Strategy Formulation Tools: MICHAEL PORTER Model for Industry Analysis Thursday, Jun 10 2010 

PORTERS MODEL FOR INDUSTRY ANALYSIS:

Perhaps the best known tool for formulating strategy is the model developed by Michael E. Porter, an internationally acclaimed strategic management expert.

Essentially, Porter’s model outlines the primary forces that determine competitiveness within an industry and illustrates how those forces are related.

The model suggests that in order to develop effective organizational strategies, managers must understand and react to those forces within an industry that determine an organization’s level of competitiveness within that industry.

According to these model, competitiveness within an industry is determined by the following factors:

  1. New Entrants or New Companies within the Industry
  2. Substitute Products or Services – for goods or services that the companies within the industry produce/provide.
  3. Supplier’s Ability to control issues like costs of material/ inputs that industry companies use to manufacture their products or provide their services.
  4. Competition level among the firms in the industry.

According to the model, buyers, product substitutes, supplier and potential new companies within an Industry all contribute to the level or rivalry among industry firms.

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Strategy Formulation: BCG Growth-Share Matrix Model Thursday, Jun 10 2010 

BCG Growth-Share Matrix:

The Boston Consulting Group, a leading consulting firm, developed and popularized a portfoilo analysis tools that helps managers develop organizational strategy based on market share of businesses and the growth of markets in which businesses exist.

The 1st step in using this model is identifying the organization’s strategic business units (SBUs). A Strategic business Unit is a significant organization segment that is analysed to develop organizational strategy aimed at generating future business or revenue.

Exactly what constitutes as SBU varies from company to company. In bigger organizations, and SBU could be a company division, a single product or a complete Product Line.

In smaller organizations, it might be the entire company.

Eventhough they vary drastically in form each SBU has the following characteristics:

  1. It is a single business or collection of related businesses.
  2. It has its own competitors.
  3. It has a manager who is accountable for its operation.
  4. It is an area that can be independently planned for within the organization.

After identifying the SBUs, the next step is to categorize each SBU within one of the 4 Matrix Quadrants:

  1. STARS – Star SBUs have a high share of a high growth market and typically need large amounts of cash to support their rapid and significant growth. Stars also generate large amounts of cash for the organization and are usually segments in which management can make additional investments and earn attractive returns.
  2. CASH COWS: SBUs that are Cash Cows have a large share of a market that is growing only slightly. Naturally, these SBUs provide the organization with large amounts of Cash, but since their market is not growing significantly, the cash is generally used to meet the financial demands of the organization in other areas, such as the expansion of a STAR SBU.
  3. QUESTION MARKS: These category of SBUs have a small share of a high growth market. These are “question marks” because it is uncertain whether management should invest more cash in them to gain a larger share of the market or deemphasize or eliminate them. Management will choose the 1st option when it believes it can turn the question mark into a star, and the 2nd option when it thinks that future investments would be fruitless.
  4. DOGS : SBUs that are dogs have a relatively small share of a low-growth market. They may barely support themselves; in some cases, they actually drain off cash resources generated by other SBUs. These are the SBUs which are likely to be shortlisted for deemphasize or elimination.

PITFALLS of the BCG Growth Matrix Model:

The matrix does not consider factors like:

  • Various types of Risk associated with product development
  • Threats that inflation and other economic conditions can create in the future.
  • Social,Political and Ecological Pressures.

A LEARNING ORGANIZATION Sunday, Jun 6 2010 

A LEARNING ORGANIZATION is an organization that does well in creating, acquiring and transferring knowledge, and in modifying behaviour to reflect the new knowledge.

Learning organizations emphasize systematic problem solving,experimenting with new ideas, learning form experience and past history, learning from the experience of others, and transferring knowledge rapidly throughout the organization.

