During My MBA

Managing the Employees

noreply@blogger.com (Ashish) — Mon, 23 Nov 2009 10:36:00 +0000

To be successful in business one should treat customers like guests and employees like human being. What happens in most of the businesses is, too much work pressure is given to the employees so that work will be done on time. For the time being work happens too; but may be with many errors and mistakes. At times employee has some personal problems but because company is paying salary and deadlines pressure on individual increases.

To be successful in business, one should treat employees like human, understanding their need and requirements and matching up their requirements with companies expectations. Message from the top management should be delivered to employees. Employees should be part of the decision making teams and they should feel like whatever input they are giving to the company is worth, business value its man power.

I think this all was true some years back. But now the trend is changing many HR people are very much aware about the need of the employees. Many HR policies are developed considering various factors associated with the man power any business has. Making employees feel important gives good results in their work too. I feel it’s not only salary which motivates employees but good treatment do. In fact we believe in giving some high fundu things but we forget give simple inputs.

Employees are humans and they do have so many barriers. There can be following barriers which affect employees’ performance on personal level.

Emotional Barrier

Something in work environment or on personal level might be bothering to the employee. Such emotional barrier may affect the working capability of an individual.

Physical Barrier

Some pain in the body reduces efficiency of an individual.

Mental Barrier

Some employees have mental perception about someone or some kind of work. Though they have the ability to work in certain way and give good output, because of such perceptions they don’t perform well.

Management should understand such small things while designing HR policies. Thought management work is not to entertain each and every employee, this is not possible either, but there has to be some human touch in the behavior or actions of management. There are many HRM systems are available and many HR policies are part of the many successful companies

Secondary Market

noreply@blogger.com (Ashish) — Tue, 10 Nov 2009 13:22:00 +0000

What is meant by Secondary market?
Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.

What is the role of the Secondary Market?
For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, Secondary equity markets serve as a monitoring and control conduit—by facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions.

What is the difference between the Primary Market and the Secondary Market?
In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading
venue in which already existing/pre-issued securities are traded among investors. Secondary market could be either auction or dealer market. While
stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market.

10 things CEOs should know about Social media and Online communities

noreply@blogger.com (Ashish) — Sun, 13 Sep 2009 17:03:00 +0000

This is by Krishna Kumar got this article on DARE.

1. Social media efforts need people,money and time, like with anything else.
It is not one more task for that intern in marketing. if you want to use social media or online communities as leverages for your business, then be ready to invest resources into it. And the most important resource you need to invest in is people dedicated to the task

2. Most still don't get it.
Most business out there still do not understand what social media is or what it can do for them. So you need not be afraid that you will make a mess of it. On the other hand, you do not have too many examples that you can follow or copy. And the rules are all unwritten and changing. So get in with your eyes open, knowing that you are going to make mistakes before you succeed.

3. Listen
Social media is about conversations. And many conversations at the same time. So, like at any noisy party, start by listening. Understand what they are talking about before you get in. Carefully choose the conversations you want to join, which are the ones you want to ignore and which to start.

4. Dialogue, not monologue
Social media is about conversations, right? And a successful conversation cannot be monologue. It has to be a dialogue with both parties contributing. There are businesses whose sole activity in Twitter is to automatically broadcast URLs of new additions at their website using tolls like twitter feed. It does not work in the long run.

5.About 99% if what is out there is not relevant. Find the relevant one percent.
Socual networks tend to generate a lot of noise. A huge amount of it, in fact. Almost every other question in LinkedIn is irrelevant to a professional network. According to twittergrader.com;s state if the Twitter sphere report 55% of twitter users have never tweeted. And if you look at the 45% who do tweet, most of it is inane stuff like - "I am awake" or "I am going to sleep".
You need to navigate through all this to find the one percent that is relevant to you. For this you need to use tool like yahoo sideline and retweerank.com

6. There is no single magic wand community.
if you believe that there is a single community that is the answer to all your needs then you are mistaken. Your customers, both current and potential, are active on many social networks, not just one. For this simple reason , if nothing else, you need to be active on multiple communities, but as pert of one continuous and cross-linked effort.

7. It is more of PR than of marketing. It is more of marketing than of sales.
Social networks are not meant for direct sales. While Dell has been talking about doing US$ three millions of sales on Twitter, not many realize that most of it is indirect and soft sales and through discount offers, and that a lot of the tweets were about other things including resolving the problems that customers were facing.
Direct sales are mostly frowned upon on social websites. They are more about helping and good PR and thus indirectly driving sales rather than hard sell.

8. Do not put all your eggs in the social media basket.
If someone tells you that social media is the answer to all your problems, take a reality check. Roughly four percent of India's billion plus population has an internet connection. Just about 600 thousand are on Twitter. Traditional channels still count and count quite a lot.

9. Revolutions are best driven from the top; else they will be bloody.
if you are looking at revolutionizing your business using social media, then be suere that someone who understands the media and equally importantly, has the requisite powers and clearances within the organization is driving it. Else, the whole effort may just blow up in your face.

10. Don't argue against the individual, even if you are right.
Soon enough, along with genuine issues, you will also come across the perpetual heckler or the constant cribber- individuals who hold a grudge or just want to be the 'David' taking on the "Goliath" that is your business. Do not agrue with the individual. you cannot win.

Comman Man needs to participate in the Millennium Development Goals

noreply@blogger.com (Ashish) — Tue, 25 Aug 2009 07:43:00 +0000

Wise people set goals. Wiser people follow their goals. It is public participation which is most essential. In the past century, there have been partnerships
for war and conflicts. We are in better era now. Today we are fortunate to have partnerships for development like the eight Millennium Development goals of
the United Nations.

Though these goals have been set by wise peoples from around the world, this can become a reality only when the common man participates in them. Otherwise goals will remain in books and as dreams.

So what is it that can inspire people to join in, to eradicate poverty, bring gender equality and educate people in every corner of our dear planet? We need to ponder over this. I would say that spirituality unites people and promotes people into doing something constructive for the world. These inspirations that come from within will enable us to act better. Faster and successful results will then come out of it. The common man will need to participate in this for the vision needs to be broadened. Confidence-building measures need to be taken, a sense of belongingness needs to be created among communities, among nations, even among age groups.

Today we find that the generation gap is widening day by day. I think it is a very good idea to have these conferences in universities where young minds are inspired to undertake goals and have a vision for sustainable development of our world. I see a galaxy of brilliant minds here, professors and doctors from various fields. You all are all going to discuss and come up with more ideas. I hope you will take those ideas and implement them as action plans involving the common man.

Education is the most important aspect of civilization. It is the lack of education or wrong education that has caused so much violence in today’s world. We see religious fanaticism in the name of ideology or politics. What is happening in Iran and India, especially in the Indian subcontinent is very saddening. Lots of lives have been lost, people are killing each other in the name of religion, political and party ideologies.

This has to come to an end. We live in the 21st century. We call ourselves as the most civilized society. Yet we still find primitive things happening. It is education that can eradicate not only poverty but also superstitions and narrow mindedness. People are engaged in selfish goals rather than having a broaden vision of a global family. It is very pertinent for today’s times that we broaden the vision of our young people and let them know that the world is with them.

I am happy that the UN Millennium Goals and officials of UN are taking a proactive step in this direction. As a gentleman here said that there are three things essential to transform society: education, education and education. Education to earn money, education to connect with people, relate with people, handle one’s own mind or emotions. It is professional and spiritual education which will build a strong and stable personality, which will be very productive for society.

What went wrong in Economics???

noreply@blogger.com (Ashish) — Thu, 30 Jul 2009 11:48:00 +0000

THIS ARTICLE IS FROM THE JULY EDITION OF "THE ECONOMIST"

And how the discipline should change to avoid the mistakes of the past

Of all the economic bubles that have been pricked, few have brusts more spectacularly than the reputation of economics itself. A few years ago, the desmal science was being acclaimed as a way of human behaviour, from drug-dealing to sumo-wrestling. Wall street ransacked the best universities for game theorists and option modellers. And on the public stage, economists were seen as far more trustworthy then politicians. Jihn McCain joked that Alan Greenspan, then chairman of federal reserve, was so indispensable that if he died, the president should "prop him up and put a pair of dark glasses on him."

In the wake of the biggest economic calamity in 80 years that reputation has taken a beating. In the public mind an arrogant profession has been humbled. Though economists are still at the centre of the policy debate - think of Ben Bernanke or Larry Summers in America or Mervyn King in Britain- their pronouncements are viewed with more scepticism than before. The profession itself is suffering from guilt and rancour. In a recent lecture, Paul Krugman, winner of the Noble prize in economics in 2008, argued that much of the past 30 years of macroeconomics was "spectacularly useless at best, and positivelyharmful at worst." Barry Eichengreen, a prominent American economic historian, says the crisis has "cast into doubt much of what we thought we knew about economics."

In its crudest form- the idea that economics as a whole is discredited- the current backlash has gone for too far. If ignorance allowed investors andpoliticians to exaggerate the virtues of economics, its now blinds them to its benefits. Economics is less a slavish creed than a prism through which tounderstand the world. It is broad canon, stretching from theories to explain how prices are determined to how economies grow. Much of that body of knowledge has no link to the financial crisis and remains as useful as ever.

And if economics as a broad discipline deserves a robust defence, so does the free-market paradigm. Too many people, especially in Europe, equate mistakes made by economists with a failure of economic liberalism. Their logic seems to be that if economists got things wrong, then politicians will do better. That is a false- and dangerous-conclusion.

Rational fools
These important caveats, however, should not obscure the fact that two central parts of the discipline- macroeconomics and final economics- are now, rightly, being severely re-examined. There are three main critiques: that macro and financial economists helped cause the crisis,that they failed to spot it, and that they have no idea how to fix it.

The first charge is half right. Macroeconomists, especially within central banks, were too fixated in taming inflation and too cavalier about asset bubbles. Financial economists, meanwhile, formalised theories of the efficiency of markets, fuelling the notion that markets whould regulate themselves and financial innovation was always beneficial. Wall Street's most esoteric instruments were built on these ideas.

But economists were hardly naive believers in market efficeiency. Financial academics have spent much of the past 30 years poking holes in the "efficient market hypothesis". A recent ranking of academic economists was topped by Joseph Stiglitz and Andrei Shleifer, teo prominent hole-pockers. A newly prominent field, behavioural economics, concentrates on the consequensces of irrational actions.

