BUSINESS CONSULTANCY

UNIT I
Introduction- the challenges of consulting-Defining and framing business problem- Develop a
Business plan- Creative problems solving

UNIT II
Questioning Interviewing and Data gathering skills- Persuasively making the business caseOrganizational structure and function

UNIT III
The Credit/ Sales controversy- Basic Strategic Analysis- Market the business-Financial
Strategies- Contemporary Strategic issues- E-Commerce Strategy.
UNIT IV

Build a Client relationship-Building Excellent Processes- Value Chain Analysis-Decision

TreesDelphi Modeling- Business Process Reengineering: Its Past, Present and Possible Future

UNIT V
Competency mapping Corporate network Business simulation games- Knowledge
Management-Project Analysis.

UNIT I

Introduction & defn:

Business consulting refers to both the industry, and the practice of, helping organizations improve their
performance, primarily through the analysis of existing business problems and development of plans for
improvement. Organizations hire the services of management consultants for a number of reasons,
including, for example, to gain external and presumably more objective advice and recommendations, to
gain access the consultants' specialized expertise or simply as temporary help during a one-time project,
where the hiring of permanent employees is not required. Because of their exposure to and relationships
with numerous organizations, consultancies are also said to be aware of industry 'best practices,' although
the transferability of such practices from one organization to another is the subject of debate.
Consultancies may also provide organizational change management assistance, development of coaching
skills, technology implementation, strategy development, or operational improvement services. Business
consultants generally bring their own, proprietary methodologies or frameworks to guide the
identification of problems, and to serve as the basis for recommendations for more effective or efficient
ways of performing business tasks.
Business consulting refers generally to the provision of business consulting services, but there are
numerous specializations, such as information technology consulting, human resource consulting, and
others, many of which overlap, and most of which are offered by the large diversified consultancies.
Business Consulting is becoming more prevalent in non-business related fields as well. As the need for
professional and specialized advice grows, other industries such as government, quasi-government and
not-for-profit agencies are turning to the same managerial principles that have helped the private sector
for years.
Consultant
A consultant is an experienced individual that is trained to analyze and advise a client in order to help the
client make the best possible choices. A strategic consultant may evaluate a business plan and help the
client develop a plan to meet those strategic goals. For example, a client concerned with government
regulations and risk mitigation may engage an ediscovery or regulatory compliance consultant. As
another example, value added resellers (VARs) may employ sales consultants to examine the client's
immediate business or technology needs and recommend products, services, or other solutions that can
address those needs.

The challenges of consulting

1. Clients Expectations:
One very huge challenge most consultants face is dealing with a client who has lofty goals, but lacks a
forward thinking attitude. When it comes to a client's business, more often than not they're fearful about
spending money. Usually they'll expect big results from very small investments.
E.g. "Often clients are short term oriented and don't consider the most important longer term strategies.
Clients may be willing to put money into advertisements for today but when encouraged to consider more
effective campaigns, which span a year or five-year period, they hold back."

2. Creative Ways of Attracting Clients

Another huge challenge that confronts all consultants has to do with getting past the "How Much Does it
Cost?" phase. That of course not only requires patience, but a lot of inventiveness and creativity as well.
Writing letters, introducing your company, creating press releases, developing a web site and of course
networking are all critical to the success of any business, but in a competitive market such as the Internet,
the challenge is even greater. What that means to the consultant is that he or she must conceive of unique
measures for opening doors to their services and that demands different approaches.
E.g.. "When approaching a prospective client, often their first question is how much will a web site cost?
Getting past that first inquiry is one of the greatest challenges for a marketing consultant since costs vary
so greatly.
Relating to and Understanding a Clients Needs

3.

Because a consultant commonly seeks to offer newer and more progressive ideas to an organization, the
consultant's challenge is to relate to and understand different client's needs and their overall business
agenda.
There are always going to be times when a potential or existing client may challenge your suggestions or
method of operation, but you have to hear and understand where a client is coming from even when you
don't agree. Your goal as a consultant is to become known as a solution finder, and the only way to do
that is to become aware of your client's concerns and help them go beyond those concerns. As
Consultants we always have the choice to either permit our challenges to defeat us or simply use them as
an opportunity to transcend specific hurdles.

Defining and framing business problem

Einstein is quoted as having said that if he had one hour to save the world he would spend fifty-five
minutes defining the problem and only five minutes finding the solution. This quote does illustrate an
important point: before jumping right into solving a problem, we should step back and invest time and
effort to improve our understanding of it. Here are strategies you can use to see problems from many
different perspectives and master what is the most important step in problem solving: clearly defining
the problem in the first place!
Steps
1. Rephrase the Problem.
When an executive asked employees to brainstorm ways to increase their productivity, all he got back
were blank stares. When he rephrased his request as ways to make their jobs easier, he could barely
keep up with the amount of suggestions. Words carry strong implicit meaning and, as such, play a major
role in how we perceive a problem. In the example above, be productive might seem like a sacrifice
youre doing for the company, while make your job easier may be more like something youre doing for
your own benefit, but from which the company also benefits. In the end, the problem is still the same, but
the feelings and the points of view associated with each of them are vastly different.
Play freely with the problem statement, rewording it several times. For a methodical approach, take single
words and substitute variations.

Increase sales? Try replacing increase with attract, develop, extend, repeat and see how your
perception of the problem changes. A rich vocabulary plays an important role here, so you may want to
use a thesaurus or develop your vocabulary.

2.

Expose and Challenge Assumptions.

Every problem no matter how apparently simple it may be comes with a long list of assumptions
attached. Many of these assumptions may be inaccurate and could make your problem statement
inadequate or even misguided.
The first step to get rid of bad assumptions is to make them explicit. Write a list and expose as many
assumptions as you can especially those that may seem the most obvious and untouchable. That, in
itself, brings more clarity to the problem at hand. Essentially, you need to learn how to think like a
philosopher.
But go further and test each assumption for validity: think in ways that they might not be valid and their
consequences. What you will find may surprise you: that many of those bad assumptions are self-imposed
with just a bit of scrutiny you are able to safely drop them. Read up on How to Be a Skeptic.
For example, suppose youre about to enter the restaurant business. One of your assumptions might be
restaurants have a menu. While such an assumption may seem true at first, try challenging it and maybe
youll find some very interesting business models (such as one restaurant in which customers bring dish
ideas for the chef to cook, for example).
3. Chunk Up.
Each problem is a small piece of a greater problem. In the same way that you can explore a problem
laterally such as by playing with words or challenging assumptions you can also explore it at
different altitudes.
If you feel youre overwhelmed with details or looking at a problem too narrowly, look at it from a more
general perspective. In order to make your problem more general, ask questions such as: Whats this part
of?, Whats this example of? or Whats the intention behind this?
Another approach that helps a lot in getting a more general view of a problem is replacing words in the
problem statement with hypernyms. Hypernyms are words that have a broader meaning than the given
word. (For example, a hypernym of car is vehicle). A great, free tool for finding hypernyms for a
given word is WordNet (just search for a word and click on the S: label before the word definitions).
A good question worth asking is whether the "problem" you're defining is really just a symptom of a
deeper problem. For example, a high heating bill might be the "problem" and an obvious solution would
be to check to see if your heating system is broken, or needs updating for better efficiency. But maybe the
bigger problem is that the people in your house use heat wastefully, and why are that? Because they don't
perceive the negative consequences; they don't have to pay the bill themselves, perhaps, so they're not
conscious of how wasting heat will affect them.
4. Chunk Down.
If each problem is part of a greater problem, it also means that each problem is composed of many smaller
problems. It turns out that decomposing a problem in many smaller problems each of them more
specific than the original can also provide greater insights about it. Chunking the problem down
(making it more specific) is especially useful if you find the problem overwhelming or daunting.

Some of the typical questions you can ask to make a problem more specific are: What are parts of this?
or What are examples of this?
Just as in chunking up, word substitution can also come to great use here. The class of words that are
useful here are hyponyms: words that are stricter in meaning than the given one. (E.g. two hyponyms of
car are minivan and limousine).
5. Find Multiple Perspectives.
Before rushing to solve a problem, always make sure you look at it from different perspectives. Looking
at it with different eyes is a great way to have instant insight on new, overlooked directions.
For example, if you own a business and are trying to increase sales, try to view this problem from the
point of view of, say, a customer. For example, from the customers viewpoint, this may be a matter of
adding features to your product that one would be willing to pay more for.
Rewrite your problem statement many times, each time using one of these different perspectives. How
would your competition see this problem? Your employees? Your mom?
Also, imagine how people in various roles would frame the problem. How would a politician see it? A
college professor? A nun? Try to find the differences and similarities on how the different roles would
deal with your problem.
6. Use Effective Language Constructs.
There isnt a one-size-fits-all formula for properly crafting the perfect problem statement, but there are
some language constructs that always help making it more effective:
Assume a myriad of solutions. An excellent way to start a problem statement is: In what ways might
I. This expression is much superior to How can I as it hints that theres a multitude of solutions,
and not just one or maybe none. As simple as these sounds, the feeling of expectancy helps your brain
find solutions.
Make it positive. Negative sentences require a lot more cognitive power to process and may slow you
down or even derail your train of thought. Positive statements also help you find the real goal behind
the problem and, as such, are much more motivating. For example: instead of finding ways to quit
smoking, you may find that increase your energy, live longer and others are much more worthwhile
goals.
Frame your problem in the form of a question. Our brain loves questions. If the question is powerful and
engaging, our brains will do everything within their reach to answer it. We just cant help it: Our brains
will start working on the problem immediately and keep working in the background, even when were not
aware of it.
7. Make It Engaging.
In addition to using effective language constructs, its important to come up with a problem statement
that truly excites you so youre in the best frame of mind for creatively tackling the problem. If the
problem looks too dull for you, invest the time adding vigor to it while still keeping it genuine. Make it
enticing. Your brain will thank (and reward) you later.
One thing is to increase sales (boring), another one is wow your customers.

One thing is to create a personal development blog, another completely different is to empower readers
to live fully.
8. Reverse the Problem.
One trick that usually helps when youre stuck with a problem is turning it on its head. If you want to win,
find out what would make you lose. If you are struggling finding ways to increase sales, find ways to
decrease them instead. Then, all you need to do is reverse your answers.
Make more sales calls may seem an evident way of increasing sales, but sometimes we only see these
obvious answers when we look at the problem from an opposite direction.
This seemingly convoluted method may not seem intuitive at first, but turning a problem on its head can
uncover rather obvious solutions to the original problem.
9.

Gather Facts.

Investigate causes and circumstances of the problem. Probe details about it such as its origins and
causes. Especially if you have a problem thats too vague, investigating facts is usually more productive
than trying to solve it right away.
If, for example, the problem stated by your spouse is You never listen to me, the solution is not
obvious. However, if the statement is You dont make enough eye contact when Im talking to you,
then the solution is obvious and you can skip brainstorming altogether. (Youll still need to work on the
implementation, though!)
Ask yourself questions about the problem. What is not known about it? When did it last work correctly?
Can you draw a diagram of the problem? What are the problem boundaries? Be curious. Ask questions
and gather facts. It is said that a well-defined problem is halfway to being solved: you could add that a
perfectly-defined problem is not even a problem anymore!

Developing a Business Plan

Overview
The importance of planning should never be overlooked. For a business to be successful and profitable,
the owners and the managing directors must have a clear understanding of the firm's customers, strengths
and competition. They must also have the foresight to plan for future expansion. Whether yours is a new
business or an existing business in the process of expanding, money is often an issue. Taking time to
create an extensive business plan provides you with insight into your business. This document can serve
as a powerful financing proposal.
A business plan is very specific to each particular business. However, while each business needs a unique
plan, the basic elements are the same in all business plans. To complete an effective business plan you
must dedicate time to complete the plan. It requires you to be objective, critical and focused. The finished
project is an operating tool to help manage your business and enable you to achieve greater success. The
plan also serves as an effective communication tool for financing proposals.
At the completion of this exercise, you should be able to:

Describe the importance of a business plan

Identify the elements of an effective business plan

Write a business plan

Outline:
I.
II.
III.

IV.
V.
VI.
VII.

Why Write a Business Plan?

Who Should Write the Business Plan?
Business Plan Components
A.
Executive Summary
B.
The Product/Service
C.
The Market
D.
The Marketing Plan
E.
The Competition
F.
Operations
G.
The Management Team
H.
Personnel
Financial Data
Supporting Documentation
Summary
Resources

I. Why Write a Business Plan?

Why should a business go through the trouble of constructing a business plan? There are five major
reasons:
1. The process of putting a business plan together forces the person preparing the plan to look at the
business in an objective and critical manner.
2. It helps to focus ideas and serves as a feasibility study of the business's chances for success and
growth.
3. The finished report serves as an operational tool to define the company's present status and future
possibilities.
4. It can help you manage the business and prepare you for success.
5. It is a strong communication tool for your business. It defines your purpose, your competition,
your management and personnel. The process of constructing a business plan can be a strong
reality check.
6. The finished business plan provides the basis for your financing proposal.
Planning is very important if a business is to survive. By taking an objective look at your business you
can identify areas of weakness and strength. You will realize needs that may have been overlooked, spot
problems and nip them before they escalate, and establish plans to meet your business goals.
The business plan is only useful if you use it. Ninety percent of new businesses fail in the first two years.
Failure is often attributed to a lack of planning. To enhance your success, use your plan! A
comprehensive, well constructed business plan can prevent a business from a downward spiral.
Finally, your business plan provides the information needed to communicate with others. This is
especially true if you are seeking financing. A thorough business plan will have the information to serve
as a financial proposal and should be accepted by most lenders.

II. Who Should Write the Business Plan?

You, the owner of the business, should write the plan. It doesn't matter if you are using the business plan
to seek financial resources or to evaluate future growth, define a mission, or provide guidance for running
your business -- you are the one that knows the most about the business.
Consultants can be hired to assist you in the process of formulating a business plan, but in reality you
must do a majority of the work. Only you can come up with the financial data, the purpose of your
business, the key employees, and management styles to mention a few items. You may still choose to use
a consultant, but realize that you will still need to do most of the work, so why not tackle the plan
yourself? If you need further help in one area, then seek the assistance of the consultant.
III. Business Plan Components
The Executive Summary
The first page of your business plan should be a persuasive summary that will entice a reader to take the
plan seriously and read on. The Executive Summary should follow the cover page, and not exceed two
pages in length.
The summary should include:

A brief description of the company's history

The company's objectives
A brief description of the company's products or services
The market the business will compete in
A persuasive statement as to why and how the business will succeed, discussing the business's
competitive advantage
Projected growth for the company and the market
A brief description of the key management team
A description of funding requirements, including a time-line and how the funds will be used

The Product or Service

It is important for the reader to thoroughly understand your product offering or the services you currently
provide or plan on providing. However, it is important to explain this section in layman's terms to avoid
confusion. Do not overwhelm the reader with technical explanations or industry jargon that he or she will
not be familiar with.
It is important to discuss the competitive advantage your product or service has over the competition. Or,
if you are entering a new market, you should answer why there is a need for your offering.
If appropriate, discuss any patents, copyrights and trademarks the company currently owns or has recently
applied for and discuss any confidential and non-disclosure protection the company has secured.
Discuss any barriers that you face in bringing the product to market, such as government regulations,
competing products, high product development costs, the need for manufacturing materials, etc.
Areas that should be covered in this section include:

Is your product or service already on the market or is it still in the research and development
stage?

