Monthly Archives: September, 2012

Steps in Planning Function

Planning function of management involves following steps:-

1. Establishment of objectives

ü  Planning requires a systematic approach.

ü  Planning starts with the setting of goals and objectives to be achieved.

ü  Objectives provide a rationale for undertaking various activities as well as indicate direction of efforts.

ü  Moreover objectives focus the attention of managers on the end results to be achieved.

ü  As a matter of fact, objectives provide nucleus to the planning process. Therefore, objectives should be stated in a clear, precise and unambiguous language. Otherwise the activities undertaken are bound to be ineffective.

ü  As far as possible, objectives should be stated in quantitative terms. For example, Number of men working, wages given, units produced, etc. But such an objective cannot be stated in quantitative terms like performance of quality control manager, effectiveness of personnel manager.

ü  Such goals should be specified in qualitative terms.

ü  Hence objectives should be practical, acceptable, workable and achievable.

2. Establishment of Planning Premises

ü  Planning premises are the assumptions about the lively shape of events in future.

ü  They serve as a basis of planning.

ü  Establishment of planning premises is concerned with determining where one tends to deviate from the actual plans and causes of such deviations.

ü  It is to find out what obstacles are there in the way of business during the course of operations.

ü  Establishment of planning premises is concerned to take such steps that avoids these obstacles to a great extent.

ü  Planning premises may be internal or external. Internal includes capital investment policy, management labour relations, philosophy of management, etc. Whereas external includes socio- economic, political and economical changes.

ü  Internal premises are controllable whereas external are non- controllable.

3. Choice of alternative course of action

ü  When forecast are available and premises are established, a number of alternative course of actions have to be considered.

ü  For this purpose, each and every alternative will be evaluated by weighing its pros and cons in the light of resources available and requirements of the organization.

ü  The merits, demerits as well as the consequences of each alternative must be examined before the choice is being made.

ü  After objective and scientific evaluation, the best alternative is chosen.

ü  The planners should take help of various quantitative techniques to judge the stability of an alternative.

4. Formulation of derivative plans

ü  Derivative plans are the sub plans or secondary plans which help in the achievement of main plan.

ü  Secondary plans will flow from the basic plan. These are meant to support and expediate the achievement of basic plans.

ü  These detail plans include policies, procedures, rules, programmes, budgets, schedules, etc. For example, if profit maximization is the main aim of the enterprise, derivative plans will include sales maximization, production maximization, and cost minimization.

ü  Derivative plans indicate time schedule and sequence of accomplishing various tasks.

5. Securing Co-operation

ü  After the plans have been determined, it is necessary rather advisable to take subordinates or those who have to implement these plans into confidence.

ü  The purposes behind taking them into confidence are :-

ü  Subordinates may feel motivated since they are involved in decision making process.

ü  The organization may be able to get valuable suggestions and improvement in formulation as well as implementation of plans.

ü  Also the employees will be more interested in the execution of these plans.

6. Follow up/Appraisal of plans

ü  After choosing a particular course of action, it is put into action.

ü  After the selected plan is implemented, it is important to appraise its effectiveness.

ü  This is done on the basis of feedback or information received from departments or persons concerned.

ü  This enables the management to correct deviations or modify the plan.

ü  This step establishes a link between planning and controlling function.

ü  The follow up must go side by side the implementation of plans so that in the light of observations made, future plans can be made more realistic.


3C Model of Ohmae

Kenichi Ohmae (born February 21, 1943) is one of the world’s leading business and corporate strategists. He is known as Mr. Strategy and has developed the 3C’s Model. In 1994, The Economist selected him one of five management gurus in the world. As an author he has published over 100 books, many of which are devoted to business and socio-political analyses.

The 3C Model is a strategical look at the factors needed for success. The 3C’s model points out that a strategist should focus on three key factors for success. In the construction of a business strategy, three main players must be taken into account:

1. The Corporation

2. The Customer

3. The Competitors

Only by integrating these three C’s (Corporation, Customer, Competitors) in a strategic triangle, a sustained competitive advantage can exist. Ohmae refers to these key factors as the three C’s or strategic triangle

1. The Corporate-Based Strategy

The Corporation needs strategies aiming to maximize the corporation’s strengths relative to the competition in the functional areas that are critical to achieve success in the industry.