So there were caveats aplenty. But as insights from academia arrived in the rough and tumble of wall street, such delicacies were put aside. And absurd assumptions were added. No economic theory suggests you should value mortgage derivatives on the basis that house prices would always rise. Finance professors are not to blame for this, but they might have shouted more loudly that their insights were being misused. Instead many cheered the party along (often from within banks). Put that together with the complacency of the macro-economists and there were too few voices shouting stop.

Blindside and divided
The charge that most economists failed to see the crisis coming also has merit. To be sure, some wared of trouble. The likes of Robert Shiller of Yale, Nouriel Roubini of New york university and the team at the Bank for Internation Settlements are now famous for their prescience. But most were blindsided. And even worrywarts who felt something was amiss had no idea of how bad the consequences whould be.

That was partly to do with professional silos, which limited both the tools available and the imaginations of the practitioners. Few financial economists thought much about illiquidity or counterparty risk, for instance, because their standard modles ignore it; and few worried about the effect on the overall economy of the markets for all asset classes seizing up simultaneously, since few believed that was possible.

Macroeconomists aslo had a bindspot: their standard models assumed that capital markets work perfectly. Their framework reflected an uneasy truce between the intellectual heirs of Krynes, who accept that economies can fall short of their potential, and purists who hold that supply must always equal demand. The models that epotomise this synthesis- the sort used in many central banks- incorporate imperfections in laour markets ("sticky" wages, for instance, which allow unemployment to rise), but make no room for such blemishes in macroeconomists were largelt able to ignore the economy's financial plumbing. But models that igonored financ had little chance of spotting a calamity that stemmed from it.

What about trying to fix it? Here that financial cirisis has blown apart the fragile consensus between purists and Keynesians that monetary policy was the best way to smooth the business cycle. In many countried short-term interest rates are near zero and in a banking crisis monetary policy works less well. With their compromise tool useless, both sides have retreated to their roots, ignoring the other camp's ideas. Keynesians, such as Mr Krugman, have become uncritical supporters of fiscal stimulus. Purists are vocal opponents. To outsiders, the cacophony underlies the profession's uselessness.

Add these criticisms together and there is clear case for reinvention, especially in macroeconomics. Just as the Depression spawned Keynesianism, and the 1970s stagflation fuelled a backlash, creative destruction is already under way. Central banks are busy bolting crude analyses of financial markets onto their workhorse models. Financial economists are studying the way that icentives can skew market efficiency. And today's dilemmas are prompting new research: which form of fiscal stimulus is most effective? How do you best loosen monetary policy when interest rates are zero? and so on.

But a broader change in mindset is still needed. Economists need to reach out from their soecualised silos: macroeconomists much understand finance, and finance professors need to think harder about the context within which markets work. And everybody needs to work harder on understanding asses bubbles and what happens when they brust. For in the end economists are socual scientist, trying to understand the real world, And the financial crisis has changed that world.

Its not about DARE

noreply@blogger.com (Ashish) — Tue, 16 Jun 2009 05:26:00 +0000

I got this article on Business Gyan, for original post click here

The way Entrepreneurs Think and Act is a lot more complex than Risk Taking.

Walking the tightrope in the Circus can be very dangerous. Yet why does the Performer do it? As Prof.Manimala of IIM-Bangalore points out in the Businessgyan Panel Discussion, the daring acts of the Circus Performer seems daring to the audience, however the performer himself has taken sufficient safeguards and training to ensure that he does not meet with a fatal fall. The Performer has enough knowledge, training, and safeguards to give him confidence that he is not at risk.

the-spark-82An Entrepreneur to many looks like this Circus Performance, looks daring and macho. This is because for the observer, the Entrepreneur is doing something that he himself possibly will not do. This is the reason why entrepreneurship seems so daring. However look from the entrepreneur's lens: Is he in business because he feels there is a big chance of failure? From his viewpoint is what he is doing risky? If it was will he do it in the first place? Entrepreneurs know how to mitigate and manage risk, they are not risk takers. And even if they lose money or time it is what they were prepared to lose. Sure Entrepreneurs might underestimate the effort required or overestimate the probability of success, but that is another point altogether, a similar expectation mismatch can happen in any new product launch even in a large company.

Prof. Saras Sarasvathy of Darden School adds that "While most people would agree that managers are largely risk averse, they would assume that entrepreneurs are risk-takers. Research has shown, however, that for the most part both are risk averse." Entrepreneurship therefore is not
about dare.

If Entrepreneurship is not risky then there is really no excuse for someone not to be an entrepreneur. However it is important to observe how entrepreneurs do things differently. Instead of setting a goal, and managing resources to meet the goal effectively, entrepreneurs start with the resources that they have in their control and leverage it to create a new reality. Prof. Saras Sarasvathy has a word for this - ‘Effectual Reasoning', "to the extent that we can control the future, we do not need to predict it." She adds that "Consciously, or unconsciously, they act as if they believe that the future is not "out there" to be discovered, but that it gets created through the very strategies of the players." This is very different from the Causal Logic taught at management schools and practiced by managers.

Risk, essentially are events which are not planned; seasoned entrepreneurs, however, know that surprises are not deviations from the path. Instead they are the norm, the flora and fauna of the landscape, from which one learns to forge a path through the jungle. Prof Saras in a research paper observes, "In fact, several of the expert entrepreneurs I studied explicitly stated that being in a market that could be predicted was not such a good idea, since there would always be someone smarter and with deeper pockets who would predict it better than they could." Seen from this light the perception of risk totally changes. Afterall as someone said "Change is the only Constant."

Regarding failures Prof.Saras Sarasvathy says that "Curiously enough, this focus of entrepreneurial thinking on using any and all available means, even the products of apparent "failure" makes the entrepreneur less resource-dependent than the manager." Scarcity of resources may even be seen as an impetus for invention rather than as a constraint. Pierre Omidyar, founder of eBay often mentions that the reason he built such a robust self-sustaining platform on which millions of people could trade at the same time was because he did not have venture capital funding.

Yet we do see big failures around us, and this reminds me of what Waren Buffet had to say about risk taking, of course from an investment context, "To make the money they did not have and did not need they risked money that they did have and did need, that is plain foolish." An expert Entrepreneur does not make this mistake. Effectual reasoning may not necessarily increase the probability of success of startups, but it reduces the costs of failure by enabling the failure to occur earlier and at lower levels of investment.

Does that mean Entrepreneurs do not go through hardtimes? The struggles and the pain? The certainly do, Entrepreneurs are committed to their objectives, have a must do attitude and are willing to go the extra mile, however are these not qualities that you would expect from any other successful professional in any area be it sports, arts, research and management?

Resources :- http://www.effectuation.org/ftp/effectua.pdf

The author is the Chief Catalyst of businessgyan. His area of interest include business strategy and innovation. For feedback and more information, e-mail: www.businessgyan.com/balaji.

Issue BG82 Jan 08

What Makes a Productive Company - the Criteria

noreply@blogger.com (Ashish) — Sat, 09 May 2009 13:27:00 +0000

Currently I am reading book named "Less is More", and following is something I really liked about the productive comapnies, I will put more from this book

Revenue Per Employee - This measueres - arrived at by divifing total sales by the number of employees- speaks volumes about a company's ability to efficiently market and sell its goods.
Some companies use ploy to inflate their sales per employee numbers. They fire employees and rehire them or others as a contracted workforce. It looks good on paper but it didn't get past us. We conunted the workforce numbers of all the companies we eventually profiled to make certain they were accurate and we tallied part-time employees and proportionately conunted them as full-time equivalents.
Return on Equity and Return on Assets - The percentage return on a company's net worth for a given period tells shareholders how effectively capital is being employed. E.g. it a company's net work ( asset less liabilities) is $5 million and they earn $1 million a year, their annual return on equity is 20 percent. During our research, we analyzed many companies that earned substantial profits and provided competitive returns on their stockholders' equity. But some of the returns on equity we unearthed were mammoth by comparison to industry or business averages, indicating that these companies are far superior to their rivals in either their efficiencies or their productivity. Similarly we reviewed a company's return on assets and only the top performers made our final list.
Operating Income Per Employee - When comparing comapnies, net profit numbers can be misleading: they're affected by differing national tax rates and othen include a myriad of one-time charges or credits that may not be a reflection of actual income from operations. So we decided instead to use income from oprtations divided by the number of full-time, or full-time equivalent, employees, which seems a much better indication of a company's productivity. This criteria gives an edge to companies that pay their workers poorly, are notoriously cheap or beat up their suppliers on a regular basis. While this books is about doing more with less and not about being nice or winning popularity contests, we also believe the marketplace is ultimately fair, rewards value and punished bad operators. We required our chosen companies to have proven themselves by having been in business for ten years or more, which should mean we got rid of the chiselers.

No LAYOFFs

noreply@blogger.com (Ashish) — Thu, 23 Apr 2009 12:22:00 +0000

These days I am reading a book named "Less Is More", this is THE amazing book I have read in the field of management...
I am just putting exact word to word copy of some paras which I feel like sharing...

This is form a chapter named "No LAYOFFS"

Highly productive companies have realized the pitfalls that await a firm when it attempts to balance its books by resorting to payoffs as a tactical response. The CEOs interviews cited four undesirable consequences of doing so.

