The Shotgun Approach- a shotgun covers a wide range in a
haphazard or ineffective manner with the hope that something will
hit the target. Examples of shotgun marketing include cold
calling,bulk mailings, banner advertising on big with random
visitors and e-mail spam.The Rifle shot Approach- a riflebrings
things into focus so that you cantake aim before pulling the
trigger. Taking the time at a trade show to ask a few questions of
the person you are speaking with to see if they have any interest
in what you're selling is rifle shot marketing. Other examples
would be use of targeted ad words, buying qualified lists for a
direct mail, or conducting public relations to a small group of
publications who share the same audience as you.Reactionary
Marketing StrategyA defensive marketing strategy is largely
reactive to the competition or perceived occurrences in the market,
according to the website for the Massachusetts Institute of
Technology. A defensive strategy seeks to counter product claims
made by the competition or to stem the tide of a perceived
competitor advantage. For example, a company that highlights the
effectiveness of its products in the wake of competitor claims of
product inferiority is using a defensive marketing strategy. A
company may also seek to introduce products into the market that
are better than its existing offerings as part of a defensive
marketing strategy.
Defensive Marketing AdvantagesFor an established company with a
wide customer base, defensive marketing is a useful strategy. The
company doesn't have to actively work to generate customer interest
in its products and can simply reinforce its product messages with
consumers. A well-built reputation through quality products makes
it difficult for a new competitor to enter the market and attack
the established company's customer base. The established company
simply uses its defensive marketing to reinforce customer
confidence in its products and swat the newcomer away.
Offensive Marketing DefinitionAn offensive marketing strategy
seeks to attack the market by targeting the weaknesses of the
competition and emphasizing the company's strengths in comparison.
Offensive marketing does not seek to challenge an industry leader's
strengths since that would only play to the leader's defensive
marketing capabilities. This strategy attacks the industry leader
where the company is at its most vulnerable. For example, a company
using an offensive marketing strategy may seek to target an
established industry leader's shaky product safety record by
emphasizing the safety of its own products.Carpet BombingThe
advertising is reactive, disjointed, and anything-but-strategic.
The logic of carpet bombing is that if you throw enough explosives
in the vicinity of the target, you might just get the target. The
problem is that there is tremendous waste and a lot of collateral
damage.The damage from this year's political carpet bombing is
likely to be a loss of consumer interest in advertising messages.
The advertising for candidates could have been so much more
effective - and palatable - if the campaign managers had followed
the proven and effective tenets of marketing: Develop a cohesive
strategy that builds over time and presents the consumer with a
clear and understandable benefit.Marketing vs Sales:Improve this
chartMarketingSales
Approach:determine future needs and has a strategy in place to
meet those needs for the long term relationship.makes customer
demand match the products the company currently offers.
Process:One to manyUsually one to one
Focus:fulfill customer's wants and needs thru products and/or
services the company can offer.fulfill sales volume objectives
Horizon:Longer termShort term
Scope:Identifying customer needs (research), creating products
to meet those needs, promotions to advertise said products.Once a
product has been created for a customer need, persuade the customer
to purchase the product to fulfill her needs
Strategy:pullpush
Concept:Marketing is a wider conceptSales is a narrower
concept
Priority:Marketing shows how to reach to the Customers and build
long lasting relationshipSelling is the ultimate result of
marketing.
1. Sales is very track-able. Marketing is not.If a sales guy
makes a sale, he knows. Marketers dont get that instant
gratification. If a person comes in because she saw an ad, she
might not even know it herself.She may think she was just walking
down the street and was thirsty. Ive heard it said thatyou have to
be in front of a person 3 times before she buys. Does she remember
the first time? Did she consciously notice it?
Improve this chartAdvertisingPromotion
Time:Long termShort term
Price:Expensive in most casesNot very expensive in most
cases.
Suitable for:Medium to large companiesSmall to large
companies
Sales:Assumption that it will lead to salesDirectly related to
sales.
Example:Giving an advertisement in the newspaper about the major
products of a companyGiving free products, coupons etc.
About:A type of marketing toolA type of marketing tool
Definition:Advertising is a one-way communication whose purpose
is to inform potential customers about products and services and
how to obtain them.A Promotion usually involves an immediate
incentive for a buyer (intermediate distributor or end consumer).
It can also involve disseminating information about a product,
product line, brand, or company.
Purpose:Increase sales, brand building.Increase sales.
Result:Slowlyvery Soon
Improve this chartCover LetterCurriculum Vitae
Length:Less than one pageTwo pages or a little more
Contents:Brief information about the person, work experience,
Job profile looking for, career goal.Name, contact information,
education, work experience and relevant work-related skills.
Includes a summary of academic background as well as teaching and
research experience, publications, presentations, awards, honors,
affiliations and other details
Commonly written as:Cover letterCV
Purpose:To complement the CV or resume, briefly introduce
yourself and explain your interest and fit for the job.In Europe,
the Middle East, Africa and Asia, employers expect a CV. In the
U.S., a CV is used primarily when applying for academic, education,
scientific or research positions.
Improve this chartCurriculum VitaeRsum
Length:Two pages or a little moreOne page, sometimes two
pages
Contents:Name, contact information, education, work experience
and relevant work-related skills. Includes a summary of academic
background as well as teaching and research experience,
publications, presentations, awards, honors, affiliations and other
detailsName, contact information, education, work experience and
relevant work-related skills. Focus is on work experience, listed
in reverse chronological order.
Commonly written as:CVResume
Purpose:In Europe, the Middle East, Africa and Asia, employers
expect a CV. In the U.S., a CV is used primarily when applying for
academic, education, scientific or research positions.Job
applications.
other purpose:personal useOfficial use
Improve this chartQuality AssuranceQuality Control
Definition:QA is a set of activities for ensuring quality in the
processes by which products are developed.QC is a set of activities
for ensuring quality in products. The activities focus on
identifying defects in the actual products produced.