– Selectivity and sequencing

The corporation does not have to lead in every function. If it can gain decisive edge in one key function, it will eventually be able to improve its other functions of the competition which are now average.

– Make or buy

In case of rapidly rising wage costs, it becomes a critical decision for a company to subcontract a major share of its assembly operations. If its competitors are unable to shift production so rapidly to subcontractors and vendors, the resulting difference in cost structure and/ or in the companies ability to cope with demand fluctuations may have significant strategic implications

– Cost-effectiveness

This can be done in three basic methods. The first is by reducing basic costs much more effectively than the competition. The second method is simply to exercise greater selectivity in terms of orders accepted, product offered, or functions to be performed which means cherry-picking the high-impact operations so that as others are eliminated,

functional costs will drop faster than sales revenues. The third method is to share a certain key function among the corporation’s other businesses or even with other companies. Experience indicates that there are many situations in which sharing resources in one or more basic sub-functions of  marketing can be advantageous.

2. The Customer-Based Strategy

– The Customer

Clients are the base of any strategy according to Ohmae. Therefore, the primary goal supposed to be the interest of the customer and not those of the shareholders for example. In the long run, a company that is genuinely interested in its customers will be interesting for its investors and take care of their interests automatically. Segmentation is helping to understand the customer.

– Segmenting by objectives

Here, the differentiation is done in terms of the different ways different customers use the product. Take coffee, for example. Some people drink it to wakeup or keep alert, while others view coffee as a way to relax or socialize (coffee breaks).

– Segmenting by customer coverage

This type of strategic segmentation normally emerges from a trade-off study of marketing costs versus market coverage. There appears always to be a point of diminishing returns in the cost-versus-coverage relationship. The corporation’s task, therefore, is to optimize its range of market coverage, be it geographical or channel, so that its cost of marketing will be advantageous relative to the competition

– Re-segmenting the market once more

In a fiercely competitive market, the corporation and its head-on competitors are likely to be dissecting the market in similar ways. Over an extended period of time, therefore the effectiveness of a given initial strategic segmentation will tend to decline. In such a situation it often pays to pick a small group of key customers and reexamine what it is that they are really looking for.

A market segment change occurs where the market forces are altering the distribution of the user-mix over time by influencing demography, distribution channels, customer size, etc. This kind of change means that the allocation of corporate resources must be shifted and/ or the absolute level of resources committed in the business must be changed.

– Changes in customer mix:

Such a market segment change occurs where the forces at work are altering the distribution of the user-mix over time by influencing demography, distribution channels, customer size, etc. This kind of change calls for shifting the allocation of corporate resources and/or changing the absolute level of resources committed in the business, failing which severe losses in the market share can occur.

3. The Competitor-Based Strategy

Competitor based strategies can be constructed by looking at possible sources of differentiation in functions such as: purchasing, design, engineering, sales and servicing. The following aspects show ways in order to achieve this differentiation:

– Power of image

When product performance and mode of distribution are very difficult to distinguish, image may be the only source of positive differentiation.

– Capitalizing on profit- and cost structure differences

Firstly, the difference in source of profit might be exploited, from new products sales etc. Secondly, a difference in the ratio of fixed costs and variable costs might also be exploited strategically. A company with lower fixed cost ratio can lower prices in a sluggish market and hence gain market share.


A favorite phrase of Japanese business planners is hito-kanemono, standing for people, money and things (fixed assets). They believe that streamlined corporate management is achieved when these three critical resources are in balance without surplus or waste.

For example: Cash over and beyond what competent people can intelligently expend is wasted. Of the three critical resources, funds should be allocated last. The corporation

should firstly allocate management talent, based on the available mono (things): plant, machinery, technology, process know-how and functional strength. Once these hito (people) have developed creative and imaginative ideas to capture the business’s upward potential, the kane (money) should be given to the specific ideas and programs generated by the individual managers.