According to Peter Senge, the 5 features of a learning organization are:

  1.  SYSTEMS THINKING: Every organization member understands her own job and how the job fits together to provide final products to the customer.                                                        
  2. SHARED VISION: All organization members have a common view of the purpose of the organization and a sincere commitment to accomplish the purpose.                                                       
  3. CHALLENGING OF MENTAL MODELS: Organization members routinely challenge the way business is done and the thought processes people use to solve the organizational Problems.                 
  4. TEAM LEARNING: Organization members work together, develop solutions to new problems together, and apply the solutions together. Working as teams rather than individuals will help organizations gather collective force to achieve organizational goals.                                                                                         
  5. PERSONAL MASTERY: All organization members are committed to gaining a deep and rich understanding of their work. 

Consumer Decision Making & Relationship Marketing Friday, May 28 2010 

The Consumer’s decision to purchase or not to purchase a product or service is an important moment for most marketers. It can signify whether a marketing strategy has been successful or not. Therefore, marketing people are interested in the consumer’s decision making process.

For a consumer to make a decision, more than one alternative must be available, including the alternative called making a decision to not buy or not buy now.

The various models of 

  1. Consumers View
  2. Passive View
  3. Cognitive View
  4. Emotional View

depict consumers and their decision making processes in distinctly different ways.

An overview consumer decision making model ties together the psychologist, social,and cultural concepts into easily understood network. This decision model has 3 sets of variables: input variables, process variables and output variables.

Input variables that affect the decision – making process include commercial marketing efforts, as well as non commercial influences from the customer’s sociocultural environment. The decision process variables are influenced by the consumer’s psychological field, including the evoked set or the brands in a particular product category considered in making a purchase choice.

The psychological field influences the consumer’s recognition of a need, pre purchase search for information and evaluation of alternatives.

The output phase of the model includes the actual purchase (either trial or repeat purchase) and post purchase evaluation. Both pre purchase and post purchase evaluation feeds back in the form of experience into the consumer’s psychological field and serves to influence future decision making process.

GIFTING:

The process of gift exchange is an important part of consumer behaviour. 

Various gift giving and gift receiving relationships are captured by the following 5 specific categories in the gifting classification scheme:

  1. Intergroup gifting: A group gives a gift to another group.
  2. Intercategory gifting: An individual gives a gift to a group or a group gives a gift to an individual.
  3. Intragroup gifting: A group gives a gift to itself or its members.
  4. InterPersonal gifting: An individual gives a gift to another individual
  5. Intrapersonal gifting: A Self Gift.

Consumer behaviour is not must making a purchase, it also includes the full range of experiences associated with using products or services. It includes the sense of pleasure and satisfaction derived from possessing or collecting “things”. The outputs of consumption are the changes in feelings,moods, attitudes, reinforcement of lifestyles, an enhanced sense of self; satisfaction of a consumer related need; belonging to groups; and expressing and entertaining oneself.

Among other things, consuming includes the simple utility of using a Superior product, the stress reduction of a vacation, the sense of having a “sacred” possession, and the pleasures of a hobby or a collection. Some possessions serve to assist consumers in their effort to create a personal meaning and to maintain a sense of the past.

Relationship Marketing impacts consumer’s decisions and their consumption satisfaction. Firms establish loyalty programs to foster usage loyalty and a commitment to continued usage of their products and services.

Relationship marketing is all about buildign trust between the firm and its customers and keeping promises made to the customers. Therefore the focus is always on developing long term bonds with customers by making them fee special and by providing them with personalized services.

How is your relationship marketing doing?

MANAGEMENT INNOVATIONS

managementinnovations2020@gmail.com; manojonkar@gmail.com, 919375970812

Consumer Behaviour, Consumer Influence and the Process of Diffusion Friday, May 28 2010 

What is Opinion Leadership?

Opinion Leadership is the process by which the opinion leader informally influences the actions or attitudes of others, who may be opinion seekers or merely opinion recipients. Opinion receivers perceive the opinion leader as a highly credible, objective source of product information who can help reduce their search and analysis time and percieved risk.