If you are still in the development stage, what is the roll out strategy or timeline to bring the
product to market?
What makes your product or service unique? What competitive advantage does the product or
service have over its competition?
Can you price the product or service competitively and still maintain a healthy profit margin?

The Market
Investors look for management teams with a thorough knowledge of their target market. If you are
launching a new product, include your marketing research data. If you have existing customers, provide
an analysis of who your customers are, their purchasing habits, their buying cycle. For more information,
see these companion articles: Conducting a Marketing Analysis and Prepare a Customer Profile.
This section of the plan is extremely important, because if there is no need or desire for your product or
service there won't be any customers. If a business has no customers, there is no business.
This section of the plan should include:

A general description of your market

The niche you plan on capitalizing on and why
The size of the niche market. Include supporting documentation
A statement and supporting documentation as to why you believe there is a need for your product
or offering by this market
What percentage of the market do you project you can capture?
What is the growth potential of the market? Include supporting documentation
Will your share of the market increase or decrease as the market grows?
How will you satisfy the growth of the market?
How will you price your goods or services in the growing competitive market?

The Marketing Strategy

Once you have identified who your market is, you'll need to explain your strategy for reaching the market
and distributing your product or service. Potential investors will look at this section carefully to make sure
there is a viable method to reach the target market identified at a price point that makes sense.
Analyze your competitors' marketing strategies to learn how they reach the market. If their strategy is
working, consider adopting a similar plan. If there is room for improvement -- work on creating an
innovative plan that will position your product or service in the minds of your potential customers. The
most effective marketing strategies typically integrate multiple mediums or promotional strategies to
reach the market. The following are some promotional options to consider.

TV
Radio
Print
Web
Direct mail
Trade shows
Public relations
Promotional materials
Telephone sales
One-on-one sales
Strategic alliances

Developing an innovative marketing plan is critical to your company's success. Investors look favorably
upon creative strategies that will put your product or service in front of potential customers. Once you
have identified how you will reach the market, discuss in detail your strategy for distributing the product
or service to your customers. Will you mail order, personally deliver, hire sales reps, contract with
distributors or resellers, etc.?
The Competition
Understanding your competition's strengths and weaknesses is critical for establishing your product's or
services competitive advantage. If you find a competitor is struggling, you need to know why, so you
don't make the same mistake. If your competitors are highly successful, you'll want to identify why.
You'll also want to explain why there is room for another player in the market.
Specific areas to address in this section are:
1. Identify your closest competitors. Where are they located? What are their revenues? How long
have they been in business?
2. Define their target market.
3. What percentage of the market do they currently have?
4. How do your operations differ from your competition? What do they do well? Where is there
room for improvement?
5. In what ways is your business superior to the competition?
6. How is their business doing? Is it growing? Is it scaling back?
7. How are their operations similar to yours and how do they differ?
8. Are there certain areas of the business where the competition surpasses you? If so, what are those
areas and how do you plan on compensating?
Analyzing your competitors should be an ongoing practice. Knowing your competition will allow you to
become more motivated to succeed, efficient and effective in the marketplace.
Operations
Now that you have had an opportunity to really sell your idea and wow potential investors, the next
question on their mind is how you will implement the idea. What resources and processes are necessary to
get the product to market? This section of the plan should describe the manufacturing, R&D, purchasing,
staffing, equipment and facilities required for your business.
You'll want to provide a roll out strategy as to when these requirements need to be purchased and
implemented. Your financials should reflect your roll out plan.
In addition, describe the vendors you will need to build the business. Do you have current relationships or
do you need to establish new ones? Who will you choose and why?
The Management Team
For most investors the experience and quality of the management team is the most important aspect they
evaluate when investing in a company. Investors must feel confident that the management team knows its

market, product and has the ability to implement the plan. In essence, your plan must communicate
management's capabilities in obtaining the objectives outlined in the plan. If this area is lacking, your
chances for obtaining financing are bleak.
If your team lacks in a critical area, identify how you plan on compensating for the void. Whether it is
additional training required or additional management staff needed, show that you know the problem
exists, and provide your options for solutions.
When preparing this section of the business plan you should address the following five areas:
1. Personal history of the principals:
a. Business background of the principals
b. Past experience -- tracking successes, responsibilities and capabilities
c. Educational background (formal and informal)
d. Personal data: age, current address, past addresses, interests, education, special abilities,
reasons for entering into a business
e. Personal financial statement with supporting documentation
2. Work experience:
a. Direct operational and managerial experience in this type of business
b. Indirect managerial experiences
3. Duties and responsibilities:
a. Who will do what and why
b. Organizational chart with chain of command and listing of duties
c. Who is responsible for the final decisions?
4. Salaries and benefits:
a. A simple statement of what management will be paid by position
b. Listing of bonuses in realistic terms
c. Benefits (medical, life insurance, disability...)
5. Resources available to your business:
a. Insurance broker(s)
b. Lawyer
c. Accountant
d. Consulting group(s)
e. Small Business Association
f. Local business information centers
g. Chambers of Commerce
h. Local colleges and universities
i. Federal, state, and local agencies
j. Board of Directors
k. World Wide Web (various search engines)
l. Banker
Personnel
The success of a business can often be measured by its employees. Seventy percent of consumers will go
elsewhere if they don't receive prompt and courteous service. You must consider the following questions
in completing this section of the business plan:
1. What are your current personnel needs (full or part-time)? How many employees do you envision
in the near future and then in the next three to five years?

2. What skills must your employees have? What will their job descriptions be?
3. Are the people you need readily available and how will you attract them?
4. Will you be paying salaries or hourly wages?
5. Will there be benefits? If so, what will they be and at what cost?
6. Will you pay overtime?

IV. Financial Data

At the heart of any business operation is the accounting system. It is important to have a certified public
accountant establish your accounting system before the start of business. An incredible number of
businesses fail due to managerial inefficiencies. Leave it to the trained professional to help you in the area
of accounting and legal matters. If your business can't afford a public accountant to establish your books,
then you are undercapitalized. You need to secure additional resources before starting.
One of the first steps to having a profitable business is to establish a bookkeeping system which provides
you with data in the following four areas:

Balance Sheet - indicates what the cash position of the business is and what the owner's equity is
at a given point (the balance sheet will show assets, liabilities and retained earnings).

Break-Even Analysis - is based on the income statement and cash flow. All businesses should
perform this analysis without exceptions. A break-even analysis shows the volume of revenue
from sales that are needed to balance the fixed and variable expenses.

Income Statement - also called the profit and loss statement, is used to indicate how well the
company is managing its cash, by subtracting disbursements from receipts.

Cash Flow - this projects all cash receipts and disbursements. Cash flow is critical to the survival
of any business.

If the goal of your business plan is to obtain financing, you will be required to generate financial
forecasts. The forecasts demonstrate the need for funds and the future value of equity investment or debt
repayments. This exercise is critical in obtaining capital for your business. To obtain capital from lending
institutions you must demonstrate the need for the funding and your ability to repay the loan.
The forecast that you generate should cover a three to five-year period. This is a period in which realistic
goals can be established and attained without much speculation. Forecasts should be broken down in
monthly increments.
V. Supporting Documentation
You must include any documents that lend support to statements made in the body of your company's
business plan. The following is a list of some items which is not complete and may vary depending on the
stage of development of your business.

1. Resumes
2. Credit information, include in Appendix
3. Quotes or Estimates
4. Letters of Intent from prospective customers
5. Letters of Support from credible people who know you
6. Leases or Buy/Sell Agreements
7. Legal Documents relevant to the business
8. Census/Demographic data
VI. Summary
The completed business plan should be bound. Once the business plan is completed, it should become an
operational tool to measure the success of the business. This plan should be updated as milestones are
reached. Often companies will spend enormous time, energy and financial resources to complete this
arduous task just for the purpose of obtaining additional capital. The companies that shelve the business
plan after its completion and presentation to lenders lose out on the real value of this useful tool in the
growth and development of small and large businesses.

Creative problems solving

Creative problem solving is the mental process of creating a solution to a problem. It is a special form
of problem solving in which the solution is independently created rather than learned with assistance.
Creative problem solving always involves creativity.
To qualify as creative problem solving the solution must either have value, clearly solve the stated
problem, or be appreciated by someone for whom the situation improves
The situation prior to the solution does not need to be labeled as a problem. Alternate labels include a
challenge, an opportunity, or a situation in which there is room for improvement.
If a created solution becomes widely used, the solution becomes an innovation and the
word innovation also refers to the process of creating that innovation. A widespread and long-lived
innovation typically becomes a new tradition. "All innovations [begin] as creative solutions, but not all
creative solutions become innovations. Some innovations also qualify as inventions.
Inventing is a special kind of creative problem solving in which the created solution qualifies as an
invention because it is a useful new object, substance, process, software, or other kind of marketable
entity.
Techniques and tools
Creative-problem-solving techniques can be categorized as follows:

Creativity techniques designed to shift a person's mental state into one that fosters creativity. These
techniques are described in creativity techniques. One such popular technique is to take a break and
relax or sleep after intensively trying to think of a solution.

Creativity techniques designed to reframe the problem. For example, reconsidering one's goals by
asking "What am I really trying to accomplish?" can lead to useful insights.
Creativity techniques designed to increase the quantity of fresh ideas. This approach is based on the
belief that a larger number of ideas increase the chances that one of them has value. Some of these
techniques involve randomly selecting an idea (such as choosing a word from a list), thinking about
similarities with the undesired situation, and hopefully inspiring a related idea that leads to a solution.
Such techniques are described in creativity techniques.
Creative-problem-solving techniques designed to efficiently lead to a fresh perspective that causes a
solution to become obvious. This category is useful for solving especially challenging problems.
Some of these techniques involve identifying independent dimensions that differentiate (or separate)
closely associated concepts. Such techniques can overcome the mind's instinctive tendency to use
"oversimplified associative thinking" in which two related concepts are so closely associated that
their differences, and independence from one another, are overlooked.

The following formalized and well-known methods and processes (listed in first-word alphabetical order)
combine various creativity and creative-problem-solving techniques:

Brainstorming is a group activity designed to increase the quantity of fresh ideas. Getting other
people involved can help increase knowledge and understanding of the problem and help participants
reframe the problem.
The Creative Problem Solving Process (CPS) is a six-step method developed by Alex Osborn and Sid
Parnes that alternates convergent and divergent thinking phases.
Edward de Bono has published numerous books that promote an approach to creative problem
solving and creative thinking called lateral thinking.
Mind mapping is a creativity technique that both reframes the situation and fosters creativity.
Synectics is a problem solving methodology that stimulates thought processes of which the subject
may be unaware. This method was developed by George M. Prince and William J.J. Gordon,
originating in the Arthur D. Little Invention Design Unit in the 1950s.
TRIZ, which is also known as Theory of Inventive Problem Solving (TIPS), was developed
by Genrich Altshuller and his colleagues based on examining more than 200,000 patents. This
method is designed to foster the creation and development of patentable inventions, but is also useful
for creating non-product solutions.

A frequent approach to teaching creative problem solving is to teach critical thinking in addition to
creative thinking, but the effectiveness of this approach is not proven. As an alternative to separating
critical and creative thinking, some creative-problem-solving techniques focus on either reducing an
idea's disadvantages or extracting a flawed idea's significant advantages and incorporating those
advantages into a different idea.
Creative-problem-solving tools typically consist of software or manipulatable objects (such as cards) that
facilitate specific creative-problem-solving techniques. Electronic meeting systems provide a range of
interactive tools for creative-problem-solving by groups over the Internet.

UNIT II

Questioning
Questioning is a major form of human thought and interpersonal communication. The thinker employs a
series of questions to explore an issue, an idea or something intriguing. Questioning is the process of
forming and wielding that series to develop answers and insight.
Garbage in, garbage out, is a popular truth, often said in relation to computer systems: If you put the
wrong information in, you'll get the wrong information out. The same principle applies to
communications in general: If you ask the wrong questions, you'll probably get the wrong answer, or at
least not quite what you're hoping for. Asking the right question is at the heart of effective
communications and information exchange. By using the right questions in a particular situation, you can
improve a whole range of communications skills: for example, you can gather better information and
learn more; you can build stronger relationships, manage people more effectively and help others to learn
too.
Here are some common questioning techniques, and when (and when not) to use them:
Open and Closed Questions
A closed question usually receives a single word or very short, factual answer. For example, "Are you
thirsty?" The answer is "Yes" or "No"; "Where do you live?" The answer is generally the name of your
town or your address.
Open questions elicit longer answers. They usually begin with what, why, how. An open question asks
the respondent for his or her knowledge, opinion or feelings. "Tell me" and "describe" can also be used in
the same way as open questions. Here are some examples:
What happened at the meeting?
Why did he react that way?
How was the party?
Tell me what happened next.
Describe the circumstances in more detail.
Open questions are good for:
Developing an open conversation: "What did you get up to on vacation?"
Finding our more detail: "What else do we need to do to make this a success?"
Finding out the other person's opinion or issues: "What do you think about those changes?"
Closed questions are good for:
Testing your understanding, or the other person's: "So, if I get this qualification, I will get a raise?"
Concluding a discussion or making a decision: "Now we know the facts, are we all agreed this is the right
course of action?"
Frame setting: "Are you happy with the service from your bank?"
A misplaced closed question, on the other hand, can kill the conversation and lead to awkward silences,
so are best avoided when a conversation is in full flow.

Funnel Questions
This technique involves starting with general questions, and then homing in on a point in each answer,
and asking more and more detail at each level. It's often used by detectives taking a statement from a
witness:
"How many people were involved in the fight?"
"About ten."
"Were they kids or adults?"
"Mostly kids."
"What sort of ages were they?"
"About fourteen or fifteen."
"Were any of them wearing anything distinctive?"
"Yes, several of them had red baseball caps on."
"Can you remember if there was a logo on any of the caps?"
"Now you come to mention it, yes, I remember seeing a big letter N."
Using this technique, the detective has helped the witness re-live the scene and gradually focus on a
useful detail. Perhaps he'll be able to identify young men wearing a hat like this from CCTV footage. It is
unlikely he would have got this information if he's simply asked an open question such as "Are there any
details you can give me about what you saw?"
Funnel questions are good for:
Finding out more detail about a specific point: "Tell me more about Option 2."
Gaining the interest or increasing the confidence of the person you're speaking with: "Have you used the
IT Helpdesk?", "Did they solve your problem?", and What was the attitude of the person who took your
call?"
Probing Questions
Asking probing questions is another strategy for finding out more detail. Sometimes it's as simple as
asking your respondent for an example, to help you understand a statement they have made. At other
times, you need additional information for clarification, "When do you need this report by, and do you
want to see a draft before I give you my final version?", or to investigate whether there is proof for what
has been said, "How do you know that the new database can't be used by the sales force?"
An effective way of probing is to use the 5 Whys method, which can help you quickly get to the root of a
problem.
Probing questions are good for:
Gaining clarification to ensure you have the whole story and that you understand it thoroughly; and
Drawing information out of people who are trying to avoid telling you something.