Human Resource Management

The terms ‘Human Resource (HR)’ and ‘Human Resource Management (HRM)’ have replaced the term ‘Personnel Management’. As human resources have become viewed as more critical to organizational success, many organizations have realized that it is the people in an organization that can provide a competitive advantage.

Human Resource (HR) management deals with the design of formal systems in an organization to ensure the effective and efficient use of human talent to accomplish organizational goals. In an organization, the management of human resources means that they must be recruited, compensated, trained, and developed.

The concept of HRM underpins all the below activities under one umbrella:

–      Recruitment

–      Compensation and Benefits

–      Career Growth and Succession Planning

–      Performance Appraisal

–      Performance Management

–      Labor Laws

–      Work Culture

–      Learning Management

–      Knowledge Management

–      Organization Management

–      Separation

Human resource management is defined as a strategic and coherent approach to the management of an organization’s most valued assets – the people working there who individually and collectively contribute to the achievement of its objectives.

Storey (1989) believes that HRM can be regarded as a ‘set of interrelated policies with an ideological and philosophical underpinning’. He suggests four aspects that constitute the meaningful version of HRM:

–      A particular constellation of beliefs and assumptions;

–      Strategic thrust informing decisions about people management;

–      The central involvement of line managers; and

–      Reliance upon a set of ‘levers’ to shape the employment relationship.

Michael Armstrong:-

HRM is a strategic approach to the acquisition, motivation, development and management of the organizations human resource. It is developed to shaping an appropriate corporate culture and introducing programs which reflect and support the core values of the enterprise and ensure its success.

With globalization and the spread of business and operations in different countries, HRM has becomes very much essential to retain the talented workforce and to provide them effective and efficient platform for all employees worldwide. Now a global company employees workforce from different countries with different culture and languages. It is the duty of the human resource management to bring all employees under one roof to meet the organizational specific goals.

Role of Research in Important Areas

Through research, an executive can quickly get a synopsis of the current scenario which improves his information base for making sound decisions affecting future operations of the enterprise. The following are the major areas in which research plays a key role in making effective decisions.



Marketing research has become very crucial in taking sound marketing decisions. Marketing research involves the process of

  • Systematic collection
  • Compilation
  • Analysis
  • Interpretation of relevant data for marketing decisions


Research tools are applied effectively for studies involving demand forecasting, consumer buying behavior, measuring advertising effectiveness, media selection, test marketing, product positioning, and new product potential.


Marketing research stimulates the flow of marketing data from the consumer and his environment to marketing information system of the enterprise. This information goes to the executive in the form of data. On the basis of this data the executive develop plans and programmers.


Research tools are applied effectively for studies involving:

  1. Demand forecasting
  2. Consumer buying behavior
  3. Measuring advertising effectiveness
  4. Media selection for advertising
  5. Test marketing
  6. Product positioning
  7. Product potential



Research enables an organization to decide on

  • What to produce
  • How much to produce
  • When to produce
  • For whom to produce


Research tools are also of immense help in quality control, and setting up optimum inventory level. Some of the areas where you can apply research are:

  • Product development
  • Cost reduction
  • Work simplification
  • Profitability improvement
  • Inventory Control



Banking institutions have found it useful to setup research departments for the purpose of gathering and analyzing information both for their internal operations and for making in-depth studies on economic conditions of business. Reserve Bank of India has setup an excellent research department for planning and management reporting.



The materials department uses research to frame suitable policies regarding

  • Where to buy
  • How much to buy
  • When to buy
  • What price to buy


Human resource development

The human-resource development department uses research to study wage fates, incentive schemes, cost of living, employee turnover rates, employment trends, and performance appraisal. It also uses research effectively for its most important activity namely manpower planning.



Research lays the foundation for all government policies in our economic system. For example, research is applied for evolving the union finance budget and railway budget every year. Research is used for economic planning and optimum utilisation of resources for the development of the nation. Research is also needed for systematic collection of information on the economic and social structure of the nation. Such information indicates what is happening to the economy and what changes are taking place.


Unique Selling Proposition

For years, business trainers have stressed the importance of “USPs” (Unique Selling Propositions). Your USP is the unique thing that you can offer that your competitors can’t. It’s your “Competitive Edge”. It’s the reason that customers buy from you and you alone.

