Another Good Initiative

February 28, 2012 2 Comments

ImageNew initiatives are important at work to improve the existing work processes or initiate new process. Initiatives can be new products or another sub-product. Organizations usually encourage employees to present new initiatives frequently. Some organizations evaluate their engineers or experts by the number of initiatives they produce every year. I was discussing this issue with a consultant once, and he complained that some organizations evaluate the engineers’ yearly bonus on number of new “money-saving” projects. These organization end up with multiple projects by the end of the year waiting for execution.

The problem with “opportunity” initiatives or “money-saving” initiatives is in their evaluation. Many initiatives promise to solve the organizational problems, save $$$, or introduce found breaking products that will make the organization the best in its market segment. Very few initiatives produce %90 of promised result. Most of the initiatives stray in a side track or end up as an embarrassing memory. Initiatives should be supported with a strong change management  plan and good management support or it will be one of the arrows in the attached figure!

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Is Balanced Scorecard easy to do?

August 21, 2011 3 Comments

custom_life_balance_13780Balanced Scorecard (BSC) is a management tool to measure the organizational implementation of the vision and strategy against the business and operating Key Performance Indicators (Carpenter & Sanders, 2009). BSC transform the strategy into tangible and intangible performance measures that make the strategy a dynamic process (Carpenter & Sanders, 2009). BSC is an innovative method to dissect and direct the strategy into four principles. The principles or categories that each strategy should have are finance, external relations, internal business process, and learning and growth. The vision and strategy can be mapped through the BSC information to give a clear representation of the strategy to the stakeholders and shareholders.

Some organizations think that BSC is a complete waste of resources and takes time to set up the required measures (Linna & Seal, 2009). The measure maybe is outdated and need change within a few months. Success in the internal processes or human resources is sometimes not rewarded (Linna & Seal, 2009); however, the rewards are usually linked to the financial measures only. BSC may be a good performance dashboard if the tangible measures are updated frequently, however BSC will not be dynamic enough when most of the measures are intangible and cannot be updated frequently.

References:

Carpenter, M. A., & Sanders, W. G. (2009). Strategic management. Upper Saddle River, NJ: Pearson Prentice Hall.

Linna, Y., & Seal, W. (2009). The balanced scorecard. Financial Management (14719185), 27-28.

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Competitive Advantage

August 8, 2011 Leave a comment

Market imperfections can be in the form of monopoly, externalities or public goods, but sometimes defined as anything that interferes with trade (DeGennaro, 2005). The organizational competitive advantage can be achieved by adapting to the external trends and events and adapt to the changes in capabilities and resources. The organizations can make the competitive advantages by formulating and implementing strategies that help adapting and taking advantage of these changes (Ogrean, Herciu, & Belascu, 2009). Organizations can definitely take advantage of the market monopoly and keep up its position until another competitor force its market penetration. Externalities can be used as a competitive advantage when the organization anticipates and plan for the positive externalities. Over fishing in a place would increase the demand when the fish supplied to the market is less than the demand. The organizations can take care of this externality by anticipating the decrease in the supply and importing enough supply of fish for the consumer in the local market.

Rolls-Royce found out that its automobile business was not competitive and its jet engine market was booming. Rolls-Royce sold its automobile business and concentrated on leasing jet engines to the airline companies (Carpenter & Sanders, 2009). The leasing strategy made Rolls-Royce take larger share of the jet engine business (Carpenter & Sanders, 2009). Xerox had good innovations coming from its research center in Palo Alto, which could have been good competitive advantages. Innovations like personal computers, bit-mapped, desktop, icons, and the use of mouse and menus (Carpenter & Sanders, 2009; Rothkopf, 2000). Xerox did not use these competitive innovations and lost a good chance to be a leader in these markets (Carpenter & Sanders, 2009; Rothkopf, 2000).

References:

Carpenter, M. A., & Sanders, W. G. (2009). Strategic management. Upper Saddle River, NJ: Pearson Prentice Hall.

DeGennaro, R. (2005). Market Imperfections. Journal of Financial Transformation, 14(2005), 107-117.

Ogrean, C., Herciu, M., & Belascu, L. (2009). Searching for sustainable competitive advantage– From tangibles to intangibles. Journal of US-China Public Administration, 6(4), 1-9.

Rothkopf, M. H. (2000). Under the Mike-R-Scope: What happened at Xerox PARC? Interfaces, 30(6), 91-94.

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PESTEL Analysis

July 30, 2011 1 Comment

PESTEL model is useful for leaders and managers to analyze the microeconomics of business environment they are working in or attempting to enter in the future. Strategist use PESTEL model to find the macro-environmental factors that can or will affect their strategy implementations and the organizational performance. PESTEL model include six environmental influencers, which are Political, Economic, Social, Technological, Environmental, and Legal. These influencers may look independent but they are related to each other in different ways. Change in the political situation may change the economical and the environmental regulations. The environmental standards may be relaxed which make the organizational investments unjustified, on the contrast, the environmental regulations may become more stringent which may need more investment in an approved project.