Focus on:QA aims to prevent defects with a focus on the process
used to make the product. It is a proactive quality process.QC aims
to identify (and correct) defects in the finished product. Quality
control, therefore, is a reactive process.
Goal:The goal of QA is to improve development and test processes
so that defects do not arise when the product is being
developed.The goal of QC is to identify defects after a product is
developed and before it's released.
How:Establish a good quality management system and the
assessment of its adequacy. Periodic conformance audits of the
operations of the system.Finding & eliminating sources of
quality problems through tools & equipment so that customer's
requirements are continually met.
What:Prevention of quality problems through planned and
systematic activities including documentation.The activities or
techniques used to achieve and maintain the product quality,
process and service.
Responsibility:Everyone on the team involved in developing the
product is responsible for quality assurance.Quality control is
usually the responsibility of a specific team that tests the
product for defects.
Example:Verification is an example of QAValidation/Software
Testing is an example of QC
Statistical Techniques:Statistical Tools & Techniques can be
applied in both QA & QC. When they are applied to processes
(process inputs & operational parameters), they are called
Statistical Process Control (SPC); & it becomes the part of
QA.When statistical tools & techniques are applied to finished
products (process outputs), they are called as Statistical Quality
Control (SQC) & comes under QC.
As a tool:QA is a managerial toolQC is a corrective tool
Improve this chartMission StatementVision Statement
About:A Mission statement talks about HOW you will get to where
you want to be. Defines the purpose and primary objectives related
to your customer needs and team values.A Vision statement outlines
WHERE you want to be. Communicates both the purpose and values of
your business.
Answer:It answers the question, What do we do? What makes us
different?It answers the question, Where do we aim to be?
Time:A mission statement talks about the present leading to its
future.A vision statement talks about your future.
Function:It lists the broad goals for which the organization is
formed. Its prime function is internal, to define the key measure
or measures of the organization's success and its prime audience is
the leadership team and stockholders.It lists where you see
yourself some years from now. It inspires you to give your best. It
shapes your understanding of why you are working here.
Change:Your mission statement may change, but it should still
tie back to your core values, customer needs and vision.As your
organization evolves, you might feel tempted to change your vision.
However, mission or vision statements explain your organization's
foundation, so change should be kept to a minimum.
Developing a statement:What do we do today? For whom do we do
it? What is the benefit? In other words, Why we do what we do?
What, For Whom and Why?Where do we want to be going forward? When
do we want to reach that stage? How do we want to do it?
Features of an effective statement:Purpose and values of the
organization: Who are the organization's primary "clients"
(stakeholders)? What are the responsibilities of the organization
towards the clients?Clarity and lack of ambiguity: Describing a
bright future (hope); Memorable and engaging expression; realistic
aspirations, achievable; alignment with organizational values and
culture.
Improve this chartCartelOligopoly
Meaning:An explicit, formal agreement between firms in an
industry to fix price and production quantity.An economic market
condition where numerous sellers have their presence in one single
market. A small number of large firms that dominate the
industry.
Prices:Unusually high. Prices are fixed by cartel
members.Moderate/fair pricing due to competition in market. But
much higher than perfect competition (where there is a large number
of buyers and sellers)
Characteristics:A small number of firms dominate the industry.
Prices and production quantities are fixed. Product is
undifferentiated.A small number of firms dominate the industry.
These firms compete with each other based on product
differentiation, price, customer service etc.
Barriers to entry:Barriers to entry are very high as it is
difficult to enter the industry because of economies of
scale.Barriers to entry are very high as it is difficult to enter
the industry because of economies of scale.
Sources of Power:Market making ability by an explicit agreement
between the dominant players in the industry.Market making ability
because of very few firms in the industry. Each firm can therefore
significantly influence the market by setting price or production
quantity.
Examples:OPEC, lysine cartel, Federal ReserveHealth insurers,
wireless carriers, beer (Anheuser-Busch and MillerCoors), media (TV
broadcasting, book publishing, movies) etc.
'Barter'An example of a barter arrangement would be if someone
built a fence for a cattle farmer in exchange for food. Rather than
the farmer paying the builder, say, $1,000 for the fence, he would
give the builder a similar value in beef. Virtually any good or
service can be bartered.For individuals, bartering not only has an
obvious financial benefit - it lets you keep more money in your
pocket - it may also have a psychological benefit in that it can
create a deeper personal relationship than a purchase and sale
transaction.When thinking about what you can barter to obtain a
good or service you want, consider not only any possessions you
might be willing to part with, but also any skills you have to
offer. These skills might include what you do professionally, but
they can also include any activity youre proficient at, from
cleaning to babysitting to yard work to baking. You could even
offer the use of your truck to someone who needs to move furniture
in exchange for their help with, say, proofreading your new
marketing newsletter.One limitation of bartering is that you can
only exchange goods and services with people you know. So if you
dont know anyone who is offering what you want, you wont be able to
get it through bartering. To overcome this limitation, bartering
groups and bartering websites have been created to help barterers
find more people to trade with.Advertising bartering comes in all
shapes and sizes. Some top-tier sites negotiate large-scale barter
deals directly, effectively putting millions of unsold impressions
to good use. Many small sites use banner exchanges as a way to
increase their reach. Ezines often swap sponsorships in an effort
to boost subscriptions.