Organization lose valuable knowledge when institutional memory is not transferred to others. When employees leave, especially as a result of layoff, the departing employees may not pass along the institutional memory they hold. Daniel W. Rasmus, vice president of Giga Information group, has written, "As a knowledge management practitioner, when I look at lay offs, I see executive taking the easy way to cut cost - or give then impression that they're doing so- with little regard for the imact of workforce reduction on the long-term viability of the oragnization, let along its people. And savings may not result. After all, it takes several thousand dollars to coach an employee to thrive in a postion, and that investment is lost when the emplloyee leaves. Then there is the issue of losing members who are vital in terms of their knowledge about their work and their connections to content, processes, and people. suerly there is a cost in this loss."
The damage to workers includes loss of moral, anixiety, presimism and a "save-my-own-butt" attitude- a soege mentality that isn't in the best interests of the company. Dr. Trevino points out that there;s plemty of evidence backing this up. "We know that eveyone within an oraganization pays close attntion to layoff because they know it's often not a single occurence . Layoff happen in stages. Instrad of working, employees look for clues as to when it might happen to them and discuss among themselves how they'll be trated.
It's more expesive to lay off workers(legal, administrative and financial packages out the dorr) and then rehire (recruiting and training expense) than it is to shorten the workweek and temporarily reduce pay. Joutnalist Victor Infante, whos has extensively covered layoffs, sums up a secret that productive companies know. "Companies downsize to cut costs, but then are quickly forced to bring new people in because surviving employees leave for what they perceive to be more stable environments. This turnover starves production and lowers work quality." And he adds a thought that represents another way of looking at the cost issue: "Since the cost of a single new hire is generally equivalent to one year's salary, any savings from layoffs are negated." Dr, Trevino agrees. "Although layoffs have been touted as good management, they actually do not have a postivie impact on the bottom line."
While layoffs may lead to superficial short-term effeciencies, they don't produce or sustain productivity. Consultant Darrell Rigby has written, "[Companies] understand that although employee layoffs will reduce costs in the short term, the combination of severance expenses,loss of knowledge and trust, and subsequent hiring, training, and retention costs can quickly overwhenlm expected savings" (From "Moving Upwards in Downturn," Harward Business Review, June 2001)

Skills and Skill Development

noreply@blogger.com (Ashish) — Sat, 04 Apr 2009 15:25:00 +0000

Skill is the ability that has been acquired by training. In other way skill is the ability to produce solutions in some problem domain e.g. “the skills of the well trained boxer”.

Why do skill Development?
Many times companies recruits fresher or people belonging to some other organization. These people are new to the processes and working culture of particular company. To make such people able to handle new kind of work and culture training is required. i.e. skills development is necessary for the development of business and individuals in an organization.
Different type of employees need different type of training, e.g.

People working in call centers need training on communication skills.
Marketing people need training on communication, company culture, product, etc.
Managers and management level employees need training on leadership.
Workers in mechanical workshop need skills to handle mechanical machines.

So we can say, skill is a learned capacity or talent to carry out pre-determined results often with the minimum outlay of time, energy or both. Skills can often be divided into domain-general and domain-specific skills.

Skills Development Model

Theory - is the explanation of the process. E.g. explaining how the lathe machine works.

Practice - Some skills development requires few minutes where as some required hours of practice. Initially some work takes more time to learn, but as an employee keep on practicing, he/she starts working more efficiently. Employee must practice to become good in particular work.

From During My MBA

Motivation – Some employees are internally motivated to perform well but this is not the case with all. For motivation management have to keep on motivating employees to develop skills.

Feedback - In the process of skills development, an employee should get feedback from superior about the skills. This allows an employee to correct his/her working skill.

Mastery – Once employee became fully familiar with a particular process then he/she starts becoming master in that particular skill and they can become superior of other new employees.

Types of skills
There are a number of different types of skills:

Cognitive - or intellectual skills that require thought processes
Perceptual - interpretation of presented information
Motor - movement and muscle control
Perceptual motor - involve the thought, interpretation and movement skills

How do we teach a new skill?

The teaching of a new skill can be achieved by various methods:

Verbal instructions
Demonstration
Video
Diagrams
Photo sequences

The Learning Phases - Fitts & Posner
Fitts and Posner (1967) suggested that the learning process is sequential and that we move through specific phases as we learn. There are three stages to learning a new skill:

Cognitive phase - Identification and development of the component parts of the skill - involves formation of a mental picture of the skill

Associative phase - Linking the component parts into a smooth action - involves practicing the skill and using feedback to perfect the skill

Autonomous phase - Developing the learned skill so that it becomes automatic - involves little or no conscious thought or attention whilst performing the skill - not all performers reach this stage

The leaning of physical skills requires the relevant movements to be assembled, component by component, using feedback to shape and polish them into a smooth action. Rehearsal of the skill must be done regularly and correctly.

Schmidt's Schema Theory
Schmidt's theory (1975) was based on the view that actions are not stored rather we refer to abstract relationships or rules about movement. Schmidt's schema is based on the theory that that every time a movement is conducted four pieces of information are gathered:

the initial conditions - starting point
certain aspects of the motor action - how fast, how high
the results of the action - success or failure
the sensory consequences of the action - how it felt

Relationships between these items of information are used to construct a recall schema and a recognition schema. The Recall schema is based on initial conditions and the results and is used to generate a motor program to address a new goal. The recognition schema is based on sensory actions and the outcome.

Adam's Closed Loop Theory
Adam's theory (1971) has two elements:

Perceptual trace - a reference model acquired through practice
Memory trace - responsible for initiating the movement

The key feature of this theory is the role of feedback.

Analyze the reference model actions, the result of those actions and the desired goals
Refine the reference model to produce the required actions to achieve the desired goals

Ultimate Mantras of Management Success

noreply@blogger.com (Ashish) — Sun, 29 Mar 2009 11:50:00 +0000

It was the BEST OF TIMES, it was the worst of times”-- Charles Dicken’s description in A Tale of Two Cities perhaps best describes the scenario facing Indian Companies today. On the one hand, unprecedented growth in the Indian economy has led companies to post record revenue and profits. On the other hand, the spectre of a world recession threatens to play spoilsport.

At Earnst & Young, we have been studying corporate performance over many years. Our research tells us that while business goes through cycles of boom and bust, some companies are successful in riding the boom periods and defying the period of bust. These companies consistently outperform the market and deliver superior results on an ongoing basis. These successful companies cut across industries, have disparate backgrounds, some are mature and established, and others are newer and younger.

These companies are more successful because of the quality of their management processes. As we conducted a study of India’s best managed companies, our aim was to identify what is it that makes one company better managed than another and what are the leading practices that India’s best companies adopt to outperform industry and competitors.

Our survey revealed several common threads that run through India’s best managed companies. We summarized these as “10 mantras” of management success. Many companies focus on one or some of these mantras, but when practiced together, these mantras churn out a “best managed” company.

Mantra #1: Be audacious in your vision

Sam Walton once famously said, “Capital isn’t scarce: vision is.” However, looking at the best managed companies of this year, there seems to be no dearth of vision. In fact, these companies have displayed a boldness of vision that was quite unimaginable for Indian companies a decade ago. If one were to select the leading beacon for its vision, it would undoubtedly be Tata Motors. Who would have thought that a company, which started making passenger cars barely a decade ago, could even think of making the world’s least expensive car, and that too half the price of the cheapest car available in the market. But this should not come as a surprise. Over the past few years, Tata Motors has time and again set out to achieve targets that skeptics have proclaimed to be unattainable. But every time it has delivered on these promises—be it in Indica or the Ace.

ITC is another interesting case in point. A strong vision not only helped it recover from not-so-successful forays into finance, trading and real estate but also galvanized the company to brace for a new round of Growth. It sets itself an ambitious target to become India’s biggest FMCG Company and then went on to launch a product blitzkrieg, unleashing a new product in the Indian market every quarter. Today, after successful competing against the FMCG majors in the foods arena, ITC is entering the highly-competitive personal care market with a new-found confidence. This new approach of Indian industry is perhaps best summed up in Ratan Tata’s modest words: “We rescaled our thinking in term of growth and cajoled our business to make this happen.”

Mantra#2 : Focus on what you know Best

In a rapidly expanding economy like India’s, diversification into unrelated but high growth sectors becomes a tempting proposition for companies. However, if one looks at the best managed companies, they have largely achieved growth by leveraging their value chain inter-relationships or through geographical expansion. The classic example of growth through backward integration is Reliance Industries. Starting with textile in the late ‘70s, Reliance pursued a strategy of backward vertical integration in polyester, fiber intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production—to be fully integrated along the materials and energy value chain, while also emerging as a leader in each of the industries it entered.

On the other hand, a remarkable case of sharpening focus through divestiture is L&T. In 2003, L&T’s cement business accounted for more than a quarter of L&T’s turnover, but it was still proving to b a drain on resources that could otherwise have gone into growing the core businesses. As L&T’s top boss A.M.Naik says: “It was only because of cement that the company’s financial parameters were depressed. L&T could have grown much faster without the cement business.” Finally in 2004, L&T bit the bullet and divested its cement business and decided to focus on engineering. The success of the measure was evident in the financial results of that year when, despite the divestment, the company’s revenues saw a minor dip and the profits actually grew by 23%.

Mantra#3: Trim flab to achieve operational excellence

For the best managed companies, cost efficiency is more than a source of competitive advantage. This has pervaded the companies’ philosophy to become an ongoing exercise. Innovative solutions are helping the best managed companies reduce costs without compromising on quality. Though a blend of backward integration, competitive sourcing strategies and efficient systems, these companies have managed to significantly rein in costs.

The best managed company in the material sector, Grasim Industries, is the lowest cost producer of viscose staple fiber in the world. According to the management, the company is the most-integrated fiber producer, with the chain stretching right from forest to pulp to fiber to yarn. Almost all the intermediate inputs are captive. Besides, Grasim’s in-house engineering division enables the company to grow in the most cost-effective way. Other winning companies are also undertaking several initiatives to trim the flab.

Tata Motor’s landmark exercise conducted in the wake of a Rs 500 crore loss in 2001 helped it return to the “black” and gave it the confidence to produce the world’s cheapest car. Tata Steel has long maintained its position as one of the lowest-cost producers of steel in the world.ITC’s e-Choupal initiative has revolutionized the agricultural supply chain, creating value not only for the company but also for the farmers.

In an increasingly globalize playing field, operational excellence, as the best managed companies illustrates, has become a necessity. Cost efficiencies are instrumental in helping these companies defend their turfs from foreign players. More importantly, these companies are now taking the war abroad by effectively wielding the cost advantage to emerge as a serious threat to global incumbents.

Mantra#4: Good governance makes business sense

Corporate Governance has become a priority for a world recovering from the shocks of scandals such as those as Enron and WorldCom. In India itself, Clause 49 of the listing agreement, which contains the corporate governance requirements, has been revised at least four times in six years. Most Indian companies have been struggling to comply with the mandatory requirements of this clause. However, we noted that the winning companies go much beyond what is mandated by the law. All but one of these companies has a documented Corporate Governance Policy and a
Whistleblower policy. Most of these companies provide formal training to their Directors and have instituted mechanisms to track the performance of their Boards.

The Tata Group stands out as leading practitioner of good Governance. It claims that adherence to ethical business conduct is rooted in the vision of its founder, Jamsetji Tata, for whom the ‘end’ of entrepreneurial triumph was always secondary to the means’ by which it was achieved. It is this very reputation for honesty and integrity that has helped the Tata Group immensely in its bid to grow internationally. This was reflected at the time of the corus acquisition; when Jim Leng, the Chairman of Corus, went on to call Tata the right partner at the right time for Corus shareholders and employees alike.