Opinion leaders are motivated to give information or advice to others, in part doing so enhances their own status and self image and because such advice tends to reduce any post purchase dissonance that they may have.Other motives include product involvement, message involvement or any other involvement.

Market researchers identify opinion leaders by such methods as self designation, key informants, the sociometric method and the objective method.

Studies of opinion leadership indicate that this phenomenon tends to be product category specific, generally one of their interest. An opinion leader of one product range can be an opinion receiver for another product category.

Generally, opinion leaders are gregarious, self confident, innovative people who like to talk. Additionally, they may feel differentiated from others and choose to act differently (or public individuation).

They acquire information about their areas of interest through avid readership of special interest magazines and ezines and by means of new product trials.

Their interests may often overlap into adjacent areas and thus their opinion leadership may also extend into those areas.

Who is a market maven ?

The market maven is an intense case of a opinion leader kind of person. These consumers possess a wide range of information about many different types of products, retail outlets, and other dimensions of markets.

They both initiative discussions with other consumers and respond to requests for market information over a wide range of products and services. 

Market mavens are also distinguished from other opinion leaders because their influence stems not so much from product experience but from a more general knowledge or market expertise that leads them to an early awareness of a wide array of new products and services.

The opinion leadership process usually take place among friends, neighbours and work associates who have frequent physical proximity and thus have ample opportunity to hold informal product related conversations. These conversations usually occur naturally in the context of the product-category usage.

The two – step flow of communication theory highlights the role of interpersonal influence in the transmission of information from the mass media to the populations at large. This theory provides the foundation for a revised multi step flow of communication model, which takes into account the fact that information and influence often are 2 way processes and that the opinion leaders both influence and are influenced by opinion receivers.

It is important for the marketers to segment their audiences into opinion leaders and opinion receivers for their respective product categories. When marketers can direct their promotional efforts to the more influential segments of these markets, these opinion leaders will transmit the information to those who seek product advice.

Marketers try to simulate and stimulate opinion leadership. They have also found that they can create opinion leaders for their products by taking socially involved or influential people and deliberately increasing their enthusiasm for a product category.

The diffusion process and the adoption process are 2 closely related concepts concerned with the acceptance of new products by customers.

The diffusion process is a macro process that focuses on the spread of an innovation from its source to the consuming public.

The adoption process is a micro process that examines the stages through which an individual consumer passes when making a decision to accept or reject a new product.

The definition of the term innovation can be

1. Firm oriented(new to the firm),

2. Product oriented(a continuous innovation, a dynamically continuous innovation, or  A discontinuous innovation),

3. Market oriented(how long the product has been on the market or an arbitrary percentage of the potential target market that has purchased it), or

4. Consumer oriented (new to the customer).

Market-oriented definitions of innovation are most useful to consumer researchers in the study of the diffusion and adoption of new products.

Five Product Characteristics influence the consumers acceptance of a new product:

 

  1. Relative Advantage
  2. Compatibility
  3. Complexity
  4. Trialability
  5. Observability

 

Diffusion researchers are concerned with 2 aspects of communication – the channels through which word about a new product or service is spread to the public and the types of messages that influence the adoption or rejection of new products or services.

Diffusion is always examined in the context of a specific social system, such as a target market, a community, a region or even a nation.

Time is an integral consideration in the diffusion process. Researchers are concerned with the amount of purchase time required for an individual customer to adopt or reject a new product/service, with the rate of adoptions and with the identification of sequential adopters.

The 5 adopter categories are innovators, early adopters, early majority, late majority and laggards.

Marketing Strategists try to control the rate of adoption through their new product pricing policies. Companies who wish to penetrate the market to achieve market leaderships try to acquire wide adoption as quickly as possible by using low prices. Those who wish to recoup their developmental costs quickly use a skimming pricing policy but lengthen the adoption process.