The terms of a barter agreement are often limited only to the
creativity of the participants. They can involve trading standard,
rotating impressions. They can also involve trading
beyond-the-banner site sponsorships featuring numerous fixed
placements of varying formats.Consumer vs CustomerConsumer and
customer are people who buy goods and merchandise. They are people
who are constantly looking for good deals and discounts in order to
save money and make the economy better. Despite their similarities,
they also have their own differences.ConsumerThis is a broad term
for individuals that use products and services that are generated
in the economy. They are the ones who consume the products or
services they have bought or were bought for them. They use these
products based on what they have heard or seen and apply all the
information where deciding whether they need the product or
not.CustomerCame from the term, custom, meaning habit. These are
people or organizations who frequently visit your store, they
purchase from you and no one else. The owner or store keeper also
makes sure that his/her customers are satisfied. In this way, owner
and customer maintain their relationship, which means expected buys
in the future. With this term, another slogan for customers was
revealed the customer is always right.Difference Between Consumer
and CustomerConsumers either buy or dont buy the products that they
necessarily use while customers are people who buy goods and
services but may not use the merchandise themselves. Consumers have
goals and purpose while buying items while customers buy these
products and may not use them personally, they either buy them to
resell or buy for those who wantthem. Consumers pertain mostly to
an individual or family while customers can be an individual,
organization or another seller. Consumers play a role in the demand
of products in the economy while customers can simply decide if
this will go or not.
Credit Practices:Develop a credit policyThis is the boring but
important phase ofcredit management, but dont be tempted to skip
it, as it will make the rest of the credit management process a lot
easier.What should be in your credit policy? Objectives:What is the
purpose of this policy? Generally, to provide a reference on the
businesses you will extend credit to, under what circumstances, how
much, and under which terms. Credit approval process:Set out the
steps for how you will deal with new debtors, including assessing
creditworthiness. Credit limits:Define the factors that contribute
to each customers credit limit. You may decide thatallnew customers
will be held to a certain limit until they have paid a set number
of invoices on time, or you may choose to set limits according to
the customers risk rating. Credit terms:Terms should include the
length, for example 30 days, and any disincentives for late
payment, such as interest charges. The debtor must declare in
writing that s/he understands and agrees to these terms to make
them enforceable. Monitoring and reporting:Using CreditorWatch you
can monitor your debtors for adverse information (court judgements,
defaults and ASIC changes). Evaluate your debtors regularly, for
example every quarter. Response tobad debt:Set out the actions you
will take if a debtors account falls in arrears. This may include a
warning process, possible consequencessuch as lowering credit
limits or withholding credit, or shortening termsand a collections
process, for example refinancing the debt, mediation/arbitration,
using a debt collection agency or litigation.
Manage riskA proactive approach torisk managementis the key to
keeping your cashflow cycle in check as well as maintaining a good
credit relationship with your customers. Be sure your credit
manager and accounts receivable department are familiar with your
business credit policy and refer to it regularly. Their role is to
monitor changes against the debtors initial credit assessment and
act accordingly if there are signs of trouble. In many cases,
timely communication with the debtor is all it takes to keep the
payments on track and the relationship in check.Risk management is
about allowing for contingencies that benefit you in the long term,
so a good credit policy should allow for financial mishaps and
offer solutions that help you avoid expensive, time consuming
consequences like litigation while keeping the customer
relationship intact.These three practices should provide the
backbone to any credit management process in any industry. Youll
find by remaining vigilant about credit you can keep both your
suppliers and clients happy and maintain a healthy
cashflow.Customer analyticsis a process by which data fromcustomer
behavioris used to help make key businessdecisionsviamarket
segmentationandpredictive analytics. This information is used by
businesses fordirect marketing,site selection, andcustomer
relationship management. Marketing provides services in order to
satisfy customers. With that in mind, the productive system is
considered from its beginning at the production level, to the end
of the cycle at the consumer. Customer analytics plays a very
important role in the prediction of customer behavior
today.RetailAlthough until recently over 90% of retailers had
limited visibility on their customers, with increasing investments
in loyalty programs, customer tracking solutions and market
research, this industry started increasing use of customer
analytics in decisions ranging from product, promotion, price and
distribution management.FinanceBanks, insurance companies and
pension funds make use of customer analytics in understanding
customer lifetime value, identifying below-zero customers which are
estimated to be around 30% of customer base, increasing
cross-sales, managing customer attrition as well as migrating
customers to lower cost channels in a targeted
manner.CommunityMunicipalities utilize customer analytics in an
effort to lure retailers to their cities.
Usingpsychographicvariables, communities can be segmented based on
attributes like personality, values, interests, and lifestyle.