Definition: The factor or consideration presented by a seller as the reason that one product or service is different from and better than that of the competition.

A unique selling proposition (USP) is a description of the qualities that are unique to a particular product or service and that differentiate it in a way which will make customers purchase it rather than its rivals.

USPs have helped many companies succeed. And they can help you too when you’re marketing yourself (when seeking a promotion, finding a new job or just making sure you get the recognition you deserve.) If you don’t have a USP, you’re condemned to a struggle for survival – that way lies hard work and little reward.

However, USPs are often extremely difficult to find. t. Philip Kotler says that the difficulty firms have in creating functional uniqueness has made them “focus on having a unique emotional selling proposition (an ESP) instead of a USP”. He gives the example of the Ferrari car and the Rolex watch. Neither has a distinctive functional uniqueness, but each has a unique emotional association in the consumer’s mind.

How to develop your USP

To develop your USP, you will have to answer the below five questions

1. What are your strengths?

2. Who are your customers?

3. What your customer wants?

4. What motivates buying decision of the customers?

5. What differentiates you from your competitor?

Business Incubation Program

Business incubation is a business support process that accelerates the successful development of start-up and fledgling companies by providing entrepreneurs with an array of targeted resources and services. These services are usually developed or orchestrated by incubator management and offered both in the business incubator and through its network of contacts.

A business incubator’s main goal is to produce successful firms that will leave the program financially viable and freestanding. These incubator graduates have the potential to create jobs, revitalize neighborhoods, commercialize new technologies, and strengthen local and national economies.

Smilor and Gill define an incubator as an organization that “seeks to give form and substance—that is, structure and credibility—to start-up or emerging ventures. Consequently, a new business incubator is a facility for the maintenance of controlled conditions to assist in the cultivation of new companies.”

Business incubation has provided solid evidence of its capacity to nurture entrepreneurial business development and, in the long-term, maintain and retain new business ventures.

Some of the advantages of Incubators

  1. Reduce Risk of small business failures by offering valuable support and services
  2. Create Jobs more effectively
  3. Contribution to local economies

Business incubators are facilities that provide small, entrepreneurial businesses with affordable space, shared support and business development services.  They can help young businesses during their start-up period when they are most financially vulnerable.

What is Planning?

Of the five management functions — planning, organizing, staffing, leading and controlling — planning is the most fundamental. All other functions stem from planning. However, planning doesn’t always get the attention that it deserves; when it does, many managers discover that the planning process isn’t as easy as they thought it would be — or that even the best-laid plans can go awry.

Planning means to look ahead and decide future courses of action. It is a preparatory step. It is a systematic activity which determines when, how and who is going to perform a specific job. Planning is a detailed program regarding future courses of action.

It is rightly said “Well plan is half done”.

Planning takes into consideration available & prospective human and physical resources of the organization so as to get effective co-ordination, contribution & perfect adjustment. It is the basic management function which includes formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources.

According to Henry Fayol, “purveyance, which is an essential element of planning, covers not merely looking into the future but making provisions for it. A plan is then a projected course of action”.

According to Koontz O’Donnell – “Planning is an intellectual process, the conscious determination of courses of action, the basing of decisions on purpose, acts and considered estimates”.

Before a manager can tackle any of the other functions, he or she must first devise a plan. A plan is a blueprint for goal achievement that specifies the necessary resource allocations, schedules, tasks, and other actions.

A goal is a desired future state that the organization attempts to realize. Goals are important because an organization exists for a purpose, and goals define and state that purpose. Goals specify future ends; plans specify today’s means.

The word planning incorporates both ideas: It means determining the organization’s goals and defining the means for achieving them. Planning allows managers the opportunity to adjust to the environment instead of merely reacting to it. Planning increases the possibility of survival in business by actively anticipating and managing the risks that may occur in the future.

A planned performance brings better results as compared to unplanned one. A Managers’ job is planning, monitoring and controlling. Planning includes the plan a thought process, action and implementation. Planning gives more power over future.