The traditional adoption process model describes 5 stages through which an individual consumer passes to arrive at the decision to adopt or reject a new product:

  1. Awareness, 
  2. Interest,
  3. Evaluation
  4. Trial
  5. Adoption

To make it more realistic, an enhanced model is recommended as one that considers the possibility of a pre existing need or problem, the likelihood that some form of evaluation might occur through the entire process, and that even after adoption there will be post adoption or purchase evaluation that might either strengthen the commitment or alternatively lead to discontinuation of the product/service.

Companies marketing new products are vitally concerned with identifying the consumer innovator so that they may direct their promotional campaigns to the people who are most like to try new products, adopts them and influences others.

Consumer Research has identified a number of consumer related characteristics, including product interest, opinion leadership, personality factors, purchase and consumption traits, media habits, social characteristics, and demographic variables that distinguish consumer innovators from later adopters. These serve as useful variables in the segmentation of markets for new product introductions.

Who are the innovators and early adopters for your products and services? How have you planned your diffusion strategy for the current products and the new products?

MANAGEMENT INNOVATIONS

managementinnovations2020@gmail.com; manojonkar@gmail.com; 919375970812

PRICING STRATEGY IN COMPETITIVE TIMES Tuesday, May 25 2010 

Pricing has lot to do with the target audience that you are positioning your product and service offerings for?

Do you want to target the uber rich and super rich or you want to target the rich and the upper middle class?

These competitive times along with the recessionary pressures will force most of the organizations to relook at their pricing strategy?

What should be your strategy? What target market will fulfill the sustainable growth requirements for your organization? 

How would your budgets look with high pricing and low volumes vs little lower pricing or even half pricing and increased volumes?

What Volumes are you expecting at what price point?

What will be the increased sales and marketing costs required based on change of the target market segments and the pricing policy to ensure the successful implementation.

What is the scalability in your production capacity, especially if you are a service organization?

Service offerings may have more restriction on their capacities and hence more restrictions on how much they can play around with their pricing models.

What is your product or service packages? What pricing models are your exploring? What optional target market segments are you considering?

Contact: MANAGEMENT INNOVATIONS

managementinnovations2020@gmail.com, manojonkar@gmail.com; 919375970812

IIPM – Indian Institute of Planning & Management Wednesday, Jun 3 2009 

Prof. Manoj Onkar has joined IIPM, Ahmedabad as a visiting Professor for conducting the HRS (Human Resource System).

Keep in touch for further updates.

MANAGEMENT INNOVATIONS

www.managementinnovations.wordpress.com

www.linkedin.com/manojonkar

managementinnovations2020@gmail.com

PRANTIJ KELVANI MANDAL – VISION, MISSION & VALUES Wednesday, Jun 3 2009 

VISION MISSION WORKSHOP – facilitated by Shri Manoj Onkar,Management Innovations.

CORE VALUES :

1. SECULAR

2. HUMANE

3. OPENNESS

4. ACCOUNTABILITY

5. BEING SYSTEM ORIENTED

6. INNOVATIVE


PURPOSE

GROOMING CHILDREN

TO BE CITIZENS ROOTED IN ONE’S OWN CULTURE

  • LIVING BY VALUES
  • EMPOWERED TO FACE CHALLENGES OF LIFE

VISION

Our Institutes – Centers  Of Excellence.

Transforming Education into an Art that Educate the Whole Child.

Children Scaling heights in all Works of Life.

Developed & Empowered  ‘PRANTIJ’

Facilitated by MANAGEMENT INNOVATIONS

managementinnovations2020@gmail.com

CHANGE & RELATED STRESS MANAGEMENT Tuesday, Dec 23 2008 

CHANGE & STRESS

 

 

Whenever managers implement changes, they should be concerned about the stress they may be creating.

 

If the stress is significant enough, it may well cancel out the improvement that was anticipated from the change.

 

In fact, stress could result in the organization being less effective than it was before the change was attempted.