Using this information, communities can approach retailers that
match their communitys profile.Customer relationship
managementAnalytical Customer Relationship Management, commonly
abbreviated as CRM, enables measurement of and prediction from
customer data to provide a 360 view of the client.Predicting
customer behavior[edit]Forecasting buying habits and lifestyle
preferences is a process of data mining and analysis. This
information consists of many aspects like credit card purchases,
magazine subscriptions, loyalty card membership, surveys, and voter
registration. Using these categories, profiles can be created for
any organizations most profitable customers. When many of these
potential customers are aggregated in a single area it indicates a
fertile location for the business to situate. Using a drive time
analysis, it is also possible to predict how far a given customer
will drive to a particular location. Combining these sources of
information, a dollar value can be placed on each household within
a trade area detailing the likelihood that household will be worth
to a company. Through customer analytics, companies can make
decisions with confidence because every decision is based on facts
and objective Data.Predictive analyticsencompasses a variety of
techniques fromstatistics,modeling,machine learning, anddata
miningthat analyze current and historical facts to
makepredictionsabout future, or otherwise unknown, events.[1][2]In
business, predictive models exploitpatternsfound in historical and
transactional data to identify risks and opportunities. Models
capture relationships among many factors to allow assessment of
risk or potential associated with a particular set of conditions,
guidingdecision makingfor candidate transactions.Predictive
analytics is used inactuarial science,[3]marketing,[4]financial
services,[5]insurance,telecommunications,[6]retail,[7]travel,[8]healthcare,[9]pharmaceuticals[10]and
other fields.Predictive models[edit]Predictive models analyze past
performance to assess how likely a customer is to exhibit a
specific behavior in order to improvemarketing effectiveness. This
category also encompasses models that seek out subtle data patterns
to answer questions about customer performance, such as fraud
detection models. Predictive models often perform calculations
during live transactions, for example, to evaluate the risk or
opportunity of a given customer or transaction, in order to guide a
decision. With advancements in computing speed, individual agent
modeling systems have become capable of simulating human behaviors
or reactions to given stimuli or scenarios. The new term for
animating data specifically linked to an individual in a simulated
environment is avatar analytics.Analytical customer relationship
management (CRM)[edit]AnalyticalCustomer Relationship Managementis
a frequent commercial application of Predictive Analysis. Methods
of predictive analysis are applied to customer data to pursue CRM
objectives, which involve constructing a holistic view of the
customer no matter where their information resides in the company
or the department involved. CRM uses predictive analysis in
applications for marketing campaigns, sales, and customer services
to name a few. These tools are required in order for a company to
posture and focus their efforts effectively across the breadth of
their customer base. They must analyze and understand the products
in demand or have the potential for high demand, predict customers'
buying habits in order to promote relevant products at multiple
touch points, and proactively identify and mitigate issues that
have the potential to lose customers or reduce their ability to
gain new ones. Analytical Customer Relationship Management can be
applied throughout thecustomers lifecycle(acquisition,relationship
growth,retention, and win-back). Several of the application areas
described below (direct marketing, cross-sell, customer retention)
are part of Customer Relationship Management.Cross-sell[edit]Often
corporate organizations collect and maintain abundant data
(e.g.customer records, sale transactions) as exploiting hidden
relationships in the data can provide a competitive advantage. For
an organization that offers multiple products, predictive analytics
can help analyze customers' spending, usage and other behavior,
leading to efficientcross sales, or selling additional products to
current customers.[2]This directly leads to higher profitability
per customer and stronger customer relationships.Customer
retention[edit]With the number of competing services available,
businesses need to focus efforts on maintaining continuousconsumer
satisfaction, rewardingconsumer loyaltyand minimizingcustomer
attrition. Businesses tend to respond to customer attrition on a
reactive basis, acting only after the customer has initiated the
process to terminate service. At this stage, the chance of changing
the customer's decision is almost impossible. Proper application of
predictive analytics can lead to a more proactive retention
strategy. By a frequent examination of a customers past service
usage, service performance, spending and other behavior patterns,
predictive models can determine the likelihood of a customer
terminating service sometime soon.[6]An intervention with lucrative
offers can increase the chance of retaining the customer. Silent
attrition, the behavior of a customer to slowly but steadily reduce
usage, is another problem that many companies face. Predictive
analytics can also predict this behavior, so that the company can
take proper actions to increase customer activity.Business
analytics(BA) refers to the skills, technologies, applications and
practices for continuous iterative exploration and investigation of
past business performance to gain insight and drive business
planning.[1]Business analytics focuses on developing new insights
and understanding of business performance based
ondataandstatistical methods. In contrast,business
intelligencetraditionally focuses on using a consistent set of
metrics to both measure past performance and guide business
planning, which is also based on data and statistical
methods.Businessanalyticsmakes extensive use of
data,statisticalandquantitativeanalysis, explanatory andpredictive
modeling,[2]and fact-based management to drivedecision making. It
is therefore closely related tomanagement science. Analytics may be
used as input for human decisions or may drive fully automated
decisions. Business intelligence isquerying,reporting,OLAP, and
"alerts."TYPES OF MARKETINGStage 1 : Domestic Marketing : Companies
manufacturing products and selling those within the country itself.
So, no international phenomenon at all.
Stage 2 :Export Marketing: Company starts exporting products to
another countries also. This is the very basic stage of global
marketing. Approach of marketer in this stage is said to be
ethnocentric because although he is selling goods to foreign
countries, product development is totally based upon the taste of
local customer. So, focus is still on domestic market
Stage 3 : International Marketing : Now, company starts selling
products to various countries and the approach is Polycentric i.e.
making different products for different countries.
Stage 4 : Multinational Marketing : Now, in this stage, the
number of countries in which the company is doing business gets
bigger than that in earlier stage. And so, instead of producing
different goods for different countries, company tries to identify
different regions for which it can deliver same product. So, same
product for countries lying in one region but different from
product offered in countries of another region. e.g. a company may
decide to offer same product to India, Sri lanka and Pakistan if it
thinks the taste of people of these countries is same but at the
same time offering different product for American countries. This
approach is called Regiocentric approach.
Stage 5 : Global Marketing : This is the final stage of
evolution. In this stage company really operates in a very large
number of countries and for the purpose of achieving cost
efficiencies it analyses the requirement and taste of customers of
all the countries and come out with a single product which can
satisfy the needs of all. This approach is called Geocentric
approach.
So, one main difference between International and the Global
marketing is the approach of marketer. A truly global company
instead of offering different products to different countries (as
in International Marketing), develops and offers a single product
to the world.
You should note one more very interesting fact that in the early
stage of Export marketing also, the company was offering a single
product to each of the countries as in the final stage of Global
marketing. But it was entirely different because in export
marketing you produce according to taste of your country and force
that on other countries but in Global approach, you take care of
entire countries and develop a product which can satisfy the need
of all.BCG MATRIXThe BCG Matrix was developed by the Boston
Consulting Group in 1986 in order to evaluate and analyze the
business units and product offerings of corporations. Companies can
use this simple 2 x 2 matrix as an analytical tool in portfolio
analysis, strategic management, product management, and brand
marketing.