Leading Questions
Leading questions try to lead the respondent to your way of thinking. They can do this in several ways:
With an assumption: "How late do you think that the project will deliver?" This assumes that the project
will certainly not be completed on time.
By adding a personal appeal to agree at the end: "Lori's very efficient, don't you think?" or "Option 2 is
better, isn't it?"
Phrasing the question so that the "easiest" response is "yes" (our natural tendency to prefer to say "yes"
than "no" plays an important part in the phrasing of referendum questions): "Shall we all approve Option
2?" is more likely to get a positive response than "Do you want to approve option 2 or not?". A good way
of doing this is to make it personal. For example, "Would you like me to go ahead with Option 2?" rather
than "Shall I choose Option 2?"
Giving people a choice between two options, both of which you would be happy with, rather than the
choice of one option or not doing anything at all. Strictly speaking, the choice of "neither" is still
available when you ask "Which would you prefer of A or B", but most people will be caught up in
deciding between your two preferences.
Note that leading questions tend to be closed.
Leading questions are good for:
Getting the answer you want but leaving the other person feeling that they have had a choice.
Closing a sale: "If that answers all of your questions, shall we agree a price?"

Rhetorical Questions
Rhetorical questions aren't really questions at all, in that they don't expect an answer. They're really just
statements phrased in question form: "Isn't John's design work so creative?"
People use rhetorical questions because they are engaging for the listener as they are drawn into
agreeing ("Yes it is and I like working with such a creative colleague") rather than feeling that they are
being "told" something like "John is a very creative designer". (To which they may answer "So what?")
Rhetorical questions are good for:
Engaging the listener
Using Questioning Techniques
You have probably used all of these questioning techniques before in your everyday life, at work and at
home. But by consciously applying the appropriate kind of questioning, you can gain the information,
response or outcome that you want even more effectively.
Questions are a powerful way of:
Learning: Ask open and closed questions, and use probing questioning.

Relationship building: People generally respond positively if you ask about what they do or enquire about
their opinions. If you do this in an affirmative way "Tell me what you like best about working here", you
will help to build and maintain an open dialogue.
Managing and coaching: Here, rhetorical and leading questions are useful too. They can help get people
to reflect and to commit to courses of action that you've suggested: "Wouldn't it be great to gain some
further qualifications?"
Avoiding misunderstandings: Use probing questions to seek clarification, particularly when the
consequences are significant. And to make sure you avoid jumping to conclusions, the Ladder of
Inference tool can help too.
De-fusing a heated situation: You can calm an angry customer or colleague by using funnel questions to
get them to go into more detail about their grievance. This will not only distract them from their
emotions, but will often help you to identify a small practical thing that you can do, which is often enough
to make them feel that they have "won" something, and no longer need to be angry.
Persuading people: No one likes to be lectured, but asking a series of open questions will help others to
embrace the reasons behind your point of view. "What do you think about bringing the sales force in for
half a day to have their laptops upgraded?"
Other types are:

Closed Questions: That seeks short answers.

Chunking Questions: Chunk up and down for more or less detail.
Clear Questions: That is simple and unambiguous.
Columbo Technique: Asking stupid questions that get the answers you want.
Double Bind Questions: Whichever way you answer, the result is the same.
Echo Questions: Repeat what they say as a question.
Empowering Questions: That release limits on people.
Funnel Questioning: Seeking more detail or more general information.
Group Questioning: Tips for asking questions of many people at once.
Interrogation Questions: Questions that lead to answers.
Kipling Questions: Rudyard Kipling's six servants.
Leading Questions: That may or may not be a good thing for you.
Open Questions: For long and detailed answers.
Open and Closed Questions: yes/no or long answer.
Positive Questions: Deliberately leading the other person.
Probing: Digging for more detail.
Probing Questions: Specific questions for finding detail.
Rhetorical Questions: Questions without answers.
Socratic Questioning: Socrates' method of questioning in order to elicit learning.
Tag Questions: Some questions encourage agreement, don't they?

Interviewing and Data gathering skills

INTERVIEWING
Definition
Interviewing is one of the major methods of data collection. It may be defined as two-way systematic
conversation between an investigator and an informant, initiated for obtaining information relevant to as a
specific study.
It involves not only conversation, but also learning from the respondents gestures, facial expressions and
pauses, and his environment. Interviewing requires face-to-face contact or contact over telephone and
calls for interviewing skills. It is done by using a structured schedule or an unstructured guide.
Importance
Interviewing may be us either as a main method or as a supplementary one in studies of persons.
Interviewing is the only suitable method for gathering information from illiterate or less educated
respondents. It is useful for collecting a wide range of data from factual demographic data to highly
personal and intimate information relating to a person's opinions, attitudes, values, beliefs, past
experience and future intentions. When qualitative information is required or probing is necessary to draw
out fully, then interviewing is required. Where the area covered for the survey is a compact, or when a
sufficient number of qualified interviewers are available, personal interview is feasible.
Interview is often superior to other data-gathering methods. People are usually more willing to talk than
to write. Once rapport is established, even confidential information may be obtained. It permits probing
into the context and reasons for answers to questions.
Interview can add flesh to statistical information. It enables the investigator to grasp the behavioral
context of the data furnished by the respondents. It permits the investigator to seek clarifications and
brings to the forefront those questions, that, for one reason or another, respondents do not want to answer.
Types of Interviews
The interviews may be classified into: (a) structured or directive interview, (b) unstructured or nondirective interview, (c) focused inter-view, and (d) clinical interview and (e) depth interview.
Telephone Interviewing
Telephone interviewing is a non-personal method of data collection.
Group Interviews
Group interview may be defined as a method of collecting primary data in which a number of individuals
with a common interest interact with each other. In a personal interview, the flow of information is
multidimensional.
Interviewing Process
The interviewing process consists of the following stages:
Preparation.
Introduction
Developing rapport
Carrying the interview forward

Recording the interview, and

Closing the interview

PANEL METHOD
The panel method is a method of data collection, by which data is collected from the same sample
respondents at intervals either by mail or by personal interview. This is used for longitudinal studies on
economic conditions, expenditure pattern; consumer behavior, recreational pattern, effectiveness of
advertising, voting behavior, and so on. The period, over which the panel members are contacted for
information may spread over several months or years. The time interval at which they are contacted
repeatedly may be 10 or 15 days, or one or two months depending on the nature of the study and the
memory span of the respondents.
Characteristics
The basic characteristic of the panel method is successive collection of data on the same items from the
same persons over a period of time. The type of information to be collected should be such facts that can
be accurately and completely furnished by the respondent without any reservation. The number of item
should be as few as possible so that they could be furnished within a few minutes, especially when mail
survey is adopted. The average amount of time that a panel member has to spend each time for reporting
can be determined in a pilot study. The panel method requires carefully selected and well-trained field
workers and effective supervision over their work.Types of Panels
The panel may be static or dynamic. A static or continuous panel is one in which the membership remains
the same throughout the life of the panel, except for the members who drop out. The dropouts are not
replaced.
MAIL SURVEY
Definition
This method involves sending questionnaires to the respondents with a request to complete them and
return them by post. This can be used in the case of educated respondents only. The mail questionnaire
should be simple so that the respondents can easily understand the questions and answer them. It should
preferably contain mostly closed-end and multiple-choice questions so that it could be completed within a
few Minutes.
The distinctive feature of the mail survey is that the questionnaire is self-administered by the respondents
themselves and the responses are recorded by them, and not by the investigator as in the case of personal
interview method. It does not involve face-to-face conversation between the investigator and the
respondent. Communication is carried out only in writing and this requires more cooperation from the
respondents than does verbal communication.
Alternative modes of sending questionnaires:
There are some alternative methods of distributing questionnaires to the respondents. They are: (1)
personal delivery, (2) attaching questionnaire to a, product, (3) advertising questionnaire in a newspaper
or magazine, and (4) newsstand inserts.

PROJECTIVE TECHNIQUES
The direct methods of data collection, viz., personal interview, telephone interview and mail survey rely
on respondents' own report of their behavior, beliefs, attitudes, etc. But respondents may be unwilling to
discuss controversial issues or to reveal intimate information about themselves or may be reluctant to
express their true views fearing that they are generally disapproved. In order to overcome these
limitations, indirect methods have been developed. Projective Techniques are such indirect methods.
They become popular during 1950s as a part of motivation research.
Meaning
Projective techniques involve presentation of ambitious stimuli to the respondents for interpretation. In
doing so, the respondents reveal their inner characteristics. The stimuli may be a picture, a photograph, an
inkblot or an incomplete sentence. The basic assumption of projective techniques is that a person projects
his own thoughts, ideas and attributes when he perceives and responds to ambiguous or unstructured
stimulus materials. Thus a person's unconscious operations of the mind are brought to a conscious level in
a disguised and projected form, and the person projects his inner characteristics.
Types of Projective Techniques
Projective Techniques may be divided into three broad categories: (a) visual projective techniques (b)
verbal projective techniques, and (c) Expressive techniques.
SOCIOMETRY
Sociometry is a method for discovering, describing and evaluating social status, structure, and
development through measuring the extent of acceptance or rejection between individuals in groups.
Franz defines sociometry as a method used for the discovery and manipulation of social configurations
by measuring the attractions and repulsions between individuals in a group. It is a means for studying the
choice, communication and interaction patterns of individuals in a group. It is concerned with attractions
and repulsions between individuals in a group. In this method, a person is asked to choose one or more
persons according to specified criteria, in order to find out the person or persons with whom he will like
to associate.
Sociometry Test
The basic technique in sociometry is the sociometric test. This is a test under which each member of a
group is asked to choose from all other members those with whom he prefers to associate in a specific
situation. The situation must be a real one to the group under study, e.g., 'group study', 'play', 'class room
seating' for students of a public school.
A specific number of choices say two or three to be allowed is determined with reference to the size of the
group, and different levels of preferences are designated for each choice.
Suppose we desire to find out the likings and disliking of persons in a work group consisting of 8 persons.
Each person is asked to select 3 persons in order or preference with whom he will like to work on a group
assignment. The levels of choices are designated as: the first choice by the' number 1, the second by 2,
and the third by 3.
The search for answers to research questions calls of collection of data. Data are facts, figures and other
relevant materials, past and present, serving as bases for study and analysis.

Types of Data
The data needed for a social science research may be broadly classified into (a) Data pertaining to human
beings, (b) Data relating to organizations, and (c) Data pertaining to territorial areas.
Personal data or data related to human beings consist of Demographic and socio-economic
characteristics of individuals like age, sex, race, social class, religion, marital status, education,
occupation, income, family size, location of the household, life style, etc. and Behavioral variables like
attitudes, opinions, awareness, knowledge, practice, intentions, etc.
Organizational data consist of data relating to an organizations origin, ownership, objectives, resources,
functions, performance and growth.
Territorial data are related to geophysical characteristics, resources endowment, population, occupational
pattern, infrastructure, economic structure, degree of development, etc. of spatial divisions like villages,
cities, Tabias, Woredas, state/ regions and the nation.
Importance of data
The data serve as the bases or raw materials for analysis. Without an analysis of factual data, no specific
inferences can be drawn on the questions under study. Inferences based on imagination or guesswork
cannot provide correct answers to research questions. The relevance, adequacy and reliability of data
determine the quality of the findings of a study.
Data form the basis for testing the hypotheses formulated in a Study. Data also provide the facts and
figures required for constructing measure-ment scales and tables, which are analyzed with statistical
techniques. Inferences on the results of statistical, analysis and tests of significance provide the answers to
research questions. Thus the scientific process of measurement, analysis, testing and inferences depends
on the availability of relevant data and their accuracy. Hence the importance of data for any research
studies.
SOURCES OF DATA
The sources of data may be classified into (a) primary sources and (b) secondary sources.
Primary Sources
Primary sources are original sources from which the researcher directly collects data that have not been
previously collected, e.g., collection of data directly by the researcher on brand awareness, brand
preference, brand loyalty and other aspects of consumer behavior from a sample of consumers by
interviewing them. Primary data are first-hand information collected through various methods such as
observation, interviewing, mailing etc.
Secondary Sources
These are sources containing data that have been collected and compiled for another purpose. The
secondary sources consist of readily available compendia and already compiled statistical statements and
reports whose data may be used by researches for their studies, e.g., census reports, annual reports and
financial statements of companies, Statistical statements, Reports of Government Departments, Annual
Reports on currency and finance published by the National Bank for Ethiopia, Statistical Statements
relating to Cooperatives, Federal Cooperative Commission, Commercial Banks and Micro Finance Credit
Institutions published by the National Bank for Ethiopia, Reports of the National Sample Survey
Organization, Reports of trade associations, publications of international organizations such as UNO,
IMF, World Bank, ILO, WHO, etc., Trade and Financial Journals, newspapers, etc.

Secondary sources consist of not only published records and reports, but also unpublished records. The
latter category includes various records and registers maintained by firms and organizations, e.g.,
accounting and financial records, personnel records, register of members, minutes of meetings, inventory
records, etc.
Features of Secondary Sources: Though secondary sources are diverse and consist of all sorts of
materials, they have certain common characteristics.
First, they are readymade and readily available, and do not require the trouble of constructing tools and
administering them.
Second, they consist of data over which a researcher has no original control over collection and
classification. Others shape both the form and the content of secondary sources. Clearly, this is a feature,
which can limit the research value of secondary sources.
Finally, secondary sources are not limited in time and space. That is, the researcher using them need not
have been present when and where they were gathered.
USE OF SECONDARY DATA
Uses
The secondary data may be used in three ways by a researcher. First, some specific information from
secondary sources may be used for refer-ence purposes.
Second, secondary data may be used as bench marks against which the findings of a research may be
tested.
Finally, secondary data may be used as the sole source of information for a research project. Such studies
as Securities Market Behavior, Financial Analysis of Companies, and Trends in credit allocation in
commercial banks, Sociological Studies on crimes, historical studies, and the like depend primarily on
secondary data. Year books, Statistical reports of government departments, reports of public organizations
like Bureau of Public Enterprises, Census Reports etc. serve as major data sources for such research
studies.
Advantages
1. Secondary data, if available, can be secured quickly and cheaply.
2. Wider geographical area and longer reference period may be covered without much cost. Thus
the use of secondary data extends the researcher's space and time reach.
3. The use of secondary data broadens the database from which scientific generalizations can be
made.
4. The use of secondary data enables a researcher to verify the findings based on primary data.
Disadvantages/limitations
1. The most important limitation is the available data may not meet, our specific research needs.
2. The available data may not be as accurate as desired.
3. The secondary data are not up-to-date and become obsolete when they appear in print, because of
time lag in producing them.
4. Finally information about the whereabouts of sources may not be available to all social scientists.

