far as they possibly can be. If it means learning a new language or learning a skill that you don’t have then take on the challenge. It is very difficult to manage people well if you have low self esteem but if you feel good about yourself and you have that feeling of progress and achievement, then it is very hard for this not to rub off on other people.
  9. Only do the most important things. Ask yourself that question or a version of it every single minute of the day:Is what I’m doing now helping directly or indirectly to increase the number and quality of the customers our organization has? Because if it doesn’t affect the customer, it shouldn’t be done.

My Consultancy–Asif J. Mir – Management Consultant–transformserorganizations 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 Asif J. Mir

Low-cost Differentiated Products

A product is differentiated if customers perceive it as having something valuable to them that other products do not have. A firm can differentiate its products by offering features that competitors’ do not have. A firm can also differentiate its products by being the first to introduce the products. Since such products are the only ones in the market, they are, by default, differentiated since no other product has their features.

Two products with identical features can still be differentiated by virtue of their locations. One differentiating factor may be the ease of access to the products.

A firm’s products may also be differentiated by the service the customer would get if such service were ever needed

The mix of products that a firm sells can also be a source of product differentiation. Customers who prefer one-stop shopping would find such product mixes valuable.

A firm’s reputation can go a long way toward making customers perceive its products as being different.

In order to deliver low-cost or differentiated products,  a firm must perform a series of activities. The different function s that perform each of these activities are called the firm’s value-chain.

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 Asif J. Mir.

Competitive Advantage

Managers evaluate and choose strategies that they think will make their businesses successful. Businesses become successful because they possess some advantage relative to their competitors. Those companies that create competitive advantages experience above average profitability. Those that lack competitive advantages usually experience average or below-average profitability. Businesses that do not have competitive advantages perform the poorest among their peers while businesses that possess competitive advantage enjoy the highest levels of profitability. My Consultancy–Asif J. Mir – Management Consultant–transforms organizations, makes them relevant, and suggests solutions for succes. For details please contact Asif J. Mir