The BCG Matrix plots business units or product offerings along
two axis; the first is market growth, the second is market
share.
Market growth describes the maturity of a market. New markets
continue to growth and expand over time, presenting additional
opportunities for revenue that can be shared among market
participants. Eventually, all markets mature and as they new
revenues sources diminish.
Market share describes the percentage of the overall market that
a companys business unit or product offerings enjoy.A business unit
or product line is categorized based on the quadrant of the matrix
in which it resides. These categories are Cash Cows, Stars,
Question Marks, and Dogs.
Cash Cowsrepresent business units or product lines (businesses
more generically) that enjoy a large market share within a market
which is experiencing low market growth. This means that the market
has already matured, and that the business is well established and
positioned within the market. Cash Cows typically generate cash in
excess of the amount needed to maintain the business. These steady
businesses are like having your own money mint. Its ever companys
goal to have as many of these as possible. Little capital
investment is turned into the businesses since it would be wasted
on such a mature market (nothing more could be gained).
Stars(or Rising Stars) are businesses that enjoy a large market
share in a fast growing market. Like Cash Cows they boast a
prominent market position for the time, but they required
investment of resources to maintain or increase their market share
is the market continues to grow. They goal of any business is to
manage and nurture their Stars through the market growth
maintaining their market position. As the market matures, those
businesses that maintain their market position with turn from Stars
into Cash Cows requiring little to no capital investment while
continuing to throw off large sums of money.
Question Marksare businesses that have a low market share in a
fast growing market. If Stars have a goal of becoming Cash Cows,
Question Marks have a goal of first becoming starts. Since the
market growth is strong, there is potential for Question Marks. But
their current market share is low. They often require large amounts
of capital to gain in market share, yet there are no guarantees
that they will succeed. Questions Marks ultimately have a fate of
becoming Stars if they successfully gain market share, or they will
never gain market share and become Dogs. All the while, they are
taking large amounts of capital to sustain. Question marks must be
analyzed carefully in order to determine whether they are worth the
investment required to grow market share.
Dogsare businesses that have a low market share in a slow
growing, mature market. Sometimes they are pet projects with small
amounts of capital allocated to support them. In the best
circumstances they barely make enough to sustain themselves.
Clearly Dogs are the bleakest of situations. Of course, there may
be times when a Dog makes sense to keep around. Maybe the breakeven
business creates synergies with other lines of business thus
providing an intangible benefit. Other times, there may be other
social benefits to such business due to the people they employ and
the opportunities they create within the environment in which they
operate. Porters Five ForcesPorter's Five Forces Analysis is an
important tool for assessing the potential for profitability in an
industry. With a little adaptation, it is also useful as a way of
assessing the balance of power in more general situations.It works
by looking at the strength of five important forces that affect
competition: Supplier Power:The power of suppliers to drive up the
prices of your inputs. Buyer Power:The power of your customers to
drive down your prices. Competitive Rivalry:The strength of
competition in the industry. The Threat of Substitution:The extent
to which different products and services can be used in place of
your own. The Threat of New Entry:The ease with which new
competitors can enter the market if they see that you are making
good profits (and then drive your prices down).By thinking about
how each force affects you, and by identifying the strength and
direction of each force, you can quickly assess the strength of
your position and your ability to make a sustained profit in the
industry.The Importance of Porter's Diamond & Porter's Five
Forces in Businessby Chirantan Basu, Demand MediaHarvard Business
School professor Michael E. Porter has developed several
theoretical models on competitiveness based on decades of teaching
and research. Porter's "five forces" model shows the five forces
that affect the competitive environment of a small business.
Porter's "diamond" model shows the four factors that affect the
competitiveness of a nation and its industries.BasicsThe five
forces in Porter's model are the bargaining power of buyers and
suppliers, threat of new competitors, threat of substitute products
and industry rivalry. Porter's diamond model has four determinants
of competitive advantage: demand conditions, factor conditions,
presence of supporting industries and company strategies. Factor
conditions refer to a country's resources, such as labor and
natural resources, while demand conditions refer to local demand
for a company's products and services.Importance: Five Forces
ModelPorter's five forces determine a company's competitive
environment, which affects profitability. The bargaining power of
buyers and suppliers affect a small company's ability to increase
prices and manage costs, respectively. For example, if the same
product is available from several suppliers, then buyers have
bargaining power over each supplier. However, if there is only one
supplier for a particular component, then that supplier has
bargaining power over its customers. Low-entry barriers attract new
competition, while high-entry barriers discourage it. For example,
opening a home-cleaning business is simple, but starting a
manufacturing company is considerably more difficult. Industry
rivalry is likely to be higher when several companies are vying for
the same customers, and intense rivalry leads to lower prices and
profits.Related Reading:Porter's Developing Starting Point for
Developing StrategyImportance: Diamond ModelGovernment policies can
influence the components of the diamond model. For example, some
economists suggest that lower income taxes stimulate consumer
demand, which leads to higher sales and profits. Countries that
invest in education have a skilled workforce, which helps companies
engage in research and development. The presence of supporting
industries in close proximity to manufacturing companies can reduce
input costs and increase profits. Supporting industries include raw
materials suppliers and component manufacturers. A competitive
industry structure is also important because companies that can
survive tough competition at home are usually able to withstand
even tougher competition in a global business environment.Due
Diligence1. Due diligence is the process of systematically
researching and verifying the accuracy of a statement.The term
originated in the business world, where due diligence is required
to validate financial statements. The goal of the process is to
ensure that all stakeholders associated with a financial endeavour
have the information they need to assess risk accurately.When due