 

STRESS:

 

The bodily strain that an individual experiences as a result of coping wit some environmental factor is stress.

 

Hans Selye, an expert on this subject, said that Stress constitutes the factors affecting wear and tear on the body.

 

In organizations, this wear and tear is caused primarily by the body’s unconscious mobilization of energy when an individual is confronted with organizational or work demands.

 

Why Study Stress?

  • Stress can have damaging psychological and physiological effects on employees’ health and on their contributions to organizational effectiveness. It can cause hear disease and it can prevent employees from concentrating or making decisions.

                                                                                                                                 

  • Stress is a major cause of employee absenteeism and turnover. Certainly such factors severely limit the potential success of an organization.

 

  • A stressed employee can affect the safety of other workers or even the public.

 

  • Stress represents a very significant cost to organizations.

 

 

MANAGING STRESS IN ORGANIZATIONS:

 

Since stress is felt by all employees in the organizations, managers must do the following:

 

  1. Understand how stress influences worker performance
  2. Identify where unhealthy stress exists in organizations
  3. Help Employees handle stress

 

Understand how Stress Influences Worker Performance:

To deal with stress among employees, managers must understand the relationship between the amount of stress felt by a worker and the impact on the worker’s performance.

 

Extremely high and extremely low levels of stress tend to have negative effects on production. While increasing stress tends to bolster performance up to some point, when the level of stress increases beyond that point, performance levels begin to deteriorate.

 

Certain amount of stress among employees is generally considered to be advantageous for the organization because it tends to increase productivity, however when the employees experience too much or too little stress, it is generally disadvantageous for the organization because it tends to decrease productivity.

 

 

SYMPTOMS OF UNHEALTHY STRESS IN ORGANIZATION:

 

Symptoms are as follows:

 

1.      Constant Fatigue

2.      Low Energy

3.      Moodiness

4.      Increased Aggression

5.      Excessive use of Alcohol

6.      Temper outbursts

7.      Compulsive Eating

8.      High Levels of Anxiety

9.      Chronic Worrying

 

A manager who observes one or more of these symptoms in employees should investigate to determine if those exhibiting the symptoms are indeed under too much stress. If so, the manager should try to help those employees handle their stress and/or should attempt to reduce stressors in the organization.

 

Helping Employees Handle Stress:

 

  • Create an organization climate that is supportive of individuals.
  • Make jobs interesting
  • Decision and operate career counselling programs

Factors for Change Management Monday, Dec 22 2008 

FACTORS TO CONSIDER WHEN CHANGING AN ORGANIZATION

 

The following factors should be considered whenever change is being contemplated:

 

  1. The Change Agent
  2. Determining What should be Changed
  3. The kind of Change to Make
  4. Individuals affected by the Change
  5. Evaluation of the Change

 

THE CHANGE AGENT:

 

The change agent might be a self designated manager within the organization or an outside consultant hired because of a special expertise in a particular area.

 

This individual might be responsible for making very broad changes, like altering the culture of the whole organization; or more narrow ones, like designing and implementing a new safety program or a new quality program.

 

Special skills are necessary for success as a change agent. Among them are the ability to determine how a change should be made, the skill to solve change related problems, and facility in using behavioural science tools to influence people appropriately during the change process.

 

Perhaps the most overlooked skill of successful change agents, however, is the ability to determine how much change employees can withstand.

 

Managers should choose agents who have the most expertise in all these areas. A potentially beneficial change might not result in any advantages for the organization if a person without expertise in these areas is designated as a change agent.

 

 

DETERMINING WHAT SHOULD BE CHANGED:

 

Organizational effectiveness depends on 3 classes of factors:

  1. People
  2. Structure
  3. Technology

 

People Factors are attitudes, leadership skills, communication skills, and all other characteristics of the human resources within the organization; Structural Factors are organizational controls, such as policies and procedures; and Technological Factors are any type of equipment or processes that assist organization members in the performance of their jobs.