Mantra#5: Develop leaders from within

A common feature across the best managed companies is that their leaders have grown from within. A.M.Naik started his career as a Junior Engineer with L&T in year 1965. Y.C. Deveshwar, the CEO of ITC, began his career as a management trainee in the company in 1968. K.M Sheth joined Great Eastern Shipping in 1952. B Muthuraman started off as a Graduate Trainee with Tata Steel. The list goes on. These companies have made a conscious effort towards creating talent pools within the organization and grooming employees for leadership positions.
L&T has launched a company-wide endeavor covering more than 4000 managers to enable them to hone their abilities in people management, and translate those skills into effective leadership and motivation. To ensure quality and depth of leadership, L&T has linked the leadership process with consistency of performance. Select employees are also sent to premier business schools and management institutes to gain experience and knowledge through their Advance Management Programs.Another best managed company, Grasim, believes in identifying and grooming management talents as also undertaking leadership development across levels through various initiatives such as ‘Competency Honing and Leadership Development’ programme at Gyanodaya, the company’s institute of Management and learning.

Henning Holck-Larsen, the co-founder of L&T, couldn’t have been more correct when he said: “ If you want to belong to a country that is becoming a nation, you have to keep the economy growing by creating jobs. And you can only do that by investing in tomorrow, and tomorrow is made by people.” Quality and commitment of workforce can make a significant contribution to the company’s success. India Inc. is becoming well aware of this and is making an effort to take care of people through initiatives that range from providing better facilities at offices, regular trainings and development programs as well as liberal leave policies. Findings from the survey
reinforce this trend: 67% of the best managed companies have specifically documented policies offering sabbaticals to employees and 78% of the best managed companies have institutionalized ‘Fast Track’ programs to recognize high performers. This year’s best of best winner, L&T, has been the recipient of number of awards for its innovative HR practices. One such initiative is the Hitori Yatai Seisan or the Single Workman Station, at L&T’s electrical engineering division. Employees are challenged to take complete responsibility for a product instead of letting them work on individual components. “Ever since we introduced the concept of the Single Workman
Station, our productivity has increased, as the employee has a sense of ownership for the final product. This is a great motivation,” said R.N. Mukhija, President (Operation), L&T. Best managed companies use a variety of approaches to reach out to their employees and go beyond the conventional offering of responsibility, security and salary. They create work environments in which their employees can flourish and dream the organization’s dream.

Mantra#6: Forge stronger partnerships with your supplier base

The top companies in India realize that their performance is inextricably linked with that of their partners. As one of the CEOs put it, “The strategic vision of the company must get absorbed and assimilated across the entire value chain.” To this end, companies are increasingly sharing their vision with partners and seeking active participation in realizing their growth objectives. Our study shows that the best managed companies in India view development of vendors as a key investment towards value creation. It was interesting to note that each of the best managed companies conducts quality audits at vendor sites and has structured systems for vendor performance appraisal. Indian companies are also actively partnering their suppliers in planning, procurement, research and development, quality assurance mechanisms and process improvement initiatives. Two-third of the best managed companies is actively investing in enhancing the technology of their vendors.

Bharti Airtel exemplifiers this mantra in that it has integrated the partnership approach in its business model. Deviating from the conventional model wherein telecom companies owned network equipment, Bharti strategically outsourced the entire network infrastructure to its vendors and incentivised the arrangement by offering 1% of the company’s revenues through SLAS. To allay vendor concerns regarding sustainability of the business, the company further outsourced network management to vendors.

The results that the partnership approach can yield are perhaps best visible in the case of Tata Motor’s breakthrough car, the Nano. Auto component suppliers played a key role in the development of the car and ensured that it met the cost target.

Mantra#7: Pursue quality with Zeal

Best managed companies use quality to do what they do best—create values. These companies devote significant efforts towards achieving the highest levels of quality. Our study confirms that quality is a concept that pervades all sectors and each business. Each of the best managed companies had process quality certifications and 78% of these companies had undertaken organization-wide six sigma exercises. Importantly, all of these companies’ strategic plans include targets for process improvements.

At ICICI Bank, increasing customer grievances and service lapses made the management set up an organizational excellence group (OEG) in 2002. Its aim was to engage in building, sustaining and institutionalizing quality in the bank by facilitating development of skill and capabilities in various quality frameworks. In the industrial products sector, L&T’s Heavy Engineering Division is focusing on improving manufacturing operations through automation, TPM, Six Sigma and ITenabled re-engineering.Tata Steel’s focus on quality led it to launch the ASPIRE program, incorporating best practices of different improvement initiatives such as TOC (Theory of Constraints),TQM(Total Quality Management) and technology. Unrelenting commitment to quality, which is a defining features of each of the best managed companies, creates that all important value among stakeholders—trust.

Mantra#8: Innovate to create value for customers

L&T’s definition of technology “as the springboard for the future and a bridge between aspiration and accomplishments” typifies the new-found attitude of business in India. The new mantra is to indigenize technology, which is evident from the increased R&D expenditure incurred in better managed companies. Companies are increasingly emphasizing on R&D for reducing costs and developing new products. A case in point is Tata Motors, whose new business strategy is focused around the development and production of technically advanced commercial vehicles and passenger cars of world-class quality. The recent launch of the first of its kind goods career, Ace, and its passengers-carrying variants, is the result of the company’s aggressive new product development programme. Innovation in products and services has helped ICICI address the needs of various customer segments. A recent example is the introduction of an end to end technology solution in rural geography that provides customers with biometric -enabled smart cards.

To sustain strong growth rates companies need to look for creating know-how in new areas by building in-house technological expertise and the best managed companies are constantly working towards this very goal.

Mantra#9 Give back to the Society

Corporate social responsibility (CSR) in India can probably be traced back to when the Tata Iron and Steel Company was floated in 1907. the Jamshedpur plant today can be described as a mammoth social out reach programme that covers 600 hundred villages in and around its manufacturing and raw materials operations through initiative in the areas of income generation, health care and education, a good example of linking business goal with a larger societal cause is ITC’s e-Choupal initiative, which has proven to be a digital revolution and has been reshaping the lives of farmers in remote Indian villages.

The Aditya Birla Group believes that CSR id textured into the group’s value systems. The group has created a whole parallel organization to focus on CSR under the stewardship of Rajshri Birla. Its vision is “to actively contribute to the social and economical communities in which we operate. In so doing build a better, sustainable way of life for the weaker section of society and raise the country’s human development index.”

L&T believes that the true and full major of growth, success in progress lies beyond balance sheet or conventional economic indices. It is best reflected in the difference that business and industry make to the lives of people. Today, it views itself as a company engaged in a higher cause of Nation building. In the case of Tata Motors, Singur was chosen by Ratan Tata as the location of the new plant because he believed that eastern India should not be deprived of the economic development enjoyed by the rest of the company. His decision may not have been an economically-prudent one, but it was backed by a strong commitment to the cause of social development. The CSR agenda of Indian companies, indeed, boarders on the extraordinary in vision. The leading Indian companies do not view CSR as an instrument of enhancing their reputation; instead they display an earnest desire to gives back to society and to contribute to the Nation’s progress.

Mantra#10 The Indian Edge

Management thinkers have often talked about the differences in management philosophy and practices as developed in the US, Europe, Japan and even China. Of late, there have been calls to identify what can be termed as the “Indian Approach to Management.” While we can not venture to define the Indian approach to management here, we noted one key difference that distinguishes the approach Indian companies from those of others. This difference lies in their inclusive nature and manifests itself in the way Indian Companies deal with their stakeholders. Today, as companies the world over struggle to show their more humane face and find the balance between profitability and social responsibility, Indian companies are comfortably partnering with their stakeholders to create value for society. Our companies often allude to their business partners as part of the larger corporate family. Employees are treated with respect and hardly any Indian company hands out pink slips in times of diffic ulty. Indian companies often engage in societal upliftment and nation-building projects, not due to any regulatory pressures but from a natural sense of duty. It is this attitude of inclusiveness that is giving Indian companies a strategic advantage in areas where other companies failed. Indian companies are far more successful in reaching out toward sly different customer segments-reach and poor, urban and rural. So they endeavor to globalize, they gain easier acceptance across diverse countries. The support they get from the extended organization multiplies their capabilities. Their strong talent pools par them to successfully compete with the best companies in the world. The mutually-beneficial relationship that the companies have with the community preempts conflicts and ensures smooth conduct of their businesses.

We believe that the inherent trait of inclusiveness that Indian companies posses, in addition to the “10 Mantras”, could well be the defining factor of their tremendous success in the years to come.

Currency of trouble

noreply@blogger.com (Ashish) — Wed, 25 Mar 2009 08:46:00 +0000

Currency of trouble
The rupee's downward march leaves many companies with an inflated debt
By Shriya Bubna

I got this article in The Week, CLICK HERE for the original article.

The fall of the rupee against the dollar is hitting hard the Indian companies that had relied on the relatively cheaper dollar funds to fund their growth in the boom time. Telecom major Reliance Communications' debt stood at Rs 25,820 crore on December 31, 2008. It was Rs 17,440 crore at the end of March 2007. Significantly, about 70 per cent of the debt is in foreign currency. "Although the company has benefited in terms of competitive interest rates on foreign currency debt, adverse movements in currency rates have affected its financial profile," says a release by credit rating agency ICRA on Reliance Communications. As the rupee continues its downward march, many companies are faced with the prospect of an inflated debt on its balance sheet.

Till early 2008, companies which had left their foreign currency positions unhedged had emerged gainers. As the rupee appreciated against the dollar to below-40 levels, their dollar debt fell significantly in rupee terms. But in 2008, the rupee was the second worse performing currency, falling 19.2 per cent against the dollar. This calendar year, it has already seen a markdown of 5.7 per cent, says a Kotak Mahindra Bank research report. "For a lot of companies whose debt is largely in dollars, repayment obligations would increase in a similar magnitude if they have left their positions open," says Vikas Aggarwal, senior vice-president, ICRA.

Companies that have hedged their currency risks are safe to the extent of the cover. "But we see that it is difficult to hedge oneself on long-term loans fully as the market is very illiquid and one does not get good rates and quotes for that," says the chief financial officer of a large public sector bank. Also, there was the belief that the rupee would appreciate.