diligence involves the offering of securities for purchase, as in
anIPO(initial public offering), specific corporate officers are
responsible for the proper completion of the process, including the
issuer, issuer's counsel, underwriters,CFOand the brokerage firm
offering shares. Because of the delicate nature and importance of
such judgments to the prospects for the performance of a company's
equities in the public market, there is a strong emphasis on
neutral, unbiased analysis of both the current financial state and
future prospects of the firm in question.2. In compliance, due
diligence describes the degree of effort required by law or
industry standard.3. In real estate, due diligence is the time
period between the acceptance of an offer and the close of
escrow.4. In civil law, due diligence is synonymous with
"reasonable care."5. When a patent is issued, due diligence is the
requirement that the patent holder should develop a product around
the patent, and not just prevent others from doing so.Generally,
due diligence refers to the care a reasonable person should take
before entering into an agreement or a transaction with another
party.IMPACT ANALYSISThe Challenge of Impact AnalysisThe challenge
in conducting an Impact Analysis is firstly to capture and
structure all the likely consequences of a decision; and then,
importantly, to ensure that these are managed appropriately.For
smaller decisions, it can be conducted as a desk exercise. For
larger or more risky decisions, it is best conducted with an
experienced team, ideally with people from different functional
backgrounds within the organization: With a team like this, you're
much more likely to spot all of the consequences of a decision than
if you conduct the analysis on your own.How to use Impact
AnalysisTo conduct an effective Impact Analysis, use the following
steps:1. Prepare for Impact AnalysisThe first step is to gather a
good team, with access to the right information sources. Make sure
that the project or solution proposed is clearly defined, and that
everyone involved in the assessment is clearly briefed as to what
is proposed and the problems that it is intended to address.2.
Brainstorm Major Areas AffectedNow brainstorm the major areas
affected by the decision or project, and think about whom or what
it might affect.Different organizations will have different areas
this is why it's worth spending a little time getting this top
level brainstorming correct.Figure 1 below shows a number of
different approaches that may be useful as starting points for
identifying the areas that apply to you.Figure 1: Impact Analysis
Major Areas AffectedThis figure gives a number of different
frameworks that you can use as a starting point for Impact Analysis
brainstorming. Pick the framework that's most relevant for you,
"mix and match" them appropriately, and include other areas where
they're more relevant.And remember as far as you can to involve the
people most likely to be affected by the decision: They'll
most-likely have more insight into the consequences of the decision
than you have.A. Organizational Approach: Impacts on different
departments. Impacts on different business processes. Impacts on
different customer groups. Impacts on different groups of people.B.
McKinsey 7Ss Approach:Using the popularMcKinsey 7Ssapproach to
thinking about the things that are important to an organization:
Strategy. Structure. Systems. Shared Values. Skills. Styles.
Staff.C. Tools-Based Approach:There's a lot of overlap here between
Impact Analysis and some of the other tools we explain on Mind
Tools, particularlyRisk Analysis,Risk/Impact Probability
ChartsandStakeholder Analysis.You can use the headings given within
the Risk Analysis article as one set of starting points for
brainstorming, and use Stakeholder Analysis for thinking about the
people who might be affected by the decision.3. Identify All
AreasNow, for each of the major areas identified, brainstorm all of
the different elements that could be affected. For example, if
you're looking at departments, list all of the departments in your
organization. If you're looking at processes, map out the business
processes you operate, starting with the process the customer
experiences, then moving on to the business processes that support
this.The extent to which you're able to do this depends on the
scale of the decision and the time available. Just make sure you go
far enough, without getting bogged down in micro-detail.4. Evaluate
ImpactsHaving listed all of the groups of people and everything
that will be affected in an appropriate level of detail, the next
step is to work through these lists identifying and listing the
possible negative and positive impacts of the decision, and making
an estimate of the size of the impact and the consequences of the
decision.5. Manage the ConsequencesNow's the time to turn this
information into action.If you're using Impact Analysis as part of
the decision making process, you need to weigh whether you want to
go ahead with the project or decision proposed. You'll need to ask
yourself whether it's worth going ahead with the project given the
negative consequences it will cause and given the cost of managing
those negative consequences.If you're managing a project which has
already been given the go-ahead, you'll need to think about things
like: The actions you'll need to take to manage or mitigate these
consequences. How you'll prepare the people affected so that
they'll understand and (ideally) support change rather than
fighting against it. The contingency strategy needed to manage the
situation should the negative consequences arise.Tip:Remember that
few changes happen in isolation. The effects they cause can be
diminished or amplified by other things that are going on. When you
are thinking about impacts, think about the context you're
operating in, and also think about how people might react to the
change and work with it or against it.- See more at:
http://www.mindtools.com/pages/article/newTED_96.htm#sthash.9vakC7Os.dpufCOST
OVERRUNAcost overrun, also known as acost increaseorbudget overrun,
is an unexpectedcostincurred in excess of a budgeted amount due to
an underestimation of the actual cost during budgeting. Cost
overrun should be distinguished fromcost escalation, which is used
to express ananticipatedgrowth in a budgeted cost due to factors
such as inflation.Cost overrun is common ininfrastructure,building,
andtechnologyprojects. ForIT projects, an industry study by the
Standish Group found that the average cost overrun was 43 percent;
71 percent of projects were over budget, exceeded time estimates,
and had estimated too narrow ascope; and total waste was estimated
at $55 billion per year in the US alone.[1]Many major construction
projects have incurred cost overruns. TheSuez Canalcost 20 times as
much as the earliest estimates; even the cost estimate produced the
year before construction began underestimated the project's actual
costs by a factor of three. TheSydney Opera Housecost 15 times more
than was originally projected, and theConcordesupersonic aeroplane
cost 12 times more than predicted.TheChannel Tunnelbetween the UK
and France had a construction cost overrun of 80 percent, and a
140-percentfinancingcost overrun.Three types ofexplanationfor cost
overrun exist:technical,psychological, andpolitical-economic.
