The essence of strategy is choosing what not to do. ~ Michael Porter
The essence of strategy is choosing what not to do. ~ Michael Porter
Meaning of Success: “See your goal, understand the obstacles, create a positive mental picture, clear your mind of self doubt, embrace the challenge, stay on, show the world you can do it.”
The style of management in changing situations is influenced by various factors like organization’s culture, value system, personal history of the manager or chance or opportunity.
The style of the manager, nevertheless, impacts the performance of various stakeholders associated with the organization including the manager himself.
What management style do you belong to? Are you driven by results, Are you autocratic or a people man, driven by relationships..
The leadership ~ management grid (Source Blake RR & McCanse, A. A, 1991 ~ Leadership Dilemmas ~ Grid Solutions) classifies the leadership styles into 5 distinct types.
(1) Impoverished Management ~ Very little concern for productivity or people
(2) Country Club Management ~ Very great concern for people but very little for productivity
(3) Authority – Compliance Management ~ Great concern for productivity & very less concern for people
(4) Middle of the Road Management ~ Compromising ~ Medium concern for both productivity and people
(5) Team Management ~ High concern for both people and productivity ~ Considered to be the Ideal Style
What category do you fit in? It’s Worth a look……
The other day, a doctor was asking me about investment banking and why is it so hot. He was rather perplexed about the sky-high digit salary figures doled out to MBA’s by top notch financial MNC’s. And so..I thought of penning down my thoughts and discussion with him for the benefit of those who would like to know the reasons for the lucrative remuneration of the blue-eyed I-Bankers..
Investment Banking are involved primarily in 2 main businesses : a) Mergers and Acquisitions and b) Merchant Banking
The MnA team advises companies on various aspects when the companies decide to expand and buy another company. The various aspects involved are strategic analysis of the deal, Screening, Due Diligence, Valuation, Structuring of the deal, Negotiation, various approvals, regulatory compliance etc. In essence the MnA team facilitates the process by bringing in expertise. The I-Bank earns a fee which is typically a percentage of the deal. So for eg: In the I-Gate – Patni deal which was about $1Billion, a percentage of the deal amount goes to the I-Bank…
Now here is the sweet part. Typically the team size is small and the bonuses earned are spread in this small team which makes the profile of an I-Banker extremely lucrative and ‘Hot’ ~ Since the team size is small, the hiring is small and hence getting into this profile is low.
The other area is Merchant Banking, which involves raising capital for the businesses. The Banker’s job is to figure out the best way to raise money, keeping into consideration market conditions, duration of requirement, urgency etc. For Eg: IPO or Initial Public Offering is a type of Issue Management which an I Banker would get involved
I Bankers are one of the most sought after professionals and their rewards multiply once they develop a reputation in the circle for their expertise ~ which makes them a HOT property.
Peter Drucker ~ Success Advices
– The purpose of business is to create a customer.
– Efficiency is doing things right; effectiveness is going the right things.
– A manager is responsible for the application and performance of knowledge.
– Knowledge has tobe improved, challenged, and increased constantly, or it vanishes.
– The most important thing in communication is hearing what isn’t said.
– Follow effective action with quiet reflection. From the quiet reflection will come even more effective action.
PEST analysis is a strategic business measurement tool.
PEST is an acronym for Political, Economic, Social and Technological factors.
These factors are primarily external factors which are used prior to doing a SWOT analysis (which is used to assess both internal and external factors).
PEST is used to assess business/strategy planning, marketing positioning, business and product development, product introduction, new idea, business diversification or to review the strategy or position of a organization.
There are variations to the PEST analysis like the PESTLE (includes Legal and Ecological/Environmental)
There are many situations where systematic PEST analysis gives clarity about the external factors which can affect the decisions such as :
More Strategic Frameworks here.
“Your entire company should be considered your branding department”
Service – Customer Service – One of the most important touchpoint. But quite often, neglected by many organizations around the world. One attribute is measuring the consumer complaints. Remember “What gets measured get managed and what gets managed gets done”
Here is a mechanism, a company can use to predict the impact/reach or impressions a customer complaint can potentially create.
The calculations some fair assumptions to make the calculations :
Assume, only 1 of 25 customers make the actual complaint against the product or service. Remaining 24 dissatisfied remain silent due to any reason (not bothered, lack of time etc.)