Not only does planning provide direction and a unity of purpose for organizations, it also answers six basic questions in regard to any activity:

  • What needs to be accomplished?
  • When is the deadline?
  • Where will this be done?
  • Who will be responsible for it?
  • How will it get done?
  • How much time, energy, and resources are required to accomplish this goal?

The planning process consists of:

  1. Identifying the goals or objectives to be achieved
  2. Formulating strategies to achieve them
  3. Arranging or creating the requires means
  4. Implementing, directing and monitoring all steps in their proper sequence

The Societal Marketing Concept

The societal marketing concept was an offshoot of the marketing concept wherein an organization believes in giving back to the society by producing better products targeted towards society welfare. Some have questioned whether the marketing concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services. Are companies that successfully satisfy consumer wants necessarily acting in the best, long-run interests of consumers and society?

The societal marketing concept questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare. Is a firm that satisfies the immediate needs and wants of target markets always doing what’s best for its consumers in the long run? The societal marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and society’s well-being. It calls for sustainable marketing, socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs.

Consider today’s bottled water industry. You may view bottled water companies as offering a convenient, tasty, and healthy product. Its packaging suggests “green” images of pristine lakes and snow-capped mountains. Yet making, filling, and shipping billions of plastic bottles generates huge amounts of carbon dioxide emissions that contribute substantially to global warming. Further, the plastic bottles pose a substantial recycling and solid waste disposal problem. Thus, in satisfying short-term consumer wants, the bottled water industry may be causing environmental problems that run against society’s long-run interests.

As above diagram shows, companies should balance three considerations in setting their marketing strategies: company profits, consumer wants, and society’s interests. UPS does this well. Its concern for societal interests has earned it the number one or number two spot in Fortune magazine’s Most Admired Companies for Social Responsibility rankings in four of the past five years.

The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, and public interest. Yet a number of companies have achieved notable sales and profit gains by adopting and practicing the societal marketing concept. Some companies practice a form of the societal marketing concept called cause related marketing. Pringle and Thompson define this as “activity by which a company with an image, product, or service to market builds a relationship or partnership with a ‘cause,’ or a number of ‘causes,’ for mutual benefit.


Following are the three examples of Societal Marketing Concept:

1: Body Shop

Body Shop is a cosmetic company found by Anita Roddick. The company uses only vegetable based materials for its products. It is also against Animal testing, supports community trade, activate Self Esteem, Defend Human Rights, and overall protection of the planet. Thus it is completely following the concept of Societal Marketing.

2: Ariel

Ariel is a detergent manufactured by Procter and Gamble. Ariel runs special fund raising campaigns for deprived classes of the world specifically the developing countries. It also contributes part of its profits from every bag sold to the development of the society.

3: British American tobacco Company

BAT is a British based Tobacco company. It was found in the year 1902. BAT is involved in working for the society in every part of the world. It conducts tree plantation drives as part of its societal marketing strategy


Principles of Marketing by Philip Kotler

Charms of Being an Entrepreneur

The most exciting part of Entrepreneurship is that you are your own master. When you are an employee, you work for others according to their plans, whims and finances. In an Entrepreneurship, it is you who set the goal, plan the action and reap the satisfaction and rewards of having achieved the goal.

Why should you become an Entrepreneur?

You will be your own boss and boss to other people and make decisions that are crucial to the business success or failure.

You will make money for yourself rather than for someone else.

You may participate in every aspect of running a business and learn and gain experience in a variety of disciplines.

You will have the chance to work directly with your customers.

You will have the personal satisfaction of creating and running a successful business.

You will be able to work in a field of area that you really enjoy.

You will have the chance to build retirement value.

Rewards for an Entrepreneur

1. Freedom to work.

2. Satisfaction of being own boss.

3. Power to do things as he likes.

4. Rewards of ownership and retirement assurance.

5. Respect of family and friends.

Penalties for an Entrepreneur

1. Constraints of financiers, laborers, customers, suppliers, and debtors curtail his freedom.

2. Frustration due to availability of limited capital and other resources.

3. Social and family life is affected due to hard long hours of working.

4. Frustration due to non-achievement of full objectives.

5. Risk of failure.

SWOT Analysis

A SWOT analysis summarizes key external issues from the business environment and the internal strategic capabilities of an organization. The SWOT analysis can therefore be used for strategy development, and be used as a basis for generating strategic options. Likewise, a SWOT analysis can be used to asses future courses of strategic actions

It is a useful technique for understanding your Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats you face. Used in a business context, a SWOT Analysis helps you carve a sustainable niche in your market. Used in a personal context, it helps you develop your career in a way that takes best advantage of your talents, abilities and opportunities.