Technical explanations account for cost overrun in terms of
imperfectforecastingtechniques, inadequate data, etc. Psychological
explanations account for overrun in terms ofoptimism biaswith
forecasters.Scope creep, where the requirements or targets rises
during the project, is common. Finally, political-economic
explanations see overrun as the result ofstrategic
misrepresentationof scope or budgets.[2]Scope creepFrom Wikipedia,
the free encyclopediaThis article is about project management. For
the firearms term, seetelescopic sight.Scope creep(also
calledrequirement creepandfeature creep) inproject managementrefers
to uncontrolled changes or continuous growth in aprojectsscope.
This can occur when the scope of a project is not properly defined,
documented, or controlled. It is generallyconsidered
harmful.Typically, the scope increase consists of either
newproductsor new features of already approved product designs,
without corresponding increases in resources, schedule, or budget.
As a result, the project team risks drifting away from its original
purpose and scope into unplanned additions. As the scope of a
project grows, more tasks must be completed within the budget and
schedule originally designed for a smaller set of tasks.
Accordingly, scope creep can result in a project team overrunning
its originalbudgetand schedule.If budget, resources, and schedule
are increased along with the scope, the change is usually
considered an acceptable addition to the project, and the term
scope creep is not used.Scope creep can be a result of: poorchange
control lack of proper initial identification of what is required
to bring about theproject objectives weakproject managerorexecutive
sponsor poorcommunicationbetween parties Scope Changeis an official
decision made by the project manager and the client to change a
feature X to expand or reduce it's functionality. Generally, scope
change involves making adjustments to the cost, budget, other
features, or the timeline. On the other hand,Scope Creepis
generally referred to as the phenomenon where the original project
scope to build a product with feature X, Y, and Z slowly grows
outside of the scope originally defined in the statement of work.
Scope creep refers to scope change which happens slowly and
unofficially, without changing due dates or otherwise making
adjustments to the budget.ORGANIC VS INORBANIC GROWTHWhen you start
a small business, you must focus on growing your customer base,
reinvesting profits in new assets for greater income, and improving
productivity to increase your bottom line. All of these efforts are
examples of organic growth. You can grow your company through
inorganic growth by merging with another company or buying another
company. This can give you a larger customer base and new channels
of distribution that can result in accelerated growth.Advantages of
Organic GrowthWhen you grow your business through strong management
and effective planning, you know your business inside and out. You
can move quickly to take advantage of changes in the marketplace,
and you can experience the satisfaction of seeing your vision come
to fruition. You also have the choice of growing your business at a
rate that is comfortable for you. Instead of merging with another
company or buying one, you can sell your business when it is
mature. This can create profit for you.Advantages of Inorganic
GrowthGrowing your business inorganically involves joining with
another business through a merger or an acquisition. This
immediately expands your assets, your income and your market
presence. You will have a stronger line of credit because of the
combined value of the two businesses. You will also benefit from
the added expertise from personnel at the new business.Related
Reading:Business Growth PlanningDisadvantages of Organic GrowthYou
may have limited resources for growing your own business. You may
also find that the marketplace will not allow you to grow beyond a
certain point. In addition, your plans for your own growth can be
thwarted by competition, causing you to cut back expectations and
consider the possibility of having to close down due to limited
opportunities. Growing a business from the start-up stage means
constantly struggling to make sure you have positive cash flow in
order to pay your bills and payroll, as well as finding ways to
grow sales. While these concerns exist if you join with another
company, the larger size of the combined organization provides
better cash flow and sales growth because of a larger customer
base.Disadvantages of Inorganic GrowthYou will have to expand your
management capabilities dramatically when you join forces with
another business. You will suddenly have many more employees and
more assets to monitor, use and dispose of as your business needs
change. In addition, you may grow in directions that you didnt
anticipate. In effect, the focus of the second business can take
over the vision you had when you started your business. You may
enter areas of the marketplace where you have no expertise. You can
also grow too fast. Most mergers and acquisitions require
financing, and you will have to service your debt from the growth
you experienced with the merger or acquisition. If your
calculations about increased income are inaccurate, you may find
yourself strapped with a debt you have difficulty
repaying.GranularityFrom Wikipedia, the free
encyclopediaGranularityis the extent to which asystemis broken down
into small parts, either the system itself or its description or
observation. It is the extent to which a larger entity is
subdivided. For example, a yard broken into inches has finer
granularity than a yard broken into feet.Coarse-grainedsystems
consist of fewer, larger components thanfine-grainedsystems;
acoarse-graineddescription of a system regards large subcomponents
while afine-graineddescription regards smaller components of which
the larger ones are composed.The termsgranularity,coarse,
andfineare relative, used when comparing systems or descriptions of
systems. An example of increasingly fine granularity: a list of
nations in theUnited Nations, a list of all states/provinces in
those nations, a list of all cities in those states, etc.The
termsfineandcoarseare used consistently across fields, but the
termgranularityitself is not. For example, ininvesting,more
granularityrefers to morepositionsof smaller size,
whilephotographic filmthat ismore granularhas fewer and larger
chemical "grains".hired gun(hrd)n.Slang1.One, especially a
professional killer, who is hired to kill another person.2.One
hired to fight for or protect another.3.One who is proficient at
obtaining power for others.4.One with special knowledge or
expertise, as in business, law, or government, who is hired to
resolve particularly difficult or complex problems.band aid
approachHastysolutionthatcoversup thesymptomsbut does little or
nothing to mitigate the underlyingproblem. See alsoquick fix.The
band-aid approach has been the most common solution to working with
students at risk. The name for this approach comes from the purpose
of a band-aid; to cover up a problem but not fix it. A problem with
this resolution is only having half-day sessions focusing on one
topic for these students. This is not helping in the end because
for the other half of the day, when they are in their regular
classroom settings, this type of attention and teaching is not
practiced (Finn, 1998). Thus, this is considered
aband-aidapproachbecause it only temporarily conceals the problem
without fixing it. The Advantages of a Tightly Integrated Supply
Chainby Chirantan Basu, Demand MediaA tightly integrated supply
chain for a small or large business is a network of businesses and
contractors that provide raw materials, transportation,
manufacturing, distribution, warehousing and retailing services.