 

For an organization to maximize its effectiveness, appropriate people must be matched with appropriate technology and appropriate structure.

 

 

THE KIND OF CHANGE TO MAKE:

Most changes can be categorized into one of the 3 kinds:

 

  1. Technological
  2. Structural
  3. People

 

These 3 kinds of change correspond to the 3 main determinants of the organizational effectiveness – each change is named for the determinant it emphasizes.

 

STRUCTURAL CHANGE:

 

Structural change emphasizes increasing organizational effectiveness by changing controls that influence organization members during the performance of their jobs.

 

Structural change is aimed at increasing the organizational effectiveness through modifications to the existing organizational structure like:

 

  1. Clarifying and Defining Jobs
  2. Modifying Organizational Structure to fit the communication needs of the organization
  3. Decentralizing the organization to reduce the cost of coordination, increase the controllability of subunits, increase motivation, and gain greater flexibility.

 

Although structural change must take account of people and technology to be successful, its primary focus is obviously on changing organization structure.

 

Managers choose to make structural changes within an organization if information they have gathered indicates that the present structure is the main cause of organizational ineffectiveness.

 

The precise structural changes they choose to make will vary from situation to situation, of course. After changes to organizational structure have been made, management should conduct periodic reviews to make sure the changes are accomplishing their intended purposes.

 

                        Matrix Organization:

 

Matrix Organizations is a traditional organization that is modified primarily for the purpose of completing some kind of special project.

 

Essentially, a matrix organization is one in which individuals from various functional departments are assigned to a project manager responsible for accomplishing some specific task.

 

The project itself may be either long term or short term, and the employees needed to complete it are borrowed from various organizational segments.

 

 

PEOPLE CHANGE:

 

Although successfully changing people factors necessarily involves some consideration of structure and technology, the primary emphasis is on people.

 

Organization Development (OD): People Change emphasizes increasing organizational effectiveness by changing certain aspects of organization members.

The focus of this kind of change is on such factors as employee’s attitudes and leadership skills.

The process of people change can be referred to as organization development (OD). Although OD focuses mainly on changing certain aspects of people, these changes are based on an overview of structure, technology, and all other organizational ingredients.

 

GRID OD:

 

One traditional used OD techniques for changing people in organizations is called Grid Organizational Development, or Grid OD.

 

The managerial grid, a basic model describing various managerial styles, is used as the foundation for grid OD. The managerial grid is based on the premise that various managerial styles can be described by means of two primary attitudes of the manager: concern for people and concern for production.

 

 

 

INDIVIDUAL AFFECTED BY THE CHANGE:

 

To increase the chances of employee support, one should be aware of the following factors:

 

  1. The usual employee resistance to change
  2. How this resistance can be reduced

 

Resistance to Change:

 

Resistance to change within an organization is as common as the need for change.

After managers decide to make some organizational change, they typically meet with employee resistance aimed at preventing that change from occurring.

 

Behind this resistance by organization members lies the fear of some personal loss, such as a reduction in personal prestige, a disturbance of established social and working relationships, and personal failure because of inability to carry out new job responsibilities.

 

Reducing Resistance to Change:

 

1.      Avoid Surprises

2.      Promote Real Understanding

3.      Set the Stage for Change

4.      Make tentative Change

 

 

EVALUATION OF THE CHANGE:

 

One must evaluate the change one makes. The purpose of this evaluation is not only to gain insight into how the change itself might be modified to further increase its organizational effectiveness, but to determine whether the steps taken to make the change should be modified to increase organizational effectiveness, next time around.

 

Evaluation of change often involves watching for symptoms that indicate that further change is necessary. But the decision to change must not be made only based on the symptoms. Additional Change is justified if it will accomplish any of the following goals:

 

1.      Further improve the means for satisfying someone’s economic wants

2.      Increase Profitability

3.      Promote human work for human beings

4.      Contribute to individual satisfaction and social well being.

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