Many companies borrowed using foreign currency convertible bonds. FCCB is a debt instrument with an option to convert to equity. But if this option is not exercised, it remains as a bond to be repaid on maturity. "Given the buoyancy of the stock market, the issuers would have expected the bonds to be converted into equity. And expecting this conversion, most companies would not have hedged these positions," says the treasury head of a private sector bank. Between 2004-05 and 2007-08, Indian companies are estimated to have raised about $20billion through FCCBs.

The erosion in FCCB prices prompted the Reserve Bank to allow Indian companies to buy back them. "However, due to limited funding, companies have found it difficult to buy back FCCBs. Reports indicate that just 9 of the 156 companies that raised FCCBs have exercised the premature buyback option so far," says a Citigroup report. Companies are not allowed to borrow from Indian markets to buy back these bonds. With other funding sources drying up, they would have to turn to banks to help them repay the loans on maturity.

Meanwhile, a Kotak Mahindra Bank research report expects that "by end-December, the rupee would recover to 50.5-52 a dollar." According to a Credit Suisse research report, "beyond 2009, the rupee could rally below 50 per dollar, as capital inflows potentially pick up and growth accelerates."

The uncertainty about the direction of the rupee has resulted in companies hesitating on taking a hedging call. Says Aggarwal, "Companies are wondering whether to hedge at current levels because what if the rupee comes back to 48 level. A prudent company would be one that is largely hedged."

The trianlge Harmony

noreply@blogger.com (Ashish) — Mon, 23 Mar 2009 08:13:00 +0000

This article is published in Business-Standard 23rd March 2009 ,CLICK HERE for the original link, written by Mukul Pal...

A simple triangle can integrate all market theories. Can we spot it?

While writing ‘Theory of Moral Sentiments’ in 1776, Adam Smith would never have thought that after two centuries people will find it oxymoronic to see morals and sentiment in the same phrase. Now, sentiment creates the popular news, lack of morals are ascribed to capitalists and what is left of the father’s work are fragmented theories.

Today, markets and prices are believed to be efficient, inefficient, random and/or ordered. All efficiency experts won’t subscribe to the mathematical order and some believers of inefficiency will call randomness preposterous.

If this was not enough, we even have a few thinkers defining a new model of finance different from economics. Unlike the coherent attempt to find a universal scientific string theory, there is no attempt to look for an integrated market model. A few behaviourologists are trashing efficiency theorists, who in turn call behavioural finance as nothing more than ‘anomalies dredging’.

Meanwhile the other two viz. random and order experts tune their trumpets. It is a cacophony out there, exacerbating the confusion as the historical crisis unfolds.

There is one thing common in all these market specialisations. Implicitly or explicitly they all look at patterns. Behaviourologists are trying to model human emotion. Fundamentalists attempt to model market information. Random experts wait for the recurring odd event.

And, order driven experts call the market model a pattern or fractal. Behaviourologists raise some questions like, “Can the human mind count?” There are of course limitations to the human minds computing ability, the very reason we cannot be called pure rational beings.

This is the same reason why even if there was complete order till infinity, we would find it muddled with randomness. What if the whole debate regarding market type is because even specialists, like rest of us all suffer from biases? What if markets were efficient, inefficient, ordered and random on the same scale but on a different time? What if order or chaos was a factor of time?

If we assume this to be true, we start answering most of the discrepancies between the various theories. Behaviourologists say humans suffer from an extrapolation bias, suggesting that we can’t see the future and we judge the past and present to estimate the future. This is why when we are on the efficient side of the market mountain, we just see efficiency. Simply putting it, we just see positivity when we are on a rising trend.

When markets are inefficient or say falling, we just look down and are unable to see the bottom or impending order. This extrapolation bias also explains why humans under-react or over-react. When we cannot see the top of the market mountain, we cannot judge how far the high is, this is why we under-react. And, when we are on the declining face, we just can’t seem to place the low and we tend to over-react.

Behaviourologists call it momentum and reversal dichotomy as they don’t see the market mountain. We can explain every other behavioural human error of loss aversion, disposition, ambiguity, validity, representativeness, winner’s curse, gambler’s fallacy, heuristics, framing, risk return distortion, over and under confidence, hope and anxiety, optimism and pessimism, if we continue to look at the market as a two dimensional triangular pattern, a face up and down, a low- high - low, cycle. One can see how the errors start getting polarized along the positive and negative slope, order being the positive and flip side of the negative uncertain chaos.

The triangle also explains why behaviourologists see the fundamentalist’s conservatism in earning predictions as the reason positive surprises tend to be followed by further positive surprises. The unanticipated surprise is the hallmark of overconfidence, a positive slope characteristic of the cycle.

The three-phased glitter and stock selections linked to excess volume, recent news and extreme price reaction is another up cycle character. The unending debate of the Fama and French three factor model, one side talking about efficiency and other side challenging it are also on different slopes of the same triangular cycle. Psychologists say fundamentalists select stocks like bonds, “good stocks are stocks of good companies”.

The reason they follow thumb rules and extrapolation is because the ongoing polarity of the up cycles, makes them comfortable and complacent. This is why a high degree of sentiment interest is followed by subsequent low returns. The turn down catches a majority by surprise. This is why psychologists compare option traders to farmers, taking more risk with cash crops after planting sustenance crops and hedging the downside. It is our way to take more risk, inefficient risk when we feel hedged. This is the reason we always misprice options.

The same triangle can explain why buybacks happen more at market lows and cause under-reaction compared to over-reaction, meaning though buy backs end up performing better, they get less attention from investors, investors under-react. Possession and dispossession of dividend also leads to over-reaction and under-reaction. When investors feel they own a dividend, they tend to over-react and take more risk and vice versa.

The behavioural criticism that humans are naive trend watchers is because humans don’t understand cyclicality. It is this same lack of understanding of cyclicality why past performance fails. The holistic pattern can also explain why prices will always keep oscillating between efficiency and inefficiency? Why riskless pair trading done on price will never be riskless? Why long-short funds playing on price are not hedged like LTCM thought and can fail? Why there will always be psychologists writing ‘trading is hazardous to your health’? Why existence of markets is linked with our inability to see the triangle? Why flipping coins can explain randomness, order, efficiency and inefficiency? Why there will always be a conflict and challenge to earn profits in economics? Why capitalism will always be driven by crisis? Why correlations are cyclical like performance? Why behavioural strategies have more tests to pass?

Why saving for tomorrow is a hindsight bias? Why we save when we should invest, and why we invest when we should save? Why Mandelbort and Taleb work together, though one is the father of mathematical order and the other claims to be the philosopher of randomness? Why ordered fractals are very close to chaotic randomness? Why the Nobel Prize winning prospect theory is about ownership and disposition that blinds humans against cyclicality? Why Prechter-Parker’s Financial-Economic dichotomy in social behaviour dynamics is not the new model of finance, but the other face of the mountain? Why demand sensitivity to price can rise and fall? Why we can make money in markets through physics, mathematics, history, psychology and so on? Why access to information and belief in it is triangular?

The two-faced cycle links everything. We are not trying to simplify 200 years of market knowledge. It was always like this, simple. Psychologists are as biased as everybody else, even if they claim to be otherwise.

Time contrarianism is not for everyone, as the preordained harmony kills all the beautiful stories.

The author is CEO, Orpheus CAPITALS, a global alternative research firm.

Cartoon

noreply@blogger.com (Ashish) — Sat, 21 Mar 2009 12:33:00 +0000

Change is Constant By Venkat Mangudi

noreply@blogger.com (Ashish) — Fri, 20 Mar 2009 10:04:00 +0000

I got this article on Business gyan CLICK HERE for the original article...

Every organization goes through tremendous change as it grows. In fact, change is what keeps it going. Adapting to change is a great asset to any organization. Take the case of Oracle which started as a database company. Today, it has grown into one stop shop for enterprise applications. With the economic downturn that the US is facing today, it is one of the few organizations with the resilience to weather the recession.

Willingness to change is strength, even if it means plunging part of the company into total confusion for a while. - Jack Welch

As an organization matures, it has to increasingly find opportunities to enhance productivity. This does not mean that it must implement software. Refining strategies and business processes is often at the heart of such productivity improvements. Often times, small and medium organizations become enamored by the lure of Enterprise Resources Planning (ERP) applications. One is led to believe these days, that software is the panacea for all problems plaguing the organization. And this is additionally fueled by reports of organizations making dramatic improvements in productivity or profitability. While such results are not impossible, they cannot be used as yardsticks to determine your needs
A detailed analysis of the organizations strengths and weaknesses is the first step to bring about change. While every management consultant will swear by Strategy Maps, Balanced Scorecard or at least a SWOT (Strengths Weaknesses Opportunities Threats) analysis, it might boil down to a simple process documentation to identify the pain points. Every small business owner will agree that the biggest challenge facing them is, not surprisingly, a lack of time. Senior Management's time is spent mainly on ensuring that the business is able to keep up with the daily challenges. One has to take time out to moving from a reactive state to a proactive state. Making small changes in the way you do business is going to make a world of difference to its profitability
Let me explain using a simple illustration. A well known manufacturer of Pneumatic products in Tamil Nadu has followed a no questions asked return policy since the inception of the organization two decades ago. The company is now one of the most profitable in the region with very loyal customers. If a customer complains that the product is defective, they just ship them a new one immediately. The customer has an option to send back the defective one at the earliest available opportunity. Why do I think this example is relevant
Typically, a manufacturer sends someone onsite to investigate the cause of the issue and then replaces it. What this means is that there are additional support costs. Not that the cost of replacement goes away, either. The customer will still insist on a replacement because he does not trust that unit anymore. If, on the other hand, you do not have a field support staff at all you save considerable travel and support costs. The customer feels happy that the replacement is sent immediately. The defective product can be added to the QA team that will then dissect the product to identify the fault and eventually build a solution into the manufacturing process
Another company that follows a similar principle is Intuit. They do not have a support staff at all. They offer free support and the software developers themselves attend support calls. This enhances the feedback mechanism and reduces overhead costs for the company that can be passed on to the customer.
Both these companies have proven without a doubt that, traditional ERP or CRM processes are not the only way to realize profitability and productivity gains. It is unique to each organization and takes a time and effort to change.
One method that is used by sales people of enterprise applications is to identify the tactical pain points in the organization. These tactical pains then group into logical strategic issues. These in turn affect a key business objective. Therefore, if one can attempt to resolve the tactical pains one by one, it will lead to fulfillment of a key business objective over time.
Such initiatives involve great amounts of energy from the top management in identifying the need, analyzing the situation, designing a solution and propagating that solution throughout the organization. Change management plays a very important role in such situations, much more that the process changes itself. As Mr. Welch says, willingness to change is strength. Make sure your employees, customers, vendors and partners know that you are attempting to make a change. This will in itself boost the confidence in the organization.
Make sure your employees, customers, vendors and partners know that you are attempting to make a change.
In short, change is something many of us are not ready to welcome in our lives, be it professional or personal. We tend to maintain status quo to a great extent. In the end, change wins. Even if you oppose it and do not give in, you have learnt something new in the process.