METHODS OF COLLECTING PRIMARY DATA: GENERAL

The researcher directly collects primary data from their original sources. In this case, the researcher can
collect the required data precisely according to his research needs, he can collect them when he wants
them and in the form he needs them. But the collection of Primary data is costly and time consuming.
Yet, for several types of social science research such as socio-economic surveys, social anthropological
studies of rural communities and tribal communities, sociological studies of social problems and social
institutions, marketing research, leadership studies, opinion polls, attitudinal surveys, readership, radio
listening and T.V. viewing surveys, knowledge-awareness practice (KAP) studies, farm management
studies, business management studies, etc., required data are not available from secondary sources and
they have to be directly gathered from the primary sources.
In all cases where the available data are inappropriate, inadequate or obsolete, primary data have to be
gathered. .
Methods of Primary Data Collection
There are various methods of data collection. A Method is different from a Tool. While a method
refers to the way or mode of gathering data, a tool is an instrument used for the method. For example, a
schedule is used for interviewing. The important methods are (a) observation, (b) interviewing, (c) mail
survey, (d) experimentation, (e) simulation, and (f) projective technique.
Observation involves gathering of data relating to the selected research by viewing and/or listening.
Interviewing involves face-to-face con-versation between the investigator and the respondent. Mailing is
used for collecting data by getting questionnaires completed by respondents. Ex-perimentation involves a
study of independent variables under controlled conditions. Experiment may be conducted in a laboratory
or in field in a natural setting. Simulation involves creation of an artificial situation similar to the actual
life situation. Projective methods aim at drawing inferences on the characteristics of respondents by
presenting to them stimuli. Each method has its advantages and disadvantages.
Choice of Methods of Data Collection
Which of the above methods of data collection should be selected for a proposed research project? This is
one of the questions to be considered while designing the research plan. One or More methods has/have to
be chosen. No method is universal. Each method's unique features should be compared with the needs and
conditions of the study and thus the choice of the methods should be decided.
OBSERVATION
Meaning and Importance
Observation means viewing or seeing. We go on observing something or other while we are awake. Most
of such observations are just casual and have no specific purpose. But observation as a method of data
collection is different from such casual viewing.
Observation may be defined as a systematic viewing of a specific phenomenon in its proper setting or the
specific purpose of gathering data for a particular study. Observation as a method includes both 'seeing'
and 'hearing.' It is accompanied by perceiving as well.
Observation also plays a major role in formulating and testing hypothesis in social sciences. Behavioral
scientists observe interactions in small groups; anthropologists observe simple societies, and small communities; political scientists observe the behavior of political leaders and political institutions.
Types of Observation

Observation may be classified in different ways. With reference to the investigators role, it may be
classified into (a) participant observation, and (b) non-participant observation. In terms of mode of
observation, it may be classified into (c) direct observation, and (d) indirect observation. With reference
to the rigour of the system adopted, observation is classified into (e) controlled observation, and (f)
uncontrolled observation
EXPERIMENTATION
Experimentation is a research process used to study the causal relationships between variables. It aims at
studying the effect of an inde-pendent variable on a dependent variable, by keeping the other independent variables constant through some type of control. For example, a -social scientist may use
experimentation for studying the effect of a method of family planning publicity on people's awareness of
family plan-ning techniques.
Why Experiment?
Experimentation requires special efforts. It is often extremely difficult to design, and it is also a time
consuming process. Why should then one take such trouble? Why not simply observe/survey the
phenomenon? The fundamental weakness of any non-experimental study is its inability to specify causes
and effect. It can show only correlations between variables, but correlations alone never prow causation.
The experiment is the only method, which can show the effect of an independent variable on dependent
variable. In experimentation, the researcher can manipulate the independent variable and measure its
effect on the dependent variable. For example, the effect of various types of promotional strategies on the
sale of a given product can be studies by using different advertising media such as T.V., radio and
Newspapers. Moreover, experiment provides the opportunity to vary the treatment (experimental
variable) in a systematic manner, thus allowing for the isolation and precise specification of important
differences.
Applications
The applications of experimental method are Laboratory Experiment, and Field Experiment.
SIMULATION
Meaning
Simulation is one of the forms of observational methods. It is a process of conducting experiments on a
symbolic model representing a phenomenon. Abelson defines simulation as the exercise of a flexible
imitation of processes and outcomes for the purpose of clarifying or explaining the underlying
mechanisms involved. It is a symbolic abstraction, simplification and substitution for some referent
system. In other words, simulation is a theoretical model of the elements, relations and processes which
symbolize some referent system, e.g., the flow of money in the economic system may be simulated in an
operating model consisting of a set of pipes through which liquid moves. Simulation is thus a technique
of performing sampling experiments on the model of the systems. The experiments are done on the model
instead of on the real system, because the latter would be too inconvenient and expensive.
Simulation is a recent research technique; but it has deep roots in history. Chess has often been considered
a simulation of medieval warfare.
Data Gathering Skills
First of all, what is information? For this inventory, the term information refers to data, including
numerical data, facts or observations about the past or present, or projections about future possibilities.
For example, you may need information from the most recent federal census in order to plan a marketing

campaign. You may want to see projections concerning how many immigrant children to expect in your
school district in the next five years. We tend to think of information as being readable or otherwise
visible, but every fire expert knows that information also can be invisible, in the form of odors, pressures,
and sounds. Identify your information gathering skills by thinking of the types of information you need,
the places in which you gather it, and the ways in which you gather it.
Some questions to consider:

What types of information do you use frequently? Sometimes? What types of information do you need to
use?
What kinds of information do you often wish you had?
Where do you find the information that you frequently need? Do you know how to use a variety of
sources? Information sources can include libraries, textbooks, government records, museums,
eyewitnesses, newspapers, magazines, radio and television broadcasts, electronic databases and
information services, company records, co-workers, etc.
How easy or difficult is it for you to track down the information that you use and need? How efficient are
you at finding and using information sources?
What more do you need to learn about gathering information?

Organizational structure
An organizational structure consists of activities such as task allocation, coordination and supervision,
which are directed towards the achievement of organizational aims. It can also be considered as the
viewing glass or perspective through which individuals see their organization and its environment.
Organizations are a variant of clustered entities.
An organization can be structured in many different ways, depending on their objectives. The structure of
an organization will determine the modes in which it operates and performs.
Organizational structure allows the expressed allocation of responsibilities for different functions and
processes to different entities such as the branch, department, workgroup and individual.
Organizational structure affects organizational action in two big ways. First, it provides the foundation on
which standard operating procedures and routines rest. Second, it determines which individuals get to
participate in which decision-making processes, and thus to what extent their views shape the
organizations actions.
Organizational structure types
Pre-bureaucratic structures
Pre-bureaucratic (entrepreneurial) structures lack standardization of tasks. This structure is most common
in smaller organizations and is best used to solve simple tasks. The structure is totally centralized. The
strategic leader makes all key decisions and most communication is done by one on one conversations. It
is particularly useful for new (entrepreneurial) business as it enables the founder to control growth and
development.
They are usually based on traditional domination or charismatic domination in the sense of Max
Weber's tripartite classification of authority
Bureaucratic structures
Weber (1948, p. 214) gives the analogy that the fully developed bureaucratic mechanism compares with
other organizations exactly as does the machine compare with the non-mechanical modes of production.
Precision, speed, unambiguity, strict subordination, reduction of friction and of material and personal
costs- these are raised to the optimum point in the strictly bureaucratic

administration.Bureaucraticstructures have a certain degree of standardization. They are better suited for
more complex or larger scale organizations, usually adopting a tall structure. The tension between
bureaucratic structures and non-bureaucratic is echoed in Burns and Stalker's distinction between
mechanistic and organic structures.
The Weberian characteristics of bureaucracy are:

Clear defined roles and responsibilities

A hierarchical structure
Respect for merit.
Post-bureaucratic

The term of post bureaucratic is used in two senses in the organizational literature: one generic and one
much more specific. In the generic sense the term post bureaucratic is often used to describe a range of
ideas developed since the 1980s that specifically contrast themselves with Weber's ideal
type bureaucracy. This may include total quality management, culture management and matrix
management, amongst others. None of these however has left behind the core tenets of Bureaucracy.
Hierarchies still exist, authority is still Weber's rational, legal type, and the organization is still rule
bound. Heckscher, arguing along these lines, describes them as cleaned up bureaucracies, rather than a
fundamental shift away from bureaucracy. Gideon Kunda, in his classic study of culture management at
'Tech' argued that 'the essence of bureaucratic control - the formalisation, codification and enforcement of
rules and regulations - does not change in principle.....it shifts focus from organizational structure to the
organization's culture'.
Another smaller group of theorists have developed the theory of the Post-Bureaucratic
Organization. provide a detailed discussion which attempts to describe an organization that is
fundamentally not bureaucratic. Charles Heckscher has developed an ideal type, the post-bureaucratic
organization, in which decisions are based on dialogue and consensus rather than authority and command,
the organization is a network rather than a hierarchy, open at the boundaries (in direct contrast to culture
management); there is an emphasis on meta-decision making rules rather than decision making rules. This
sort of horizontal decision making by consensus model is often used in housing cooperatives,
other cooperatives and when running a non-profit or community organization. It is used in order to
encourage participation and help to empower people who normally experience oppression in groups.
Functional structure
Employees within the functional divisions of an organization tend to perform a specialized set of tasks,
for instance the engineering department would be staffed only with software engineers. This leads to
operational efficiencies within that group. However it could also lead to a lack of communication between
the functional groups within an organization, making the organization slow and inflexible.
As a whole, a functional organization is best suited as a producer of standardized goods and services at
large volume and low cost. Coordination and specialization of tasks are centralized in a functional
structure, which makes producing a limited amount of products or services efficient and predictable.
Moreover, efficiencies can further be realized as functional organizations integrate their activities
vertically so that products are sold and distributed quickly and at low cost. [11] For instance, a small
business could make components used in production of its products instead of buying them. This benefits
the organization and employees faiths.
Divisional structure
Also called a "product structure", the divisional structure groups each organizational function into a
division. Each division within a divisional structure contains all the necessary resources and functions

within it. Divisions can be categorized from different points of view. One might make distinctions on a
geographical basis (a US division and an EU division, for example) or on product/service basis (different
products for different customers: households or companies). In another example, an
automobile company with a divisional structure might have one division for SUVs, another division for
subcompact cars, and another division for sedans.
Each division may have its own sales, engineering and marketing departments.
Matrix structure
The matrix structure groups employees by both function and product. This structure can combine the best
of both separate structures. A matrix organization frequently uses teams of employees to accomplish
work, in order to take advantage of the strengths, as well as make up for the weaknesses, of functional and
decentralized forms. An example would be a company that produces two products, "product a" and
"product b". Using the matrix structure, this company would organize functions within the company as
follows: "product a" sales department, "product a" customer service department, "product a" accounting,
"product b" sales department, "product b" customer service department, "product b" accounting
department. Matrix structure is amongst the purest of organizational structures, a simple lattice emulating
order and regularity demonstrated in nature.

Weak/Functional Matrix: A project manager with only limited authority is assigned to oversee the
cross- functional aspects of the project. The functional managers maintain control over their
resources and project areas.
Balanced/Functional Matrix: A project manager is assigned to oversee the project. Power is shared
equally between the project manager and the functional managers. It brings the best aspects of
functional and projectized organizations. However, this is the most difficult system to maintain as the
sharing power is delicate proposition.
Strong/Project Matrix: A project manager is primarily responsible for the project. Functional
managers provide technical expertise and assign resources as needed.
Organizational circle: moving back to flat

The flat structure is common in small companies (entrepreneurial start-ups, university spin offs). As the
company grows it becomes more complex and hierarchical, which leads to an expanded structure, with
more levels and departments.
Often, it would result in bureaucracy, the most prevalent structure in the past. It is still, however, relevant
in former Soviet Republics, China, and most governmental organizations all over the world. Shell
Group used to represent the typical bureaucracy: top-heavy and hierarchical. It featured multiple levels of
command and duplicate service companies existing in different regions. All this made Shell apprehensive
to market changes,[12] leading to its incapacity to grow and develop further. The failure of this structure
became the main reason for the company restructuring into a matrix.
Starbucks is one of the numerous large organizations that successfully developed the matrix structure
supporting their focused strategy. Its design combines functional and product based divisions, with
employees reporting to two heads.[13] Creating a team spirit, the company empowers employees to make
their own decisions and train them to develop both hard and soft skills. That makes Starbucks one of the
best at customer service.[citation needed]
Some experts also mention the multinational design,[14] common in global companies, such as Procter &
Gamble, Toyota and Unilever. This structure can be seen as a complex form of the matrix, as it maintains
coordination among products, functions and geographic areas.

In general, over the last decade, it has become increasingly clear that through the forces of globalization,
competition and more demanding customers, the structure of many companies has become flatter, less
hierarchical, more fluid and even virtual.
Team
One of the newest organizational structures developed in the 20th century is team. In small businesses, the
team structure can define the entire organization. Teams can be both horizontal and vertical. While an
organization is constituted as a set of people who synergize individual competencies to achieve newer
dimensions, the quality of organizational structure revolves around the competencies of teams in
totality. For example, every one of the Whole Foods Market stores, the largest natural-foods grocer in the
US developing a focused strategy, is an autonomous profit centre composed of an average of 10 selfmanaged teams, while team leaders in each store and each region are also a team. Larger bureaucratic
organizations can benefit from the flexibility of teams as well. Xerox, Motorola, andDaimlerChrysler are
all among the companies that actively use teams to perform tasks.
Network
Another modern structure is network. While business giants risk becoming too clumsy to proact (such as),
act and react efficiently, the new network organizations contract out any business function that can be
done better or more cheaply. In essence, managers in network structures spend most of their time
coordinating and controlling external relations, usually by electronic means. H&M is outsourcing its
clothing to a network of 700 suppliers, more than two-thirds of which are based in low-cost Asian
countries. Not owning any factories, H&M can be more flexible than many other retailers in lowering its
costs, which aligns with its low-cost strategy. The potential management opportunities offered by recent
advances in complex networks theory have been demonstrated including applications to product design
and development, and innovation problem in markets and industries.
Virtual
A special form of boundaryless organization is virtual. Hedberg, Dahlgren, Hansson, and Olve (1999)
consider the virtual organization as not physically existing as such, but enabled by software to exist. The
virtual organization exists within a network of alliances, using the Internet. This means while the core of
the organization can be small but still the company can operate globally is a market leader in its niche.
According to Anderson, because of the unlimited shelf space of the Web, the cost of reaching niche goods
is falling dramatically. Although none sell in huge numbers, there are so many niche products that
collectively they make a significant profit, and that is what made highly innovative Amazon.com so
successful.
Hierarchy-Community Phenotype Model of Organizational Structure

Hierarchy-Community Phenotype Model of Organizational Structure

In the 21st century, even though most, if not all, organizations are not of a pure hierarchical structure,
many managers are still blind-sided to the existence of the flat community structure within their
organizations
The business firm is no longer just a place where people come to work. For most of the employees, the
firm confers on them that sense of belonging and identity- the firm has become their village, their
community. The business firm of the 21st century is not just a hierarchy which ensures maximum
efficiency and profit; it is also the community where people belong to and grow together- where their
affective and innovative needs are met.
Lim, Griffiths, and Sambrook (2010) developed the Hierarchy-Community Phenotype Model of
Organizational Structure borrowing from the concept of Phenotype from genetics. "A phenotype refers to
the observable characteristics of an organism. It results from the expression of an organisms genes and
the influence of the environment. The expression of an organisms genes is usually determined by pairs of
alleles. Alleles are different forms of a gene. In our model, each employees formal, hierarchical
participation and informal, community participation within the organization, as influenced by his or her
environment, contributes to the overall observable characteristics (phenotype) of the organization. In
other words, just as all the pair of alleles within the genetic material of an organism determines the
physical characteristics of the organism, the combined expressions of all the employees formal
hierarchical and informal community participation within an organization give rise to the organizational
structure. Due to the vast potentially different combination of the employees formal hierarchical and
informal community participation, each organization is therefore a unique phenotype along a spectrum
between a pure hierarchy and a pure community (flat) organizational structure."