Originated by Albert S Humphrey in the 1960s, SWOT Analysis is as useful now as it was then. You can use it in two ways – as a simple icebreaker helping people get together to “kick off” strategy formulation, or in a more sophisticated way as a serious strategy tool.

A SWOT analysis groups key pieces of information into two main categories:

Internal factors:

Internal factors are presented as the strengths and weaknesses internal to the organization. These factors may shed light upon which processes the company masters, and which processes are not being handled satisfactorily to be competitive. Here one must do a comprehensive analysis of the internal environment’s potential strengths and weakness. Factors that could be evaluated are:

  • Company culture
  • Company image
  • Key staff
  • Access to natural resources
  • Brand Awareness
  • Exclusive contracts

External factors:

External factors are presented as the opportunities and threats presented by the external environment to the organization. These external factors may be evaluated using the PESTEL Framework that tries to evaluate macroeconomic factors affecting the company and its strategies. Likewise, companies should monitor its competitors, and their relative strength and importance. Opportunities arise when changes occur in the external environment, a company can come upon a chance to introduce a new product due to environmental changes. Changes can be related to:

  • Customers
  • Competitors
  • Market trends
  • Suppliers
  • Social changes
  • New technology


All the advantages the company holds over others and the key factors to keep it ahead of the competitive market. A firms strength are its resources and capabilities that can be used as a basis for developing a competitive advantage

  • What advantages does your organization have?
  • What do you do better than anyone else?
  • What unique or lowest-cost resources can you draw upon that others can’t?
  • What do people in your market see as your strengths?
  • What factors mean that you “get the sale”?
  • What is your organization’s Unique Selling Proposition (USP)?

Consider your strengths from both an internal perspective, and from the point of view of your customers and people in your market.

You should also be realistic – it’s far too easy to fall prey to “not invented here syndrome.” Also, if you’re having any difficulty with this, try writing down a list of your organization’s characteristics. Some of these will hopefully be strengths!

When looking at your strengths, think about them in relation to your competitors. For example, if all of your competitors provide high quality products, then a high quality production process is not strength in your organization’s market, it’s a necessity.



The disadvantages and the limitations of the company which keep it behind the competitors and can adversely affect in achieving the goal. The absence of certain strength can be viewed as a weakness.

  • What could you improve?
  • What should you avoid?
  • What are people in your market likely to see as weaknesses?
  • What factors lose you sales?

Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you don’t see? Are your competitors doing any better than you?

It’s best to be realistic now, and face any unpleasant truths as soon as possible.


External factors that can work in favor of the company to achieve its goal and improve performance towards achieving the same.

  • What good opportunities can you spot?
  • What interesting trends are you aware of?
  • Falling trade barriers in attractive foreign markets
  • Changes in technology and markets on both a broad and narrow scale.
  • Changes in government policy related to your field.
  • Changes in social patterns, population profiles, lifestyle changes, and so on.
  • Local events.


External factors that can work against the favor of the company to achieve the goals and adversely affect the performance of the company

  • What obstacles do you face?
  • Rising sales of substitute products
  • What are your competitors doing?
  • Are quality standards or specifications for your job, products or services changing?
  • Is changing technology threatening your position?
  • Do you have bad debt or cash-flow problems?
  • Bargaining powers of suppliers and customers
  • Could any of your weaknesses seriously threaten your business?
  • Entry of low cost foreign competitors

Business SWOT Analysis

What makes SWOT particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well placed to exploit. And by understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares.

More than this, by looking at yourself and your competitors using the SWOT framework, you can start to craft a strategy that helps you distinguish yourself from your competitors, so that you can compete successfully in your market.


Philip Kotler – Principles of marketing