Businesses rely on efficient supply chains to provide a high level
of customer service, while meeting sales and profit targets.
Information technologies, including enterprise resource planning
systems, are at the core of integrated supply
chains.FlexibilityTight supply chain integration gives management
operational flexibility to respond rapidly to external events, such
as the actions of competitors and changes in customer demand.
Companies can gather intelligence through their supply chains,
which allows them to be generally aware of what their competitors
are planning months in advance. For example, if a competitor
launches a new product, an electronics manufacturer could leverage
its integrated supply chain to source the parts, activate a
marketing plan and rush a prototype from the design stage to the
launch stage in a few weeks.Inventory ManagementIntegrated supply
chains improve inventory management, which means fewer overstocked
and understocked conditions. Overstocking may result in higher
storage costs and product obsolescence, while understocking could
mean losing customers to competitors. Tight integration means that
retailers can quickly adjust their inventory orders weeks or months
in advance of anticipated changes in customer demand to ensure that
the right amount of stock is on hand. Speed is essential in global
supply chains because raw materials and finished goods are often
transported over long distances. Tightly integrated supply chains
also facilitate just-in-time manufacturing, in which companies
assemble and manufacture products as the orders come in.Related
Reading:What Are the Four Elements of Supply Chain
Management?Profit MarginsOperating flexibility and tight inventory
management lead to a lower cost structure, which results in higher
profit margins. By responding rapidly to changes in the competitive
and customer environments, small businesses are able to remain
competitive and maintain or grow their top and bottom lines. Tight
integration provides companies with visibility not only into their
own operations but also into their suppliers' operations, which
allows for collaborations on reducing costs and driving
margins.ConsiderationsTightly integrated supply chains can serve as
early warning systems. For example, if a supplier is experiencing
cash flow problems, customers will find out quickly and they can
start making alternative arrangements. Some customers may step in
and loan the supplier some working capital so that they can
continue operating. Supply chain integration usually involves
upfront costs and disruptions in operations as people are trained
on new information systems.Key Difference:Gantt charts and PERT
charts are visualization tools that project and breakdown the tasks
along with the time it takes to do the particular task. Gantt chart
is represented as a bar graph, while PERT chart is represented as a
flow chart.Gantt charts and PERT charts are visualization tools
that project and breakdown the tasks along with the time it takes
to do the particular task. These are time management tools that are
used by managers and administrators to display tasks that are
required for project completion. The charts schedule, control and
administer the tasks that are set by the manager.A Gantt chart is a
bar graph that was introduced by Henry Gantt and is used to
illustrate a project schedule. Gantt developed the chart during the
1910-1915s. The chart shows the start dates, end dates and
individually breaks down the project into smaller tasks. Select
Gantt charts also show the dependency relationships between
activities. This chart is also used in Information Technology to
show data that has been collected. A tool similar to this chart was
developed in 1896 by Karol Adamiecki and was named harmonogram;
however Adamiecki didnt publish his chart until 1931 and even then
only in Polish, limiting its adaptation in other countries. Gantt
charts have become a popular tool in many companies around to world
as a work breakdown structure (WBS) chart.The chart shows a
horizontal bar which represents the task, while the length of the
bar shows the time required to complete the task. On an x-y axis,
the x axis represents the time for project completion. Independent
tasks are connected using arrows, which show the relationship
between two independent tasks. The relationship stems from the
dependency of one task on another, where one task must be finished
in order to being the other task. A limitation of the Gantt chart
is that they do not efficiently represent the dependency of one
task to another. Gantt charts are also limited to small projects
and are not effective for projects with more than 30 activities.The
Program Evaluation and Review Technique (PERT) chart is statistical
tool that is used in project management that is similar to the
Gantt chart. This chart is a flow chart. PERT charts are also
designed to analyze and represent the tasks involved in completing
a given project. They were developed by the United States Navy in
the 1950s and are commonly used with the critical path method
(CPM). The PERT chart also analyzes the various different tasks
involved in a project and the time it will take to complete each
task and subsequently the whole project. PERT was initially
developed to simplify the planning and scheduling of large and
complex projects. It was designed for the US Navy's Polaris nuclear
submarine project.PERT charts can manage large projects that have
numerous complex tasks a very high inter-task dependency. The
charts have an initiation node, which further stems into a network
of individual tasks. PERT chart are popular for projects that
require an assembly line and also represent the relationship
between different tasks that are required to complete the project.
The PERT chart has numerous interconnecting networks of independent
tasks. The events in a PERT chart are in logical sequence so that
no other task can begin until the previous task is completed. A
PERT chart may have multiple pages with many sub-tasks. PERT chart
is useful when trying to manage multiple tasks that will occur
simultaneously. This chart is a bit complicated to use and are
often used with Gantt charts in order to simplify the tasks
better.