What Are the Functions of Organizational Structure?

Organizational structure defines the lines of authority, supervisory relationships, grouping of employees,
and operational work flow of a company. A number of vital factors of success, including workplace
culture and operational efficiency, are directly influenced by organizational structure. An effective and
well-designed
structure
is
important
to
the
success
of
any
business
Company Hierarchy

The most fundamental function of organizational structure is the delineation of lines of authority within a
company. Company hierarchies can be relatively tall, with many layers of management, or relatively flat,
with large numbers of employees reporting to a small number of supervisors. One hierarchy is not
necessarily better than another; different hierarchical structures work in different situations. For example,
highly creative industries, such as software development, tend to benefit more from flat hierarchies,
whereas light-labor jobs with high turnover, such as in restaurants, tend to benefit from a taller structure.
Decision Making

Decision-making authority is influenced by organizational structure. In decentralized structures, front-line

employees are often empowered to make on-the-spot decisions to meet customer needs. An example of
this is the clothing store clerk who is able to offer a refund or exchange without management's
authorization. In centralized structures, low-level employees pass critical information to managers, who
make
the
majority
of
decisions.

Work Groups and Departments

According to a Lamar University Web page, organizational structure determines the physical groupings of
employees with diverse functions. In a functional structure, employees are grouped based upon the type
of work they do. An example of this is an accounting or marketing department. A product structure
groups employees according to a specific product line. In this case, representatives from marketing,
accounting, production and human resources, for example, are grouped together working on a single
product line. In a market or geographical structure, employees from diverse functional areas are grouped
according to the specific market they serve.
Career Advancement

A well-defined organizational structure can serve to guide individual employees' career advancement
plans. With clear layers of authority, the company hierarchy can serve as a map of career progress, with
new responsibilities and higher compensation at each level. Some companies go as far as to create a
formal advancement plan to guide employees from entry-level positions to upper management through
years of outstanding service.
Organizational Culture

According to Organizational Culture, the culture of a company is highly influenced by its organizational
culture. Companies with flatter hierarchies and wider decision-making authority tend to encourage a
culture in which employees feel free to experiment and grow. Heavily bureaucratic organizations tend to
stifle creativity in most employees, encouraging a stagnant and autocratic workplace culture.

UNIT III
Basic Strategic Analysis
The SWOT analysis is a basic yet powerful strategic analysis tool. In order to develop business literacy
and competency, using strategic analysis tools like SWOT can be helpful devices to gain a competitive
edge.
SWOT looks at internal strengths, internal weaknesses, external opportunities, and external threats that
may affect ones organization. SWOT analysis causes one to strategically think about past, present, and
future issues that may affect planning. Additionally, the results of our SWOT analysis will help to:

Build upon our internal Strengths

Minimize our internal Weaknesses

Leverage our external Opportunities

Avoid external Threats

Those four categories are the basis which makes up SWOT.
As shown in the following exhibits, strategic business analysis includes (1) industry analysis, (2) business
strategy analysis, and (3) strategy evaluation and recommendations.
Industry analysis begins with a definition of products and markets, skills and competitors contained
within the industry, followed by industry structural analysis, and concluded with the identification of the
key success factors for the industry.
Business strategy analysis begins with a description of the strategic goals and business strategy of the
firm. It's implementation is then analyzed in terms of the firm's functional and operational capabilities and
the resulting financial and competitive performance.
Strategic evaluation or SWOT analysis encompasses the internal and external factors that affect the
company's business strategy. The business strategy is compared against the industry's key success factors
and competitive resource requirements and the firm's internal capabilities and resources.
Critical issues & Recommendations seek to identify the critical issues that the company needs to
address. The analysis concludes with recommendations that address the critical issues and result in
changes of product-market strategy or functional implementation.
Industry Analysis
The course is based on the ability of students to define their business, conduct an effective industry
analysis, and identify the "key success factory" for firms competing in the industry. Such industry
analysis is based on:
A. DEFINE THE BUSINESS. The boundary for industry analysis is the markets and products that
describe the domain of the industry. Once you understand the business segment that is to be analyzed,
identify the capabilities required to participate in that industry, and those competitors that are able to
effectively target the same business segments. These four elements set the parameters for understanding
and analyzing the industry. As industries like printers, copiers, scanners, and facsimile machines

converge, business definitions become more difficult. In industries like computers, consumers are
becoming more demanding for customized products and services.
B. DESCRIBE THE INDUSTRY STRUCTURE. For each product-market segment, an industry
analysis will describe the "five-forces" of competition.
1. A primary force comes customer segments that make up the markets. The size and importance of
customers provide the power to negotiate prices and deals that reduce the profitability of the
industry. The size and growth of segments determine their potential influence on product
development and level of competition.
2. A second force comes from the competitors and their strategies for gaining market share. Each
competitor offers a set of products and services that attempts to provide higher value to the
product-market segments they address. Strategies can be to provide some combination of higher
performance, more fashion and features, higher quality, or lower price. Increased rivalry often
leads to price or service competition that can reduce the profitability of the business.
3. A third force comes from the industry suppliers. Industry suppliers often control critical inputs
that can affect a firms ability to compete. Access to critical equipment, materials, or components
can determine what firms will lead the industry. For this reason, increased outsourcing often leads
to lower entry barriers for new competition.
4. The fourth force represents the barriers to change in industry structure, either from new
competitors entering the industry or current competitors existing the industry. Barriers to
entry often include heavy investment in capital, equipment, and market development. Barriers
to exit often include outstanding warranty or service contracts that must be honored, and
alternative use or potential sale of equipment and facilities. Once specialized facilities are
established, they are seldom shut down, but are often sold to another industry participant.
5. The fifth force represents the potential for change in product-market structure of the industry
through the substitution of products or services with alternative approaches to satisfying the
customer's needs. This requires the identification of potential substitutes and the characteristics
that would cause rapid substitution. Price often becomes a driver for substitutes, such as plastics
for metals in cars and plumbing supplies. Today, the Internet is becoming a substitute for mail
service and, eventually, telephone service.
C. IDENTIFY KEY SUCCESS FACTORS. The primary purpose of industry analysis is to identify the
requirements and trends that determine the key success factors for the business. These factors encompass
(1) customer requirements, (2) competitive factors that must be met, (3) regulations/industry standards in
the business, (4) the resource requirements to implement competitive strategy, and other (5) technical
requirements to build a competitive position.
1. Customers are looking for products that provide some level of value for the price they pay. Each
buyer segment has different requirements that affect its key success factors. Requirements can
include high performance, durability, special features or fashion, ease of use, or rapid availability.
2. Competing firms often use similar product-market strategies. Competition is often based on price,
quality, and delivery. Depending on their strategic focus, each firm must develop a set of skills
(strategic weapons) that allow it to perform better than their competitors on each competitive
dimension.
3. Industry regulations or standards are often minimum requirements for participation in a
competitive arena. Government regulations often affect safety issues for the environment or end
users. Industry standards often determine technical compatibility, process performance, and
interface issues for network or system products. Industry standards can be set by a special body,
like the Industry Standards Organization (ISO), or become ad hoc standards set by leading
competitors, like Intel and Microsoft.
4. Resource requirements are becoming increasingly critical as markets become global and
economies of scale become critical for research and development, manufacturing, and marketing.
Investments now exceed $1 billion for facilities in semiconductors, paper making, and steel

production. In high technology areas, like information technology, shortages of qualified

personnel are forcing firms to outsource much of their capabilities.
5. Technical requirements are also key to today's competitive environment. Without access to, or
internal technology, firms are not able to participate in many industries. This is especially
important for suppliers, such as component suppliers for electronics or automobiles. As firms
reduce their number of suppliers, suppliers must increasingly add research and development
capabilities to stay in the game.
Business Strategies Analysis
Competitive product-market strategies are critical to business success. Business strategy analysis requires
the following:
A. IDENTIFY STRATEGIC GOALS. A firm's strategic goals drive business strategy and address the
key success factors of the industry. Strategic goals often include the vision or mission statement for the
business. They should also set the direction and standard for financial and market results against which
actual performance can be measured. The two most common strategic goals are:
1. Competitive and market goals that define market share or market growth and penetration for the
firm's products or services.
2. Financial performance in terms of key ratios, like return on investment and sales, and growth in
revenues and/or profitability.
B. DEFINE BUSINESS STRATEGY. The definition of business strategy includes six areas of analysis.
The product-market focus is the first step. The underlying capabilities in implementing a product-market
strategy include the technologies, processes and market access that a firm has. These address the business
and its key success factors. Business strategy includes customer targeting, product lines and positions,
technical capabilities, strategic processes, and market access.
1. Describe the customer targeting strategy and its requirements. Without targeting a specific
customer segment, it is impossible to develop effective products or services that meet specific
customer needs and requirements. Each segment, by definition, has a different set of
requirements. While differences may be minor at time, they affect the decision of the customer to
purchase the product or service.
2. Describe the product line and product positioning strategies for the market segment. The
business unit must decide what it will offer and how those offerings will be positioned within the
competitive environment. A firm can have one product or a product line that covers a range of
prices with a variety of features. The price-quality-performance position is a relative
determination compared with competitors' prices, quality levels and features when comparing
your products with alternative products in the marketplace.
3. Identify the technologies required to implement the product-market strategy. Technologies
provide the basic capabilities needed to develop products or services, as well as the associated
processes used in developing or delivering them to the marketplace. Technology determines the
range of products and speed with which they can be developed and delivered to the marketplace.
4. Identify the strategic process(as) required to implement the product-market strategy. The
core capabilities of a firm are embedded in the business processes and functions. Strategic
processes can either improve the product or marketing capabilities of a firm. These processes and
functions are the basis of a firms competitive strengths and weaknesses, and make up the core
competencies of the firm. These skills and capabilities are described in section C below.
5. Identify the market access strategy. The final element of strategy requires that a firm have
access to its market or customers. Today, the Internet is considered the new channel for accessing
markets. In the 1960s, 1-800 numbers were the new method of access. At the same time, discount
superstores grew their market share in retail walk-in sales markets.

C. IDENTIFY INTERNAL CAPABILITIES AND SKILLS. The ability of a firm to implement its
strategy is dependent upon both the functions and business processes that support its strategy.
Depending on the nature of the organization, its functions and business process capabilities and skills are
central to strategy implementation. These capabilities can be classified into product or service creation
functions and processes, and product or service delivery and satisfaction functions and processes.
Product-related functions and processes are
manufacturing/purchasing capabilities.

dependent

upon

firm's

R&D

and

1. The R&D function generates proprietary technologies that can be applied to the development and
production of new products. In the electronics industry, access to basic components, like hard
disk drives and floppy disk drives and high precision production equipment are fundamental to
making smaller, lighter, higher quality products. Each generation of smaller products, like palm
corders, stimulates market growth for the company that is first to the market. Each generation of
smaller products also reduce packaging and shipping costs, reduce power consumption, extend
battery life, and are more convenient to carry.
2. The time-to-market process is required to integrate new technology into a firm's products and
services. Today, competitive advantage is often related to the speed with which a firm can
introduce the next generation of technologies into the market through new product and process
developments. Once the product is developed, production capacity often becomes the limiting
factor of market growth.
3. The manufacturing function transforms a set of purchased components and software into a firm's
products. Having acceptable products available in a timely manner for customers is central to
making sales. The ability to provide the highest quality products in the most efficient allows
companies to gain market share by offering competitive prices and ready availability. Experience
curve effects from high volumes can lead to lower costs.
4. The integrated-supply-chain process coordinates purchasing of components for assembly,
product outsourcing, and otherwise making sure products are available to meet customer order
requirements. Outsourcing and alliances increase a firm's ability to offer a wider range of
products or to introduce new products more rapidly. Increased flexibility provides competitive
advantage in responding to rapid market changes.
Market-related functions and processes are directed at serving the customer in the most effective
manner possible. Distribution and marketing activities, including sales and service, are central to fulfilling
customer demands and ensuring customer satisfaction.
1. The distribution function is essential for a firm in gaining market access. The company that
dominates the sales channels for a given market often controls the market. Market share is related
to product availability, i.e. the number and type of locations that make the products and services
available to your customer target. The Internet is providing the next generation of distribution and
marketing system.
2. The market-to-collection process is used to obtain customers and deliver products. The Internet
is changing the role of sales from face-to-face communication to phone or computer
communications. It is expected that many intermediary roles (such as distributors and agents)
will change to that of infomediary. As product quality and durability improve, service becomes
less important, and new channels can be developed.
3. The marketing function provides the customer with information and education about a firm's
products and services. Product information and education is often needed to let customers know
about product capabilities. Advertising is the part of marketing that helps pull the customer into
the market-to-colletion process by creating recognition and image for the brand's products and
services. It helps pull the customer into the store and create brand image. Coca Cola, with the
largest advertising budget, spends less money per bottle of soft drink sales than any other
competitor. That gives them competitive advantage.
4. The customer-service and satisfaction process is critical to sustain a company's brand loyalty.
It is much less expensive to keep an existing customer than to acquire a new customer. Once a

customer relationship is established, it is important that appropriate customer service activities are
established to maintain the relationship, and solve problems that might hurt the relationship.
When after sales service is required, customers need a company contact. 1-800 numbers and the
Internet are rapidly providing direct purchase opportunities and technical support capabilities.
Dell Computers, for example, guarantees 48 hour repairs of their products (often next day
service). Xerox provides 7-day, 24-hour repair service to their large system customers.
D. STRATEGIC PERFORMANCE. Performance is an outcome of strategy. The success with which a
firm's business strategy effectively addresses its industry's key success factors will determine its strategic
performance. Strategic performance is measured in terms of both financial and market success.
1. Financial performance is essential for continued business operations. Financial capabilities are
critical in supporting functional strategies and making required infrastructure investments. For
example, a company with adequate funding can expand or invest, or can provide customer
financing.
2. Market share demonstrates a firm's ability to create and hold customers, which determines the
long term success of a firm. The freshness of product lines and market positioning affect a firm's
ability to attract customers ahead of their competition.
Business Strategy Evaluation & Recommendations
Strategic analysis is based on assessing the effectiveness and efficiency with which a firm's business
strategy meets the requirements of its competitive marketplace. After defining the industry and business
strategy, we can seek ways to improve the firm's strategic performance. This is done by applying the
traditional SWOT analysis to the firm's strategy, and then determining the critical issues that need to be
addressed. After ranking critical issues in order of importance, recommendations for action can be made.
A. EVALUATE BUSINESS STRATEGY. The business strategy definition provides the basis for its
evaluation. This process assesses issues that are both internal and external to the firm.
1. Internal assessments are based on the firm's functional and process capabilities and
financial resources. The internal assessment leads to an understanding of the
firm's strengths and weaknesses.
2. External assessments are based on the key success factor that has been identified. The
external assessment leads to an understanding of the opportunities and threats facing the firm.
This assessment is often referred to as a SWOT analysis.
B. IDENTIFY CRITICAL ISSUES AND PRIORITIES. The SWOT analysis will lead to an
understanding of the critical issues that face a firm in maintaining or improving its competitive and
financial performance. The combination of strengths, weaknesses, opportunities, and threats must be
ranked by priorities so that action can be planned in a manageable way. Since managers have limited time
and resources, it is important that actions be taken in order of importance.
C. MAKE RECOMMENDATIONS. Finally, recommendations must address the critical issues for
management actions in the short and long term. We are seeking to improve the effectiveness of
competitive strategies and the efficiency of their implementation.