Political factors: governmental instability make the intended market undesirable because new government may revoke contracts or change social policies (Evans & Richardson, 2007). The unexpected changes may consume the intended profit margin. Tax policies and trade regulations, like NAFTA, are equally important political factors.

Economic factors include unemployment rate, buyers disposable income, and credit accessibility (Carpenter & Sanders, 2009). These three factors affect the individuals buying power. Strategist need to look at these factors along with interest rate and inflation before offering their products and services in the intended market.

Social Factors are lifestyles, educational levels, wealth distribution, and population demographics (Evans & Richardson, 2007). A product or service may be successful in a country or part of the country because of the lifestyle of that area but could be unsuccessful in another. Trendy cafes may be successful with the young population but gourmet coffee shops are more desirable for the older population.

Technological factors like innovations and discoveries can affect the pace of technological obsolescence (Carpenter & Sanders, 2009). The introduction of iPod in the market signaled the obsolescence of the Sony Walkman. The same situation can be noticed with the DVD use over VHS tapes and now the online rent services made the DVD lose market share fast. Digital and audio books affected the printed books heavily. Boarders, the bookshop chain, just announce its troubled operations and its intention to close more stores.

Environmental factors are increasing and becoming more stringent every year. Waste disposal, energy conservation, and protections laws are the most important factors but not all. Environmental laws keep on increasing the limits after the noticed global environmental changes. Managers and business leaders need to plan for more changes in the protection laws because of the constant demand from the environmental groups and the international environmental organizations.

Legal factors are changing constantly depending on the market needs, or government political views (Carpenter & Sanders, 2009; Evans & Richardson, 2007). Change in the employment regulations like minimum wage, discrimination laws, and health and safety regulations can affect the operational cost.

Managers and business leaders should expect the risk of the changes in the above factors. Well planned and risk managed strategy can decrease the cost and maybe signal good opportunities in the future.

References:

Carpenter, M. A., & Sanders, W. G. (2009). Strategic management. Upper Saddle River, NJ: Pearson Prentice Hall.

Evans, C., & Richardson, M. (2007). Assessing the environment. Manager: British Journal of Administrative Management(60), i-iii.

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Political Aspects of Organizations

July 23, 2011 2 Comments

The researchers, Chang, Rosen, and Levy (2009) state, organizational politics are widespread and affect the employees’ performance and resources allocation. Employees’ use of politics depends on the work situations, workplace, and type of goal they want to achieve (Bodla & Danish, 2009). Organizational politics will have positive results when used with good intentions to achieve important tasks. Bodla and Danish (2009) state that organizational politics are important for the organizational life and these politics affect the employees differently. Organizational politics has a negative effect when the employees misuse the politics. Employees who understand and control these politics respond less negatively, so employees should be aware of the politics and its effect on the organizations. Bolman and Deal (2008) explain that some groups have more access to decision makers and can take advantage of this closeness.The following discussion will develop organizational model to govern the organizational culture, climate, internal, and external stakeholders, and human capital issues. The model will discuss the difficulties in working with international teams and suggest a guideline for the organizational leadership to morally and ethically approach the international teams’ problems. Read the full research …

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Valentine’s Day is A Commercial Day

February 14, 2010 5 Comments

Happy Valentine's Day

Like most lovers

Listen to this postValentine’s day is today February 14 if you forgot. This day is set for people to express their love to each other. I believe that valentine’s day is a commercial day and has been marketed very well to make us feel guilty for not buying something valuable to express our love to our loved ones.
Valentine’s day is named after a priest who lived in Rome around AD 269. The occasion became more popular in 1800 when British printers started producing decorated cards that have paper ribbons and lace.  People started mailing each other such cards and the occasion grow up with popularity since that date. This how it was back then but now, you have to buy gifts, flowers or chocolate. A combination of all these gifts will get you closer to your loved one. The more you buy the better they will feel. That is how Valentine’s day is sold to us. But we do not need to show our love only on that day and does not have to be through gifts.

Cut Hart

Getting ready

I will now discuss the commercial side of Valentine’s day. The day is marketed very well by printing calendars with a reminder that February 14 is Valentine’s day. Just before that day, the companies (especially brand names) need to remained us of their existence. No more marketing is needed because we are sold on the idea. I think the reminder is actually meant for the gift-receiver to expect the gift from the giver. A survey conducted this year in Bahrain estimated that 30% of the population would spend $180 (KD 52) for Valentine’s Day gifts. A quick calculation resulted in $40 million will be spent this year on Valentine’s Day in Bahrain. Please note that this survey was done in Bahrain, an Arab country that did not hear about Valentine’s Day until recently.

Be My Valentine

Most of the gifts has short shelve time, meaning that the store can not store them for the next year similar to unsold water heaters and blankets when the winter season end. So it is more economical to prepare the gifts just one week before the set date and sell them on that day. Commercially, Valentine’s day has another advantage which is storage space. The stores order large quantities of their merchandise and sell them all in 1 – 2 days. No storage needed to stock delicate products like flowers and chocolate around the year in large quantities. The store need to hold the smallest quantity always. So the business formula is to market the date, pre-order the products, sell them all in one day to enjoy quick profit. Now if I try to convince my wife on the above logic she would think that I am cheap!

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