Personal values for a recession

noreply@blogger.com (Ashish) — Mon, 16 Mar 2009 13:53:00 +0000

Business Line Article (Link) - Date 16th March 2009

A young professional who considers me an aunt (the agony type) came to me in a state of distress. With a career graph similar to that of other executives who were considered hot until now, he was gnawed by thoughts that he may be unemployed in a few months from now. Having lived through a few economic downturns myself, I counselled him on some valuable traits which could keep him afloat.

Bill Cosby, arguably the best comedian in the US, once said: “Is the glass half empty or half full? It depends on whether you are pouring or drinking.” Many of us are now on the undesirable side of long-term prosperity, either for the first time or definitely after a long time. In these vulnerable times, here are some thoughts on qualities that will help us in a recession.

Follow your heart

Some B-schools, particularly those that are not considered ‘premier’, seem to be victims of a ghastly whisper campaign. Students of these institutions, who have to opt for their specialization, are being warned of hardships if they make a wrong choice. To me, the only wrong choice to make is to be in a field you don’t want to be in.

Sir Ken Robinson, the internationally renowned expert on creativity who has lectured passionately on education, has beseeched parents and students to pursue what they love doing. He says, “We cannot prepare for the future because the future is unknown.”

Frugality and simplicity

The Ireland-born English writer and poet Oliver Goldsmith said, “If frugality were established in the state and if our expenses were laid out to meet needs rather than superfluities of life, there might be fewer wants and even fewer pleasures, but infinitely more happiness.” My maid is a cheerful lady who lives in an 8x8 feet hut with her mother and daughter. She has aspirations, particularly for her child, and is a good bargainer when it comes to her salary. She goes about her work with a smile on her face and a song on her lips. I do hope this thought helps you imbibe and practise the next attribute.

Attitude of gratitude

Almost all holistic systems of healing, including those that claim to be life altering, have one aspect in common. They encourage you to say “thank you”, be it for the music, the food or the blue skies; whatever you take for granted. In simple terms, ‘count your blessings’. Envy on the other hand is defined as the art of counting other people’s blessings and is best kept on a tight leash.

Sense of Humour

Humour will probably seem too trivial in a time of such hardship. But to look at life seriously, one needs a sense of humour. Oscar Wilde, my favourite humourist, said: “It is a curious fact that people are never so trivial as when they take themselves seriously.”

I believe that more than IQ or EQ, HQ or the Happiness Quotient is what we should look at. If on picking up a copy of Reader’s Digest, you go straight to ‘Laughter, the Best Medicine’, ‘Humour in Uniform’ or ‘College Rags’, you score highly on HQ.

Art Buchwald was able to find mirth even in the process of dying and wrote a book on it called Too Soon to Say Goodbye.

grab opportunities

A young entrepreneur called Manjunath used to run an electrical products shop in Chikpet in Bangalore and worked hard to make his business a success. He noticed that it took a long time and many trips to the tea shop to get beverages like tea and coffee supplied to his shop. He also found that all the other businesses in the area faced the same problem. Therefore, he set up a hot beverage delivery service where local businesses could order tea by giving him a ‘missed call’ on his mobile. Alerted by the ‘missed call’, Manjunath sends a delivery man with tea and coffee to the customer’s premises. Today, he has a roaring business popularly called the ‘mobile tea shop’. He has also expanded the menu to include seasonal drinks like buttermilk. This may not be his ‘dream’ enterprise, but it is one that can definitely fund almost any dream of his!

In a story made popular by Abraham Lincoln, it is said that an Eastern monarch once charged his wise men to present him with a sentence which should be true and appropriate at all times and in all situations. They presented him with the words: “And this too shall pass away.” Appropriate words those for these tough times for they inspire us to focus on the simple qualities required to keep marching ahead.

Trust me, I'm the boss

noreply@blogger.com (Ashish) — Mon, 16 Mar 2009 13:35:00 +0000

This is the article published in Business Line(16th March 2009)
Source of this article is http://insight.iese.edu/doc.aspx?id=954&ar=20 , article by Pablo Cardona, Wei He

Transformations and adaptations cannot take place within an organization unless the employees trust their leader. Studies have shown that transformational and charismatic leaders are able to build this trust in their followers, and that there is a correlation between leadership and effectiveness.

Conversely, if there is a lack of trust within an organization, employees are more likely to take a defensive stance, which can be detrimental to the organization and its performance. Given the current economic climate and prevalence of downsizing, creating trust is a challenge like never before.

Recognizing the seriousness of this issue, IESE Prof. Pablo Cardona and Wei He look at how trust is initiated, developed and maintained in organizations. Their paper examines the factors that influence trust levels in boss-subordinate relationships, and they suggest some ways of restoring the trust that is so essential for the successful running of any organization.

What Is Trust?
Though trust has been studied across a variety of fields, from history to psychology, the concept remains difficult to pin down in one universal definition. Generally speaking, however, trust can be understood as a relationship that involves a “willingness to be vulnerable to the action of another person, based on positive expectations about the other person’s intentions and behavior,” according to Cardona and He.

Based on this definition, trust becomes not necessarily a choice, nor a specific behavior, but more an attitude toward a particular person who can be the cause of another’s choices. Trust, therefore, is the attitude someone takes based on direct or indirect experience with another person, past interactions or personal observations of how that person behaves toward others.

The Trust Factor(s)
By definition, the boss wields power over the subordinate. However, this does not mean that the worker is a passive receiver of trust. Rather, the worker’s perception of the boss will determine his or her participation in “an interaction of trust.”

What factors encourage trust or distrust between workers and their supervisors?

First, there are the personal factors – characteristics of the boss and the subordinate – that affect the extent of the subordinate’s trust in the boss. These factors include demographic characteristics, personality traits and the professional competence of each.

Second, the boss’s behavior during interactions with subordinates will also determine the boss’s trustworthiness. The five key types of behavior are consistency, integrity, communication, delegation and consideration.

The Matrix Applied to China
Trust is a dynamic relationship, and the interaction process involves both the boss’s personal factors and his or her behavior. Obviously, the personal factors are concerned with the characteristics of both parties involved in the interaction, while the boss’s behavior is concerned with the relationship between boss and subordinate.

Cardona and He provide an illustrated matrix of this dynamic relationship. This matrix reveals a variety of dimensions, including the idea that, at the start of a relationship, favorable personal factors are necessary for trust. However, those factors may become less important as time goes by, because they could be compensated by accumulated past experience.

While their trust matrix is based on Western-based cultural studies, it can just as easily be applied to China. The authors take the four categories of the matrix and match them with four Chinese counterparts: the fast-dying paratroopers, the slow-dying old fellow, expatriates and successful entrepreneurs. Combinations of personal factors and the boss’s behaviors will lead to different perceptions from subordinates: respect only, trust or distrust.

Developing Trust Over Time
The length of a relationship can often indicate the degree of trust between parties, with the number of years between a boss and subordinate thought to have a positive correlation in terms of the level of trust. However, trust does not automatically come with time, but rather with the quality of the interactions between the boss and subordinate.

In general, the subordinate will develop an initial trust or distrust of the boss based on personal factors. Competence and trustworthiness are often based on information received via third parties or on direct observation of how the boss behaves toward others.

When boss and subordinate begin to interact, trust will develop based on the quality of their interactions. The boss’s behavior and subordinate’s response provide a dynamic relationship of mutual influence. Obviously, as the boss is in a position of greater influence, his or her behavior is critical as to how it affects the subordinate’s motivation.

The interaction will continue with the boss’s initial judgment of the subordinate’s capabilities. From that initial interaction, the relationship develops. While a boss might trust a subordinate, it does not mean the subordinate trusts him or her back, though it is essential to have some degree of reciprocity.

Potential Risks
While many bosses express a strong desire to build and maintain trust, not everyone is able to achieve it. This is due to four issues in the boss-subordinate relationship: the nature of the relationship, unclear principles and values, incongruence between words and behavior, and misuse of power and authority.

But if bosses and subordinates are able to interact effectively and achieve the desired trust, the results will be positive all around. Indeed, the level of trust can eventually be such that, according to one American survey, the majority of workers polled said they would trust their boss with babysitting their own children, and 77 percent said they would actually hire their own boss. Now that’s trust!

Worried about the slowdown? Don't be. Simply follow these six steps to bright future ( article from thesmartmanager)

noreply@blogger.com (Ashish) — Tue, 17 Feb 2009 17:11:00 +0000

This article is from THE SMART MANAGER Jan-Feb 09 Issue....Article by Aditya dev sood.

The world has turned upside down and may take time righting itself. Rather tha dreaming about remaking the world, many creative consultancies now have to think about making their next payroll. When growth goes negative, design begins to look like a luxury and budgets are frozen.

Here are a few pointers to help you make the best of a temporary recession:

Create a burn rate optimization tool :
Make a six month survival plan. Establish that you can and will still be in business in six months time by cutting spending and delaying investments. Within that horizon you will have found ways to understand and adapt to new market conditions and flourish again.

Enter the crisis:
It may be a management chiche that in Chinese, crisis = Danger + Opportunity, but it is true nonetheless that in a crisis people change everyday ways of thinking and become open to new options and ways of doing things. The new can more easily become the familiar, more so in a naturally creative company.

Argue from efficiency:
there are two angles. First, out sourcing works because it leads to business efficiencies. Creative consultancies represent a form of outsourcing, though they are not conventionally seen that way. Show your clients exactly how you are a more direct path to innovation than their internal team. Remind them that you have a wider breadth of expertise across a range of industries; that you are in tune with current design trends; that you have therefore accumulated expertise and specialization, while their internal team knows only how to deal with their particular widget. Second, if a client sees design can help them succeed in the market by creating products that their consumers actually prefer. Design is the path out of stagnation toward innovation and new market opportunities.