BUSINESS MARKETING
Business Marketing is the practice of individuals, or organizations, including commercial businesses,
governments and institutions, facilitating the sale of their products or services to other companies or
organizations that in turn resell them, use them as components in products or services they offer, or use

them to support their operations. Also known as industrial marketing, business marketing is also called
business-to-business marketing, or B2B marketing, for short.

Business to business (B2B) Marketing Strategies

B2B Branding
B2B Branding is different from B2C in some crucial ways, including the need to closely align corporate
brands, divisional brands and product/service brands and to apply your brand standards to material often
considered informal such as email and other electronic correspondence. it is mainly of large scale when
compared with B2C
Product (or Service)
Because business customers are focused on creating shareholder value for themselves, the cost-saving or
revenue-producing benefits of products and services are important to factor in throughout the product
development and marketing cycles.
People (Target Market)
Quite often, the target market for a business product or service is smaller and has more specialized needs
reflective of a specific industry or niche. A B2B niche, a segment of the market, can be described in terms
of firmographics which requires marketers to have good business intelligence in order to increase
response rates. Regardless of the size of the target market, the business customer is making an
organizational purchase decision and the dynamics of this, both procedurally and in terms of how they
value what they are buying from you; differ dramatically from the consumer market. There may be
multiple influencers on the purchase decision, which may also have to be marketed to, though they may
not be members of the decision making unit.
Pricing
The business market can be convinced to pay premium prices more often than the consumer market if you
know how to structure your pricing and payment terms well. This price premium is particularly
achievable if you support it with a strong brand.
Promotion
Promotion planning is relatively easy when you know the media, information seeking and decision
making habits of your customer base, not to mention the vocabulary unique to their segment.
Specific trade shows, analysts, publications, blogs and retail/wholesale outlets tend to be fairly common
to each industry/product area. What this means is that once you figure it out for your industry/product, the
promotion plan almost writes itself (depending on your budget) but figuring it out can be a special skill
and it takes time to build up experience in your specific field. Promotion techniques rely heavily
on marketing communications strategies (see below).
Place (Sales and Distribution)
The importance of a knowledgeable, experienced and effective direct (inside or outside) sales force is
often critical in the business market. If you sell through distribution channels also, the number and type of
sales forces can vary tremendously and your success as a marketer is highly dependent on their success.
B2B Marketing Communications Methodologies
The purpose of B2B marketing communications is to support the organizations' sales effort and improve
company profitability. B2B marketing communications tactics generally include advertising, public
relations, direct mail, trade show support, sales collateral, branding, and interactive services such

as website design and search engine optimization. The Business Marketing Association is the trade
organization that serves B2B marketing professionals. It was founded in 1922 and offers certification
programs, research services, conferences, industry awards and training programs.
Positioning Statement
An important first step in business to business marketing is the development of your positioning
statement. This is a statement of what you do and how you do it differently and better and more
efficiently than your competitors.
Developing your messages
The next step is to develop your messages. There is usually a primary message that conveys more
strongly to your customers what you do and the benefit it offers to them, supported by a number of
secondary messages, each of which may have a number of supporting arguments, facts and figures.
Building a campaign plan
Whatever form your B2B marketing campaign will take, build a comprehensive plan up front to target
resources where you believe they will deliver the best return on investment, and make sure you have all
the infrastructure in place to support each stage of the marketing process - and that doesn't just include
developing the lead - make sure the entire organization is geared up to handle the inquiries appropriately.
Briefing an agency
A standard briefing document is usually a good idea for briefing an agency. As well as focusing the
agency on what's important to you and your campaign, it serves as a checklist of all the important things
to consider as part of your brief. Typical elements to an agency brief are: Your objectives, target
market, target audience, product, campaign description, your product positioning, graphical
considerations, corporate guidelines, and any other supporting material and distribution.
Measuring results
The real value in results measurement is in tying the marketing campaign back to business results. After
all, youre not in the business of developing marketing campaigns for marketing sake. So always put
metrics in place to measure your campaigns, and if at all possible, measure your impact upon your desired
objectives, be it Cost Per Acquisition, Cost per Lead or tangible changes in customer perception.

FINANCIAL STRATEGIES
Factors involved
When you plan your financial strategy, these are some of the factors you should consider:

Future need for liquidity

Future cash flow
Relation between assets and liabilities
Your company's risk profile
Time horizon
How your business will be financed
A large part of the business plan for any small business is the financial section of the plan. The financial
section includes the income statement, cash flow statement and balance sheet. For new businesses, these
financial statements will be projections, whereas for an existing the business the section will contain
several years of history as well as projections. In addition to statements, the plan should include the
financial strategies of the business in how finances will be handled.

Cash Flow Management

The income statement and balance sheet of a business may look great on paper, but if the cash is not
properly managed, the small business can quickly go under. Part of the financial strategy of the business
plan will detail how cash will be used in the business. This includes identifying an amount that will
always be in reserves as well as how major expenses will be paid. By laying out the financial cash
strategy ahead of time, it will make financial decisions easier about when to write a check and when to
access a line of credit during normal business practice.
Purchases
Any purchases made through the business, particularly large purchases, should have detailed guidelines in
the business plan. This will determine which purchases will be made with cash, a line of credit and with a
credit card. This strategy will also outline taking advantage of the terms of suppliers. For instance, if a
supplier offers 45-day terms, the business will wait until the end of the term to make a payment. In
addition, the purchasing strategy should specify if approval is needed by a manager or board for
purchases over a certain amount.
Collections
If the business is not properly managing its own receivable, it can be devastating to the financial health of
the business. The financial strategy should detail the collections plan. This may include dedicating inhouse staff to following up with overdue customers or turning them over to an outside agency. It will also
specify late fees and if deposits are due before products and services are delivered for new customers.
Investments
Although a specific investment strategy may not be able to be detailed in a written plan, general guidance
should be given to management. This includes a percentage of money invested in high-risk portfolios vs.
lower-risk portfolios. The investment section of the plan will also include guidelines of when approval is
needed to make changes to current investments or to liquidate investments to cover business necessities.
Considerations
The financial strategy of a business plan should be a general guide. While some specifics, such as
approval authorities can be outlined, it will be difficult to account for every possible financial scenario
that may arise in the business. However, the financial strategy should be enough of a guideline to direct
the basic staff of the business in conducting the financial aspects of the business from paying for
purchases to making payroll.
Contemporary Strategic issues
What is a Strategic Issue?
A Strategic Issue is, first of all, an issue - an unresolved question needing a decision or waiting for some
clarifying future event. Secondly, it is strategic and has major impact on the course and direction of the
business. It probably relates directly to one or more of the fundamental Three Strategic Questions:

What are we going to sell?

To whom are we going to sell it?
How will we beat or avoid our competition?

Strategic Issues lie right at the heart of the business. Correspondingly, the process step dealing with
Strategic Issues lies right at the heart of Simplified Strategic Planning.

E-COMMERCE STRATEGIES
Ecommerce Strategies provides performance-based online marketing services and technologies for
leading multi-channel marketers. Clients benefit from Ecommerce Strategies custom approach to online
marketing and lead generation programs. Ecommerce Strategies proprietary tracking and reporting
technology platform, advanced market expertise, and active account management enable clients to acquire
and
reacquire
online
customers.
Most importantly, advertisers and publishers alike work intimately with Ecommerce Strategies to obtain
the best results for all those involved. Past history proves the most effective customer acquisition
campaigns are achieved by companies who can bridge the gap between advertisers and publishers with a
common goal, and Ecommerce Strategies is the unchallenged leader in accomplishing this.
No one leverages the power of digital marketing services and technologies to drive measurable results for
our clients like Ecommerce Strategies.
Ecommerce strategy is the plan and initiatives of a company to offer its products and services on the
internet. For companies that have existing offline operations, e commerce strategy is focused on
integrating its offline operations into an online presence. This includes how to best represent the company
online, the infrastructure and framework required to do so and the range of initiatives used to promote the
companys core activities on the world wide web.

A companies ecommerce strategy should be consistent with the organizations core goals and objectives.
For some companies, a simple brochure based site with a sales letter will suffice for representing the
companies goods and services. The aim of the site is encourage end users to make further contact with the
company to enquire about the solution the company can offer to the enquirer's problem. For larger
companies with several integrated departments, the web can be used as an additional channel to reach
customers or for internal communication purposes. This can include integration with offline systems or to
simply represent the company online to facilitate greater awareness about the companies goods and
services.
A companys internet strategy will also be shaped by infrastructure and end user requirements. If the
company has online shop front requirements, the ecommerce platform will require database functionality,
credit card processing and a content management system to maintain the sites presence. This can include
the ability to dynamically add, edit and delete product offerings on the fly. Security precautions are also a
concern and the infrastructure must be robust and hacker proof to give end users peace of mind when
using credit card details.
Web development companies specialize in creating the framework required to bring a companys
ecommerce strategy to life. This includes the interpretation of the companys core goals and objectives,
the scope and design of the infrastructure required, selection of the technology requirements and the
design of the interface according to the target market. The potential pitfalls of the internet make
specialized guidance a must for any company. The failure to scope and bound a project correctly can
result in solution misfit, costly overruns and ecommerce strategies that do not suit the intended company.
An understanding if strategy and the internet are necessary for any company that wants to do business on
the web. With the growing complexity of technology and the changing nature of consumer behavior,
involving personnel who specialize in ecommerce strategy is essential for any company that wants to
maximize the synergy of its online operations.

UNIT IV
Four Steps To Building Great Client Relationships
There are four basic steps firms can take to dramatically increase the quality and consistency of their
client relationships and help maintain good cash flow.
Step#1: Choose Your Clients Carefully
If you have attorneys who believe that, on a slow week, the prospect of a little revenue from an "F" client
is better than no revenue at all - they need to think again. "F" clients - the ones who their gut is already
telling them will be trouble - usually end up costing them and the firm far more in time, overhead, stress,
and aggravation than they will ever pay in fees. In fact, the unpaid fees are only part of the issue. Perhaps
more important is the time they take, which attorneys could better use for client development or taking
better care of "A" clients. "F" clients actually hold the attorney back from taking positive actions to build
their practice, and create undue stress on both attorney and staff.
So, when an obvious "F" client is encountered, the attorney should just say "no." Better that they use their
time for building their practice than to give it away to a client without scruples. And beware not every
"F" client is obvious. Attorneys should spend more time with every prospective client, asking questions
and listening carefully to answers, attitudes, and implications, to identify potential "F" clients.
Let's make an important distinction between the pro bono client and the "F" client. Pro bono work is
important, but the wise attorney chooses pro bono work up front rather than discovering halfway through
a matter that they're working for free.
In fact, a good client selection process starts before the attorney ever meets with the prospective client. It
starts with the initial call to the attorney's office. The attorney's assistant can ask some basic questions that
disqualify some prospective clients from making an appointment at all. These might be questions like:

"What is the matter concerning?" (Is it even in the attorney's practice area?)
"Have you worked with more than one other attorney on this matter?" (Odds are that, if the caller
has consulted with more than one other attorney, either they or the matter spells trouble.)
"M. Jones has an initial consultation fee of $200. Will you be paying by credit card or check?"
(Most of those who will balk at a nominal initial retainer will be "shoppers" looking for free
advice, and not serious prospects.)
"Who referred you to our office?" (The assistant should have a list of the attorney's referral
sources, and make anyone referred by them a priority.)

Step #2: Define the Working Relationship and Set Client Expectations
Attorneys often jump directly into case details as soon as the client has agreed to work with them. They're
off and running, already immersing themselves in the familiar process of developing a case strategy.
Unfortunately, they may well have left their client at the starting gate.
"Client communications" is one of the most frequent causes of bar grievances, with good reason. Clients
are seldom told what the structure and standards are in terms of communication.
It's vitally important to remember that the vast majority of clients have never used an attorney before, and
therefore have no idea how the relationship will work. To them their matter is by far the most important
item on the attorney's agenda. Without such an understanding, they will form their own expectations
about how the relationship should work. And invariably, it's very different from the attorney's modus
operandi.
Therefore it's important that clients be provided with very specific information on how they and the
attorney will work together at the very beginning of the relationship, before they form their own

expectations. Rather than simply giving them an agreement to sign or worse, to take home and sign
(they'll never read it all) they should be walked through a detailed and structured process. This includes:
1) A verbal guided tour through the agreement.
a) What will and will not be included in the representation.
b) Terms of the retainer agreement.
2) A financial discussion.
a) What fees will be charged for what type of work.
b) Details on how fees are charged.
i) Hourly and partial-hour rates.
ii) How phone calls are charged.
iii) How e-mails are charged.
iv) Types of charges which may appear without client involvement:
Research, depositions, strategy meetings, meetings with other lawyers,
travel if necessary, copying and materials, other costs, direct and indirect.
c) How the retainer works.
d) How billings will be handled.
i) How soon after being recorded will hours be billed.
ii) Who to call for questions on their bill.
e) What happens when payment is past due.
i) 10 days - first reminder call.
ii) 20 days - second reminder call.
iii) 30 days - work is suspended or motion to withdraw is sent.
3) How communications are best facilitated.
a) Best times to call to speak with the attorney.
b) Hours the attorney will normally not be available to speak with them.
c) How and when calls will be returned.
d) Who can help if the attorney is not available.
e) What times of day and week office meetings are normally scheduled.
f) What kinds of materials they'll be copied on.
i) How they'll be informed of what to do with them: For their file, for their response or action.
g) What to do when the call is an emergency.
h) Times when it is important to call the attorney.
Of course, all of this should be provided in writing and tucked into a good-looking folder where they can
collect everything the attorney's office sends them. The entire walkthrough can be accomplished in 15-30
minutes, and can be done by a paralegal or associate. This small amount of time upfront will reap
considerable benefits:

It will set the "context" of the working relationship and reduce client stress during the process.
It will save the attorney and staff uncounted hours answering calls. It will reduce client frustration
around having calls returned. It will encourage clients to speak to others in the office.
It will clarify their financial obligations and the consequences of not meeting them
It will provide written "standards" which can be referred to when they express concerns over the
working relationship.