Assume, each dissatisfied customer speaks bad about the companies products/services to (8 – 16) people, let’s average that to 12 people.
Now, if you receive 1000 complaints in a month, let us calculate the potential bad impressions the complaints can have on the product/services & ultimately the brand1. Received 1000 complaints / month (by letters/phone/email etc) 2. Translates to (1000 x 12) x 25 = 3,00,000 nos of dissatisfied customers annually 3. Which is 3,00,000 x 12 (Word of Mouth) = 36,00,000 nos of bad impressions …. Wow!!!!
In today’s world of ‘Free Economy’ where products are literally marketed as services and experience, a lack of insight into the customer services/experience is spelling disaster (in capital letters, repeated twice, with a dramatic pause in between) for the brand….!!!!
Sustainable Competitive Advantage – The 3 essential ingredients – Passion, Innovation, Initiative.
What gets measured, gets managed ~ Peter Drucker
Performance Measures should be linked to Value. Managers are evaluated based on these measures. Of course, there are extremely important non-performance measures like Customer Satisfaction, Quality, Cycle Time which is important and not captured in the objectivity of the financial measures.
So what are the financial performance of measures which are commonly used….
There are four main categories of financial measures, which are used for performance:
CASH FLOW MEASURES
Gross cash flow
Earnings before interest, tax and depreciation/amortization (EBITDA)
Earnings before interest and tax (EBIT)
EBITDA – Depreciation/Amortization
Net operating profit after tax (NOPAT)
EBIT ( 1- tax rate)
Net Income (NI)
EBIT + Interest Income – Interest Expense
Earnings per share (EPS):
Net Income/ # of shares outstanding
Return on Equity (ROE):
Net income/Total common equity
(NI/Sales) x (Sales/TA) = ROI
Identify value drivers based on different components of ROE
Return on Capital Employed (ROCE) or Return on Net Assets (RONA):
NOPAT/ Net Assets (TA-Current Liabilities)
SINGLE PERIOD VALUE ADDED MEASURES
Residual Income (RI):
EBIT minus a charge for assets
Economic Value Added (EVA):
Stern Stewart measure of economic profit minus a charge for capital employed
Net Operating Profit After Taxes (Stern Stewart) – (Weighted Average Cost of Capital) X (Capital Employed)
Is value creation by Venture Capitalists a reality or myth?….
Whatever it is… there is no denying the fact that Venture Capitalists and Private Equity players have facilitated creation of industries …. accelerated emergence of new age business and led to creation of new breed of entrepreneurs… Here are some of the roles and responsibilities which a VC typically plays across functional areas of a organization in the hopes of a ‘HOME RUN’ blockbuster exit….
|Broad functions||Roles and Functions of Venture Capitalist in Portfolio Companies|
|Formal roles||Informal roles|
|Board of director||Member|
|Strategic functions||Formulating business strategy||Strategy sessions|
|Managing crises and problems||Business advisor|
|Boundary spanning||Selecting vendors and equipments||Developing professional support group|
|Source of professional contacts|
|Source of Industry contacts|
|Finance related||Obtaining alternative sources of financing|
|Interfacing with investor group|
|HR related||Management Recruiter (Interviewing and selecting)||Searching for candidates of management team|
|Negotiating employment terms with candidates||Motivating personnel|
|Replacing management personnel|
|Marketing related||Formulating marketing plans||Soliciting customers or distributors|
|Testing or evaluating marketing plans|
|Operations related||Developing actual product or service|
|Developing production or service technique|
|Supervisory||Monitoring financial performance||Phone calls|
|Monitoring operating performance||Non board meetings|
|Seeking periodical reports|
|Interpersonal||Friend / Confidant|
|Mentor / Coach|
More on the VC here….
Around 2,500 years ago, Greek philosopher Heraclitus of Ephesus had pronounced: “The only constant in life is change.” Think of change as a never-ending game – ‘The Change Game’
In the context of business education in India, an MBA degree from a premier institute has always been the key to riches, glory and recognition. (Perception……???)
This year’s ranking of the Top 10, too, suggests that at a time of turbulence in the economy, global and local, premier institues like IIM are considered the safe house.
More here Business Today article
This is what happens during a MBA class when you allow computers in class… LOL