Thrive through adversity:
creative people know better than most that the mind focuses better as the deadline draws near. Share the fear with you larger team, and allow the group to consider new market needs they can fulfill, ones they might have earlier thought were too infra-dig or beneath their caliber

Build systems and establish processes:
The slack you're enjoying now is actually haven-sent, given how busy you've been over the last decade. Figure out how to improve internal processes so that the company moves like greased lightning when things finally pick up.

Live each day (as if it were your last):
This is hard for any team or person to get right, but most especially for young, lateral-thinking minds, pushing continuously into the future. Even as you pedal harder every hour of your eight hour day, step back and step out during after hours. Spend time with family and take good care of yourself. An economic slowdown is a chance to take a breather, to reconsider your priorities and the creative directions your company should take.

What is Open BIDDING?

noreply@blogger.com (Ashish) — Mon, 02 Feb 2009 16:57:00 +0000

Bidder have to offer a price higher than the two-week formula, which will benefit shareholders. Those who want to exit can do so when the offer is launched while other share holders can choose to stay invested.

What Does It mean to Have Vision? HBR

noreply@blogger.com (Ashish) — Sat, 31 Jan 2009 08:42:00 +0000

What does it mean to have vision? (HBR review)
[I got this in HBR Jan 2009 review

Across the studies and research traditions, vision has been found to be the central component in charismatic leadership and the essence of the oft-noted distinction between management and leadership. But what does it look like in action? As detailed by Global Executive Leadership Inventory, behaving in visionary way is matter of doing three things well;

Sensing opportunities and threats in the environment

simplifying complex situations
foreseeing events that will affect the organization.

Setting strategic directions

encouraging new business
defining new strategies

making decisions with an eye toward the big picture.

Inspiring constituents
challenging the status quo
being open to new ways of doing things

inspiring others to look beyond limitations

Can microfinance be used for financial inclusivity?

noreply@blogger.com (Ashish) — Wed, 28 Jan 2009 05:06:00 +0000

The study focuses on Microfinance and its financial inclusivity in India. Whether microfinance is success of failure in India, can it be used as a means of reaching to poor. What is the impact of current liquidity crunch on microfinance, can it be used as a mean of providing income to poor people.

Microfinance is often defined as financial services for poor and low-income clients. Micro Finance Institutions (MFIs) are providers of very small loans to unsalaried borrowers taking little and no collateral. These institutions commonly tend to use new methods developed over the last 30 years, these methods includes lending and liability, pre-loan saving requirements, gradually increasing loan sizes and an implicit guarantee to ready access to future loans if present loans are repaid fully. The microfinance industry in the country has over 2500 micro finance providers in the form of trusts, societies, cooperative and NBFCs.

Poverty is multi-dimensional. By providing access to financial services, microfinance plays an important role in the fight against the many aspects of poverty. For instance, income generation from a business helps not only the business activity expand but also contributes to household income and its attendant benefits on food security, children's education, etc. Moreover, for women, who, in many contexts, are secluded from public space, transacting with formal institutions can also build confidence and empowerment.

The poor already save in ways that we may not consider as "normal" savings--- investing in assets, for example, that can be easily exchanged to cash in the future (gold jewelry, domestic animals, building materials, etc.). After all, they face the same series of sudden demands for cash we all face: illness, school fees, need to expand the dwelling, burial, weddings.

These informal ways that people save are not without their problems. It is hard to cut off one leg of a goat that represents a family's savings mechanism when the sudden need for a small amount of cash arises. Or, if a poor woman has loaned her "saved" funds to a family member in order to keep them safe from theft (since the alternative would be to keep the funds stored under her mattress), these may not be readily available when the woman needs them. The poor need savings that are both safe and liquid. They care less about the interest rates that they can earn on the savings, since they are not used to saving in financial instruments and they place such a high premium on having savings readily available to meet emergency needs and accumulate assets.

Poor people use savings for a wide range of purposes—from taking advantage of business opportunities to accumulating assets to protecting against a variety of risks. They have a variety of cash requirements for events like the marriage and education of their children; structural risks like macroeconomic fluctuations and seasonal variations in cash needs and availability; and crises like theft, fire, damage, accidents, and death of a family member. The less predictable the opportunity or risk, the more difficult it is for the poor to manage without some sort of savings.

Poor value security above all other considerations. Other priorities include convenient locations and operating hours, flexible products, helpful and friendly staff, confidentiality, and a decent return (although this last feature is less important to the smallest depositors). Appropriate products encompass both highly liquid accounts that allow for frequent, small deposits and withdrawals, combined with time-bound accounts that allow people to save for specific objectives (school fees, weddings, etc.).

Microfinance products such as savings accounts, microcredit loans (usually $50 to $150), and health insurance empower the poor to lift themselves out of poverty. Through microfinance, they can secure better nutrition, education, healthcare and housing for their families.

Microfinance success or failure

Micro-finance programs have given women and men access to savings and credit. Microfinance institutions and self help groups in India are playing crucial role to help poor people.

Some of Microfinance institutions in India are 'Arman India', 'Arohan', 'Asmitha Microfinance', 'Bandhan Microfinance', 'Basix Microfinance', 'Janalakshmi', 'Moksha Yug', 'Saadhana', 'Samridhi Microfinace', 'Sarvodaya Nano Finance', 'Share Microfinace','SKS India', 'Spandana India' and Self help groups are 'SKDRPD India', 'Aadarsh Welfare Society'.

Microfinance institutions come in all sorts of shapes and sizes, but the main ones plying their trade in rural India are Self-Help Groups (SHGs) and for-profit MFIs. SHGs—numbering 3.4 million and servicing 45 million poor—are groups of up to 20 women who borrow directly from banks at a 12 per cent rate and then lend the money internally to members with additional percentage points tacked on. Interest income earned on each loan goes into a savings pool. In about five years, each individual from the group has a nice little nest egg of around Rs 25,000 to spend as they like. For profit MFIs like SKS and Spandana—only 25 of which serve 14 million people, but are the fastest growing outfits today in microfinance—have a different approach. They loan out money using the Grameen model, within groups of five women or so—but the loans are to individuals. The group exists as a collective guarantee for the loan and if someone defaults, the rest of the members have to come up with the cash. A staggering 800 million of India's poor are starved of formal credit and MFIs can be a godsend to their poor clients who use this cash injection to try and transform themselves into successful minientrepreneurs by rearing buffalos or selling vegetables and thereby improving the quality of their lives. Without them, the only alternative is to sell one's pound of flesh to the money lender, who is only too happy to give out funds that command interest rates that range from 100 per cent to a mind-boggling 5,000 per cent, depending on the nature of the loan.

There is evidence of significant potential for micro-finance to enable women to challenge and change gender inequalities at all levels if there is a strategic gender focus. There have also been many important recent innovations in products and services to enable women to better benefit. Nevertheless benefits cannot be assumed and even financially sustainable micro-finance if it is gender blind may seriously disempowering for women and increase inequality. Many of the strategies promoted for financial sustainability may exacerbate the negative impacts of debt, because of overpaid expansion, rigid product design inappropriate to women's economic activities, cutting of necessary support services and lack of attention to local economic contexts.

Challenges currently faced by MFIs

The current challenges are in the form of "funds" – both capital and funds for on lending. Retail participation in the capital structure requires listing on the stock exchange, for smooth operations regular funding from banks and financial institutions is critical. Along with the funding, human capital and technology are the main area of concern.

There is less effect of the global financial crisis on the poor, mainly because micro enterprises are not dependent on global consumption patterns; "economy of poor is decoupled from the global crisis", but the surplus generated by micro enterprises has come down. Along with this as the liquidity of large banks diminishes, it directly affects the ability of MFIs to give loans to their customers. When financial crisis coincides with food and oil price fluctuation; which leads to increase in the cost of inventories for the business and basic necessities of the family, there was increase in the demand for micro loans.

Inflationary situations affect more to poor people, since there is increase in the prices has more impact on poor families. This leads to more demand for the micro loans, because of less funds with banks there is less supply for the micro loans and more interest rate though the amount is very less.

According to a report called "Maturing of Indian Microfinance" by EDA Rural Systems and numbers published by the World Bank, the current estimated market for microcredit in India is Rs2,400bn. This is based on a calculation that there are 150 million poor household in the country (as per World Bank statistics for India) with an average credit demand on Rs20,000 per household. The credit demand is adjusted with a 20% upside for the urban poor households.

With the high inflation in the economy and global crisis, the overall requirement of the micro credit in the underserved low-income segment has gone up substantially. This is due to increase in costs of inputs and also an increase in overall volumes for the products manufactured by microfinance clients.

Microfinance has grown significantly in India and worldwide from last 5-6 years.

Microfinance is playing very important role for the development of poor, though there are some negative impact, like too much loan is given without any collateral, there are situations where MFIs start competing with each others, loan is given to more people for the same purpose without understanding their business plan e.g. many retail shops in same village will not help the purpose of microfinance i.e. to bring poor people above poverty line, again many times loans are not given to poor people only.

Regulations should be tightening so that only poor and needy people will be benefited by microfinance.

Conclusion

Microfinance is very successful India, to help poor people. Many MFIs and Self help groups are working in India and their customer base is also increasing year on year. Microfinance is helping poor people to fight against many aspects of poverty. Though microfinance is a failed in some cases it has successfully allowed poor people to lift themselves out of poverty in many parts of country.

Biblography

http://www.ifmr.ac.in/cmf/elibrary/

http://www.indiamicrofinance.com/

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http://knowledge.wharton.upenn.edu/

http://infochangeindia.org/

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http://www.indiamicrofinance.com/search/label/Microfinance%20India

http://microfinance.cgap.org/

http://www.indiamicrofinance.com/2008/11/global-financial-crisis-hitting-south.html

http://microfinance.cgap.org/2008/12/15/how-sustainable-is-microfinance-really/

http://microfinance.cgap.org/2008/11/18/microfinance-and-the-financial-crisis/

http://crisistalk.worldbank.org/

http://digitaldebateblogs.typepad.com/digital_money/

http://www.microcapital.org/

http://www.microfinancegateway.org/section/faq#Q7

http://www.vccircle.com/500/news/microfinance-less-impacted-by-global-crisis-says-akula

http://www.thaindian.com/newsportal/business/global-crisis-has-not-affected-micro-finance-sector_100110817.html

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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1157369

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Problems faced by mangers

noreply@blogger.com (Ashish) — Sun, 25 Jan 2009 08:44:00 +0000

Business environment is changing drastically in today’s corporate world. In early years of current management era manager were suppose to work exclusively with equipments, data and systems; performing traditional tasks. But scenario of management responsibilities has been changed significantly and today’s manger faces issues like cross training, personnel management , interdepartmental communication and widening job scope. Globalization is shaping and re-shaping business environment, resulting in increase of competitors, demand of new sourcing strategies and facing new markets with new demands.