Step #3: Communicate, Communicate, and Communicate

Two important principles in communication:
The first principle: every time you communicate with a client (or dont communicate) you are, at the gut
level doing only one of two things: increasing trust or decreasing it.

One of the most common client complaints is I dont know (or dont understand) whats happening! So
make sure that effective (not just adequate because who is to decide whats adequate? You or the
client?) Here are some ways to do that.
First, make sure that every client gets some type of update communication ideally a phone call, or at
least an e-mail or note at least once a month even when nothing is happening. If thats the case, tell
them, and let them know when you expect something will happen. Silence breeds paranoia, and paranoia
is a disease of a D client.
Next, make sure the client receives copies of all pertinent information. But dont just send those copies
help them understand what those copies are all about. Develop a series of pre-printed clip-on notes or
even rubber stamps which say things like FYI and file only no action needed Please read and review
for our next meeting Please read and sign where indicated or Please read and call to schedule a
meeting. When necessary, dictate a cover letter of explanation.
Communications aids such as this help clients feel less fearful, and keep them participating fully in their
matter.
Second principle: every communication contains two elements: information and service. A client can feel
served by a phone call from a helpful team member when the attorney was not going to be able to get
back to them timely, even when they didnt get the information they desired.
So an unreturned call justly upsets a client, not only because they didnt get the information they wanted,
but because they felt ignored, unimportant, unserved.
So, return phone calls promptly according to the standards you laid out in your client education meeting.
Delegate it to the appropriate team member as per the standards laid out in the meeting, and if you cant
return the call in the specified period, have a team member call with an apology and an offer to help.
How do you know if your communications efforts are effective and not simply adequate? ASK them. The
best firms regularly have an outside person, or someone in the firm not on their legal team, check in with
clients to find out how they are perceiving the attorneys and teams and firms efforts on their behalf.
Sound far fetched? Why? After all, its the clients matter, the clients money, and he clients life.
Theyve just put it all in our hands for safekeeping. We work for them.
Last, the bill. You already know its one of the most fear-inducing communications you can send them, so
do everything you can to reduce the fear factor. Bill as quickly as possible after doing the work; never let
more than 30 days go by, and provide detailed explanations of billings. Ideally, you should keep a
recorder handy, and instead of slapping a decimal into the computer, dictate the time and what it was
spent on.
Instead of simply not billing for certain things short calls, check-in calls, etc. include them in the bill,
along with their cost then deduct them as a courtesy discount. You already do a lot of thing for free
for your client. Let them know. We all like nothing better than something free.
From a clients point of view, effective communications makes the difference between doing it with their
attorney or having their attorney do it to them. And for the attorney, it can make the difference between
happy, paying clients, and unpaid bills, complaints, grievances or even malpractice suits.
Step #4: Live by Your Own Standards
If the attorney sets standards for the client, they need to be prepared to live by them, or all of the
foregoing was wasted time.
Don't take non-urgent phone calls during hours indicated as "not available" just because you have a
moment. The client will decide you should always take them.

Train staff to direct calls to the paralegal or associate for assistance. Return calls promptly as per the
standard given the client. Have others return calls you can't get to within the time standard. Copy the
client with all promised materials, with instructions on what to do with it (read and file, read and respond,
etc.)
Bill within the standard set, follow up on overdue billings per the standard, and take actions as indicated
in the standard.
Many an "A" client slips to "D" or "E" or even "F" because of lack of enforcement of the standards that
were explained to them. When they fail to pay bills and the attorney continues to work, they learn they
don't have to pay. When the attorney takes a week to return their call, they come to believe their problem
isn't important to the attorney. When they receive unidentified papers in the mail, they get worried and
fearful.
The cumulative result is a good client who starts to act like a poor one. All because no one educated them
on the process and the working relationship, and no one in the attorney's office is operating on a standard.
Sound like a lot of work? Then think about the time an attorney spends working for free unintentionally,
and the stress caused by an unhappy client or worse, the grievance filed by one. Then, think about an
office free of "F" clients and filled with less stressed and more satisfied clients (and staff).

Building Excellent Processes

Business process management activities can be grouped into six categories: vision, design, modeling,
execution, monitoring, and optimization.

Functions are designed around the strategic vision and goals of an organization. Each function is attached
with a list of processes. Each functional head in an organization is responsible for certain sets of processes
made up of tasks which are to be executed and reported as planned. Multiple processes are aggregated to
function accomplishments and multiple functions are aggregated to achieve organizational goals.

Design

Process Design encompasses both the identification of existing processes and the design of "to-be"
processes. Areas of focus include representation of the process flow, the actors within it, alerts &
notifications, escalations, Standard Operating Procedures, Service Level Agreements, and task hand-over
mechanisms.
Good design reduces the number of problems over the lifetime of the process. Whether or not existing
processes are considered, the aim of this step is to ensure that a correct and efficient theoretical design is
prepared.
The proposed improvement could be in human-to-human, human-to-system, and system-to-system
workflows, and might target regulatory, market, or competitive challenges faced by the businesses.

Modeling

Modeling takes the theoretical design and introduces combinations of variables (e.g., changes in rent or
materials costs, which determine how the process might operate under different circumstances).
It also involves running "what-if analysis" on the processes: "What if I have 75% of resources to do the
same task?" "What if I want to do the same job for 80% of the current cost?"

Execution

One of the ways to automate processes is to develop or purchase an application that executes the required
steps of the process; however, in practice, these applications rarely execute all the steps of the process
accurately or completely. Another approach is to use a combination of software and human intervention;
however this approach is more complex, making the documentation process difficult.
As a response to these problems, software has been developed that enables the full business process (as
developed in the process design activity) to be defined in a computer language which can be directly
executed by the computer. The system will either use services in connected applications to perform
business operations (e.g. calculating a repayment plan for a loan) or, when a step is too complex to
automate, will ask for human input. Compared to either of the previous approaches, directly executing a
process definition can be more straightforward and therefore easier to improve. However, automating a
process definition requires flexible and comprehensive infrastructure, which typically rules out
implementing these systems in a legacy IT environment.
Business rules have been used by systems to provide definitions for governing behavior, and a business
rule engine can be used to drive process execution and resolution.

Monitoring

Monitoring encompasses the tracking of individual processes, so that information on their state can be
easily seen, and statistics on the performance of one or more processes can be provided. An example of
the tracking is being able to determine the state of a customer order (e.g. order arrived, awaiting delivery,
invoice paid) so that problems in its operation can be identified and corrected.
In addition, this information can be used to work with customers and suppliers to improve their connected
processes. Examples of the statistics are the generation of measures on how quickly a customer order is
processed or how many orders were processed in the last month. These measures tend to fit into three
categories: cycle time, defect rate and productivity.
The degree of monitoring depends on what information the business wants to evaluate and analyze and
how business wants it to be monitored, in real-time, near real-time or ad-hoc. Here, business activity
monitoring (BAM) extends and expands the monitoring tools generally provided by BPMS.
Process mining is a collection of methods and tools related to process monitoring. The aim of process
mining is to analyze event logs extracted through process monitoring and to compare them with an a
priori process model. Process mining allows process analysts to detect discrepancies between the actual
process execution and the a priori model as well as to analyze bottlenecks.

Optimization

Process optimization includes retrieving process performance information from modeling or monitoring
phase; identifying the potential or actual bottlenecks and the potential opportunities for cost savings or
other improvements; and then, applying those enhancements in the design of the process. Overall, this
creates greater business value.

Re-engineering

When the process becomes too noisy and optimization is not fetching the desired output, it is
recommended to re-engineer the entire process cycle. BPR has become an integral part of organizations to
achieve efficiency and productivity at work.
VALUE CHAIN ANALYSIS
The Value Chain
To better understand the activities through which a firm develops a competitive advantage and creates
shareholder value, it is useful to separate the business system into a series of value-generating activities
referred to as the value chain. In his 1985 book Competitive Advantage, Michael Porter introduced a
generic value chain model that comprises a sequence of activities found to be common to a wide range of
firms. Porter identified primary and support activities as shown in the following diagram:

Porter's Generic Value Chain

M
A
Marketing
Inbound
Outbound
R
> Operations >
>
&
> Service >
Logistics
Logistics
G
Sales
I
N

Firm Infrastructure
HR Management
Technology Development
Procurement

The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities,
thereby resulting in a profit margin.
The primary value chain activities are:

Inbound Logistics: the receiving and warehousing of raw materials and their distribution to
manufacturing as they are required.
Operations: the processes of transforming inputs into finished products and services.
Outbound Logistics: the warehousing and distribution of finished goods.
Marketing & Sales: the identification of customer needs and the generation of sales.
Service: the support of customers after the products and services are sold to them.

These primary activities are supported by:

The infrastructure of the firm: organizational structure, control systems, company culture, etc.
Human resource management: employee recruiting, hiring, training, development, and
compensation.
Technology development: technologies to support value-creating activities.
Procurement: purchasing inputs such as materials, supplies, and equipment.

The firm's margin or profit then depends on its effectiveness in performing these activities efficiently, so
that the amount that the customer is willing to pay for the products exceeds the cost of the activities in the
value chain. It is in these activities that a firm has the opportunity to generate superior value. A
competitive advantage may be achieved by reconfiguring the value chain to provide lower cost or better
differentiation.
The value chain model is a useful analysis tool for defining a firm's core competencies and the activities
in which it can pursue a competitive advantage as follows:

Cost advantage: by better understanding costs and squeezing them out of the value-adding
activities.
Differentiation: by focusing on those activities associated with core competencies and
capabilities in order to perform them better than do competitors.

Cost Advantage and the Value Chain

A firm may create a cost advantage either by reducing the cost of individual value chain activities or by
reconfiguring the value chain.
Once the value chain is defined, a cost analysis can be performed by assigning costs to the value chain
activities. The costs obtained from the accounting report may need to be modified in order to allocate
them properly to the value creating activities.
Porter identified 10 cost drivers related to value chain activities:

Economies of scale
Learning
Capacity utilization
Linkages among activities
Interrelationships among business units
Degree of vertical integration
Timing of market entry
Firm's policy of cost or differentiation
Geographic location
Institutional factors (regulation, union activity, taxes, etc.)

A firm develops a cost advantage by controlling these drivers better than do the competitors.
A cost advantage also can be pursued by reconfiguring the value chain. Reconfiguration means structural
changes such a new production process, new distribution channels, or a different sales approach. For
example, FedEx structurally redefined express freight service by acquiring its own planes and
implementing a hub and spoke system.

Differentiation and the Value Chain

A differentiation advantage can arise from any part of the value chain. For example, procurement of
inputs that are unique and not widely available to competitors can create differentiation, as can
distribution channels that offer high service levels.
Differentiation stems from uniqueness. A differentiation advantage may be achieved either by changing
individual value chain activities to increase uniqueness in the final product or by reconfiguring the value
chain.
Porter identified several drivers of uniqueness:

Policies and decisions

Linkages among activities
Timing
Location
Interrelationships
Learning
Integration
Scale (e.g. better service as a result of large scale)
Institutional factors

Many of these also serve as cost drivers. Differentiation often results in greater costs, resulting in
tradeoffs between cost and differentiation.
There are several ways in which a firm can reconfigure its value chain in order to create uniqueness. It
can forward integrate in order to perform functions that once were performed by its customers. It can
backward integrate in order to have more control over its inputs. It may implement new process
technologies or utilize new distribution channels. Ultimately, the firm may need to be creative in order to
develop a novel value chain configuration that increases product differentiation.
Technology and the Value Chain
Because technology is employed to some degree in every value creating activity, changes in technology
can impact competitive advantage by incrementally changing the activities themselves or by making
possible new configurations of the value chain.
Various technologies are used in both primary value activities and support activities:

Inbound Logistics Technologies

o Transportation
o Material handling
o Material storage
o Communications
o Testing
o Information systems

Operations Technologies
o Process
o Materials
o Machine tools
o Material handling
o Packaging
o Maintenance

o
o
o

Testing
Building design & operation
Information systems

Outbound Logistics Technologies

o Transportation
o Material handling
o Packaging
o Communications
o Information systems

Marketing & Sales Technologies

o Media
o Audio/video
o Communications
o Information systems

Service Technologies
o Testing
o Communications
o Information systems

Note that many of these technologies are used across the value chain. For example, information systems
are seen in every activity. Similar technologies are used in support activities. In addition, technologies
related to training, computer-aided design, and software development frequently are employed in support
activities.
Linkages between Value Chain Activities
Value chain activities are not isolated from one another. Rather, one value chain activity often affects the
cost or performance of other ones. Linkages may exist between primary activities and also between
primary and support activities.
Consider the case in which the design of a product is changed in order to reduce manufacturing costs.
Suppose that inadvertently the new product design results in increased service costs; the cost reduction
could be less than anticipated and even worse, there could be a net cost increase.
Sometimes however, the firm may be able to reduce cost in one activity and consequently enjoy a cost
reduction in another, such as when a design change simultaneously reduces manufacturing costs and
improves reliability so that the service costs also are reduced. Through such improvements the firm has
the potential to develop a competitive advantage.
Analyzing Business Unit Interrelationships
Interrelationships among business units form the basis for a horizontal strategy. Such business unit
interrelationships can be identified by a value chain analysis.
Tangible interrelationships offer direct opportunities to create a synergy among business units. For
example, if multiple business units require a particular raw material, the procurement of that material can
be shared among the business units. This sharing of the procurement activity can result in cost reduction.
Such interrelationships may exist simultaneously in multiple value chain activities.
Unfortunately, attempts to achieve synergy from the interrelationships among different business units
often fall short of expectations due to unanticipated drawbacks. The cost of coordination, the cost of

reduced flexibility, and organizational practicalities should be analyzed when devising a strategy to reap
the benefits of the synergies.
Outsourcing Value Chain Activities
A firm may specialize in one or more value chain activities and outsource the rest. The extent to which a
firm performs upstream and downstream activities is described by its degree of vertical integration.
A thorough value chain analysis can illuminate the business system to facilitate outsourcing decisions. To
decide which activities to outsource, managers must understand the firm's strengths and weaknesses in
each activity, both in terms of cost and ability to differentiate. Managers may consider the following when
selecting activities to outsource:

Whether the activity can be performed cheaper or better by suppliers.

Whether the activity is one of the firm's core competencies from which stems a cost advantage or
product differentiation?
The risk of performing the activity in-house. If the activity relies on fast-changing technology or
the product is sold in a rapidly-changing market, it may be advantageous to outsource the activity
in order to maintain flexibility and avoid the risk of investing in specialized assets.
Whether the outsourcing of an activity can result in business process improvements such as
reduced lead time, higher flexibility, reduced inventory, etc.

The Value Chain System

A firm's value chain is part of a larger system that includes the value chains of upstream suppliers and
downstream channels and customers. Porter calls this series of value chains the value system, shown
conceptually below:
The Value System
...

>

Supplier
Channel
Buyer
Firm
>
>
>
Value Chain
Value Chain
Value Chain
Value Chain

Linkages exist not only in a firm's value chain, but also between value chains. While a firm exhibiting a
high degree of vertical integration is poised to better coordinate upstream and downstream activities, a
firm having a lesser degree of vertical integration nonetheless can forge agreements with suppliers and
channel partners to achieve better coordination. For example, an auto manufacturer may have its suppliers
set up facilities in close proximity in order to minimize transport costs and reduce parts inventories.
Clearly, a firm's success in developing and sustaining a competitive advantage depends not only on its
own value chain, but on its ability to manage the value system of which it is a part.

DECISION TREE
A decision tree is a decision support tool that uses a tree-like graph or model of decisions and their
possible consequences, including chance event outcomes, resource costs, and utility. It is one way to
display an algorithm. Decision trees are commonly used in operations research, specifically in decision
analysis, to help identify a strategy most likely to reach a goal. If in practice decisions have to be taken
online with no recall under incomplete knowledge, a decision tree should be paralleled by

a Probability model as a best choice model or online selection model algorithm. Another use of decision
trees is as a descriptive means for calculating conditional probabilities.
In decision analysis, a "decision tree" and the closely related influence is used as a visual and
analytical decision support tool, where the expected values (or expected utility) of competing alternatives
are calculated.

A decision tree consists of 3 types of nodes:1. Decision nodes - commonly represented by squares
2. Chance nodes - represented by circles
3. End nodes - represented by triangles

DELPHI MODELING
The Delphi method is a structured communication technique, originally developed as a systematic,
interactive forecasting method which relies on a panel of experts.
In the standard version, the experts answer questionnaires in two or more rounds. After each round, a
facilitator provides an anonymous summary of the experts forecasts from the previous round as well as
the reasons they provided for their judgments. Thus, experts are encouraged to revise their earlier answers
in light of the replies of other members of their panel. It is believed that during this process the range of
the answers will decrease and the group will converge towards the "correct" answer. Finally, the process
is stopped after a pre-defined stop criterion (e.g. number of rounds, achievement of consensus, and
stability of results) and the mean or median scores of the final rounds determine the results.
Other versions, such as the Policy Delphi, [3] have been designed for normative and explorative use,
particularly in the area of social policy and public health.[4] In Europe, more recent web-based
experiments have used the Delphi method as a communication technique for interactive decisionmaking and e-democracy.
Delphi is based on the principle that forecasts (or decisions) from a structured group of individuals are
more accurate than those from unstructured groups.[6] This has been indicated with the term "collective
intelligence. The technique can also be adapted for use in face-to-face meetings, and is then called miniDelphi or Estimate-Talk-Estimate (ETE). Delphi has been widely used for business forecasting and has
certain advantages over another structured forecasting approach, prediction markets.

BUSINESS PROCESS RE-ENGINEERING

Business process re-engineering is the analysis and design of workflows and processes within an
organization. According to Davenport (1990) a business process is a set of logically related tasks

performed to achieve a defined business outcome. Re-engineering is the basis for many recent
developments in management. The cross-functional team, for example, it has become popular because of
the desire to re-engineer separate functional tasks into complete cross-functional processes Also, many
recent management information systems developments aim to integrate a wide number of business
functions. Enterprise
resource
planning, management,
knowledge systems, systems,
Human and customer relationship management.
Business process re-engineering is also known as business process redesign, business transformation, or
business process change management.

Reengineering guidance and relationship

of Mission and Work Processes to
Information Technology.
Definition
The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements
in critical modern measures of performance, such as cost, quality, service, and speed.
"Business Process Reengineering, although a close relative, seeks radical rather than merely continuous
improvement. It escalates the efforts of JIT and TQM to make process orientation a strategic tool and a
core competence of the organization. BPR concentrates on core business processes, and uses the specific
techniques within the JIT and TQM toolboxes as enablers, while broadening the process vision."

UNIT V

COMPETENCY MAPPING
Competency mapping is a process through which one assesses and determines ones strengths as an
individual worker and in some cases, as part of an organization. It generally examines two
areas: emotional intelligence or emotional quotient (EQ), and strengths of the individual in areas like team
structure, leadership, and decision-making. Large organizations frequently employ some form of
competency mapping to understand how to most effectively employ the competencies of strengths of
workers. They may also use competency mapping to analyze the combination of strengths in different
workers to produce the most effective teams and the highest quality work.
Competency Mapping is a process of identifying key competencies for an organization and/or a job and
incorporating those competencies throughout the various processes (i.e. job evaluation, training,
recruitment) of the organization. To ensure we are both on the same page, we would define a competency
as a behavior (i.e. communication, leadership) rather than a skill or ability.
The steps involved in competency mapping with an end result of job evaluation include the following:
1) Conduct a job analysis by asking incumbents to complete a position information questionnaire (PIQ).
This can be provided for incumbents to complete, or you can conduct one-on-one interviews using the
PIQ as a guide. The primary goal is to gather from incumbents what they feel are the key behaviors
necessary to perform their respective jobs.
2) Using the results of the job analysis, you are ready to develop a competency based job description. A
sample of a competency based job description generated from the PIQ may be analyzed. This can be
developed after carefully analyzing the input from the represented group of incumbents and converting it
to standard competencies.
3) With a competency based job description, you are on your way to begin mapping the competencies
throughout your human resources processes. The competencies of the respective job description become
your factors for assessment on the performance evaluation. Using competencies will help guide you to
perform more objective evaluations based on displayed or not displayed behaviors.
4) Taking the competency mapping one step further, you can use the results of your evaluation to identify
in what competencies individuals need additional development or training. This will help you focus your
training needs on the goals of the position and company and help your employees develop toward the
ultimate success of the organization.

A problem with competency mapping, especially when conducted by an organization is that there may be
no room for an individual to work in a field that would best make use of his or her competencies. If the
company does not respond to competency mapping by reorganizing its employees, then it can be of little
short-term benefit and may actually result in greater unhappiness on the part of individual employees. A
person identified as needing to learn new things in order to remain happy might find himself or herself in
a position where no new training is ever required. If the employer cannot provide a position for an
employee that fits him or her better, competency mapping may be of little use.
However, competency mapping can ultimately serve the individual who decides to seek employment in
an environment where he or she perhaps can learn new things and be more intellectually challenged.
Being able to list competencies on resumes and address this area with potential employers may help
secure more satisfying work. This may not resolve issues for the company that initially employed
competency mapping, without making suggested changes. It may find competency mapping has produced
dissatisfied workers or led to a high worker turnover rate.

CORPORATE NETWORK
Business
networking is
a socioeconomic activity
by
which
groups
of
likeminded businesspeople recognize, create, or act upon business opportunities. A business network is a type
of social network whose reason for existing is business activity. There are several prominent business
networking organizations that create models of networking activity that, when followed, allow the
business person to build new business relationships and generate business opportunities at the same time.

A professional network service is an implementation of information in support of business networking.

Many businesspeople contend business networking is a more effective method of generating new
business than advertising or public relations efforts. This is because business networking is a low-cost
activity that involves more personal commitment than company money.
As an example, a business network may agree to meet weekly or monthly with the purpose of exchanging
business leads and referrals with fellow members. To complement this activity, members often meet
outside this circle, on their own time, and build their own one-to-one relationship with the fellow
member.
Business networking can be conducted in a local business community, or on a larger scale via
the Internet. Business networking websites have grown over recent years due to the Internet's ability to
connect people from all over the world. Internet companies often set up business leads for sale to bigger
corporations and companies looking for data sources.
Business networking can have a meaning also in the ICT domain, i.e. the provision of operating support
to companies and organizations, and related value chains and value networks.
It refers to an activity coordination with a wider scope and a simpler implementation than pre-organized
workflows or web-based impromptu searches for transaction counterparts (workflow is useful to
coordinate activities, but it is complicated by the use of s.c. patterns to deviate the flow of work from a
pure sequence, in order to compensate its intrinsic linearity; impromptu searches for transaction
counterparts on the web are useful as well, but only for non-strategic supplies; both are complicated by a
plethora of interfaces needed among different organizations and even between different IT applications
within the same organization).
BUSINESS SIMULATION GAME
Why play a business simulation game? Simulating a business environment can help you learn about how
business takes place in the real marketplace. Business simulation games often mimic with a great deal of
accuracy the cause-and-effect relationship that exists between business decisions and economic outcomes.
Depending on the game you play, you may gain insight into topics such as buying and selling shares of
stock, inflation and deflation, economic change, and financial planning strategies.
Children who are interested in business but have not experienced it on their own can learn many basic
economic principles and build their business vocabulary by playing business simulation games. Many
business simulations compel players to learn more about economics in order to achieve greater results and
advance in the gameplay. Business simulation games can also help children get a better understanding of
the real worth of money and purchasing power, particularly if the games they play are programmed to
reflect real-world monetary value.
Business simulation games can also help inspire creative ideas for real-world business ventures. Many
business simulation games are rich with detail and offer players an endless number of strategies to
achieve success while playing. These strategies can translate to insights in real-world business dealings
and help broaden players business horizons and create new opportunities.
Business simulation games, also known as economic simulation games or tycoon games, are games
that focus on the management of economic processes, usually in the form of a business. "Pure" business
simulations have been described as construction and management simulations without a construction
element, and can thus be called management simulations. Indeed, micromanagement is often
emphasized in these kinds of games. They are essentially numeric, but try to hold the player's attention by
using creative graphics. The interest in these games lies in accurate simulation of real-world events using

algorithms, as well as the close tying of players' actions to expected or plausible consequences and
outcomes. An important facet of economic simulations is the emergence of artificial systems, gameplay
and structures.
KNOWLEDGE MANAGEMENT
Knowledge management (KM) comprises a range of strategies and practices used in an organization to
identify, create, represent, distribute, and enable adoption of insights and experiences. Such insights and
experiences comprise knowledge, either embodied in individuals or embedded in organizations
as processes or practices.
Knowledge management efforts typically focus on organizational objectives such as improved
performance, competitive advantage, innovation, the sharing of lessons learned, integration
and continuous improvement of the organization. KM efforts overlap with organizational learning, and
may be distinguished from that by a greater focus on the management of knowledge as a strategic asset
and a focus on encouraging the sharing of knowledge.
Strategies
Knowledge may be accessed at three stages: before, during, or after KM-related activities. Different
organizations have tried various knowledge capture incentives, including making content submission
mandatory and incorporating rewards into measurement plans. Considerable controversy exists over
whether incentives work or not in this field and no consensus has emerged.
One strategy to KM involves actively managing knowledge (push strategy). In such an instance,
individuals strive to explicitly encode their knowledge into a shared knowledge repository, such as
a database, as well as retrieving knowledge they need that other individuals have provided to the
repository. This is also commonly known as the Codification approach to KM.
Another strategy to KM involves individuals making knowledge requests of experts associated with a
particular subject on an ad hoc basis (pull strategy). In such an instance, expert individual(s) can provide
their insights to the particular person or people needing this (Snowden 2002). This is also commonly
known as the Personalization approach to KM.
Other knowledge management strategies and instruments for companies include:

rewards (as a means of motivating for knowledge sharing)

storytelling (as a means of transferring tacit knowledge)
cross-project learning
after action reviews
knowledge mapping (a map of knowledge repositories within a company accessible by all)
communities of practice
expert directories (to enable knowledge seeker to reach to the experts)
best practice transfer
knowledge fairs
competence management (systematic evaluation and planning of competences of individual
organization members)
proximity & architecture (the physical situation of employees can be either conducive or obstructive
to knowledge sharing)
master-apprentice relationship
Collaborative technologies (groupware, etc.)

Knowledge repositories (databases, bookmarking engines, etc.)

measuring and reporting intellectual capital (a way of making explicit knowledge for companies)
knowledge brokers (some organizational members take on responsibility for a specific "field" and act
as first reference on whom to talk about a specific subject)
Social software (wikis, social bookmarking, blogs, etc.)
Inter-project knowledge transfer

Benefits & Issues of knowledge management

Some of the advantages claimed for KM systems are:
1.
2.
3.
4.
5.

Sharing of valuable organizational information throughout organizational hierarchy.

Can avoid re-inventing the wheel, reducing redundant work.
May reduce training time for new employees
Retention of Intellectual Property after the employee leaves if such knowledge can be codified.
time management

Knowledge Sharing remains a challenging issue for knowledge management, and while there is no clear
agreement barriers may include time issues for knowledge works, the level of trust, lack of effective
support technologies and culture.

Ratios
Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07
Per share ratios
Adjusted EPS (Rs)

7.96

5.90

20.08

24.58

26.92

Adjusted cash EPS (Rs)

17.94

14.88

27.73

35.32

37.66

Reported EPS (Rs)

12.18

8.90

22.21

28.83

35.94

Reported cash EPS (Rs)

22.17

17.88

29.86

39.57

46.68

Dividend per share

5.50

5.00

6.50

8.50

8.50

Operating profit per share (Rs)

23.95

21.74

36.80

49.79

55.62

Book value (excl rev res) per share (Rs) 153.89 149.65 146.61 199.51 180.65
Book value (incl rev res) per share (Rs.) 153.89 149.65 146.61 199.51 180.65
Net operating income per share (Rs)

76.07

81.78

98.40

132.02 131.19

Free reserves per share (Rs)

84.56

77.56

76.50

106.99 94.26

Operating margin (%)

31.48

26.58

37.39

37.71

42.39

Gross profit margin (%)

18.35

15.60

29.62

29.58

34.21

Net profit margin (%)

15.08

10.15

21.09

20.47

25.71

Adjusted cash margin (%)

22.22

16.96

26.33

25.09

26.94

Adjusted return on net worth (%)

5.16

3.94

13.69

12.32

14.90

Reported return on net worth (%)

7.91

5.94

15.15

14.45

19.89

Return on long term funds (%)

7.29

8.73

17.58

19.04

23.77

Long term debt / Equity

0.65

0.42

0.39

0.25

0.24

Total debt/equity

0.65

0.42

0.39

0.25

0.24

Owners fund as % of total source

60.32

70.14

71.52

79.47

80.38

Fixed assets turnover ratio

0.30

0.38

0.51

0.55

0.55

Current ratio

3.19

2.95

2.90

3.27

2.88

Current ratio (inc. st loans)

3.19

2.95

2.90

3.27

2.88

Quick ratio

3.06

2.88

2.86

3.18

2.82

Inventory turnover ratio

24.84

43.37

70.85

44.32

53.95

Dividend payout ratio (net profit)

52.57

65.50

34.23

34.49

26.96

Dividend payout ratio (cash profit)

28.89

32.61

25.46

25.13

20.76

Profitability ratios

Leverage ratios

Liquidity ratios

Payout ratios

Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07
Earning retention ratio

19.51

1.17

62.13

59.55

64.00

Cash earnings retention ratio

64.31

60.81

72.58

71.85

74.27

Adjusted cash flow time total debt

5.64

4.28

2.11

1.46

1.17

Financial charges coverage ratio

3.28

2.66

3.32

2.97

2.78

Fin. charges cov.ratio (post tax)

3.54

2.72

3.27

3.01

3.02

Material cost component (% earnings) 5.48

5.81

5.26

3.00

3.12

Selling cost Component

2.18

1.74

1.73

1.97

1.82

Exports as percent of total sales

Import comp. in raw mat. consumed

Long term assets / total Assets

0.72

0.63

0.59

0.58

0.48

33.33

33.33

Coverage ratios

Component ratios

Bonus component in equity capital (%) 30.30

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