Irregular flow of information often subject to quantitatively strong fluctuations, controlling the flow of information is necessary otherwise these fluctuations can become detrimental. Information controlling is the analysis, evaluation and importance attached to the data that collected and provided with the data under various criteria. Because day by day managerial job is becoming more and more hectic manager needs to continuously look for new ways to improve speed and quality along with reduction in rising cost.

Rising costs is another problem for the managers. Rising in the cost of services and wages is becoming more and more troublesome for managers. In current environment there is no guarantee of the employee’s being loyal to company, then in that case, to get more money employees ask for higher wages. Also there is requirement to keep the cost of services, provided by company under constant watch. If company starts loosing because of rising service cost then mangers put attention to solve this issue.

As complexity of electronic data processing increases, security often decreases. Not only does this pose problems in the form of breaches, it also has legal ramifications with regard to license. This problem especially faced in IT industries. IT companies buy very expensive software and after some months or years new version comes up, then again managers need to change their strategy along with change in technology. Customers may want to change or upgrade to new technology, then managers has to negotiate for the money and services, this may lead to unsatisfactory customer service.

Mainly following are the main challenges faced by today’s managers

Responding to Globalization: Various forces of globalization are reshaping the business environment generating new competitors and demanding new sourcing strategies and market. In dynamic market situations it’s very hard for managers to predict any concrete goal and strategy for the business development. Short term strategy may work very well but for long term, goal setting is the problem. Again dynamic market conditions of global economy make the profit prediction shaky. No one is able to predict the variations in the profit and losses, business can make. Responding to globalization is becoming more and more important; this result in redefining business model. Today change is happening at a rate that does not afford organizations the luxury of managing one major change at a time. Today managers are facing two questions because of globalization, how does relentless change redefine the nature of management and the structure of an enterprise? And what role should management play in re-shaping the enterprise?

Managing work force diversity: Because of globalization and open market system for business, management has to face diversity in work force. Now a day’s businesses are spread over different cities in various countries. Thus many times not only gender and age diversity, but cultural diversity becomes essential to manage work force. Basically heterogeneity of people becomes challenge for the managers because of variations in the ethics, motives and working culture.

Improving quality and Productivity: Main problem for the management is to decide, what is to produce, how much is to produce and where is to be produce. Management has to decide either to produce different products or to emphasis on one product. Once deciding this, managers have to make sure that the quality of the product is good. It takes long time for the organization to create a market about the product; but if there is any lacuna in quality and productivity then because of high competition it’s become hard for the product to sustain in market.

Improving customer service: Improving customer service is sometimes managers think they will get around to in time. But that time rarely comes. Changes in the requirements or changes in the taste of customers become hurdle in the improvement of customer service. To solve this issue many times managers try to set up scenarios that challenge employees and cover the full range of customer requests. At times management also keep two scenarios running parallel and asks employee to maintain balance.

Along with above problems managing labor force is again a challenge for managers. Now days there is no unwritten contract of being loyal to an organization, because of this many employees seems to be fired from the organization or they leave the organization for getting good salary job. In the absence of contract between employee and organization, employee may decide to leave an organization in the middle of project work. This is very challenging situations for managers to deal with.

To overcome these challenges managers have to modify the working culture. Managers need to be aware of the skills of their subordinates and people under them. Empowering of employees is the best way to get maximum output from them. People get bore because of routine work, then to get more output managers can make changes or innovations in the working style. Along with the challenges discussed above, managers have to make efforts to understand their employees. If managers are able to gel with their employees then only employee will be happy to work with the manager, and he/she will be ready to face or tackle the challenges faced by managers. By knowing employee managers will be in a position to understand the working capacity of employees and allocate the work accordingly. This will also help for the performance appraisal and to know liking of an employee about the job and the work allocated to him/her.

Conclusion: Considering many changes in the working environment and globalization today’s managers are facing many new challenges comparing to previous years. Today’s managers are coming up with new ideas and theories about the challenges faced by them. Inflation and changing rates of foreign exchanges are also creating challenges to managements, to handle this managers have to come up with new innovative ideas.

Person perception is all about making judgment about others.

noreply@blogger.com (Ashish) — Sun, 25 Jan 2009 07:47:00 +0000

Perception: Attempt to develop explanations of why things are in a certain way.

Whenever any individual joins some organization; one observes people and their behavior. Then he/she attempts to develop explanation about, why people behave in certain manner. This is the perception of that individual about the environment around him/her. Thus Perception is the process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.

Perception of an individual is caused because of External and Internal factors.

Whenever behavior of an individual is under his/her control it is known as internally caused behavior. E.g. coming late in office because of oversleep, is an internally influenced behavior. Such behavior is known as Internally caused behavior.

Also when individual behave because of outside causes is known as externally caused behavior. E.g. coming late in office because of traffic jam or some other such reason is an externally influenced behavior. Such behavior is known as Externally caused behavior.

Attribution Theory: When individuals observe behavior, they attempt to determine whether it is internally or externally caused

Attribution theory is mainly of three phases.

· Observation.

· Interpretation.

· Attribution of Cause.

Individual behavior comes under observation.

Interpretation is of following three types

1. Distinctiveness: Refers to whether an individual display different behavior in different situations. If individual always shows the same behavior, it is internally caused behavior, else if the behavior is unusual one then it is caused because of External things. E.g. If one individual always comes late in office then it is an internally caused behavior but if he/she seldom comes late then we can say that this is because of external causes.

2. Consensus: Whether in similar situation, everyone responses in the same manner. If everyone behaves in similar way then consensus is high, i.e. the behavior is externally caused. E.g. If all employees who use same route to come to office; come late, then this can said to be an externally caused behavior. If consensus is low then the behavior is internally caused.

3. Consistency: This is refers to the consistency in the behavior of an individual. Does the person responses same way over time, again and again. If yes then it is said to be internally caused behavior, otherwise it is an externally caused behavior.

Whenever any organization uses Attribution Theory, there are biases or errors those distorts attributions.

Fundamental attribution error is the tendency to underestimate the influence of external factors and over estimate then influence of internal factors when making judgments about the behavior of others.

Self-serving bias is the tendency for individual to attribute their own success to internal factor, while putting the blame for failures on external factors.

E.g. if one member of the sales team is making calls to the customers, but neither of them is replying, then other team members may blame on the laziness of the 1^st member, this is an fundamental attribution error in perceiving the behavior.

Also if some case customer itself needs some product of an organization he/she calls the sales person, then that sales person might take pride in saying that, he/she made the deal possible, this is a Self-serving bias.

Frequently used short-cuts in judging others are as follows

· Selective Perception: People selectively interpret what they see on the basis of their interest, background, experiences and attitude.

· Halo effect: Drawing a general impression about an individual on the basis of a single characteristics.

· Contrast effects: Evaluation of the person's characteristics that one affected by comparisons with other people recently encountered who rank higher or lower on the same characteristics.

· Projection: Attributing one's own characteristics to other people.

· Stereotyping: Judging someone on the basic of one's perception of the group to which that person belongs.

Specific applications in Organizations

In any organization judgment happens on the basis of performance. And Performance of employees' is related to their perceptions too.

Employment Interview: Employees are employed on the basis of perceptual judgments of interviewer. Also the perception about the employee may be different by different interviewers. Many times in organizations interview is very common application for the employee's performance; and this is heavily influenced by personal perception of interviewer.

Performance Expectations: People's expectations determine their behavior. Self-fulfilling prophecy is a situation in which one person inaccurately perceives a second person and the resulting expectations cause the second person to behave in ways consistent with the original perception.

Ethnic Profiling: A form of stereotyping in which a group of individuals is singled out- typically on the basis of the race or ethnicity- for intensive inquiry, scrutinizing, or investigation.

Performance Evaluation: An employee's performance appraisal is very much dependent on the perceptual process.

Employee Effort: Many organizations give more importance for the employee's performance rather his/her perception in the organization. As assessment of an individual's effort is a subjective judgment susceptible to perceptual distortions and bias.

Return on Investment

noreply@blogger.com (Ashish) — Sat, 24 Jan 2009 05:15:00 +0000

The basic measure for evaluating the performance of capital investments is the return on investment (ROI), which always is expressed as a percent. To calculate ROI, the amount of return is divided by the amount of capital invested:

ROI% = return/capital invested

ROI is always for a given period of time—one year unless clearly stated otherwise. Return is a generic term and means different things for different investments. For investments in marketable securities, return includes cash income received during the period and the increase or decrease in market value during the period. The ROI on an investment in marketable securities is negative if the decrease in market value is more than the cash income received during the period.

Money Market

noreply@blogger.com (Ashish) — Thu, 08 Jan 2009 16:21:00 +0000

The money market is a market in which the cash requirements of market participants who are long cash are met along with the requirements of those that are short cash. This is identical to any financial market; the distinguishing factor of the money market is that it provides for only short-term cash requirements. The market will always, without fail, be required because the needs of long cash and short cash market participants are never completely synchronized. The participants in the market are many and varied, and large numbers of them are both borrowers and lenders at the same time. They include:

the sovereign authority, including the central government (“Treasury”),as well as government agencies and the central bank or reserve bank;

financial institutions such as the large integrated investment banks,commercial banks, mortgage institutions, insurance companies, and finance companies;

corporations of all types;

individual private investors, such as high net-worth individuals and small savers;

intermediaries such as money brokers, banking institutions, etc.;

infrastructure of the marketplace, such as derivatives exchanges.

Derivatives Basics(3) - How is the future price arrived at?

noreply@blogger.com (Ashish) — Mon, 05 Jan 2009 16:55:00 +0000

How is the future price arrived at?
Future price is nothing but the current market price plus the interest cost for the tenure of the future.
This interest cost of the future is called as cost of carry.
If F is the future price, S is the spot price and C is the cost of carry or opportunity cost, then
F=S+C
F = S + Interest cost, since cost of carry for a finance is the interest cost
Thus,
F=S (1+r)^T
Where r is the rate of interest and T is the tenure of the futures contract.

The rate of interest is usually the risk free market rate.